Federal Housing Administration (FHA):
FHA loans are great option for people whose credit scores are 580 and higher, and who have a 3.5% down payment.
FHA loans are insured by the Federal Housing Administration (FHA).
The FHA protects lenders against defaults on payments. This makes it easier for you to qualify, and allows lenders to offer lower interest rates.
Some Basic Requirements for FHA Loans:
- A minimum 3.5% down payment.
- A minimum FICO® Score of 580.
- A debt-to-income ratio (DTI) of no more than 50% and a steady employment history. Estimate your DTI by adding your monthly debt payments (such as credit card and car payments) and dividing the total by your monthly income before taxes.
- Money to cover the upfront mortgage insurance premium (UFMIP). The amount is usually equal to 1.75% of your loan amount.
- Money to cover closing costs, which could be anywhere from 2% – 6% of the purchase price.
U.S. Department of Veterans Affairs (VA):
VA Loans are an excellent benefit available to eligible service members, veterans and their surviving spouses. VA home loan are to help you buy, build, or improve a home or refinance your current home loan.
VA loans are considered non-conventional loans because of their easier credit requirements. They offer many advantages over conventional loans, including lower interest rates, more lenient borrowing requirements and no down payment due at closing.
Some Basic Requirements for VA Loans:
- You must have a Certificate of Eligibility from VA
- 0% down payment does not mean Zero cost.
- A minimum FICO® Score of 580 – 620.
- VA loans can be used on Single Family Home, condos and manufactured homes.
- The Property must be occupied as your primary home with in 60 days.
- According to the VA, the loan limit for a no-down-payment VA loan is $548,250 in most of the country.
- Most people who get a VA loan are required to pay a funding fee as of January 1, 2020 2.3% – 3.6% which can be added to the loan amount.
- Reserve Funds equal to 2 months’ worth of mortgage payments.