PURCHASE
Loan Options
Which Mortgage is Right for You?
When it comes to purchasing a home, choosing the right mortgage is one of the most important decisions you’ll make. With several types of home loans available, it’s essential to understand your options to ensure you select the one that best fits your financial situation, future plans, and homeownership goals. The type of mortgage you choose will impact your monthly payments, interest rates, down payment requirements, and overall financial flexibility.
That’s why we’re here to help you navigate through the various loan options to help you find the one that best suits your needs. Here’s a breakdown of some common mortgage types and how they align with varying borrower qualification profiles:
CONVENTIONAL Purchase
A conventional purchase loan is a mortgage not backed by a government agency, such as the FHA or VA. It typically requires a higher credit score and a larger down payment but offers more flexible terms for borrowers with strong financial profiles. Conventional loans allow buyers to avoid private mortgage insurance (PMI) if they make a down payment of 20% or more.
FHA Purchase
FHA purchase loans are government-backed mortgages insured by the Federal Housing Administration, designed to help low- to moderate-income borrowers. These loans allow for lower credit scores and down payments, making homeownership more accessible to first-time buyers. FHA loans typically require mortgage insurance premiums (MIP) regardless of the down payment amount.
VA Purchase
VA purchase loans are mortgages backed by the Department of Veterans Affairs,. These typically do not require a down payment and do not include private mortgage insurance (PMI), making them highly affordable for qualified borrowers. VA loans also typically offer competitive interest rates and more flexible credit requirements compared to conventional loans.
JUMBO Purchase
Jumbo purchase loans are mortgages used to finance properties that exceed the conforming loan limits set by the Federal Housing Finance Agency (FHFA). These loans typically require higher credit scores, larger down payments, and more stringent income qualifications compared to conventional loans. Jumbo loans are ideal for buyers looking to purchase high-value homes that require financing beyond the standard limits.
USDA Purchase
USDA purchase loans are government-backed mortgages offered by the U.S. Department of Agriculture, designed for buyers in eligible rural and suburban areas. These loans require no down payment and offer competitive interest rates, making homeownership more affordable for low- to moderate-income borrowers. USDA loans also typically have lower mortgage insurance premiums compared to other loan types.
First Time Home Buyer
First-time buyer purchase loans are designed to help individuals buying their first home by offering favorable terms, such as lower down payments and reduced interest rates. These loans may be backed by government programs like FHA, USDA, or VA, or offered through private lenders with specific incentives for new buyers. Many first-time buyer loans also include financial assistance options, such as down payment grants or closing cost aid, to make homeownership more affordable.
100% FINANCING Purchase
A 100% financing purchase loan allows buyers to finance the entire cost of a home without needing a down payment. These loans are typically available through specific programs, such as VA loans for veterans or USDA loans for rural properties. While they eliminate the need for upfront cash, borrowers may face stricter eligibility requirements and higher interest rates or fees to compensate for the increased lender risk.
REVERSE MORTGAGE Purchase
A reverse mortgage purchase loan allows seniors aged 62 and older to buy a new home while using the equity from their current home, enabling them to avoid monthly mortgage payments. Instead of making payments, borrowers repay the loan when they sell the home, move out, or pass away, allowing them to retain ownership and live in the home as long as they meet the terms. This type of loan can provide financial flexibility for retirees, helping them purchase a more suitable residence while accessing funds for other expenses.
DSCR Purchase
A Debt Service Coverage Ratio (DSCR) purchase loan is a type of financing primarily used for investment properties, where the borrower’s income from the property is evaluated against the loan payments. This loan is designed for real estate investors who may not have traditional income sources, allowing them to qualify based on the property's cash flow rather than personal income. Typically, lenders look for a DSCR of 1.0 or higher, indicating that the property's income covers its debt obligations.
BANK STATEMENT Purchase
Bank statements as evidence of income purchase loan allows borrowers to use their bank statements as proof of income instead of traditional documentation like pay stubs or tax returns. This type of loan is often beneficial for self-employed individuals or those with non-traditional income sources, as it provides a clearer picture of cash flow and financial stability. Lenders typically require several months of bank statements to verify income consistency and assess the borrower’s ability to repay the loan.
P & L STATEMENT Purchase
A profit and loss statement purchase loan allows self-employed individuals or business owners to use their business income documentation as a basis for securing a mortgage. Instead of relying solely on traditional income verification methods, lenders consider the profitability of the business reflected in the profit and loss statement, making it easier for entrepreneurs to qualify for a home loan. This type of loan is beneficial for those whose income may fluctuate, as it provides a more accurate representation of their financial health.
ASSET DEPLETION Purchase
An asset depletion purchase loan allows borrowers to qualify for a mortgage by using their liquid assets as a source of income when traditional income documentation is insufficient. This option is particularly beneficial for retirees or individuals with significant savings but limited regular income, as lenders calculate a monthly income equivalent based on the total assets available. By converting assets into income, borrowers can enhance their chances of securing a mortgage without relying solely on traditional employment income.
No matter what you’re qualifications are, we are dedicated to helping you secure a mortgage loan tailored specifically to your needs.
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