mortgage

Conventional financing in real estate refers to a mortgage loan that is not insured or guaranteed by the government, unlike FHA, VA, or USDA loans. These loans are typically offered by private lenders such as banks and credit unions and usually require a higher credit score and a larger down payment. Conventional loans often have more flexible terms and may be used for a variety of property types, making them a popular choice for many homebuyers.

General Guidelines:

• Financing Options: Up to 97% of home’s value

• Minimum Down Payment: 3-5%

• Minimum Credit Score: 620

• Private Mortgage Insurance (PMI): Required with Loan-to-Value (LTV) of 80% or higher

• LTV below 80%: PMI is removed

• Rate can be fixed or adjustable

FHA financing is a government-backed mortgage option offered by approved lenders and insured by the Federal Housing Administration. It is designed to make homeownership more accessible by offering lower down payment requirements—often as low as 3.5%—and more flexible credit score criteria compared to conventional loans. While FHA loans are popular among first-time homebuyers, they are also available to repeat buyers, including those who may have experienced financial challenges in the past. FHA loans can be used for various property types, including single-family homes, multi-family properties, and certain condos, making them a versatile option for a wide range of buyers looking to secure financing with more lenient requirements.

General Guidelines:

• Financing Options: Up to 96.5% of home’s value

• Minimum Down Payment: 3.5%

• Minimum Credit Score: 580

• Private Mortgage Insurance (PMI): Required for the life of the loan

USDA financing is a government-backed mortgage program designed to help eligible buyers in rural and suburban areas secure homeownership with no down payment required. Offered by the U.S. Department of Agriculture, USDA loans provide competitive interest rates and flexible credit guidelines, making them an attractive option for low- to moderate-income buyers who may not have the resources for a larger down payment. While USDA loans are often associated with first-time homebuyers, they are available to repeat buyers as well, as long as they meet income limits and the property is located within an eligible rural area. These loans can be used for purchasing single-family homes, certain condos, and in some cases, new construction, providing a path to homeownership in more rural and underserved areas.

General Guidelines:

• Financing Options: Up to 100% of home’s value

• Minimum Down Payment Options: 0%

• Minimum Credit Score: 600

• Private Mortgage Insurance (PMI): Required for the life of the loan

• Borrower must meet certain income guidelines

• Home to be purchased must be located in eligible areas

VA financing is a mortgage program backed by the U.S. Department of Veterans Affairs, designed to help active-duty service members, veterans, and eligible surviving spouses achieve homeownership. One of the key benefits of VA loans is that they require no down payment, making them an attractive option for those who may not have the funds for a large upfront payment. Additionally, VA loans offer competitive interest rates and more lenient credit requirements compared to conventional loans. These loans are available for purchasing single-family homes, multi-family properties, and some types of condominiums. VA financing also provides the advantage of no private mortgage insurance (PMI) requirement, further reducing the cost of homeownership. While typically used by veterans and military families, VA loans can be a valuable resource for anyone who qualifies.

General Guidelines:

• Financing Options: Up to 100% of home’s value

• Minimum Down Payment: 0%

• Minimum Credit Score: No minimum

• Private Mortgage Insurance (PMI): No monthly premium

• Must qualify for VA entitlement

Section 184 financing is a government-backed mortgage program specifically designed to help Native American and Alaska Native families, tribes, and tribal organizations secure homeownership. Administered by the U.S. Department of Housing and Urban Development (HUD), Section 184 loans offer low down payment requirements, typically 2.25%, and more flexible credit qualifications compared to conventional loans. These loans can be used to purchase, refinance, or renovate single-family homes, as well as some multi-family properties, within approved areas. Section 184 financing is available to both first-time and repeat homebuyers, and it is particularly beneficial for Native American individuals or families living on tribal lands, offering a pathway to homeownership that might otherwise be difficult to access.

General Guidelines:

• Financing Options: Up to 97.75% of home’s value

• Minimum Down Payment: 2.25%

• Minimum Credit Score: No minimum

• Private Mortgage Insurance (PMI): No monthly premium

• Borrower must be enrolled members of a federally recognized Native American or Alaska Native tribe

• Home to be purchased must be located in an eligible area (the entire state of Oklahoma is considered eligible)

Jumbo loans are a type of mortgage that exceeds the conforming loan limits set by the Federal Housing Finance Agency (FHFA), which are typically used for financing more expensive properties. Because they fall outside of the guidelines for government-backed loans, jumbo loans are not eligible for purchase by Fannie Mae or Freddie Mac. As a result, these loans are offered by private lenders and often come with stricter credit requirements, higher down payments, and competitive interest rates. Jumbo loans are ideal for buyers looking to purchase high-end or luxury homes, and they can be used for various property types, including single-family homes, multi-family homes, and even certain vacation properties. Given their higher value, they require careful financial planning and a solid credit profile to qualify.

General Guidelines:

• Financing Options: Up to 90% of home’s value

• Minimum Down Payment: 10%

• Minimum Credit Score: 660

• Private Mortgage Insurance (PMI): No monthly premium

• Loan amounts up to $3 Million

New construction loans are short-term, specialized loans designed to finance the building of a new home or residential property. These loans typically cover the cost of land acquisition, materials, labor, and other construction-related expenses. Unlike traditional mortgages, which are paid out in a lump sum, new construction loans are usually disbursed in installments, or "draws," as different phases of the construction are completed. Once the construction is finished, the loan is typically converted into a permanent mortgage, often referred to as a "construction-to-permanent" loan. These loans are available to both first-time homebuyers and repeat buyers, and they often require a higher down payment and stronger credit qualifications due to the additional risks associated with construction projects. New construction loans are ideal for those looking to build their dream home or invest in a custom property.

Options:

• Construction-to-Permanent (One-time Close): Converts to FHA/USDA/VA/Conventional mortgage at the end of construction

• Construction Only: Covers only the cost of building a home and must be paid off at the end of construction

• End Loan: A mortgage taking out a loan at the end of the construction phase

• Planned Development: Builder has usually already secured the land and construction loan. Buyer gets a traditional loan and not a construction loan

Renovation loans are specialized mortgage options designed to help homebuyers or homeowners finance both the purchase of a property and the cost of renovations or repairs. These loans allow buyers to roll the cost of necessary or desired improvements into their mortgage, eliminating the need for separate financing or personal loans. Common renovation loan programs include the FHA 203(k), Fannie Mae’s HomeStyle Renovation loan, and VA renovation loans, each offering different terms and requirements. These loans can be used for a wide range of improvements, from updating kitchens and bathrooms to major structural repairs. Renovation loans are ideal for buyers looking to purchase a fixer-upper or for homeowners who want to upgrade their current property. By financing both the home purchase and the renovations in one loan, they simplify the process and make home improvements more affordable.

Non-QM (Non-Qualified Mortgage) financing refers to a category of mortgage loans that do not meet the standard requirements set by the Consumer Financial Protection Bureau (CFPB) for qualified mortgages. These loans are typically designed for borrowers who may not fit traditional lending criteria, such as self-employed individuals, those with non-traditional income sources, or those with a less-than-perfect credit history. Non-QM loans offer more flexible terms and can accommodate a wider range of financial situations. They may include features like interest-only payments, balloon payments, or higher debt-to-income ratios, which are not allowed under QM standards. While non-QM loans can provide more options for borrowers who might otherwise struggle to secure financing, they often come with higher interest rates and more stringent terms due to the increased risk. These loans are commonly used for unique property types or specific borrower circumstances that require a more customized approach to financing.