Modern-day home buying offers many home loan options for financing your mortgage. Many people believe the common myth that in order to buy a home you must have great credit and thousands of dollars to put down. Simply put, that is incorrect. You can get a home loan with less than 4% with a credit score of 580. The one thing to note though is, the worse the credit score, the more that may be required for a down payment. Whether you have good credit, not so good credit, or a perfect credit score, we have a loan option for you. Here are some of our best home loan options:
Adjustable-Rate Mortgage Loan:
Adjustable Rate Mortgages are also known as ARMs. They generally begin with a set interest rate that is often on the lower end of the current rates. After this set period of time, interest rates can fluctuate. So what does this mean for your mortgage payment? This means that during the “set period of time” the interest rate, and monthly mortgage payment will remain the same. After the set period of time, the monthly mortgage payment will fluctuate with the interest rates. If the rates go up, so do the payments. If the rates go down, your monthly payments decrease as well. There are certain rate caps that can limit the amount of fluctuation on the interest rate of the mortgage.
The interest rates of an ARM are adjusted according to indexes and margins. The margin is the interest amount that a lender adds to the index to calculate the newly adjusted rate. This number remains the same throughout the life of the loan. Indexes are rates that help the lender calculate the new rates. They use indexes as a starting point or reference.
Fixed-Rate Mortgage Loan:
Unline Adjustable Rate Mortgages, fixed-rates have a set interest rate throughout the life of the loan. If interest rates go up, your monthly mortgage payment will remain the same. If interest rates go down, your monthly mortgage payment will still remain the same. The lender calculates the interest rate and what monthly payments will be, so you know what you’ll be paying each month at the time of closing.
FHA Loan:
This loan comes from the Federal Housing Administration and is specifically for those with lower incomes and credit scores. Currently, if you have a credit score of 580 or above, you can finance a home with only 3.5% down. If your credit score falls below that, you can still be approved, but you will need to put 10% down. You can get this type of loan through lenders that are approved through the FHA.
VA Home Loan:
These loans were created by the US Department of Veterans Affairs made specifically for veterans, active-duty military, and their qualifying surviving family members. These loans often come with no down payment and even no closing costs. You may qualify for a VA loan if you are an active-duty service member and have served at least 181 days during peacetime, have served at least 90 days during a time of war, you have at least 6 years of service in the reserves or national guard, or you are the spouse of a service member that has died during the line of duty or received a service-related disability. Qualifications for VA loans typically are that you have at least a credit score of 620, but this loan is a great option for service members and veterans.
Conventional Home Loan:
Conventional home loans are not secured through a government agency like FHA loans or VA loans. Instead, they are financed through private lenders. These loans can generally have a higher interest rate than those provided through government agencies. To qualify for a conventional home loan, you’d need an acceptable debt-to-income ratio, 20% down payment, and a credit score of at least 680. Typically only credit scores of at least 700 will be approved for a conventional home loan.
Jumbo Mortgage:
Jumbo Mortgages are loans that exceed the amount set by government agencies as in FHA and VA loans. These loans are designed for large purchases. The amount available can vary by your location.
USDA Loans:
USDA loans are another government-backed loan option. These loans are provided through the US Department of Agriculture for homes in rural areas. These loans are similar to FHA loans in that they were created for those with low incomes. These loans require nothing down. Eligibility for this loan includes a credit score of at least 640, a household income that is within the limits set by the USDA, and the home you are purchasing must be in a rural area. All of these requirements are set forth by the USDA.
These loans are not our only loan options. For more information, to get pre-approved, or for a free consultation, call us today. 816-396-6001
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