With conventional financing, your down payment will be anywhere between 5% to 20% or more, depending on your credit score, the property, and your circumstances. Conventional financing can have many advantages, like no mortgage insurance if you put 20% or more down, very competitive interest rates, and the property and borrower guidelines aren’t quite as strict as some other loan programs. This program is popular for move up, second home purchasers and investors.
FHA financing is a financing program only available to purchasers who plan to occupy the property as their primary residence. It requires a 3.5% down payment and can sometimes have a higher interest rate. It also requires some additional loan costs and private mortgage insurance. The borrower guidelines and property guidelines are more restricted. The property must be livable – meaning no major defects or non-functioning systems.
Another type of FHA financing is the FHA-203k program. This little known secret is the ultimate loan program for foreclosure or distressed property sales. The FHA-203k program allows purchasers to finance the rehab and repairs of their future home. Hate the carpet? Want to replace the linoleum with 18″ tile? No problem – any cosmetic repair or upgrade can be done with this awesome program. It is a lot of work up front, but it can bring your dream home within reach. Unfortunately, this program can be very intimidating – for purchasers, Realtors, and lenders. Be sure you’re working with a team that’s done a few of these!
Another popular loan program in our area is the USDA loan program that is designed for rural housing. Casa Grande soon will be unable to utilize this fantastic program. One the census data is released, the population will have exceeded guidelines. The program provides 100% financing – that’s right, no down payment! This program is only available to first time home buyers.
The other widely used loan program is VA financing. Possibly the most property restrictive financing available, this is an awesome tool for veterans.
Each loan program has it’s own associated costs. Ultimately, you and your lender will decide on the best option for you and your Realtor will help you choose the home that fits within the guidelines of your loan program.