Here are the loan programs you can qualify for as a homebuyer.
Once you’ve selected a real estate agent to work with you through the home-buying process, the next step is to contact a loan officer who can assist you with your financing. Today I’ve invited Ryan Paquin of First Home Mortgage back to join me to discuss this topic.
Typically, there are four main loan types for which you can qualify. The first is an FHA loan, which requires a 3.5% down payment. The next is a VA loan, which is for current or retired members of the Armed Forces and requires no down payment. After that, you have the USDA loan, which also requires no down payment but is only available in certain rural areas. Last up are conventional loans, which require down payments as low as 5% or 3%.
Lenders always look at these four loan types as they pull your credit so they can determine which program is best. As soon as they have your credit score and understand your debt-to-income ratio, they can decide whether to use a conventional or government loan (FHA, VA, and USDA). It’s easy for lenders to determine which government loans you’re eligible for because they only need to know whether you’ve been in the military long enough and whether you served active duty, reserve duty, or National Guard. In that case, you can get a VA loan with a minimum credit score of 620.
If that doesn’t apply to you, they’d look at an FHA or USDA loan. The rural areas for USDA loans aren’t as rural as you think. There are areas in Prince George’s County and the surrounding areas that might be eligible. Like VA loans, USDA loans require a minimum credit score of 620, and since they don’t require a down payment either, you’ll only need money for closing costs if you opt for this loan. USDA loans do, however, have income limitations.
Whether you’re eligible for a government or conventional loan is more or less dictated by your credit score. If you have a score of 680 or above, your lender will start looking at conventional loans. Within conventional guidelines, there are different programs to choose from; Fannie Mae and Freddie Mac, for instance, have an affordable housing program that you can qualify for if you have a credit score of at least 680. You only need to put 3% down for this program, and they’ll reduce the interest rate and mortgage insurance associated with the loan. The higher your credit score is, the more your interest rate and mortgage insurance are reduced. When it comes to government loans, your credit score doesn’t dictate your interest rate as much.
If you’d like to know which loan program you qualify for, you can give Ryan a call at (443) 377-1589. If you would like to know more about the home-buying process, feel free to give me a call as well. I’d love to help you.