| |
Down Payment
|
Appraisal Occupancy Type
|
Qualifying
|
Loan Purpose
|
| Conventional |
Higher
|
Primary
Residence
Investment
Second Residence
|
Stricter
|
Purchase and Refi
|
| FHA |
Lower
|
Primary Residence Only
|
More Lenient
|
Purchase and Refi
|
| VA |
No Down Payment Required
|
Primary Residence Only
|
More Lenient
|
Purchase and Refi
|
| USDA - RHS |
No Down Payment Required
|
Primary Residence Only
|
Most Lenient Ratios
|
Purchase Only
|
A conventional mortgage loan is a home loan that is not insured or guaranteed by a government agency. Read more...
Conventional loans are usually based on an 80% loan-to-value ratio, meaning that the borrower has made a down payment of 20%. With such a down payment, the borrower can avoid paying Private Mortgage Insurance (PMI), which protects the lender in case of default. Where PMI is needed, borrowers are required to pay the PMI premiums as part of their regular monthly mortgage until sufficient equity in the property (78% loan-to-value (LTV) ratio) is reached. Conventional mortgages that have a loan limit set by Fannie Mae and Freddie Mac are referred to as Conforming loans. Loans that exceed the conforming loan limit are known as Jumbo mortgage loans. Rates on Jumbo loans are usually higher than those on Conforming loans.
For more information or to apply, please visit www.1stMarinerMortgage.com.
The Federal Housing Administration assists homebuyers by offering products that require lower down payments than traditional conventional loans (as low as 3.5%). For this benefit the borrower pays an upfront mortgage insurance premium, plus a monthly premium that is included with the payment. Read more...
The Section 203(b) mortgage is the most common FHA program and can be used to purchase new or existing 1-4 family homes, including manufactured homes. The FHA 203(k) mortgage allows a borrower to purchase or refinance and rehabilitate a home at least 1 year old. Part of the loan proceeds are used to purchase the home or pay off the existing mortgage, and the remaining funds are placed in an escrow account and released as the rehab work is completed.
The biggest disadvantage of FHA financing is the mortgage insurance premium (MIP). For most FHA loans, there is an upfront payment of 1.75% of the loan amount payable at closing, and a .55% per year renewal premium that is paid monthly. Like Private Mortgage Insurance (discussed above under Conventional Loans), the MIP is automatically canceled when the homeowner’s equity reaches 78%. MIP is required for at least 60 payments, even if the 78% LTV level has already been reached.
FHA also offers refinance mortgage programs. Streamline refinances do not have any credit qualifying standards and can be done with or without an appraisal. They can only be used to refinance existing FHA insured mortgages where the 12 previous mortgage payments and the current payment have not been late 30 days or more. Additionally, the refinance must result in a benefit to the borrower in the form of a lower interest rate, lower monthly payments, a shorter loan term, or a conversion from a variable-rate to a fixed-rate mortgage. On a streamline refinance without an appraisal, the new loan amount can never exceed the previous original principal balance and therefore cannot result in cash to the borrower. Loan amounts on Streamline refinances where an apprasial is obtained can include closing costs as long as the final loan amount in less than 97.75% of the appraised value.
For more information or to apply, please visit www.1stMarinerMortgage.com.
VA loans are guaranteed by the U.S. Department of Veterans Affairs and allow veterans and service personnel to obtain home loans with favorable loan terms and minimal down payment. Read more...
This guarantee is paid for by the vetern through a Funding Fee. Funding fees range from .5% to 3.3% of the loan amount and are determined by the loan to value, the veteran's status, and the loan purpose. Eligibility for a VA loan is determined by the Veterans Administration and is evidenced by a Certificate of Eligibility that needs to be provided when applying for a VA loan.
The VA also offers refinance mortgage programs. Streamline refinances do not have any credit qualifying standards and do not require an appraisal. They can only be used to refinance existing VA mortgages where the mortgage is current and where no more than one payment has been late in the prior 12-month period. Additionally, the refinance must result in a benefit to the borrower in the form of a lower interest rate, lower monthly payments, a shorter loan term, or a conversion from a variable-rate to a fixed-rate mortgage. Closing costs can be included in the new loan amount, but the borrower cannot receive cash back.
VA also offers a full refinance loan that requires credit qualifying and an appraisal, but allows the borrower to receive cash from the transaction, subject to a maximum loan to value of 90%.
For more information or to apply, please visit www.VAMortgage.com.
The Rural Housing Service (RHS), which is part of the U.S. Department of Agriculture, guarantees loans to rural residents with no down payment. Only low- and moderate- income rural residents are eligible for these loans. Read more...
The guarantee is paid for by the borrower through a Guarantee Fee of 2% of the loan amount . These loans require full credit, income and property qualifying
Click here to see if your home qualifies for an RHS Loan.
For more information or to apply, please visit www.1stMarinerMortgage.com.