🏡 FHA LOANS 🏡

• First and foremost, FHA Loans: FHA stands for federal housing administration, and an FHA loan is a home mortgage that is insured by the government and issued by a bank or other lender that is approved by the agency.

• The FHA loan is now one of the most beloved mortgage types among first-time home buyers, and helps to make homeownership possible for up and coming individuals, young couples, and families. Best part - FHA mortgage approval standards are considered to be some of the MOST friendly across the industry.

• Normally - having a high credit score is almost mandatory to get a mortgage, but with an FHA loan, if you have a credit score of at least 580 (and for context the scale goes from 500-850), you can borrow up to 96.5% of the value of a home with an FHA loan, as of 2022.

• That means the required down payment is only 3.5%. And even if your credit score is really not the best, somewhere between 500 and 579 (some of the worst possible scores), you can still get an FHA loan as long as you can make a 10% down payment.

• The only real drawback is that you’ll have to pay PMI - private mortgage insurance. PMI is required any time you put down less than 20%, and it’s essentially a monthly fee that the FHA will collect as an insurance premium for lending you the money while letting you put so little down. And this a great segue into the second type of mortgage.

🏡 Conventional Loans 🏡

• A Conventional 97 is a type of loan where you get rewarded for having a high credit score by only having to put down a 3% down payment.

• This has a lot of the benefits of an FHA, but fewer upfront insurance fees, and once you have 20% equity in your home - your Private Mortgage insurance automatically drops off! While folks with credit scores as low as 620 have qualified for these, most folks who get conventional 97 loans, have a credit score in the 700 or 800s

A Few Things To Keep in Mind about Conventional Loans

• These are only for first time homebuyers (kind of a misnomer because it doesn’t actually have to be your first home, you just can’t have owned a home in the past three years)

• For most locations the home can’t cost more than $453,100, and in high cost areas, this amount is increased to around $679,650.

  There’s even a look up tool to check what the cap in your area would be: Fannie Mae Area Median Income Lookup Tool

• The home has to be your primary residence.

• And as mentioned, you will pay PMI until you hit 20% equity

🏡 USDA Loans 🏡

If you’re more Little House on the Prairie than Sex in the City, get ready to thank the U.S. Department of Agriculture, for one of the government’s least-known mortgage assistance programs.

The program’s mission was to “improve the economy and quality of life in rural America.” USDA loans offer low interest rates and no down payments, making them a super accessible mortgage option.

The USDA offers three mortgage types:

1. A direct loan from the USDA - these are for low income and very low income families and individuals.
   Income limits will vary by location - if you're curious you can look them up here: https://www.rd.usda.gov/sites/default...

2. Similar to an FHA loan, the USDA can also guarantee a mortgage issued by a participating local lender. This lets you get a competitive mortgage without putting any money down, but again, as with the FHA loan and convention 97, since you’ll be putting less than 20% down you will have to pay PMI - Private mortgage insurance.

3. the USDA offers loans and even GRANTS for home improvement. Yes - Grants. As in free money. Packages can also combine a loan and a grant, providing up to $27,500 in assistance.

🏡 VA Loans 🏡

They are truly the best mortgage product available. VA loans, similar to USDA loans, allow you to put 0% down on your home, and as the name suggests, are available to current and former members of the U.S. military and surviving spouses. But here’s what makes them better. For qualifying borrowers, you don’t have to pay mortgage insurance like you would for all of the other loans I mentioned, so like I said - pretty much the best mortgage product available. These loans are offered as a major incentive to help give veterans a financial leg up in return for them serving their country. Well deserved.

Whether you’re looking to close on a home tomorrow or are just looking, being educated on different mortgage types will make sure you’re making the most of your money & the right financial decision for you.