Loan Programs
Because no two home buyers are the same, your loan team will work directly with you to wholly understand your unique financial situation and goals, allowing us to help you determine which loan program is right for you.
When considering mortgage loan programs, you have many options, including conventional and 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 loan
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. Mortgage Trust 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 – your loan officer will discuss this with you. 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-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.
Your loan officer will explain all these details in more depth. A conventional loan is a good option for home buyers with better credit, who have enough savings for a down payment, and who want to avoid mortgage insurance premiums.
FHA loan
An FHA Loan is a great option for home buyers who don’t meet the income, credit, or down payment requirements for 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. Mortgage insurance may apply during 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 your loan officer 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. Your loan officer 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 meet certain standards at appraisal.
• There are also maximum mortgage limits for FHA loans that vary by state and county.
VA loan
Veterans Affairs-guaranteed home loans are a fantastic option for veterans and military families. Mortgage Trust is proud to assist our service members in their pursuit of homeownership.
Like all home loans, VA loans have eligibility requirements and guidelines. Our experienced loan officers 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
USDA loan
The US Department of Agriculture created this home loan program 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. Our experienced Loan Officers will help you determine geographic and income/credit eligibility, and guide you through the USDA home loan process.
Other options
This is just the beginning of real estate financing options. If your situation doesn’t fit one of these traditional programs, your loan officer will work with you to explore other possibilities, including jumbo loans for high-value properties, and alternative-documentation loans for unusual income or asset scenarios.