Types of Financing
CONVENTIONAL FHA VA LOANS OWNER WILL CARRY HOME PATH BRIDGE LOANS Financing TerminologyConventional Loans
- Down payment requirement between 3% and 20%.
- Possibility for no monthly mortgage insurance.
- Best suited for borrowers with good to excellent credit
- Typically less complicated than FHA or VA loans
- Conforming loans up to $417,000 / Jumbo loans for loans greater than $417,000
- Can be used for owner occupied primary residence, second/vacation home, investment property
FHA Loans
- Down payment as low as 3.5%.
- Less stringent credit requirements – as low as 580 FICO
- Low interest rates and relaxed debt-to-income ratios
- Designed for First-Time Home Buyers
- Maximum loan amount of $287,500
- Borrower must use the house as a primary residence
VA Loans
- Loans guaranteed by the Veterans Administration
- No down payment required
- Less stringent credit requirements
- Low interest rates and less stringent debt-to-income ratios
- Maximum loan amount of $417,000
Owner Will Carry
- Used when traditional financing may not be available to a buyer
- Intended to be short term financing
- Higher interest rate than traditional financing
- Higher down payment requirements than traditional financing
- Credit, Down payment, and income requirements vary due to the individualized nature
- Can be used strategically by savvy buyers
Home Path
Fannie Mae ended the HomePath Financing program in October 2014. While there means there is one less option for homebuyers, it also means there is less foreclosure inventory pulling down prices.Bridge Loans
- Used when traditional financing is not available to a buyer
- Intended to be short term (just a few years) loans to “bridge” the time until traditional financing is available.
- Higher interest rate than traditional financing
- Higher down payment requirements than traditional financing