16 — Say you saw it in The Real Estate Browser of Lynchburg — Volume 8 Number 4 www . LynchburgRealEstateBrowser . com
What Type of Mortgage Loan Do I Need ?
By Sherry Brady , NMLS 217258 , Branch Manager , Summit Mortgage Corporation
You want to buy a home , but you have no idea what kind of loans there are or what you might qualify for . I ’ d like to help you learn about the most common types of mortgage loans and the differences between them .
Conventional loans , sometimes referred to as “ Fannie Mae ” or “ Freddie Mac ”, generally require at least 5 % down , but can be obtained with as little as 3 % down . Your credit should be very good to excellent , and unless you have at least 20 % down , you will have private mortgage insurance . The loan limit for 2017 is $ 424,100 for this area ; above that amount is what ’ s known as a “ jumbo ” loan .
Government loans include VA , FHA , USDA and VHDA loans . All of these loans have a form of upfront mortgage insurance ( or funding fee ), and most of them also have a monthly mortgage insurance cost . Each program has its own special characteristics .
USDA provide financing for 100 % of the purchase price . You don ’ t have to be a firsttime homebuyer , but you can ’ t own any other property at the time this loan closes . There are restrictions on where your new home can be located , and household income limits for this loan . It ’ s best to check with your lender to determine whether the home you want is in an eligible area and make sure that your credit and income are eligible , but this is an excellent loan option if you qualify for it .
VHDA ( FHA Plus ) also provides 100 % financing . This loan can be used anywhere in the state of Virginia , but there are income , sales price , and acreage limits in addition to the standard credit and debt ratio requirements . You must also be a first-time homebuyer to use this program .
FHA loans are the least restrictive . There are no income limits , or restrictions on location , but there is a loan limit . For Lynchburg and surrounding counties , that limit is $ 292,100 . You must have 3.5 % down for this loan , but Gift Funds are allowed . This loan is the most forgiving of past credit issues , and the most lenient with debt ratio allowances . FHA also has a Renovation loan called a 203K .
VA loans are specifically for Veterans with qualifying service time . A VA loan provides for financing of 100 % of the purchase price . If you ’ re a disabled vet , you are exempt from the funding fee , and a tremendous benefit of all VA loans is that there is no monthly mortgage insurance on this type of loan .
Please contact us or your lender to learn more and determine which is the best loan for you !