What Loan Works for You?

Many loan officers will often try to push consumers into one of two types of loans to improve their profits or for their own convenience—not taking into consideration what might be right for you.

A good loan officer should be asking a lot of questions and requesting certain documentation upfront. They do this to not only avoid hiccups later in the process, but to also figure out what loan types might be best for you—not just what is best for them. There are many different loan options out there.

Here are just a few options, along with some criteria and considerations:

CONVENTIONAL

The down payment can range from as low as 3% to above 20% if you like. Usually this loan is a good option for people with credit scores in the area of 680 or higher. This type of loan has the least amount of restrictions in regards to what types of properties you can purchase (i.e. condos, townhomes, and fixer-uppers). Many of these loans have the option to remove the mortgage insurance once there is 20% or higher equity in the home. This will lower the monthly payment once it is removed.

FHA

FHA (Federal Housing Administration) loans are not just for first-time homebuyers. These can be particularly beneficial to people with credit scores that fall in between 600-680. This type of loan is also attractive due to its 3.5% minimum down payment. Families with higher monthly debt payments may also benefit from this type of loan. Unlike conventional loans, the mortgage insurance is collected for the life of the loan.

VA

This is a veteran exclusive loan that is truly 0% down and has no mortgage insurance. VA loans usually have the best loan pricing. Therefore, it is the “go-to” loan for those who are eligible and looking for a single family home. However, it can be difficult to find condos that have associations approved for VA financing.

MHFA, USDA RURAL DEVELOPMENT, HOME READY, & HOME POSSIBLE

These programs have minimum down payments ranging from 0% to 3% of the sale price. They also may have income limitations based on the area. These are low down payment programs. However, they may not have the best interest rates or payments depending on a person’s financial situation.

PORTFOLIO

These loans are for buyers or properties that don’t conform to FHA or conventional guidelines. Portfolio loans may be a good option if you are looking for a fixer-upper or if you are selfemployed. They typically require a higher down payment of 20% or more and may have a slightly higher interest rate.