Find the Best Home Loan Option for You
Par 4 Mortgage can help you find the best home loan option. Homeownership is still an achievable goal in this crazy real estate market. Although your selection of properties might be limited, your choice of home loan types doesn’t have to be. Even with credit challenges or limited money for closing costs, we have a variety of loan programs for you. Try our free mortgage calculator here.
Let’s take a deeper look into some of the available low-to-no money down mortgage loan options:
A Federal Housing Administration (FHA) Loan is one of the most popular government-backed home loans available today. With low money down options for all types of homebuyers, the FHA offers financing for those who may not have the financial capabilities for a large down payment.
FHA loans are great options for those with a sizable down payment but a lower credit score. However, home buyers should beware, as these loans can cost more over time than conventional loans if not approached correctly.
The United States Department of Agriculture (USDA) offers a loan program that the department backs. Some loan options also allow for down payments of $0; however, applicants have income requirements. Many of these loan programs are designed to incentivize purchasing property in rural and suburban areas, so check the USDA’s website for an updated map of eligible geographic areas.
The U.S. Veterans Affairs (VA) Loan options were created for service and reserve members, both active and veteran status. Many loan options through the VA are ideal for service and reserve members because of the zero down payment ability for borrowers.
The VA has some requirements for applicants to be considered “active” or “reserve” military members. Click here to speak with a mortgage loan lender who will be able to assist you to see if you qualify.
These loans are backed by private lenders rather than the federal government. Conventional loans can be used to buy or refinance homes. A conventional conforming loan meets the requirements to be sold to Fannie Mae or Freddie Mac, the government housing finance giants that buy mortgages from lenders and sell them to investors.
There are conventional loan options for homebuyers with good credit and healthy finances. Contrary to popular belief, borrowers do not always need a 20% down payment for a conventional home loan.
The Conventional 1% Down is an exciting new purchase program that is big news in the housing market. When income-qualified borrowers put 1% down, Par 4 Mortgage pays an additional 2% toward the down payment, up to $4,000, for a total of 3% down. Helps borrowers who need it most. Reduces upfront costs and the mortgage insurance premiums. Qualify with income at or below 80% of the AMI. Follows the same guidelines as Home Possible® and HomeReady®. Lowers your down payment.
Another term for a Jumbo loan is a non-conforming mortgage. This is a mortgage that doesn’t conform to the guidelines of Fannie Mae or Freddie Mac. In 2023, the conforming loan limit for a 1 unit property is usually $726,200, but can go higher in certain high value markets. Loans larger than these limits are usually called Jumbo mortgages.
Jumbos have some flexibility that conforming loans don’t – Higher debt-to-income ratio. Flexible income calculations. Less than 20 percent down with no mortgage insurance.
While jumbo mortgages used to carry higher interest rates than conventional mortgages, the gap has been closing recently. Now the average annual percentage rate (APR) for a Jumbo loan is often par with conventional mortgages, in some cases, even lower.
Reverse Mortgage Loan
A Home Equity Conversion Mortgage (HECM), the most common type of reverse mortgage, is a special type of home loan only for homeowners who are 62 and older. A reverse mortgage loan allows homeowners to borrow money using their home as security for the loan.
Like a traditional mortgage the title to your home remains in your name. However, unlike a traditional mortgage, with a reverse mortgage loan, borrowers don’t make monthly mortgage payments. The loan is repaid when the borrower no longer lives in the home. Interest and fees are added to the loan balance each month and the balance grows. With a reverse mortgage loan, homeowners are required to pay property taxes and homeowners insurance, use the property as their principal residence, and keep their house in good condition.
A reverse mortgage loan isn’t free money. It is a home loan where borrowed money + interest + fees each month = rising loan balance. The homeowners or their heirs will eventually have to pay back the loan, usually by selling the home.
Depending on the lender, you may be able to qualify for a home loan with little to no money down; however, be prepared to pay private mortgage insurance (PMI) because it’s legally required until you meet that 20% down payment threshold.
Find the Best Home Loan – Tips
Here are a few more tips to find the best home loan:
– Shop below your budget (understand the total costs)
– Build a solid credit score and history
– Do your research and make sure that you fully understand all the upfront fees of buying a home
It’s possible to secure your dream home; you simply need to ensure that it’s the best financial decision for you and your family at this stage. So do your research, take your time, and happy house hunting!
Learn About Your Additional Options
The Par 4 Mortgage is here to assist you and help you make the right decision.
We offer a variety of loan types of loans for a wide range of credit profiles.
Contact Par 4 Mortgage today to learn more.