Let Us Lend affiliates provide a wide range of loan programs for individuals who want to become qualified and get approved for a mortgage loan. In your journey to securing your home, you will need to choose the option that best suits your individual circumstances. Reach out to one of our expert mortgage partners today and see how they can help you on the path towards becoming a proud homeowner.
An FHA mortgage loan is insured by the Federal Housing Administration (FHA). A 3.5% down payment on the home is the minimum investment needed, meaning that homebuyers can borrow up to 96.5% of the home’s value. FHA loans are the optimal choice for low-income borrowers who want to be protected from a potential loss (in case they default on the loan), and cannot afford a standard down payment.
In addition to allowing a low down-payment, FHA loans are great for individuals who have low credit scores (i.e. poor credit history) and have experienced bankruptcy and/or foreclosure in the past (must be a minimum of ~2-3 years ago). Anyone with a FICO score over 580 and above is entitled to a maximally financed loan, and those with a credit score below 580 can qualify for a home loan if they put at least a 10% down payment. With the money that you save, home improvements will become far more affordable.
Overall, these affordable loans are easily accessible to a wide variety of people, including veterans that aren’t eligible for VA financing, those buying a home for the very first time, or previous home owners that simply want to enjoy the benefits FHA affords.
With only 6% of United States Veterans successfully owning a home, nearly 20 million vets across the country are underpaid, under-appreciated and under-served. They are being left behind by false promises of ‘qualifying’ from mortgage lenders, and being deprived of the financial stability that comes with home ownership. It’s time to serve our active military and honorably discharged veterans by putting them on the right path to becoming proud owners of their dream homes. And that’s why VA loans are so important.
These loans are provided exclusively to eligible veterans and their spouses, and are guaranteed by the U.S. Department of Veteran Affairs (VA). It provides financing for their home, and is generally the best option for those who are or have served in the military. While various qualified lenders are responsible for actually approving the loan, the VA determines the qualifying criteria for a VA loan and ensures said loans against losses if the borrower ends up defaulting on their loan(s).
There are two strategic advantages VA loans afford those who are eligible. First, VA does not require a down payment, and most if not all of the closing costs may be paid by the seller (this must be negotiated with the seller). Very few loans in existence offer this kind of financial leverage. Secondly, there are no ongoing insurance fees (known as ‘private mortgage insurance’, or PMI) included in the monthly payment. Much like the FHA loan, you may still qualify if you have previously experienced bankruptcy/foreclosure (minimum of 2 years ago at the time of approving the loan).
Overall, it is a very competitive loan that promises extremely favorable outcomes to well-deserving veterans who are seeking financial and emotional stability.
Unlike FHA and VA loans, the conventional mortgage loan is not created, insured or secured (i.e. guaranteed) by any government entity whatsoever. The down payment requirement is typically more than FHA and VA, except for those with exceptional credit and meet specific income guidelines. Conventional loans have their place; however, they are less accessible for low-income individuals and families who are low on funds to close, and/or have lower credit scores. Conventional loans are either fixed rate (i.e. an interest rate that stays constant while paying off the loan), or adjustable rate (i.e. periodic adjustments to the interest rate are made while paying off the loan).
Those who can afford to take on conventional mortgages will be delighted to know that there are no upfront mortgage insurance requirements. There are no monthly mortgage insurance obligations with 20% down; however, with anything less than 20% down, monthly mortgage insurance (PMI) is required.
The loans are also processed at a much faster rate due to the fact that the borrower and lender are directly working with one another without any government assistance, and less documentation is typically required for the entire process. Naturally, the more competitive (i.e. lower) mortgage rates are available to those who are on faster repayment schedules and are ‘qualified’ to take on conventional loans.
Here is a brief set of recommended criteria to meet if you want to have a strong financial profile that qualifies you for a conventional loan:
- FICO credit score: A minimum of 620. Naturally, those with higher credit scores will have access to lower interest rates on their loans and better terms.
- Financial stability: The lower your debt-to-income ratio, the more favorably your situation is viewed.
- Access to the down payment: The higher amount of funds you have available to put into your home purchase, the more favorably your situation is viewed.