Conventional loans are not part of any specific government program. They often cost less than other loans but can have stricter requirements. We offer both conforming loans (hyperlink to definition) and nonconforming loans.
A “jumbo mortgage” is a loan that exceeds a particular county’s loan limits. Jumbo mortgages usually have stricter underwriting guidelines because they are not backed by Fannie Mae or Freddie Mac, but are instead held or securitized by large banks or private funds. Stricter guidelines include tighter debt ratio requirements, larger down payment and reserve requirements, and tighter credit standards.
Federal Housing Administration (FHA) mortgages are insured by the FHA and offer more flexible down payment and underwriting guidelines. They are not just for first-time homebuyers but are available for all borrowers who qualify for both purchases and refinances.
Veterans Administration (VA) mortgages are guaranteed by the VA with very flexible underwriting and down payment guidelines for veterans and their spouses.
“QM” stands for “qualified mortgage,” a regulatory term associated with most of the mortgages underwritten today, including FHA, VA, Jumbo and Fannie Mae and Freddie Mac loans. For borrowers with unique circumstances such as self-employed borrowers who don’t show a lot of income on their tax returns, Non-QM loans represent a great opportunity to still obtain mortgage financing.
The rates and fees for Non-QM loans are typically higher than they are for QM loans.
Borrowers who live in rural areas had additional options thanks to a program administered by the United States Department of Agriculture (USDA). For buyers in these areas who face challenges such as a low credit score or high debt a USDA loan may open the door to homeownership. Low- to mid-income applicants who qualify for a USDA loan will not need to make a down payment on the purchase of their home because the federal government finances the entire home value. Lenders are able to offer low interest rates on these types of loans, as repayment is guaranteed by the government even if the borrower defaults.
Borrowers are required to purchase mortgage insurance on a USDA loan and their debt must not exceed 41% of total income.
Call us today to discuss which loan program is right for you.