FHA loans are mortgages insured by the Federal Housing Administration (FHA). Congress established the FHA in 1934 to help lower income borrowers obtain a mortgage that otherwise would have trouble qualifying.
Because FHA loans are insured by the government, they have easier credit qualifying guidelines, as well as relatively low closing costs and down payment requirements. Your down payment can be as low as 3.5% of the purchase price, assuming you have at least a 600 credit score. And closing costs can be bundled with the loan.
FHA loans are available for both purchases and refinances, including cash out refinances. The max loan-to-value (LTV) for a cash-out FHA loan is 95%, assuming the loan amount is $417,000 or smaller.
Conventional loans have established guidelines for borrower credit scores, income requirements and minimum down payments. For example, most conventional loans require somewhere between 5% and 20% down. We offer a conventional program with only 3% down.
Most of these mortgages have either fixed or adjustable interest rates. Typical fixed interest rate loans have a term of 15 or 30 years. Adjustable-rate mortgages, or ARMs, fluctuate in relation to the rate of a standard financial index.
The drawback of conventional loans is the difficulty they present for borrowers with less than good credit or lack of a substantial down payment. But on the upside, conventional mortgages generally pose fewer bureaucratic hurdles than FHA or VA mortgages, which may take longer to process because of the red tape. And because these mortgages generally require higher down payments than the others, home equity can build up faster.
BrandMortgage is grateful to the service men and women in our country and offer VA loans to help our vets qualify to purchase or refinance their home with absolutely no down payment.
The VA Home Loan program is specifically for veterans, active military, and surviving military spouses. Those interested likely meet the service requirements if the potential homebuyer served 181 days on active duty during peacetime; 90 days on active duty during wartime; or served six years in the Reserves or National Guard.
Unlike conventional loans, VA mortgages offer the unique benefit of $0 money down. In fact, 9 out of 10 VA Loan borrowers do not place a down payment. This benefit is here to make the purchase of a house easier and more accessible to those who have served our nation.