Purchasing a home can be an intimidating process, but the good news is you’re not alone! Whether this is your first home or last, we’re here to help you find the perfect mortgage for your unique financial situation. Although there are hundreds of loan products out there, we’re going to walk you through just a few of the most common options and explore what each may entail.
Are you a first-time homebuyer?
Although there are numerous loan options available for first-time homebuyers, an FHA loan may be a solid choice for you. For starters, an FHA loan typically has lower down-payment requirements. That means you can get into a home while paying less out-of-pocket upfront costs. The flipside? You will have to pay a monthly FHA mortgage insurance premium – requiring you to pay more over the life of the loan.
Another reason why many borrowers choose an FHA loan is because they often come with lower credit score requirements. Oftentimes, this is seen as an attractive attribute for first-time homebuyers who may not have a long history of established credit.
Additionally, an FHA loan is qualified as an “assumable mortgage.” What does that mean? If you choose to sell your home in the future, buyers can undertake your loan. Oftentimes, this is seen as a selling-point for buyers and can be beneficial when it comes time to putting your home on the market.
Are you a military service member or veteran?
If you’re a military service member, Veteran or an eligible surviving spouse, you may qualify for a VA loan. VA loans are guaranteed by the U.S. Department of Veterans Affairs. (Also known as the VA) In many cases, VA loans require zero money down—meaning you could get into a home with minimal out-of-pocket costs. Those who qualify for VA loans have no private mortgage insurance premiums.
Additionally, VA loans are typically easier to obtain. Because the loan is backed by the government, banks foresee less risk and have less stringent qualification standards for VA loans. Many states also offer resources to Veterans—including property tax reductions.
Do you have a good credit score?
If you have a strong credit history, a conventional loan may be a great option for you. A conventional loan abides by the standards set forth by Fannie Mae and Freddie Mac.
Although conventional loans are best suited for those with a strong credit history, you may still qualify with less than perfect credit—just know there may be higher costs associated with your loan. A conventional loan can offer borrowers great rates and flexible qualifying guidelines.
While conventional loans require private mortgage insurance if you are putting less than 20 percent down, it is automatically terminated when your loan-to-value reaches 78 percent of the original value—as long as your loan payments are current.
One perk of a conventional loan over an FHA loan is that upfront mortgage insurance is not required. Also, conventional loans can require as little as 3 percent down—making it a great option for those who do not want an FHA loan.
Although we’ve mentioned a few of the most commonly chosen loan options, don’t worry if none of them speaks to your unique situation! We know our customers aren’t “one size fits all,” and neither should their mortgages. At Pulte Mortgage, we lead with a customer-first approach—finding loans for our customers, not customers for loans.
