There are a number of different types of home loans available to you, and it can pay to familiarize yourself with them. Of course, we’ll be happy to help you choose the best type of home loan for your needs, but it only takes a few minutes to review your home loan options and get an idea of what might provide the best value for you.
Our home loan options include:
30 Year Fixed Rate Mortgage Settle down for the long haul with a 30-year fixed rate mortgage. Because of the steady interest rate inherent to a conventional 30-year fixed rate mortgage, you can look forward to consistent monthly payments for many years to come, providing you with peace of mind and a consistent budget. We recommend this type of home loan if you’re planning to stay in your home for a minimum of 5-10 years.
What is a 30-year fixed rate mortgage?
A conventional 30-year fixed rate mortgage features a steady interest rate throughout its lifetime. Spanning three decades, homeowners with this mortgage can look forward to consistent monthly payments for many years to come, which can provide peace of mind and help them budget their finances. A conforming 30-year fixed rate loan offers amounts up to $484,350 in most of the US and a maximum of $726,525 in high-cost areas. To decide if a 30-year fixed mortgage is right for you, ask yourself these four questions:
- How long are you planning to stay in your home?
If you are considering a 30-year fixed rate mortgage, you should be planning to stay put for the long haul. We recommend a minimum of 5-10 years in your new home.
- Would you prefer consistent monthly mortgage payments?
Like the sun rising in the east, the terms of a 30-year fixed rate mortgage never change. A consistent interest rate throughout the lifespan of your loan keeps your monthly mortgage payments the same for 360 months. Kiss those fluctuating mortgage payments goodbye!
- Would you prefer a low mortgage payment?
Due to the long-term nature of this loan, a 30-year fixed rate mortgage makes your monthly mortgage payments more affordable than a fixed rate mortgage with a shorter time frame. You end up paying more interest over three decades, but the principal repayment is spread over that same period of time. Lower monthly mortgage bills mean you can afford more house!
- Are you purchasing or refinancing?
Looking to buy a new home? This mortgage option is tailor-made for you. Looking to refinance your home at a lower rate? A 30-year loan may be too long. Consider a shorter term fixed mortgage or an adjustable rate mortgage based on your budget and refinancing goals.
Conventional 30-year fixed rate mortgage features include:
- 3-5% minimum down payment options for qualified homebuyers.
- Regular, qualified income required.
- No private mortgage insurance (PMI) with 20% or more down.
- HomeStyle renovation loans with options as little as 5% down .
- Seller assistance with up to 3% of closing costs.
- Loan options up to $5 million for non-conforming mortgages.
- 203k renovation loans with a minimum 620 FICO score.
Did you know?
As with most amortized loans, the initial payments of your 30-year fixed rate mortgage are primarily devoted to paying of interest. As the years roll by, this will gradually shift and you’ll reach a point where your monthly payments cover more principal than interest.
What does this mean? As you embark on your 30-year fixed rate mortgage, your first couple years of mortgage payments won’t make much of a dent in your loan’s principal balance. Once you pay off most of the interest, the latter years of your mortgage will be devoted to your principal and you’ll see your mortgage balance decrease dramatically.
Make your home ownership dreams come true with an FHA loan. Featuring flexible credit restrictions and down payment options as low as 3.5%, an FHA loan is a popular type of loan for first-time home buyers.
What is an FHA home loan?
FHA home loans are mortgages insured by the federal government through the Federal Housing Administration (FHA), a branch of the Department of Housing and Urban Development. FHA home loans reduce the barrier to entry for buying and refinancing by featuring low down payments, flexible credit requirements and more purchase power. If funds are limited, an FHA home loan can help you finance more than 80% of your home value.
What are FHA home loan requirements?
In order to ensure that you meet the minimum FHA home loan requirements, you need to consider the following factors.
- Are you over the age of 18?
- Do you have a valid Social Security number and lawful residency in the United States?
- Do you have a steady employment history? If not, have you at least worked for the same employer for the past two years?
- Can you afford the minimum down payment of 3.5% or 10% (depending on credit score)?
- Do you have a credit score above 580?
- Have you been out of bankruptcy for at least the past two years? (If the answer is no, there may still be exceptions that can be made on a case-by-case basis.).
- Will this home be your primary residence?
You’ll likely need to be able to answer all of these questions with a hearty ‘YES’ in order to meet FHA home loan requirements.
The FHA home loan advantage
FHA home loans are backed by the federal government and offer you a myriad of advantages for your home purchase or mortgage refinance.
Minimum down payment option of 3.5% for qualified buyers. For those with credit scores of 620 and above, the down payment for an FHA home loan is 3.5%. (For those with credit scores below 580, a 10% down payment is required.)
Easier to qualifyFHA home loan requirements are, typically, less strict than typical loans. Although a credit score below 580 does not allow you to take advantage of the 3.5% down payment option, conventional lenders require a minimum credit score of 620 or higher.
No maximum income restrictions
Seller assistance with up to 6% of closing costsFHA home loans allows the seller to pay up to 6% of the closing costs, including any costs of the appraisal, title expenses and a credit report.
Loan limits adjusted annuallyFHA home loans have a maximum loan amount (or “ceiling”) that is regularly adjusted every year and vary according to the cost of living in a given area. In 2019, the ceiling for FHA home loans is $726,525. This annual adjustment increases your likelihood of getting an FHA home loan that meets your current needs.
With an FHA home loan, you can use borrowed money and other gifts from family members to cover down payments and closing costs. And don’t worry about prepayment penalties! An FHA home loan lets you refinance or pay off your home early without having to deal with extra fees or other sticking points. As long as you meet FHA home loan requirements, an FHA home loan may be within your future!.
VA Home Loan Enjoy exclusive military benefits with a VA loan. If you are a veteran or an active-duty service member, a VA loan offers less restrictive credit guidelines and low down payment options for you and your family.
What is a VA home loan?
The US Government’s VA loans program helps veterans, active-duty service members and their families qualify for a home loan. Though they are issued by private lenders like Guaranteed Rate, VA home loans are backed by the US Department of Veterans Affairs. Created during World War II to help returning service men and women purchase homes, this program has guaranteed over 22 million VA loans since 1944.
VA home loans feature no down payment or private mortgage insurance (PMI) requirements, making them a great choice for any veteran or active service member looking to purchase a home. Since the housing market collapse of the 2000s, VA home loans have become even more critical in the wake of stricter lending requirements. For this reason, a guaranteed VA loan is often the best and easiest way for veterans to purchase a home of their own.
What are VA home loan requirements?
A VA loan is a no-brainer for qualified homebuyers and refinancers. The intended candidate is a service member or surviving spouse with a clean financial record. Ask yourself these four questions to determine if you meet the minimum VA home loan requirements:
- Are you a current or ex-military personnel?
- Are you the surviving spouse of a current or ex-military personnel?
- Have you defaulted on a home loan within the last 12 months?
- Have you declared bankruptcy within the last two years?
If you answered “YES” to either of the first two questions and a resounding “NO” to questions three and four, you most likely meet the basic VA home loan requirements.
Other VA home loan requirements have to do with military service time. Specifically, you must have serve for 90 or more days in wartime or 181 or more days in peacetime. In both cases, the stipulation is waived if you are discharged due to a service-related disability. Reserves and National Guard soldiers must serve for at least 6 years to be eligible.
Spouses of deceased service members are eligible for VA loan benefits, provided they have not remarried and that the deceased either:
- Died in service or from a service-related disability.
- Was missing in action or a prisoner of war for at least 90 days.
- Was rated totally disabled and was eligible for disability compensation at the time of death.
Children of deceased veterans are not eligible for VA loan benefits.
The VA loan home advantage
VA loans are fully backed by the government and offer a myriad of advantages for your home purchase or mortgage refinance. Here are the six biggest:
No money downWhile conventional loans generally require down payments that can reach up to 20%, no such thing is required with a VA home loan at or under the local conforming limit. Down payments are still an option, of course, but they are not a requirement. The VA allows you to purchase jumbo loans, but requires you to supply 25% of the difference between the loan amount and the loan limit.
No PMIPrivate Mortgage Insurance (or PMI) is a requirement when you put less than 20% down on the purchase of a home and typically adds 0.2-0.9% of expenses to your monthly mortgage. With a VA loan, you can wave goodbye to PMI!
Competitive interest ratesSince VA loans are guaranteed by the federal government this can provide lenders with a greater sense of safety and flexibility. This can ultimately lead to a more competitive interest rate than you may otherwise receive.
Easier to QualifySimilarly to the interest rates, the VA loan being backed by the government also lets the banks assume far less of the risk. This can lead to less stringent qualification standards, once the aforementioned qualifications are met.
Fewer credit restrictionsReduced restrictions mean easier qualification. With a VA loan, you’re allowed a higher debt-to-income ratio and afforded more leniency with your credit score.
Seller assistanceThe VA allows sellers to assist with up to 4% of closing costs.
Easy refinance Borrowers can refinance their homes with a VA streamline or cash-out loan. The streamlined version lowers the mortgage rate of an already existing VA loan, usually for less than the current principal and interest. This means it doesn’t require a credit check or appraisal. The cash-out option involves a credit check and appraisal, since the home’s value represents the maximum loan amount and the new loan will be larger than the existing loan.
Move into your forever home with a jumbo loan. Need a loan that exceeds the current conforming limit? A fixed or adjustable jumbo mortgage can help you make your move. This type of home loan will allow you to buy a lot of real estate but can also requires more stringent credit guidelines and a larger down payment.
Interest Only Mortgage
Free up your cash flow with an interest only mortgage. Take advantage of the low monthly payments right off the bat to afford a more expensive home and invest your income elsewhere.