How can I match with an affordable mortgage?
One of the biggest challenges potential buyers face when looking to enter the housing market is finding a mortgage that matches their financial requirements. An affordable mortgage could not only help make it easier to buy a home but could also lead to potential savings*.
There are many affordable mortgage options, depending on your needs and situation. Let’s break down a few popular options, as well as qualifications, to help you find the perfect mortgage match.
Once you have found the perfect match, you can begin the application process online with a trusted lender.
FHA home loan
Those looking to buy a first home who might not meet the qualifications or down payment options of a conventional loan might be a perfect match for a home loan backed by the Federal Housing Administration, an FHA loan.
FHA loans have a credit score minimum of 620 and debt-to-income maximum of 43% requirement for borrowers. Depending on your exact situation, FHA loans have down payment options as low as 3.5%.
FHA loans are a match for those looking to purchase a primary residence, as they cannot be used for investment or vacation properties.
VA home loan
Former or active military service members looking to find a home have a match with a VA home loan.
The U.S. Department of Veterans Affairs is the government organization that backs these loans to benefit qualified active-duty service members, veterans and surviving spouses.
The VA doesn’t require any minimum credit score for borrowers and offers zero-down payment options. Of course, to match with a VA loan, you will need to meet the service requirements.
USDA home loan
Potential homeowners looking to buy in rural or suburban areas might have the best match with a USDA home loan. Similar to other government-back loans, the USDA loans can be easier to qualify for as they are issued by the U.S. government.
Backed by the U.S. Department of Agriculture, USDA loans offer zero down payment options with more lenient credit score requirements than conventional loans. Homes purchased with these loans have to be in designated areas.
One benefit of USDA loans is that they are accessible to families with low- to moderate-income.
RateReduce
Potential buyers looking to match with a lower interest rate as they begin their homeowning journey could work with sellers and look into RateReduce.
RateReduce has five options for borrowers, some offering lower interest rates for the first few years (RateReduce Temp), while others have the lower rate for the life of the loan (RateReduce Perm). The seller you are buying your home from will have to cover at least part of your buydown, so you will need to work with them for a RateReduce.
This is a helpful option for many homeowners as it allows them to ease into their mortgage payments and either save the money they might have been spending or potentially invest those extra funds into home renovations.
Local mortgage matches
There are many state and local programs potential homebuyers can match with to assist in purchasing a property. This assistance can come in the forms of grants, low-interest loans or tax credits.
The best way to find a local mortgage to match with is by finding a local Loan Officer who knows of and how to qualify for these loans.
Down payment assistance programs
Down payment assistance programs are a great match for any buyers who can make their monthly payments but might not have enough saved to make a large down payment.
These programs could come in the forms of grants you won’t have to repay, loans with special terms or forgivable loans that you won’t need to repay if you meet certain conditions. There are many of these programs, so you should have a decent chance of finding one to match your needs.
HomeReady & Home Possible
Backed by Fannie Mae and Freddie Mac, HomeReady** and Home Possible*** loans are popular options for potential homeowners who may not meet the qualifications for a conventional loan.
These two loans are a great match for low- to moderate-income households as they both have down payment options as low as 3%, as well as not requiring a minimum credit score.
Do you have a mortgage that doesn’t feel like a match?
Many homeowners who already have a home mortgage choose to refinance or tap into their equity. They choose to do this for a number of reasons. Maybe it was the only mortgage they could qualify for at the time. Or maybe their mortgage felt more affordable when they bought their home but now they have other expenses that are putting stress on their finances.
If you’re looking to buy your first home and maybe don’t have the best paying job or highest credit score, you may have a home mortgage with a higher interest rate and longer term.
If your situation changes, you can refinance your home loan to better match your current situation. This could mean shorting your loan term or updating your financial information. Many borrowers choose a refinance when mortgage rates drop in hopes that their monthly loan payments drop as well.
If other expenses start coming up after you get a home mortgage, you can tap into your home equity to help fund those. Medical emergencies, unexpected bills, paying for school or funding home improvements are all reasons homeowners choose to tap into their equity.
One popular option for tapping into your home equity is through a HELOC, home equity line of credit.
What to do after finding a mortgage that feels like a match
When you have found a home mortgage that feels like the perfect match for you and your situation, you will be ready to start your application.
Start your home loan application online today and be connected with a professional loan officer who can help you along the way!
*Savings, if any, vary based on the consumer’s credit profile, interest rate availability, and other factors. Contact Rate for current rates. Restrictions apply.
**The HomeReady Mortgage is available to borrowers with 80% or less of area median income for purchase or limited cash-out refinance transactions on one to four unit properties. Additional property restrictions and minimum borrower contribution requirements apply and vary based on number of units of subject property. Occupant borrowers may own one other financed residential property in addition to subject property at the time of closing. Minimum FICO score requirements apply. Up to six months of reserves may be required based on the factors of borrowers' eligibility including but not limited to credit score, debt to income, and loan type. If all co-borrowers are first time homebuyers or when using non-traditional credit to qualify then at least one borrower will be subject to additional requirements regarding homeownership education or counseling from an approved source. Applicants subject to credit and underwriting approval. Not all borrowers will be approved. Restrictions apply. Contact your loan officer for more information and to determine your eligibility.
