A Comprehensive Guide to the Top 7 Home Loan Programs

home loan programs

The prime home buying season has arrived and because we’re currently in a seller’s market, it’s important to understand what’s ahead as you enter the home buying process. Although a mortgage professional will be available to walk you through your financing options, it’s a good idea to understand which loan programs could be the best fit for you. We’ve developed a comprehensive guide to help you understand the top 7 home loan programs we offer at Easy Mortgage to get you into a new home this year.

Related article: The 6 Steps to the Mortgage Approval Process

Fixed Rate Home Loans

A fixed rate home loan is a loan that has a fixed interest rate for the entire term of the loan. Fixed rate home loans offer borrowers the flexibility to choose a 10, 15, 20, 25, or 30-year term, depending on the loan type. This way, borrowers can choose to extend the life of their loan for smaller monthly payments, or they can opt for a shorter term and pay off their fixed rate mortgage faster if they can afford a higher monthly payment.

Who are they good for?

Fixed rate home loans are a great option for people planning to stay in their homes for more than seven or eight years, as the interest rate remains the same for the entire term of the loan. First-time home buyers may find the 30-year fixed rate home loan appealing, as it offers lower and more affordable monthly home mortgage payments.

 What are the benefits?

There are several benefits to fixed rate home loans, such as flexibility in term length, consistent monthly payments and interest rates, protection from rising interest rates, and no closing cost options.

Adjustable Rate Mortgages (ARMS)

An adjustable rate mortgage is a loan term with interest rates that can change periodically after the initial fixed rate period. This means most ARMs have an initial fixed rate period where the interest rate doesn’t change followed by a longer period during which the rate changes at preset intervals, moving up and down as interest rates fluctuate.

Who are they good for?

Adjustable-rate mortgages are great for those who plan to stay in their homes for only a few years, often less than 5 years. This is because those who are planning to sell within a few years can take advantage of the lowest interest rate available at the time of borrowing.

What are the benefits?

Benefits of adjustable rate mortgages include lower interest rates, lower initial monthly payments, and the possibility to qualify for a higher loan amount.

Veterans Administration Home Loans (VA home loans)

VA home loans are available through a program established by the United States Department of Veterans Affairs and assist service members, veterans, and eligible surviving spouses to become homeowners.

Who are they good for?

VA home loans are available to eligible veterans, service members, and surviving spouses. Our team at Easy Mortgage offers VA home loans through the Homes for Heroes program which provides significant savings to veterans, service members, police officers, firemen, teachers, nurses, and doctors.

What are the benefits?

There are several benefits available for those eligible for VA home loans, including no money down options, 100% financing, no closing costs, and no prepayment penalties or private mortgage insurance.

Wisconsin Housing and Economic Development Authority (WHEDA)

WHEDA offers special loan programs to home buyers looking to purchase an owner-occupied home in Wisconsin, meaning the home will be your primary residence.

Who are they good for?

WHEDA home loans are great for those who meet requirements such as falling within specific income limits and residing in the home as a primary residence. They are also helpful for lower-income families as it offers the lowest monthly mortgage payments, down payment, and closing cost assistance.

What are the benefits?

Those eligible for WHEDA home loans can take advantage of several benefits including 100% financing, lowest allowable monthly mortgage payments, low-interest rates, and low closing costs.

Federal Housing Administration Home Loans (FHA home loans)

FHA home loans are insured by the Federal Housing Administration and are designed for borrowers with low to moderate income.

Who are they good for?

These loans offer less rigorous lending standards and can help accommodate borrowers with low credits scores, typically as low as 500. This is also a great loan option for those who don’t have a credit history as lenders will typically ask for other forms of records such as utility and rent payments.

What are the benefits?

FHA home loans provide borrowers with several benefits including only 3.5% down payments, low interest rates, low FICO score requirements, and you’re allowed to use gift money toward the down-payment.

US Department of Agriculture Home Loans (USDA home loans)

USDA home loans are 100% no-money-down home mortgage loans that are backed by the US Department of Agriculture.

Who are they good for?

USDA home loans are great for families with low and moderate income living primarily in rural areas. There are three primary USDA home loans, including USDA loans issued by qualified lenders such as Easy Mortgage, direct loans issued by the USDA, and home improvement loans.

What are the benefits?

USDA home loan benefits include 100% financing (no money down), low interest rates, low FICO score requirements, low closing costs, and you’re allowed to use gift money toward the closing costs.

Jumbo Loans

Jumbo loans, or non-conforming mortgages, typically have lower rates than many other mortgage options and allow buyers to purchase a more expensive home with a loan amount above the conforming limit set by the Federal Housing Finance Agency. The conforming loan limit is $453,100 in most areas of the U.S. as of 2018.

Who are they good for?

Jumbo loans are great for borrowers with a low debt-to-income ratio and higher credit score, but without enough funds to bring the loan amount under the conforming limit.

What are the benefits?

Those eligible for jumbo loans are able to use the loan for their primary home, secondary home, or investment property; they’re able to use one loan for the entire amount borrowed, and are able to finance a home over the maximum loan amount established by the Federal Housing Finance Agency.

 

Now that you have a better understanding of the top 7 loan programs we offer, reach out to us to get the ball rolling. We’d love to help you find the home loan program that best fits your needs so you can get into your dream home this season!

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