FHA Loans: Flexible Options with Fewer Qualifications

Insured by the Federal Housing Administration, FHA loans have fewer qualifications and tend to be ideal for many first time home buyers. The maximum loan amount varies, depending upon the location of the home, but these loans typically have lower down payment requirements and competitive interest rates.

Through FHA loans, you can often purchase a home with a down payment as small as 3.5%. Furthermore, you can use monetary gifts from others for the down payment and closing costs, and there is potential for some leniency during difficult financial periods you may experience in the future. The FHA also offers home improvement funding through its 203K programs.

The FHA loan has flexible options, such as a fixed-rate mortgage or a 5-year adjustable rate mortgage (ARM), giving you the opportunity to find a loan to meet your budget needs and plan for the future. FHA loans are ideal if you:

• •Have less than good credit.
• •Do not have the 20% of the home cost for the down payment.
• •Are interested in having a loan insured by the government.

VA Loans: A Benefit of Home Ownership for Veterans

Veterans Affairs (VA) home loans allow veterans with qualifying credit and income to buy a home without a down payment, closing costs or earnest money, as long as the sale price is not greater than the appraised value of the home.

Borrowers pay a funding fee up-front toward the VA’s guaranty, which protects the lender against loss if the borrower does not repay the loan. Because the lender has this safeguard, it is able to provide loan options to veterans and other qualified participants that they may not be able to obtain through traditional financing. VA loans offer fixed and adjustable rate home loans and do not include PMI—monthly insurance. A VA loan is ideal if you:

• •Are a veteran or a military member or a surviving spouse of a veteran;
• •And are seeking a loan with little to no down payment requirement.

State Housing Programs: Bond Loans for Borrowers with Low-to-Medium Income

As state-sponsored loan programs, these bond loans are designed for borrowers with low-to-medium income. State and local agencies sell bonds to generate the funds for these loans, which provide low interest rates for qualifying borrowers.

The loan programs often target specific occupations or geographic areas to provide assistance to people who might not qualify for conventional home loans. The amount of mortgage assistance varies and is subject to income limits. The loans may include help through State Down Payment Assistance.

State Housing Programs may be ideal if you:

• •Have low-to-medium income and do not have money for a down payment.
• •Are unable to qualify for traditional home loans.
• •Live in a low-income area.

Rural Housing: USDA-Backed Loans Help Moderate-Income Families

Guaranteed by the U.S. Department of Agriculture (USDA), rural housing loans provide 100% financing for low-to-moderate income families. Qualifying homes must be located within an area designated by the USDA.

Benefits of the USDA Guaranteed Loan include 100% mortgage loan-to-value based on the appraised value of the home, no necessary down payment and no mortgage insurance (PMI) required. Flexible credit qualifications make it easier for borrowers with credit issues to apply.

Lenders must be USDA approved, and Midland Mortgage Corporation is approved to provide these loans. While 30-year fixed rate loan is the only option for the USDA loan, interest rates for these loans are low.

Rural housing loans may be right for you if you:

• •Have low-to-medium income and do not have money for a down payment.
• •Are interested in purchasing a home in a rural area.
• •Do not have money for a down payment.
• •Have credit issues that have made it difficult for you to obtain a home loan or one with an affordable interest rate.