Offered through the Federal Housing Administration, an FHA loan is an affordable option when you’re looking to get into a home with a smaller down payment, lower closing costs and with limited credit reporting to credit agencies.
An FHA loan has no income limits and is not limited to First-Time Homebuyers. Anyone can obtain an FHA loan, but usually FHA limits you to one FHA financed property at a time. This program will also allow for someone who will not occupy the property to co-apply, thus allowing for easier qualifications.
When selecting an FHA Loan, keep these factors in mind:
- FHA loans have lower down payment options
- Loans are available in a variety of loan terms, and are offered in fixed rate programs or ARM programs
- An FHA loan requires government-sponsored mortgage insurance called monthly mortgage insurance (MI)
- This type of loan allows for more flexibility in income, debt and credit requirements
Your down payment and closing costs may come from a gift or grant
VA loans are one of the only mortgages to offer 100% financing, require no down payment and favorable loan terms for Active Duty Service members, Veterans, Reservists, National Guard members, surviving spouses, and certain other individuals who meet eligibility requirements to purchase homes or refinance existing mortgages.
In addition, VA loans offer refinance and cash out options that can be used to pay off debt, fund major expenses, make home improvements, or refinance a non-VA home loan into a VA home loan with improved terms.
When considering a VA loan, you can benefit from:
- Low to no down payment
- No MMI (monthly mortgage insurance) or PMI (private mortgage insurance) is required
- More flexible income, debt and credit requirements
- VA loans offer more flexible gift guidelines: your down payment or closing cost may come from a gift or grant
- Allows for the seller to pay all closing cost and prepaids for the veteran up to 6% on a 100% loan
- VA loan programs are available in variety of loan terms
There is also a streamlined option known as an Interest Rate Reduction Refinance Loan (IRRRL) that provides veterans with existing VA loans an opportunity to quickly and easily refinance an existing VA loan when market conditions improve and interest rates drop.
VA loans are guaranteed by the Department of Veterans Affairs. Veterans must provide a VA Certificate of Eligibility (COE).
USDA loans are an excellent option for a homebuyer looking to purchase a home in USDA designated rural areas and allows you to purchase a home with flexible qualification requirements and no down payment. USDA loans are available from the United States Department of Agriculture Rural Development Department.
When considering a USDA Loan, keep these factors in mind:
- The loan amount can be up to 100% of the appraised value of the home
- The seller may pay up to 6% towards closing costs and prepaid items
- Gifts and grants may also be used for down payments.
- A USDA loan requires a one-time Guarantee Fee that may be financed into the loan
- This type of loan requires a reduced monthly MMI
A USDA loan has income limits and property location restrictions.