A Closer Look At The Different Types of Loans… Which Loan Is Best For Your Situation?
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CONVENTIONAL LOANS
- This is a popular option and typically offers a lower rate. May Require a higher credit score than many other loans.
- LTV: 80%
- Best for: Repeat Buyers, Applicants with higher FICO scores.
*Loans with higher LTVs may be available with mortgage insurance.
Down Payment Requirements
5% is minimum. Some programs allow 3% down payment but require 620 FICO. If investment property, 15% down payment is minimum
Source of Funds
100% gift funds allowed. A minimum borrower contribution from the borrower’s own funds is not required
Seller Contributions
Limited to 3%
Minimum FICO
620; however, interest rate adjustments are made for any score below 720
Mortgage Insurance
Depends on the loan-to-value ratio
FHA LOANS
- These are partially insured by the Federal Housing Administration (FHA). This means lenders can offer options with easier credit qualifying and lower down payments.
- LTV: 96.5% (varies, may be as high as 96.5%)
- Best for: First time buyers, and those without savings for a big down payment.
Down Payment Requirements
3.5% minimum. Some HUD foreclosures allows $100 down payment
Source of Funds
Own funds, gift, secured loans, first time home buyer grants
Seller Contributions
Up to 6% but can’t include any part of the down payment
Minimum FICO
580
Mortgage Insurance
Depends on the loan-to-value ratio and loan terms
VA LOANS
- Exclusively for military veterans and members of the US military.
- LTV: 100%
- Best for: Veterans, Active Service Personnel, qualifying Reservists
Down Payment Requirements
No down payment required*
Source of Funds
Own funds and home buyer assistance programs
Seller Contributions
Limited to 4%
Minimum FICO
580
Mortgage Insurance
No mortgage insurance, just a funding fee that adjusts depending on how man times you used your VA eligibility
Here are a few highlights of the program:
- VA Purchase Loans allow eligible Veterans 100% home Financing*
- No down payment required for qualified borrowers
- Seller contributions allowed
- Lender / Seller credits permitted and may reduce overall investment
- VA Interest Rate Reduction Refinance Loans available
- High Balance VA products also available
JUMBO LOANS:
- These are for more expensive properties and provide up to $2.5 million in loan funds
- LTV: 80%
- Best for: Buyers in areas with higher property prices, and those planning to build a custom home
*Loans with higher LTVs may be available with mortgage insurance
Here are a few highlights of the program:
- Maximum Loan Amount up to $2.5 million.
- Maximum Loan to Value ratios up to 80%.
- Minimum borrower contribution is 5%; Gift funds allowed on primary residence only.
- Maximum Cash Out amount permitted up to $500,000.
- Minimum 680 FICO.
- Maximum 43% DTI ratio.
- Fixed and ARM options.
- 1-4 unit primary residences, 1-unit second homes and 1-unit investment.
- Maximum 10 acres but will consider up to 20 acres on an exception basis.
Eligible borrowers include:
- U.S. Citizens.
- Permanent Resident Aliens.
- Non-Permanent Resident Aliens with an unexpired visa and a minimum two-year history of credit and employment in the U.S.
- Non-arm's length transactions for primary residences only.
- First-Time Homebuyers (A First-Time Homebuyer is an individual that has not had a mortgage in the past or owned a home in the past 3 years).
HOMES FOR TEXAS HEROES LOAN:
If you're a Teacher, Police Officer, Firefighter or EMT, you can be rewarded for the vital service you provide. Participating Lenders in the Homes for Texas Heroes Loan program provided by Texas State Affordable Housing Corporation can assist. This program provides financial assistance for up to 100% for the homebuyer's cash to close, for qualified Texas homebuyers. The program combines a 30-year, fixed-rate mortgage with other available assistance options, reducing your out of pocket expenses.
Here are a few highlights of the program:
- Conventional, FHA, VA, and USDA options available
- A minimum 640 FICO score is necessary to qualify
- Your client may buy a single-family property, condo, modular home or 1-4 unit property
- You may qualify for up to 4% of 1st lien loan amount in the form of a Grant. However, you can qualify up to 5% of the 1st lien loan amount for Conventional in the form of a repayable 2nd lien
If you are a first-time homebuyer, you may qualify for a Mortgage Credit Certificate. This allows you to credit 20% of your mortgage interest annually when preparing your federal tax return, and lasts for the life of the original mortgage (up to 30 years)*
DOCTOR / PHYSICIAN LOAN:
Flexible financing to Doctors / Physicians, Dentist, Optometrists or Oral Surgeons who have:
- Recently completed their residency or fellowship and are about to begin their new employment
- Less than six months to complete their residency or fellowship
- Been practicing less than 1 year
Qualifying Medical Designations:
- Medical Resident (Educational License)
- Doctor of Medicine (MD)
- Doctor of Dental Surgery (DDS)
- Doctor of Osteopathy (DO)
- Doctor of Optometry (OD)
- Doctor of Dental Medicine or Surgeon (DMD)
- Doctor of Pediatric Medicine (DPM)
Student Loan Deferments can help you buy a new home now:
Doctor / Physician Loan program allow students loans that will be deferred for a minimum of 12 months after the closing date to be excluded from your monthly debt-to-income ratio calculation, provided that:
- The deferred debt will remain in a deferred status until after the Borrower is placed within his or her receiving full compensation; and
- the underwriter applies a reasonableness test as to the likelihood of the Borrower's compensation and employment following the deferment period, and the likelihood that the Borrower's income will be sufficient to expect timely repayment of the student loan debt.
Future earning potential will also be factored into the application, so you may qualify for additional funding for a more comfortable home.
Other requirements
All Doctor / Physician loan applications must have a Social Security number. Both permanent and non-permanent resident aliens may qualify. Minimum 720 FICO scores for primary residences.
HOME SWEET TEXAS LOAN:
Home Sweet Texas Loan program is provided by Texas State Affordable Housing Corporation. This program provides financial assistance for up to 100% for the homebuyer's cash to close, for qualified Texas homebuyers. The program combines a 30-year, fixed-rate mortgage with other available assistance options, reducing your out of pocket expenses.
Here are a few highlights of the program:
- Conventional, FHA, VA and USDA options available
- A minimum 640 FICO score is necessary to qualify
- You may buy a single-family property, condo, modular home or 1-4 unit property
- You may qualify for up to 4% of 1st lien loan amount in the form of a Grant. However, you can qualify up to 5% of the 1st lien loan amount for Conventional in the form of a repayable 2nd lien
If you are a first-time homebuyer, you may qualify for a Mortgage Credit Certificate. This allows you to credit 20% of your mortgage interest annually when preparing your federal tax return, and lasts for the life of the original mortgage (up to 30 years).
PHYSICIAN, NURSE, OTHER MEDICAL PROFESSIONAL LOAN:
Affordable Home Financing with Non-traditional qualifying guidelines.
Here are a few highlights of the program:
- Low down payments
- Down payment assistance and "community seconds" provided by state, city and community sources* are allowed
- Friends, family and employers may help you with gift funds
- You may buy a single-family property, condo, modular home or 1-4 property
- Non-traditional credit histories accepted
SETH GOLD STAR PROGRAM:
The SETH GoldStar Program provides eligible homebuyers Down Payment and Closing Costs Assistance when purchasing a home. Buyers also receive a 30 year fixed rate FHA, VA, USDA or Conventional loan. Actual amount of Assistance determined by final loan amount.
- Available for the entire State of Texas except Travis County and the cities of El Paso & Grand Prairie
- Max Sales Price: $331,200 FHA
- Max Sales Price: $484,350 Conventional / USDA / VA
- Min Credit Score: 600
- Additional AIS Grants Now Available
- All Buyers to Complete the SETH on-line Homebuyer Education Course
- Qualify for a Mortgage Loan from a Program Lender
- NO First Time Homebuyer Requirement
- NO Repayment of DPA After Forgiveness Term
- NO Federal Recapture Tax
- NO Prepayment Penalties
- Borrowers must be income eligible:
Fort Bend County: $88,665 (Income Limits) and $61,680 (AIS Grant Limits)
Harris County: $88,665 (Income Limits) and $61,680 (AIS Grant Limits)
Galveston County: $88,665 (Income Limits) and $61,680 (AIS Grant Limits)
Montgomery / Walker County: $88,665 (Income Limits) and $61,680 (AIS Grant Limits)
ADJUSTABLE RATE MORTGAGE (ARM) LOANS:
- This loan's rate is typically lower for the first 5 to 10 years before adjusting each year.
- LTV: 80%
- Best for: Buyers who will refinance or sell their home before their rate adjusts
*Loans with higher LTVs may be available with mortgage insurance
USDA LOANS:
- Similar to FHA Loans, these offer easier credit qualifying and down payment options. Only available for properties in areas defined as rural by USDA.
- LTV: 100% (Varies, may be as high as 100%)
- Best for: Buyers of properties in rural areas
Here are a few highlights of the program:
- Available for Purchase or Refinances
- Available for Eligible Homebuyers
- Zero Down Payment
- Competitive Fixed Rates
- No Cash Reserves Required
- Guarantee Fee can be financed, Closing Cost can be paid by Seller
Want to know more? We are here to talk & walk you through the entire process. Call today to get started!
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