Recently, we talked about how the VA Loan program can benefit veterans interested in buying homes. But if you’re not a current or former member of the military, you’re ineligible for the VA Loan and its benefits. Fortunately, there are other options available that make financing a home easy and affordable. Let’s look at three of these mortgage programs.
Conventional mortgages are loans that are neither backed by the government nor do they involve any government cooperation. They are issued by private lenders like mortgage companies, banks, and credit unions, as well as two private, government-sponsored enterprises: Freddie Mac and Fanny Mae. As a result of their independent nature, the requirements necessary to receive a conventional mortgage tend to vary depending on who issues the loan. With that said, there are some general requirements that are common in most conventional mortgages, such as:
- Borrowers usually need a minimum credit score of around 620 for approval.
- Conventional loans tend to last either 15, 20, or 30 years.
- Many conventional loans require a 20% down payment, but there are some that let borrower put down lower.
- It’s common to require borrowers that put down less than 20% to have Private Mortgage Insurance (PMI).
The FHA loan is a mortgage backed by the Federal Housing Administration (FHA). Because this type of loan is government insured, borrowers benefit from lower down payments and less stringent requirements than conventional mortgages. This makes FHA loans especially attractive to first-time homebuyers. Some of the requirements and benefits of an FHA loan include:
- 5% down payment for borrowers with a credit score of 580 or higher.
- 10% down payment for borrowers with a credit score between 500 and 579.
- Loan limits are 115% of your county’s median home price.
- Borrower pays a one-time mortgage insurance premium equaling 1.75% of the loan.
USDA Home Loan
The USDA Home Loan program helps prospective buyers interested in purchasing a home outside a metropolitan statistical area (MSA) or in a suburb with 10,000 people or less. While the USDA Home Loan program is one of the lesser known government loan programs, it can be very helpful for homebuyers living in rural communities. Here are some of its benefits and requirements:
- The USDA Home Loan doesn’t require a down payment.
- Borrowers should be able to make a monthly payment that equals 29% or less of their monthly income.
- Borrowers need to be in good standing with creditors, without any accounts in collections over the last 12 months.
- Offers some of the lowest interest rates – as low as 1% in some cases.
Financing the Perfect Home
Due to the various flexible mortgage programs available, it’s easier than ever for Floridians to become homeowners. If you’re reading to purchase a home of your own, the Edge Group at Keller Williams is happy to help you along the way.
Our talented team serves a number of popular housing markets across the state, including Jacksonville, Orlando, Tampa, Ft. Lauderdale, and the DeBary Area.
Call or email us today to get started!