Mortgage loans are an important part of buying a home, but they can sometimes be confusing. What kinds of loans are out there? What are down payments? Are 30-year conventional loans the only option? There are tons of different options out there, but I’ll focus on the main few here and try to break it down as much as possible. You want to be as informed as you can when making a big decision like this!
The price you pay for your investment (home).
A down payment is the chunk of money upfront (on top of the amount lent to you) that you need to have when purchasing a home. Depending on the loan program, it may require a certain percentage of the home’s purchase price. For example, if the purchase price is $100,000, and you need a 3% down payment, you would need $3,000 in down payment. The more you have in down payment money, the less your loan needs to be.
Private Mortgage Insurance
An extra amount of money that is required on top of the mortgage payment. It ensures that mortgage lenders are compensated in case of a default on a mortgage loan.
The maximum amount that a loan program will grant.
Check out these Gilbert home that qualify for FHA loan programs
Different Loan Options
Down Payment Assistance Program
This program was created for those who need help with their down payment. 3-5% of down payment and closing cost assistance can be granted depending on qualifying standards. The money does not need to be paid back!
Purchase Price Limit: $300,000
Minimum credit score of 640 for Government sponsored programs
Minimum credit score of 680 for Conventional loans
An income that does not exceed $88,340
Purchasing a home in Maricopa County that is priced at less than $300,000
This loan is guaranteed by the Federal Government. It has lower interest rates and more relaxed qualifying standards than some of the other loans. Down payment assistance programs are also available with this loan. There are no prepayment penalties, and these loans are eligible for seller concessions up to 6% to help pay for closing costs.
Loan Limit $271,050
3.5% down payment (entire amount could possibly be gifted)
Minimum credit score 580
With a down payment of less than 20%, a mortgage insurance premium is required (can be either an upfront cost or a annual fee)
These loans were created for our veterans to thank them for their service and sacrifice! Qualifications will vary based on time as an active-duty soldier or service in the National Guard. Because this program is also guaranteed by the Federal Government, interest rates are very competitive. No private mortgage insurance is needed with this loan, and it is eligible for seller concessions of up to 4% to help pay for closing costs.
Loan Limit $417,000
$0 down payment required (based on Certificate of Eligibility)
Based on time serving as an active-duty soldier or service in the National Guard.
This is the “Old Reliable” program! Interest rates are also low and competitive. If you have a 20% down payment, you don’t have to pay private mortgage insurance every month on top of your mortgage payment. There’s also no upfront mortgage insurance premium. Down Payment Assistance programs are available. This loan is also eligible for seller concessions up to 3% with down payment of less than 10% and 6% with a down payment of more than 10% to help pay for closing costs.
You may have heard of 30-year mortgages and 15-year mortgages, but there are options for 25-year, 20-year and 10-year as well. Click here to see those options.
Loan Limit $417,000
3-5% down payment
This is a niche loan program that isn’t offered by many banks. They were created with moderate-income families in mind that have a household income at or below 115% of the median income for their area. This loan is insured by the U.S. Department of Agriculture. Overall it helps low-income buyers in rural area’s purchase a home. The monthly mortgage insurance payments are less than that of FHA loan programs.
Must be purchasing a home in a suburban or rural area
$0 down payment options
To see more information on loan programs, check out the Sun American Mortgage Company website. Click here.
Ready to find your dream home? Maybe one of these loan options can help get you there!
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