VA Loan (Available to Qualifing Active Military and Veterans)
This year the VA Home Loan program will receive $6 Billion in funding. It is amazing that less than 10% of the individuals who are eligible for a VA Home Loan use their benefits.
The government subsidizes your home loan, which eliminates the need for mortgage insurance saving you money each month. A big plus is that there is no down payment required when purchasing a home with a VA Loan. This can lead to a variety of benefits, such as affording a larger home. It is also easier to qualify for a VA Loan compared to a conventional loan since the credit and income standards are not as strict.
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FHA (Great option for non-VA eligible buyers)
A FHA Loan is an excellent option for… First time Homebuyers, and those in an urban or rural environment who is considering purchasing a home and would like to make a low down payment. The FHA is fairly lenient with credit, though requirements may vary by state. You can apply even if you have no credit history if you can prove that you have met past financial obligations.
Things to remember about FHA loans: (Not intended as comprehensive list, but intended as overview)
•Any past bankruptcy must be at least 2 years old and the applicant must have had good credit for at least 2 consecutive years following the bankruptcy. •Any history of foreclosure must be at least 3 years old. •You must have had a stable income for at least 2 years and proof that you have paid all your bills. •You must be able to make a 3.5% down payment, which is considerably lower than conventional loans. (This can be gifted from acceptable source: contact me for details) •You can assume a FHA loan from a seller or pass it on to a buyer.
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Conventional Loan (Term used for many different types of loan programs)
A conventional loan is basically any kind of lender agreement that's not backed in full by the Veterans Administration or protected by the FHA (the Federal Housing Administration). All told, there are several broad categories of conventional loans. These can be conforming or non-conforming.
Conventional loans include conforming loans. Basically, these are arrangements that meet stipulations set forth by Fannie Mae and or Freddie Mac, two very large mortgage trading companies.
Nonconforming loans – instruments/programs which don't meet Fannie Mae or Freddie Mac qualifications -- are also considered conventional. Another category of loans, jumbo loans, falls outside of Fannie Mae eligibility but is also considered conventional. A jumbo loan is a loan that's too large to be eligible to be traded by the two main loan purchasers.
First and foremost, the kind of loan you want will impact pricing both in the short-term and in the long-term. Lenders will also look at how much funds you have to close, your credit history, and your employment history. Finally, the financial details of your final arrangement will be intimately tied up with the location of your property and the kind of home you purchase or build.
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