If you are new to buying a home, or it’s been years since you have, one of the first steps to take is getting pre-approved for a loan. I’m sure you have heard the radio commercials about “nothing down”, “2% interest rates”, and numerous other teaser lines to get you to call.
Our clients trust us to make sure we find them a loan program with no hidden fee’s, no teasers, and to make sure they understand the type of loan and payments they will have. So let’s break down the most common loan programs currently available.
Conventional: This is the “old faithful” of loans. Often buyers thought they had to have 20% down to get a conventional loan. That is not the case anymore, you can get a conventional loan with as little as 3% down. Keep in mind anytime you have less than 20% down there will be additional fees such as Mortgage Insurance (MI). Buyers for a conventional loan need to have a credit score of at least 620.
VA: A fantastic program just for Veterans (active or retired). This is a 100% loan program, meaning you don’t have to put any money down (you are welcome to, but no required). Buyers of a VA loan need to have a credit score of at least 580.
FHA: Many first time buyers take advantage of FHA loans, requiring only 3.5% downpayment and that money can be gifted to you from a family member. There are additional safeguards in place for the buyer, the home must appraise for the contract price, properties must be livable, and other criteria a home needs to meet. Buyers for FHA loans need a credit score of at least 580.
USDA: An often overlooked loan but is extremely beneficial if you and the home qualify. This is a 0% down, 100% loan for properties that are in a more rural setting. Properties that meet the guidelines are typically outside of the city, in the Jefferson County, and rural parts St Charles County. The rates are good, and you only need a credit score of 600.
MHDC: This is from the state of Missouri and is a great option for buyers who qualify. Downpayment requirement is 3.5%, but the state will kick in 3% of that downpayment and if you live in the home for at least 5 years then that total is forgiven. Credit scores need to be at least 640, and there are income requirements.
As you can see there are a number of great programs available to you with multiple options for down payments requirements, credit scores, etc. We can help council you on each program to see which you qualify for and you can choose which is the best option for you and your family. Keep in mind with any of these programs there are restrictions that a buyer needs to meet to qualify, and not every potential buyer will. Using anyone of these loan programs a lender might be able to reduce their fees, so a couple of phone calls might put money back into your pocket…..where it belongs!