Loan Types

A conventional loan is a type of mortgage that’s issued by private lenders, such as banks or credit unions, and the eligibility requirements for conventional loans can be stricter than government-backed loans.

To qualify for a conventional loan, you typically need a good credit score, a stable income, and a low debt-to-income ratio. You’ll also need to have a down payment, which is a percentage of the total cost of the house that you have to pay upfront. This can be anywhere from 3% to 20% of the purchase price, depending on the lender and the borrower’s financial situation.

Overall, conventional loans can be a good option for borrowers who have strong credit and are able to make a sizable down payment, as they often have lower interest rates and fewer restrictions than government-backed loans.

A USDA loan is a type of mortgage that’s designed to help people in rural areas buy a home. It’s backed by the United States Department of Agriculture (USDA), and it offers some special benefits that other types of mortgages may not offer.

One of the biggest benefits of a USDA loan is that you can buy a home with no down payment. This means that you don’t need to put any money down upfront when you buy the home. Additionally, USDA loans often have lower interest rates and mortgage insurance premiums, which can make them more affordable.

To be eligible for a USDA loan, you’ll need to meet certain criteria. For example, your income must not exceed a certain limit, and the home you’re buying must be located in a designated rural area. The USDA has specific definitions of what qualifies as a “rural area,” but in general, it means that the home is located outside of a city or town.

USDA loans can be a good option for people who want to buy a home in a rural area but may not have the money for a down payment or who may not qualify for other types of loans. However, it’s important to remember that there may be some eligibility requirements and restrictions that you’ll need to meet.

An FHA loan is a type of mortgage that’s backed by the Federal Housing Administration (FHA), which is a part of the U.S. government. It’s designed to help people buy a home who may not be able to qualify for a conventional loan.

One of the biggest benefits of an FHA loan is that you can buy a home with a lower down payment than you would need for a conventional loan. This means that you can put down as little as 3.5% of the purchase price, which can make it easier to buy a home.

Another benefit of an FHA loan is that it may be easier to qualify for, even if you have a lower credit score. The FHA has more flexible requirements for credit scores and debt-to-income ratios than many other lenders, which means that more people may be able to get approved for an FHA loan.

However, there are some trade-offs to consider. FHA loans often come with higher mortgage insurance premiums than conventional loans, which can increase your monthly payment. Additionally, there may be some restrictions on the types of homes you can buy with an FHA loan, such as limits on the purchase price or requirements for the condition of the home.

Overall, an FHA loan can be a good option for people who want to buy a home but may not have a lot of money saved up or who may not have a perfect credit score. However, it’s important to weigh the pros and cons and to understand the requirements and restrictions before you decide to apply for an FHA loan.

A jumbo loan is a type of mortgage that’s used to buy a more expensive home. The amount of money you can borrow with a jumbo loan is higher than the limit set for other types of mortgages, like conventional loans.

The limit for a jumbo loan varies depending on where you live, but it’s typically around $500,000 or more. This means that you can use a jumbo loan to buy a home that costs more than the limit set for other types of loans.

Because jumbo loans involve lending more money, they’re often considered riskier for lenders. As a result, you may need to meet more stringent requirements to qualify for a jumbo loan. For example, you may need to have a really good credit score, a high income, and a large down payment.

If you’re thinking about buying a more expensive home, a jumbo loan may be an option to consider. However, it’s important to remember that jumbo loans can be harder to get and may come with higher interest rates than other types of mortgages. It’s a good idea to talk to a mortgage lender to learn more about whether a jumbo loan is the right choice for you.

A VA loan is a type of mortgage that’s designed to help veterans, service members, and their families buy a home. It’s backed by the U.S. Department of Veterans Affairs, which means that the government guarantees a portion of the loan to the lender.

One of the biggest benefits of a VA loan is that you can buy a home with no down payment. This means that you don’t need to put any money down upfront when you buy the home. Additionally, VA loans often have lower interest rates than other types of mortgages, which can make them more affordable.

To be eligible for a VA loan, you need to be a current or former member of the U.S. military or a qualifying family member. You’ll also need to meet certain credit and income requirements, and the home you’re buying must meet certain standards.

VA loans can be a good option for people who have served in the military or who are currently serving, as they offer some special benefits that other types of loans may not offer.

A DPA (Down Payment Assistance) loan is a special type of loan that helps people buy a home by providing them with money to cover part or all of their down payment towards the purchase price of the house.

DPA loans are designed to make it easier for people who may not have enough savings to afford a down payment.

With a DPA loan, a separate organization or program provides you with the money you need for the down payment. This money is usually in the form of a loan or grant, which means you may need to pay it back eventually or it might be given to you for free. The specific terms of the loan or grant will depend on the program or organization offering the assistance.

DPA loans can be helpful because they allow you to buy a home with less money upfront. This can make it easier to become a homeowner, especially if you’re struggling to save up enough money for a down payment. However, it’s important to carefully consider the terms of the DPA loan and understand any requirements or repayment obligations associated with it.

Overall, DPA loans provide financial assistance to help people achieve their goal of buying a home by helping them cover the down payment portion of the purchase.

A chattel loan for a home is a type of financing arrangement used to purchase or refinance a manufactured or mobile home. Unlike traditional home mortgages, which typically involve the financing of both the home and the land it sits on as real property, a chattel loan focuses solely on the financing of the home itself as personal property. In this context, “chattel” refers to movable personal property, such as the mobile or manufactured home.

Here are some key features and characteristics of a chattel loan for a home:

Collateral: The primary collateral for a chattel loan is the manufactured or mobile home itself. Since it is considered personal property and can be transported, it doesn’t have the same legal status as real property, like a site-built house on a foundation.

Term: Chattel loans typically have shorter loan terms compared to traditional mortgages. Loan terms can range from 5 to 20 years, depending on the lender and the borrower’s creditworthiness.

Interest Rates: Interest rates on chattel loans tend to be higher than those on traditional mortgages because they are considered riskier for lenders. The borrower’s credit score and financial history can impact the interest rate they are offered.

Down Payment: Borrowers may be required to make a down payment, which can vary depending on the lender and the borrower’s creditworthiness. The down payment percentage may be higher than what is required for a conventional home loan.

Loan Purpose: Chattel loans are typically used to finance the purchase of mobile or manufactured homes, which are often placed in mobile home parks or on leased land. They can also be used for refinancing existing chattel loans.

Legal Structure: The legal structure and documentation for chattel loans differ from traditional mortgages. The loan agreement may be more similar to an auto loan or personal loan in terms of legal formalities.

Title and Ownership: The borrower typically receives a title or certificate of ownership for the manufactured or mobile home, which is registered with the appropriate state agency. However, the land on which the home is placed may be owned by someone else (e.g., a mobile home park owner or land leaseholder).

It’s important to note that the specific terms and requirements of chattel loans can vary depending on the lender, local regulations, and the borrower’s financial situation. Before entering into a chattel loan agreement, it’s advisable to carefully review the terms, interest rates, fees, and other conditions with the lender and seek legal or financial advice if needed.

A one-time close construction loan, often referred to as a “construction-to-permanent loan” or “single-close construction loan,” is a type of mortgage financing that simplifies the process of building a new home. It combines two stages of home financing into a single loan, making it more convenient for borrowers. Here’s how it works:

Construction Phase: During the construction phase, the borrower secures the funds needed to build the home. This phase typically involves purchasing land, paying for construction costs, and any necessary permits and fees. Unlike a traditional construction loan, where the borrower would need to make interest payments on the construction funds borrowed, a one-time close construction loan typically does not require interest payments during this phase. Instead, the interest is capitalized into the loan.

Transition to Permanent Financing: Once the construction is completed and the home is move-in ready, the one-time close construction loan automatically converts into a permanent mortgage loan without the need for a separate closing. This transition from construction to permanent financing happens seamlessly, simplifying the process and potentially saving borrowers money on closing costs compared to having two separate loans.

Key features and benefits of a one-time close construction loan include:

Interest Rate Lock: Borrowers can often lock in a fixed interest rate at the beginning of the loan, protecting them from potential interest rate increases during the construction phase.

Streamlined Process: Combining the construction and permanent financing into a single loan simplifies the paperwork and eliminates the need for a second closing, which can save time and money.

Consistent Payments: Borrowers have the convenience of making consistent monthly payments from the start, rather than dealing with variable interest payments during the construction phase.

Long-Term Financing: The permanent mortgage portion of the loan can be structured as a fixed-rate mortgage, adjustable-rate mortgage, or other suitable mortgage type, depending on the borrower’s preferences and qualifications.

Down Payment: Borrowers may be required to make a down payment, but the down payment requirements are typically similar to those for traditional home purchase loans.

It’s important to note that qualification requirements, terms, and features of one-time close construction loans can vary among lenders. Borrowers should thoroughly research lenders, compare loan offers, and consult with a mortgage professional to determine the best financing option for their specific construction project and financial situation. Additionally, lenders may require borrowers to work with approved builders or contractors to ensure that the construction