Tag: USDA

Conventional Loan vs FHA Loan vs VA Loan vs USDA Home Loans

compare home loan options

When shopping for a mortgage it is a good idea to compare loan options. Many lenders offer a variety of home loans that might fit your needs. Each mortgage options has it benefits and weaknesses that should be considered for your individual loan needs.

Lending guidelines are not the same for all mortgage lenders.  All banks and mortgage companies operate off the same set of guidelines for the specific mortgage programs however each may have its own overlays. Lending overlays are additional conditions or interpretations of the set guidelines.  For example, FHA loans with a 3.5% down payment allows as low as a 580 credit score but most banks and lenders add an overlay that requires a 640+ credit score.

The best way to review mortgage options is to speak with a licensed loan officer that will be an expert on the loan options. They will help to review the pros and cons and assist with comparing home loans that may be the best for you.

The chart below compares Conventional Loans vs FHA loans vs VA loans vs USDA Rural Development Loans.  These are the most popular loan options that most borrowers will review. As you can see below, if you have had a recent bankruptcy or foreclosure then Conventional would not be an option.

If none of these options seem to fit your life situation then a portfolio loan may be your last resort. Portfolio mortgages are home loans that do not fit the agency guidelines. They take a more common sense approach and make exceptions on loan requirements if the borrower is has financial strength in other areas. The trade off is that they typically require larger down payments and have higher rates than other loan programs.

Home Loan Comparison Chart

April 11th, 2018:Conventional LoansFHA LoansVA LoansUSDA Loans
Minimum Required Down Payment3% of Purchase Price3.50% of Purchase Price
(Only 1.5% required for our FHA Down Payment Assistance Program)
Zero DownZero Down
Annual Mortgage Insurance Rates (Paid Monthly)Private Mortgage Insurance (PMI)  ranges from .10 to 1.5% of the loan amount annually based on Residency Status, Credit and Loan to Value.Mortgage Insurance Premiums (MIP) ranges from .80% to .85 % for loan terms over 15 years and .45% to .95% for loan terms of 15 years or less.NONE.5% of loan amount
Additional CostsIncrease to rate or loan fees based on credit score1.75% Upfront Mortgage Insurance Premium added to your loan balance or paid in full at closing.0% fee if Disabled Veteran or surviving spouse
2.15% for First VA Loan Standard Military
2.40% for First VA Loan National Guard or Reserves
3.3% Subsequent Loans
2.00% Funding Fee added to your loan balance.
Minimum Credit Score620+ credit score530+ with 90% loan to value and 580+ for 96.5% loan to value550+ credit score580+ (Additional requirements including proof of Rental History under 620 score)
Maximum Loan Amount$453,100 Loan Limit
(Read More)
$294,515 Loan Limits for Single Family Homes
$377,075 for Two Units
$455,800 for Three Units
$566,425 for Four Units
$453,100 Loan Limit$453,100 Loan Limit
Allowable Seller Contributions

Principal Residence & Second Homes
LTV Greater than 90% = 3%
LTV 75.01-90% = 6%
LTV 75% or less = 9%

Investment Properties
ALL LTV ratios = 2%

6% Seller Contributions payable towards Buyer Closing Costs and Pre-Paid items.4% Seller Contributions payable towards Buyer Closing Costs and Pre-Paid items.USDA sets no maximum however most lenders set 6% Seller Contributions payable towards Buyer Closing Costs and Pre-Paid items.
Required Waiting Period after BankruptcyChapter 7 requires 4 Years from discharge date
Chapter 13 requires 2 Years from discharge date
Chapter 7 requires 2 Years from discharge date
Chapter 13 requires 1 Years from discharge date
Chapter 7 requires 2 Years from discharge date
Chapter 13 requires 1 Years from discharge date
Chapter 7 requires 2 Years from discharge date
Chapter 13 requires 1 Years from discharge date
Required Waiting Period after Foreclosure

7 Years from Completion

3 Years from Completion2 Years from Completion3 Years from Completion

To review home loan options with a Licensed Loan officer simply complete the form below to request a free consultation or call us now at 1-800-555-2098.

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Buy A House with a Small Down Payment

If you are a first-time homebuyer, getting a mortgage may seem overwhelming — especially with all the different options available. Maybe you don’t have a lot of money for a down payment or your credit isn’t great. The good news is, you can still qualify for a home loan. Here are 4 low or no down payment options that can help you, as a first-time homebuyer, get into the house of your dreams.

FHA Loan

With an FHA loan, all you need is a 3.5% minimum down payment to buy your first home. Because the Federal Housing Administration backs the FHA loan, the qualifications are a bit more lenient. People who have no established credit or small savings for a down payment, and even a credit score as low as 580 can qualify. The FHA loan is also available to immigrants who have a Visa or Green Card, as well as those who have gaps in their employment.

It’s also easier to qualify for an FHA loan if you’ve filed for bankruptcy. With a conventional loan, you have to wait four years after filing Chapter 7 to apply for a mortgage. With the FHA loan, you only have to wait two years. If you filed for Chapter 13, you only have to wait one year. You can also get an FHA loan three years after being foreclosed on your previous property.

VA Loan

The government created the VA loan to provide home ownership to veterans and military personnel. Like the FHA loan, the government backs the VA loan for extra security, so qualifying is easier. To qualify, you must get a certificate of eligibility from the Veterans Administration. Having bad credit may not hinder you from getting approved. VA loans require no down payment or Private Mortgage Insurance (PMI). Veterans can choose either a 30-year fixed VA loan or a 15-year fixed VA loan for up to $424,100. They may also get a cash-out refinance of up to 100% of their home.

USDA Rural Development Loan

For those wishing to buy a home in a rural area, the USDA Rural Development Loan requires zero down payment, making it great for first-time home buyers. The government also backs this loan for added security, so there’s low or no PMI attached to it. You only have to pay a 1% guarantee fee upfront and 0.5% each year after that. That’s less than the 1.75% up front and 0.85% each year with the FHA loan. If you’ve recently filed for bankruptcy or were foreclosed, you won’t have to wait too long to qualify for a USDA loan.

Conventional 1% Down Mortgage

Important Update! Last date for loan submissions is 5/31/2018. Program is being discontinued.

Riverbank Finance offers homebuyers a way to put only 1% down on a home and still get a conventional mortgage. In this case, the home buyer puts 1% down and the lender (Riverbank Finance) contributes 2%, giving home buyer 3% equity when closing on the home. Freddie Mac created this option to make homes more affordable for new buyers. It allows people to buy a new home for, essentially, the cost of one month’s rent and avoid PMI altogether or drop PMI in the future. Your 1% down payment may be a gift from someone, you must have at least a 700 FICO score, and your debt-to-income (DTI) ratio is limited to 43%.

For more information or to speak with a loan officer about any of these mortgage options, call Riverbank Finance at (800) 555-2098.

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