Loan Programs

Loan Programs

Conventional

Features

  • Available in a variety of fixed-rate and adjustable-rate loan options.
  • Has down payment options as low as 3.0% if you are a first time homebuyer. 5% in all other cases.
  • Lets you add extra features such as a temporary buy down.
  • You typically have to pay mortgage insurance if your first loan has less than 20% equity.

Benefits

  • Mortgage insurance has the ability to drop off when you have 20% equity.
  • Allows a co-applicant to help you qualify even if the person doesn’t live in the home.

Considerations

  • A Conventional loan has the benefit of a low down payment but there are other loan products with the same option.
  • Be certain to ask your Mortgage Advisor to help you compare the overall costs of all products, including the monthly and long-term costs and conditions of the required mortgage insurance.
  • In many instances, you may find a Conventional loan to be a less expensive financing option and should be considered after thoroughly evaluating all other product options that meet your credit qualifying and financial needs.

FHA

Features

  • Available in a variety of fixed-rate and adjustable-rate loan options.
  • Has down payment options as low as 3.5%.
  • May allow you to use a gift or grant for all or a portion of the down payment or closing costs.
  • Lets you add extra features such as a temporary buy down.
  • You typically have to pay upfront and monthly FHA mortgage insurance premiums.

Benefits

  • Requires less cash upfront for your down payment and closing costs.
  • Available for all income levels.
  • Allows a new buyer to take over the loan if you sell your home (subject to loan approval).
  • Allows a co-applicant to help you qualify even if the person doesn’t live in the home.

Considerations

  • An FHA loan has the benefit of a low down payment but there are other loan products with the same option.
  • Be certain to ask your Mortgage Advisor to help you compare the overall costs of all products, including the monthly and long-term costs and conditions of the required mortgage insurance.
  • You can typically only have one FHA mortgage at a time.
  • In many instances, you may find an FHA loan to be a more expensive financing option and should be considered after thoroughly evaluating all other product options that meet your credit qualifying and financial needs.

VA

Features

  • Provides financing for qualified veterans, reservists, active duty personnel, or eligible family members.
  • Available in a variety of fixed-rate and adjustable-rate loan options.
  • Allows closing costs to come from a gift or grant.
  • Has low-and-no-down payment options
  • Lets you add extra features such as a temporary buy down.

Benefits

  • Provides a wide range of rate, term, and cost options.
  • Doesn’t require monthly mortgage insurance.
  • Provides the potential for minimal out-of-pocket expenses with seller contributions.

Considerations

  • With a VA loan, you typically have to pay a one-time VA funding fee that can be financed into the loan amount.
  • You can get financing for your primary residence only.

Jumbo Loans

Features

  • A “non-conforming” loan with mortgage amounts above the maximum conforming loan limits.
  • Available in a variety of fixed-rate and adjustable-rate loan options.
  • You may be able to add extra mortgage features, such as a temporary buy down.

Benefits

  • Obtain financing for loan amounts higher than the Fannie Mae and Freddie Mac conforming limits.
  • Get the convenience of one loan for the entire loan amount.
  • Choose from a variety of loan options.

Considerations

  • You build equity at a slower pace because payments during the first several years go largely toward interest rather than the principal balance.

Fixed Rate Mortgage

Features

  • Your interest rate and monthly principal and interest (P&I) payments remain the same for the life of your loan.
  • Available in a variety of loan term options.
  • You may be able to add extra features such as a temporary buy down.

Benefits

  • Predictable monthly P&I payments allow you to budget more easily.
  • Protection from rising interest rates for the life of the loan, no matter how high interest rates go.
  • May be a good choice if you plan to stay in your home for a long time.

Considerations

  • The overall interest you pay is higher on a longer-term loan than on a shorter-term loan.
  • On a shorter-term loan, the monthly P&I payment is typically higher than on a longer-term loan.

Adjustable Rate Mortgage

Features

  • Your interest rate and monthly principal and interest (P&I) payments remain the same for an initial period of 3, 5, 7, or 10 years, then adjust annually.
  • Loans available in a variety of longer terms.
  • Includes an interest rate cap that sets a limit on how high your interest rate can go.

Benefits

  • Typically ARMs have a lower initial interest rate than on a fixed-rate mortgage.
  • The interest rate cap limits the maximum amount your P&I payment may increase at each interest rate adjustment and over the life of the loan.
  • May provide flexibility if you expect future income growth or if you plan to move or refinance within a few years.

Considerations

  • Monthly principal and interest payments may increase when the interest rate adjusts.
  • Your monthly principal and interest payments may change every year after the initial fixed period is over.