Trying to decide which loan is best for you when purchasing a home can be overwhelming. How to Finance Your Purchase using FHA /VA and conforming loans. Do you go with an FHA loan, VA loan, or a conforming loan? Let’s take a look at the pros and cons of each type of loan and how to finance your purchase using FHA, VA and conforming loans.

FHA Loans

Generally speaking, FHA loans have been looked upon as loans for second class borrowers. However, these loans have actually helped hard working Americans fulfill their dreams of owning their own home since the Great Depression. They are often seen as more attractive than conventional mortgage loans due to the fact that they require lower down payments and allow for less than perfect credit scores. Along with these benefits comes higher insurance premiums in comparison to other types of loans.

There are certain requirements borrowers must meet to qualify for an FHA loan, including:

  • The home you consider must be appraised by an FHA-approved appraiser.
  • You can only get a new FHA loan if the home you consider will be your primary residence, which means that it can’t be an investment property or second home.
  • You must occupy the property within 60 days of closing.
  • An inspection must occur, and the inspection must report whether the property meets minimum property standards.

There are a few more specific conditions to qualify, including a down payment amount, mortgage insurance, credit score, loan limits and income requirements.

VA Loans

If you are qualified veteran or active duty member of the military then a VA loan might be right for you. These types of mortgage loans offer 100% financing with no down payment required and no private mortgage insurance (PMI). Another benefit is that there is no minimum credit score requirement; however, veterans must still qualify based on other factors such as debt-to-income ratio (DTI). The main drawback to this type of loan is that it’s only available to those who serve or have served in our armed forces.

Conforming Loans

A conforming loan is one that meets the guidelines set forth by government-sponsored enterprises such as Fannie Mae and Freddie Mac. These types of mortgages typically have lower interest rates than other types of mortgage loans due to the fact that they are backed by these government entities. Additionally, if you plan on living in the property for five years or more then this might be a good option since there are no prepayment penalties associated with this type of loan. On the downside, conforming loans generally require higher credit scores than other types of mortgages and may also come with additional fees such as origination costs and PMI premiums depending on your credit score and DTI ratio.

In Conclusion

When it comes to financing your purchase there are many options available. It’s important to weigh all your options before making a decision so that you can ensure you get the best deal possible while also finding something that fits within your budget and lifestyle needs. Whether you choose an FHA loan, VA loan, or conforming loan make sure you do plenty of research before committing so that you know exactly what kind of terms come with each type of mortgage loan product. How to Finance Your Purchase using FHA /VA and Conforming Loans.

Learn hands on from Doug Vairo, Manfred Certified Instructor. Since 1998, he has trained thousands of loan officers and real estate agents around the country. Doug has trained for companies such as, Countrywide, Capital One, Wells Fargo, Morgan Stanley, Exit Realty, Brooklyn Real Property, Staten Island Board of Realtors, Brooklyn Board of Realtors, Bronx Board of Realtors, Triple Play, Manfred Real Estate Learning Center and countless other organizations. Join Doug on May 17th. Rather than focusing on JUST the loan product, the Real Estate Pro will come away with a new and fuller understanding of the entire process. This class will help demystify the process of these fantastic loans.

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