Types of Loans
Fixed Rate Mortgages
- Great for buyers planning on staying in their home for 5 years or more
- Straightforward, predictable monthly mortgage payments
- Easier for overall budgeting and financial planning
- Consistent mortgage payments
- Protection from rising interest rates for the life of the loan
- Repayment periods include 15, 20, or 30 year terms
- Lower down payment options
- Jumbo loans for higher priced properties
Adjustable Rate Mortgage (ARM)
- Good for borrowers planning on living in their home for 5 years or less
- Initial interest rates are typically lower than fixed rate mortgages
- Interest rate adjusts based on financial markets after initial fixed rate period
- Borrowers can take advantage of falling rates without refinancing
USDA
- 0% Down Payment Requirement
- Property must be located in USDA territory
- Income Limits Apply
- No co-signers allowed
- Gifts allowed
- Seller concessions up to 6%
- Guarantee fee
This type of mortgage loan is reserved for people who live in certain parts of the country and is overseen by the United States Department of Agriculture.
The main benefit of this loan is the zero down payment option. Borrowers are able to purchase a primary residence with zero down payment and a favorable rate. USDA does not charge mortgage insurance; however, they do charge a small monthly fee as well as an up-front funding fee.
USDA loans do have an income limit, but unlike many loans, there are certain expenses we are able to deduct from your income to help you qualify.
VA
- 0% Down Payment Requirement
- Must meet VA eligibility
- $424,100 Maximum Loan Amount
- No MI
- No Co-signers allowed
- Seller concessions allowed
VA loans are reserved for military service members and their families and are managed by the Department of Veteran Affairs. It can be used to finance 100 percent of a home purchase, which eliminates the need for a down payment.
While there is no mortgage insurance on a VA loan, VA does charge a funding fee that can paid at closing or rolled into the loan.
Conventional
- 3% minimum down payment requirement
- $424,100 maximum loan amount
- Seller concessions up to 3%
- PMI required under 80% LTV
Conventional mortgages are not insured or guaranteed by the government.
Fixed rates and adjustable rates are available on a conventional mortgage. With 20% equity in your property, you will not have monthly mortgage insurance and there are no up-front mortgage insurance fees like there are on government loans. However, with less than 20% equity, you will incur monthly mortgage insurance premiums.
203K
- Purchase, refinance, and renovation loans for occupied buyers
- Minimum down payment of 3.5%
- Down payment can be in the form of gift funds
- Minimum credit score: 580
- Maximum loan amount: $275,665
- Used for eligible improvements, excluding luxury items
- Appraisal is based on the home’s value after rehabilitation
- Loan amount is based on the property’s purchase price and rehab costs
An FHA 203k rehab loan is a very well-liked loan used to fix up and repair homes.
The 203K loan allows access to a government-backed loan program for needed funds. Think of this as a one-time close construction loan. At closing, the seller receives their money and the rest is put into an escrow account for the buyer to use for rehabbing the property.
MHDC
- 4% grant of loan amount
- Credit and income requirements
- MHDC sets the interest rate
MHDC is a down payment assistance program through the Missouri Housing Development Commission. The goal of this type of assistance is to help those who may not be able to meet the down payment requirements needed to purchase a new home.
Beyond Housing
- Forgivable or deferred
- 0% interest loan (dependent on property location)
- First time home buyer class required
- Credit and income requirements
Reverse Mortgage
A Reverse Mortgage is like any other mortgage loan except for one KEY detail: You’re not required to make a mortgage payment!
A Reverse Mortgage is a loan for a senior homeowner, over the age of 62, that uses a portion of the home’s equity as collateral. The loan generally does not have to be repaid until the last surviving homeowner permanently moves out of the property or passes away. All remaining equity is inherited by the estate.