Government Loans benefit customers seeking a mortgage with a lower down payment requirement or those who may need more flexible qualifying guidelines due to limited credit history.
- FHA Mortgages have lower down payment requirements that may be easier to qualify for than a conventional loan. The loans are made by private lenders and insured by the FHA, with both an upfront and a monthly charge for this insurance. The FHA has caps (limits) on the mortgage amount based on the county where the home is located.
- FHA 203(k) Mortgages are available to help borrowers refinance a home in need of updating or improvements. The lender loans money to refinance a home AND complete repairs in a single mortgage. This rehab loan offers fixed rates with only a 3.5% down payment required. The home must be your primary residence. The FHA 203(k) is also available for refinance transactions.
- FHA Energy Efficient Mortgages (EEM) are available to assist home owners with energy upgrades that are financed into their mortgage loan. The FHA EEM Program will add value to your home while reducing utility expenses without effecting qualification or having to provide additional down payment.
- VA Mortgages are made by private lenders and guaranteed by the Department of Veterans Affairs (VA). The VA guarantee allows veterans and active service personnel get a home loan for up to 100% of the home’s value with no down payment. It’s typically easier to qualify for a VA loan than for a conventional one, but there’s usually a maximum loan limit of $417,000.
- USDA Mortgages are for designated rural properties and are guaranteed by the Department of Agriculture. Benefits include financing up to 100% of the purchase price and no monthly mortgage insurance premium.
Conventional Loans benefit customers with good, though not necessarily perfect, credit histories. But, if your down payment for a purchase, or home equity in the case of a refinance, is less than 20%, you will have to pay for private mortgage insurance (PMI).
- Conforming Mortgages offer lower rates because they are originated to guidelines established by Fannie Mae or Freddie Mac, which are Government Sponsored Enterprises (GSEs). These loans must also “conform” to established maximum loan limits set by Fannie Mae and Freddie Mac.
- Non-Conforming Jumbo Mortgages carry higher interest rates because they are above the established Fannie Mae and Freddie Mac maximum loan limits.
30 Year Fixed Rate Mortgages have a fixed interest rate and principal payments that never change over the life of the loan. However, taxes and insurance included in the monthly payment are likely to change over time. Fixed rate mortgages have higher rates than adjustable rate mortgages, but when interest rates are low, fixed rate loans are not much more expensive. This loan is a good choice if you plan to stay in your home seven years or more because you’ve locked in your rate for the life of the loan.
15 Year Fixed Rate Mortgages offer all the above advantages, plus a lower interest rate. You’re also paying off your mortgage in half the time, so you’ll have a higher monthly payment. Some borrowers like to take out a 30 year fixed rate mortgage then voluntarily make larger payments to pay down the loan in 15 years.
Adjustable Rate Mortgages (ARMs) have a rate that is recalculated at the end of a specified time period. The longer you ask the lender to commit to a specific rate, the higher it will be.
2/1 Buy Down Mortgages let buyers qualify for a loan at below market rates, allowing you to borrow more. Your initial interest rate will increase by 1% after the first year and by another 1% after the second year. It then stays at a fixed rate for the remainder of the loan. Borrowers often refinance these loans at the end of the second year at the best long-term rates. Leaving the loan in place for three full years or more will generally keep its average interest rate in line with original market conditions.
Cash Out Refinances are a combination of a home equity loan and a refinance loan. The home owner applies for refinance, but adds to the requested amount a portion of the property equity.