Conventional, FHA, USDA, Interest Only

Conventional

Government insured up to 80% LTV (loan to value), conventional loans have several notable features. Down payment starts at 5% with a minimum FICO of 620. Buy with 20% down, no PMI is required. Advantages of conventional loans:

  • May be used for primary, secondary, vacation or investment properties
  • There are no requirements for upfront mortgage insurance premiums or funding fees
  • Borrower has the right to cancel Private Mortgage Insurance (PMI) once their property reaches at least 80% loan-to-value ratio

FHA

The Federal Housing Authority (FHA) offers a variety of loan programs with fixed or adjustable interest rates. These home loans are attractive because they require very small down payments and gifts can be used for down payments and closing costs. These loans have qualifications that are more lenient than traditional mortgages and are a great option for first time home buyers.Main advantages of FHA loans:

  • Required down payment is only 3.5% of the purchase price
  • Money for the down payment can be a gift to the home purchaser from outside sources
  • Seller’s concession is up to 6% of home purchase price
  • Bankruptcy or foreclosure does not necessarily disqualify a borrower
  • FHA mortgage can be refinanced up to 97.75% of the value of the home
  • Cash–out refinance is available up to 85% of the value of the home

FHA has permitted streamline refinances on FHA insured mortgages since the early 1980’s. The term “streamline” refers to the reduced amount of documentation and underwriting that needs to be performed to receive loan approval, allowing you to complete the refinancing process in a shorter amount of time.

USDA

USDA mortgage loan or sometimes called Rural Housing Loan is a loan program guaranteed by United States Department of Agriculture. The home buyer must select a home as their primary residency in a qualified USDA area and must meet USDA income eligibility requirements.Main advantages:

  • No down payment is required, you may finance up to 100% of the property value
  • The 2% guarantee fee and all other costs may be added to the loan
  • USDA home loans do not have a specific loan size limitation
  • Refinance your present USDA home loan via USDA Streamline Pilot Refinance Program that requires no appraisal and all closing costs can be financed

Fixed, Adjustable, Interest Only – 10 to 40 year terms

  • Fixed Rate – Interest rate remains the same throughout the entire course of the loan
  • Adjustable Rate (ARM) – Fixed interest rate for several years then may adjust based on a consumer index
  • Interest Only – While rate is generally higher, payment is lower because you only pay interest, no principal

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