PickMyMortgage.com

Loan Product Summary

SUMMARY Specialized Loan Programs FHA, VA, and other specialized programs are mortgage loans made to home buyers that meet certain requirements. Less Than 20% generally these loans require less than 20% down payment — and in some with zero % down — and the interest rate is typically lower than normal rates on conventional loans. Lower Income Requirements another advantage is that the income requirements for these programs are less stringent — both the income and debt ratios are a little higher when qualifying for a loan: Government Sponsored Loans Government agencies that sponsor these loans include the Federal and State governments. A review of each type loan will be noted below.

 

money saving tip interest rates on FHA and VA loans are 0.5-1.0% lower than other rates FHA closing costs do not require two months of PITI payments (principal, interest, taxes, insurance) qualifying veterans can use their entitlement sum for the down payment Another Money Saving Tip view our program to help payoff your mortgage in 1/3rd of the time saving your thousands in interest — plus imagine how to use your mortgage payoff bonus to plan for college, retirement, other see how the mortgage payoff plan works

Loan Advantages and Disadvantages

ADVANTAGES Lower Down Payment these programs require less down payment than conventional loans - VA Loans can be issued with as little as zero down Lower Interest Rate interest rates on government sponsored programs are lower than conventional loans Higher Debt Ratios FHA / VA debt ratios are higher than conventional loans Assumable FHA / VA loan can be assumed under guidelines   DISADVANTAGES Higher Rates interest rates are slightly higher than ARMs and other special mortgages More Costly Product the average homeowner does not remain in the home for the full 30 years, thus paying more financing charges than with other mortgage loans

 

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Federal Housing Administration (FHA) Loans

The FHA does not lend money, they only insure the loan against homeowner default.

The homebuyer helps pay for this insurance premium at closing.

This role allows private lenders to extend affordable housing for low- to moderate-income level families. Lower or no down payment is required in most cases.

The interest rate on FHA loans is generally 0.5 - 1.0% lower than conventional loans.

Loan maximum may be up to 100 percent of the FHA-established reasonable value of the property. These values may vary by region.

Lookup FHA mortgage limits by region:
entp.hud.gov

The big advantage under the FHA program is that you can buy a home with minimum down

— as little as 3% for the first $25,000, and 5% on the rest:

For more information about low-down payment:
www.hud.gov

Another major advantage is that the entire down can come from another party in the form of a gift.

The "housing" and "debt-to-income" ratios are higher for FHA loans

— 29% for the housing ratio; 41% for the debt ratio:

calculate your own qualifying ratios

Limitation on buyer's closing costs — although the closing costs tend to be higher than conventional loans.

Most FHA loans are 30-year fixed. But there are Adjustable Rate Loans and graduated payment programs.

The FHA loan is an assumable mortgage, subject to FHA approval

This means another buyer can assume your mortgage if you plan to sell. This can be an added advantage in rising rate markets.

You have the right to repay the loan without penalty.

Link to the FHA web site for more detailed information:
www.hud.gov

Veterans Administration (VHA) Loans

The Department of Veterans Affairs (VA) is a government agency set up to promote affordable home ownership for veterans.

The VA does not lend money, they only insure the loan against homeowner default.

This role allows private lenders to extend affordable housing to qualifying veterans and their families with as little as zero down.

The interest rate on VA loans is about 1.0% lower than conventional loans.

VA loans require little or no down payment and minimum income requirements.

Loan maximum may be up to 100 percent of the VA-established reasonable value of the property. Limits apply:

View the VA fact sheet on loan limitations:
www.homeloans.va.gov

VA Loans are available for eligible veterans, active-duty personnel, and surviving spouses.

View VA eligibility status:
www.homeloans.va.gov

Under certain conditions, VA loans are assumable by non-veterans.

The big advantage of the VA program is that qualifying veterans can buy a home with zero down in most cases

— subject to the veteran's entitlement.

VA loans do not require mortgage insurance for down payments less than 20%: savings of about $50 per month.

The "housing" and "debt-to-income" ratios are higher for VA loans — 29% for the housing ratio; 41% for the debt ratio

calculate your own qualifying ratios

Limitation on buyer's closing costs — although the closing costs tend to be higher than conventional loans:

VA fees will be required at closing.

Most VA loans are 30-year fixed rate loans.

The VA loan is an assumable mortgage, even by non-veterans:

This means another buyer can assume your mortgage if you plan to sell. This can be an added advantage in rising rate markets.

- right to repay the loan without penalty.
- flexibility in negotiating interest rates with the lender
- limitation on buyer's closing costs

Link to the VA web site for more detailed information:
www.homeloans.va.gov

Rural Housing Services (RHS)

Affordable housing for low- to moderate-income level rural residents to purchase, construct, repair, or relocate rural-related facilities.

Not subject to farmers only, but available to anyone who wishes to buy a home in rural areas or in towns under 10,000 population (higher population levels in some areas).

Lower or no downpayment is required in most cases.

The Department of Agriculture works with private lenders to guarantee loans for qualified applicants. List of programs include single family housing, rural rental housing, and community facilities.

Link to the RHS web site for more detailed information:
www.rurdev.usda.gov

State Agencies

Many state and local governments provide low- to moderate financing programs to qualified candidates.

Programs include financing, down payment assistance, closing cost assistance and other programs for first-time home buyers.

Programs limit loan size and the paperwork involved can be exhaustive.

Lookup county and city governments for information:
www.statelocalgov.net

Note: The loan information above is general information related to mortgage products and the mortgage lending process. The information does not represent terms of any particular lender. Lenders whom you may work with may offer different product terms.

PickMyMortgage.com is not a lender. Therefore, we cannot quote rates or guarantee best terms. We refer applicants interested in getting a lending quote to Secure Rights, a licensed mortgage broker representing multiple lenders.