The 7 Most Popular Loan Programs and Who They’re Perfect For
This loan program offers first time home buyers a chance to purchase with a down payment of only 3.5% of the purchase price. Interest rates tend to be lower for this program than for other conventional financing however the mortgage insurance is mandatory for a longer time period compared with conventional financing that allows you to remove the mortgage insurance once you reach below 80% loan to value. For cash out refinances FHA allows up to 85% loan to value as the max limit whereas conforming and Jumbo loans typically max at 80% loan to value.
The minimum down payment for this program is 5% and is preferred over FHA when financing condominiums. With FHA the condo will also need to be approved by FHA and this is not always the case. The mortgage insurance time period is also less restrictive than FHA and can be removed when your loan to value reaches 80%. For cash out refinances 80% loan to value is the generally the max limit.
If you have the advantage of cutting your loan term in half and qualify with the higher mortgage payment of a 15 year fixed compared with a 30 year fixed mortgage consider this loan. You not only cut the life of your loan by half you also cut down the interest rate. If you choose to go with the 15 year fixed you can compare the savings using our loan calculator in the tools section.
If your loan amount is over $822,350 than your loan is considered a Jumbo loan. These loans have slightly higher interest rates and are perfect for home buyers with 20% down payment and for homeowners who wish to refinance as long as the loan to value is equal or less than 80%.
This loan program is perfect for veterans who qualify and have their certificate of eligibility. Not only are the interest rates low there is no mortgage insurance required! Loan amount limits vary by county and for most counties in the San Francisco Bay Area the max loan limit is $822,350. In the San Francisco Bay Area if purchasing a a home over the county loan limit, say $1M then the buyer would be required to pay 25% of the difference between county loan limit and purchase price which would be $44,412.50 as the down payment in this scenario.
This loan program requires no income documentation and is perfect for buyers with gaps in employment or imperfect credit but have a large down payment. This program is also great for buyers who are buying properties that are in bad condition and cannot get traditional financing. This loan is good for short term use and balloons in 5 years.
For short term financing adjustable rate mortgages maybe better than a 30 year fixed mortgage in that the interest rate and monthly payment is lower. These programs are perfect for investors flipping real estate or for home buyers who may need an initial lower payment to help qualify for a home purchase.
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