No two home buyers are alike, and everyone faces their own unique obstacles on the road to home ownership. Fortunately, there are several specialty loans available to buyers who meet certain criteria, and you might be eligible for one of them. Learn more about these specialty loan options and see if you qualify today – you could be one step closer to owning your own home by tomorrow!
FHA Loans – FHA loans are offered by the Fair Housing Administration through the United States Department of Housing and Urban Development. Many first-time home buyers decide to take out mortgages backed by the FHA, because they can obtain a down payment of as little as 3.5% – much lower than the 20% down payment required by many lenders. In order to qualify for an FHA loan, you’ll need to meet with an FHA lender to analyze your finances. They’ll compare your estimated mortgage expenses against your income to ensure the ratio does not exceed 31%. They’ll also compare your debt to income ratio, which may not exceed 43%. The FHA offers maximum loan limits which vary by state, so it’s important to research how much money you’ll be allowed to borrow before committing to a specific home.
USDA Loans – USDA home loans are offered through the United States Department of Agriculture, and are targeted toward home buyers purchasing homes in rural and undeveloped areas. Outside of major metropolitan areas, the USDA considers most of the country rural. The property you want to buy must fall into a zone considered rural by the USDA, and you must meet specific income criteria to qualify for the loan. Income eligibility varies by state and county, but essentially anyone who has an income up to 115% of the median income for the area might qualify. You must be without adequate housing, but still earn enough to cover mortgage payments, taxes and insurance. All USDA loans come with a 30-year term length, and there is no required down payment involved with this loan.
VA Loans – VA loans are backed by the United States Department of Veterans Affairs, and are only available to active duty military members, veterans and eligible surviving spouses. If you qualify, you can obtain a loan from a private lender, and the USDVA will guarantee a portion of the loan. This typically results in far more favorable terms for you as a borrower. You’ll get a competitive interest rate, won’t be required to front a down payment and you won’t have to obtain private mortgage insurance. It’s important to note that in most cases, you can only take advantage of a VA loan once, and after taking out one to purchase a home you won’t be able to obtain another to purchase a different property. The exception to this rule is if you pay off your VA loan in full and dispose of the property, you can have your entitlement to the loan restored.
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