What are FHA loans?
FHA loans have been helping people become homeowners since 1934. The Federal Housing Administration (FHA) insures the loan, so your lender can offer you better loan terms.
- First-time or experienced homebuyers
- FHA loan limits are relatively high, so for most, the only limitation is qualifying for the mortgage
Easier to Qualify
- Because FHA insures your mortgage, lenders may be more willing to give you loan terms that make it easier for you to qualify.
Less than Perfect Credit
- You don’t have to have a perfect credit score to get an FHA mortgage. In fact, even if you have had credit problems, such as a bankruptcy, it’s easier for you to qualify for an FHA loan than a conventional loan.
Low Down Payment
- FHA loans have a low 3.5% downpayment and that money can come from a family member, employer or charitable organization as a gift. Other loan programs don’t allow this.
Low Closing Costs
- Most of your closing costs and fees can be included in the loan
- FHA loans have competitive interest rates because the Federal government insures the loans. Always compare an FHA loan with other loan types.
- As of December 7, 2011, loan limits for a single family detached property are as follows: Hollister, San Benito County: $729,750
Costs Specific to an FHA mortgage
- Talk with a mortgage professional about the costs of an FHA mortgage.
*This overview of the FHA Home Loan Program is based on information from the United States Department of Housing and Urban Development website www.hud.gov/ *Anderson Homes does not guarantee the accuracy of this information. Please talk with a mortgage professional for the latest information on FHA mortgage guidelines
What are VA mortgage loans?
- Qualified veterans can obtain a loan from a private lender, and VA “stands behind” the loan with that lender. If something goes wrong and the borrower can’t make the payments anymore, the lending institution can come to VA to cover any losses they might incur. The VA loan guaranty is this “insurance” that VA provides the lender.
- VA loans offer $0 down and no private mortgage insurance.
- The borrower must live in the home as their primary residence and qualify in terms of income and credit
- Active duty personnel
- Certain reservists and National Guard members
- Surviving spouses of persons who die on active duty or die as a result of service-connected disabilities
- Certain spouses of active duty personnel who are (a) missing in action, (b) captured in line of duty by a hostile force, or (c) forcibly detained by a foreign government or power
- The borrower can be a first-time or an experienced home buyer
- The borrower can buy a home without a down payment as long as the sales price doesn’t exceed the appraised value and they qualify for the loan amount.
No Private Mortgage Insurance (PMI)
- The borrower does not need to buy private mortgage insurance.
- Closing costs may be paid by the seller.
- VA may be able to provide some assistance if the borrower runs into difficulty making payments.
Future VA mortgages are permitted
- The borrower can reuse the benefit of a VA mortgage.
- The 2012 VA Limit are as follows:
- Hollister, San Benito County: $625,000
- Additional Counties can be found at www.benefits.va.gov
Costs Specific to a VA mortgage
The VA Funding Fee
- Although private mortgage insurance is not required, borrowers will be charged a funding fee, which can be folded into the loan. If the borrower receives service-connected disability payments each month, they are exempt from the fee.
*This overview of the VA Home Loan Program is based on information from the United States Department of Veterans Affairs website. *Anderson Homes does not guarantee the accuracy of this information. Please talk with a mortgage professional for the latest information on VA mortgage guidelines
What are USDA mortgage loans
- Qualified borrowers in certain communities, such as San Benito County, can finance the purchase of their home with a government backed, United States Department of Agriculture (USDA) loan.
- USDA Loans offer $0 down payment, low closing costs, and low monthly mortgage insurance.
- Borrowers may be eligible for financing 102% of the purchase price, plus closing costs.
- All USDA Guaranteed Loans carry 30 year terms and are set at a fixed rate.
- The borrower must qualify in terms of income and credit.
- First time home buyer or experienced home buyer
- Most lenders require a minimum 620 FICO credit score
- The borrower must earn less than Rural Development County Income Limit for Moderate Income Families (based on number of household members).
2012 Income Limits are found at usda.gov and are as follows:
San Benito County:
- Household of 4 persons or less: $93,300
- Household of 5 persons or more: $123,150
- The maximum USDA Rural Development Loan amount is 102% of appraised value of the home, which includes the 2% USDA RD Loan guarantee fee
- Appraisal permitting, closing costs can be included in the loan amount
- Closing Costs may also be contributed by the seller
Low Mortgage Insurance
- Mortgage insurance is required for USDA mortgages, but it is relatively low compared to other mortgage programs
- Gifts or grants permitted from family, friends & non-profit agencies which could be used to pay, for example, closing costs.
Maximum Loan Amount
USDA does not set a maximum loan amount, but does set maximum income limits. A mortgage professional will be able to determine maximum loan amounts for qualified borrowers.
Costs Specific to a USDA mortgage
USDA charges a 2% loan guarantee fee which can be included in the loan. Because of this upfront fee, mortgage insurance is relatively lower compared with most loan programs.
*This overview of the USDA Home Loan Program is based on information from the United States Department of Agriculture Rural Development website www.rurdev.usda.gov *Anderson Homes does not guarantee the accuracy of this information. Please talk with a mortgage professional for the latest on USDA mortgage guidelines.
What are Conventional mortgages?
A Conventional Loan is a mortgage that is not guaranteed or insured by the federal government. Conventional loans can be either “conforming” or “non-conforming”.
- A conforming loan is generally referring to a mortgage loan that follows the guidelines of government sponsored enterprises (GSE’s) such as Fannie Mae or Freddie Mac.
- Conforming loans generally have better terms than non-conforming loans as the lender can sell the loan to these GSE’s.
- Non-conforming loans do not meet these guidelines. This could be a result of a loan amount above the conforming loan limit or a borrower having a lower credit score than required
Conforming Loan Limits
- The maximum loan amount allowed for a Conforming Loan varies from county to county, ask a mortgage professional for more details
- Eligibility for non conforming loans would be determined by the lending institution
- Conventional loans generally require a downpayment of 5% to 20% A higher downpayment results in a lower mortgage payment (all other loan terms being equal)
Private Mortgage Insurance (PMI)
- Lenders may not require the borrower to obtain PMI if the downpayment is greater than 20%, which would reduce the mortgage costs for the borrower.
Maximum Loan Amounts
According to the FHFA, the 2012 Conforming Loan Limits are as follows:
- Hollister, San Benito County: $625,500
Costs Specific to a conventional mortgage
- Talk with a mortgage professional about the costs of conforming and non-conforming loans
Please talk with our preferred lender about programs that may be available to first-time homebuyers.