Mortgage Types

Conventional Loans, Confirming Loans, Government Loans, FHA Loans, VA Loans, USDA Loans

Conventional Loans

• The borrower must pay PMI (private mortgage insurance) if loan to value > 80% (downpayment < 20%)
• PMI is waived if the loan to value reaches 80%
• Not guaranteed or insured by the federal government
• Types of homes: primary residence, rental/investment property, second/vacation home, or a property you plan to fix up and flip
• Loan types: conforming loans and non-conforming loans
• FICO credit score: 620+

Conventional conforming loans

• Guided by Fannie Mae or Freddie Mac
• Loan limit: $548,250 (high-cost areas: $822,375)
• Downpayment: 5% (for first-time homebuyer: 3%)
• High DTI (Debt to Income): 43-50%

Conventional non-conforming loans

• No loan limits
• Downpayment: 20%
• Security: 6-12 months of saving
• Loans: jumbo loans, portfolio loans, and subprime loans

FHA Loans

• Insured by Federal Housing Administration (FHA)
• Loan limits: $356,362-$822,375 (depending on the area)
• Minimum downpayment: 3.5%
• Credit score 580+ with down: 3.5%
• Credit score 500+ with down 10%
• The borrower must pay MIP (Mortgage Insurance Premium)
• Upfront: 1.75% PMI
• High DTI (Debt to Income): 57%
• First-time homebuyers

VA Loans

• Guaranteed by U.S. Department of Veterans Affairs (VA).
• The borrower must be a member of the U.S. armed forces, veteran, reservist/national guard member, or an eligible surviving spouse.
• No minimum downpayment
• No minimum credit score
• No insurance
• Types of homes: primary residence
• One-time charge: 1.25-3.6%

USDA Loans

• U.S. Department of Agriculture
• Income limited
• USDA-approved areas
• The borrower must be a U.S. citizen or a permanent resident
• Credit score: 640+
• Types of homes: primary residence
• No minimum downpayment
• Upfront guarantee fee: 1%
• Annual fee: 0.35%

Other types of loans?