When considering mortgage loan programs, you have the option to apply for either a conventional loan or a government-backed loan. Government-backed loans, such as FHA, VA and USDA, are insured through the federal government. Conventional loans with a less than 20% down payment are insured through private companies and must conform to guidelines established by the Federal Housing Finance Association.
Conventional loans can require a substantial down payment. Typically, borrowers provide at least 5% down payment, though 3% down payment programs are possible for eligible borrowers. Borrowers with less than 20% down payment must pay private mortgage insurance until certain criteria is reached, such as paying down the loan balance to a specified amount.
Conventional loans must also meet certain credit and financial requirements. We will pull the applicant’s credit report from the three major credit bureaus; both credit score, and credit history, will determine eligibility for a conventional loan. Higher credit scores can influence better interest rates—I will discuss this with you personally. Conventional loans also have specific debt-to-income ratio requirements, and applicant’s employment history, income and debt will be thoroughly examined to meet lender guidelines.
Conventional loan programs offer several repayment period terms—15, 20, or 30 years—with competitive rates for shorter terms. With a fixed interest rate loan, the interest rate remains the same for the life of the loan. Adjustable-rate mortgages are also an option. Here, the interest rate is tied to current market rates and changes periodically, depending on the program you choose. With this option, your monthly mortgage payment will go up and down accordingly.
We will explain all these details in more depth. A conventional loan is a good option for home buyers with better credit, have enough savings for a down payment, and want to avoid mortgage insurance premiums.
An FHA Loan is a great option for home buyers who don’t meet the income, credit, or down payment requirements for traditional, conventional loan programs.
FHA Loans are insured by the Federal Housing Administration and FHA Borrowers are required to make Upfront and monthly Mortgage Insurance payments. The FHA recently reduced the cost of mortgage insurance (MI). However, MI is now for the life of the loan for borrowers that do not meet down payment amounts specified by FHA.
The Department of Housing and Urban Developments makes periodic changes to FHA guidelines and requirements. It is therefore advisable to consult with us for the most current rates and terms on FHA loans.
Other factors to consider:
- Currently, FHA Borrowers must make a minimum down payment of 3.5%. This money can be gifted by a family member.
- Credit score requirements are lower for FHA loans. I will discuss minimum scores with you when they pull your credit report.
- FHA loans are only available for Primary Residence occupancy, and an FHA loan requires that the property meets certain standards at appraisal. There are also maximum mortgage limits for FHA loans that vary by State and County.
VA-guaranteed home loans are a fantastic option for veterans and military families. We are proud to assist our service members in their pursuit of homeownership.
Like all home loans, VA loans have eligibility requirements and guidelines. We will work with you to obtain a Certificate of Eligibility and guide you through the entire process.
VA Loan Highlights:
- Low Down Payment options + 0% Down Payment for eligible borrowers
- No Private Mortgage Insurance
- Competitive Interest Rates
- VA Jumbo Loans are available with down payment requirements
The US Department of Agriculture created this home loan to support rural development, and to assist lower income households in achieving homeownership.
“Providing affordable homeownership opportunities promotes prosperity, which in turn creates thriving communities and improves the quality of life in rural areas.” – USDA.gov
A common misconception is that USDA loans only apply to remote rural and farming areas. In fact, eligible areas are based on town and city population numbers, and you may be surprised to find that the home you are looking at is located within USDA designated boundaries.
Like all home loans, USDA loans have eligibility requirements and guidelines. We will help you determine geographic and income/credit eligibility, and guide you through the USDA home loan process.
NHF® Down Payment Assistance
For many households, the dream of homeownership has remained elusive because saving for a down payment is financially unrealistic. Mortgage Trust, Inc. is proud to be a participating lender for the NHF Platinum® Down Payment Assistance Program. Through this program, I can help eligible families and individuals obtain a grant for a down payment and/or closing costs—a grant that does not need to be repaid.
The National Homebuyers Fund® is a nonprofit public benefit corporation that supports affordable, responsible homeownership. NHF manages several Down Payment Assistance (DPA) programs that help people purchase a home with fewer out-of-pocket costs. DPA programs follow standard mortgage loan underwriting guidelines to ensure that borrowers are able to afford their mortgage.
For eligible applicants, the process is simple. We will prequalify borrowers for the NHF Platinum™ loan, determining eligibility through standard examination of income, credit, and debt. From there, we take care of registration, the reservation of DPA Funds, and confirmation of the Grant Letter. All you need to do is apply!
NHF Platinum Program Highlights*
- Non-repayable grant, up to 5% of loan amount
- No first-time homebuyer requirement
- For the purchase of primary residence
- Conventional, FHA, VA, and USDA mortgages
- FICO scores as low as 640
*Certain restrictions apply on all programs. Contact me to learn more about borrower eligibility, rates, terms, and guidelines.
National Homebuyers Fund, Inc. (NHF) is a non‐profit public benefit corporation and Instrumentality of Government under Internal Revenue Service code section 115.