RESIDENTIAL LOAN
Traditional &
Non-Traditional
At HomePrime Mortgage, we recognize the challenges of homeownership. We stand by your side from start to finish.
WHAT WE DO
Traditional Loan Programs
Our knowledgeable staff will help you understand each loan program you qualify for, and help you make the best decision for you and your Family based on your situation.
FHA
Home loans provided by the Federal Housing Administration (FHA) may make it easier for you to buy a home.
VA
If you’re a military veteran or still in active service, you may qualify for a U.S. Department of Veterans Affairs (VA) loan.
USDA
There are many benefits of a USDA home loan. One of the biggest benefits is that no down payment is required.
Reverse Mortgages
Instead of you making payments to your lender, your reverse mortgage lender makes payments to you.
Fixed-Rate Mortgages
A home loan with a mortgage interest rate that stays the same for the entire loan term.
First Time Home Buyers
Buying your first home is a very exciting step! HomePrime Mortgage loan specialists are here to guide you through every step of the loan process.
Low Down Payment Options
Carefully consider the amount of money that you want to put down.
Your lender will qualify you for a certain level based on your income
WHAT WE DO
Non-Traditional Loan Programs
Our knowledgeable staff will help you understand each loan program you qualify for, and help you make the best decision for you and your Family based on your situation.
Conventional Loans
Conventional loans have higher minimum credit score requirements than other loan types.
Adjustable-Rate Mortgages
An adjustable-rate mortgage (ARM) is a type of mortgage loan that has a variable interest rate.
High-Balance Loans
It is a loan with a balance that exceeds the standard conforming loan limit.
Jumbo Mortgages
It is a larger conventional loan, typically used to buy a luxury home.
Rehab
If you have found the perfect home but it needs renovation, you can purchase the home and roll the costs of the renovation into your loan.
Second Mortgages: Home Equity Loans And HELOCs
A type of mortgage loan that allows you to borrow against the equity you’ve built in your home over time.
Investment Property
If you are looking for an investment property or a vacation home to spend relaxing days, HomePrime Mortgage can help with investment property loans.
Self-Employed Home Loan
While you certainly can get a mortgage if you’re self-employed, you will likely have additional underwriting requirements to prove your income.
Debt Service Coverage Ratio (DSCR) Loan
A DSCR loan allows real estate investors to secure financing based on the rental income of a property rather than their personal income.
TRADITIONAL LOAN PROGRAMS
FHA Loans
The Federal Housing Administration (FHA) backs these types of mortgage loans, which cater to borrowers with credit blemishes and limited down payment funds. You can qualify for an FHA loan with a 580 credit score and a minimum 3.5% down payment. If your score is between 500 and 579, you’ll need a 10% down payment.
In 2022, the FHA loan limit in most U.S. counties is set at $420,680 for single-family homes. In high-cost areas, the FHA loan limit is $970,800.
FHA loans have mandatory mortgage insurance premiums. If you put down less than 10%, you’ll pay FHA mortgage insurance for the life of your loan — unless you refinance into a conventional loan after building at least 20% equity. Otherwise, you’ll only pay it for 11 years if you put down at least 10%.
Key features:
- Require just a 580 credit score to qualify for the minimum down payment amount
- Include a mortgage insurance premium requirement for most borrowers
- Come with the ability to buy a multi-unit property with up to four units as a primary residence with just 3.5% down (and at least a 580 score)
Pros
- Available to first-time and repeat buyers
- No income limits
- Easier to qualify for than conventional loans
Cons
- You must live in the property, even if you rent out other units
- Loan limits are lower than what some conventional loans can offer
- You'll pay mortgage insurance premiums
- Ideal for: Borrowers with lower credit scores and access to minimal savings for a down payment.
TRADITIONAL LOAN PROGRAMS
VA Loans
Military servicemembers, veterans and eligible spouses may qualify for a loan backed by the U.S. Department of Veterans Affairs (VA).
In the vast majority of cases, VA loans don’t require a down payment. While the VA doesn’t have a minimum credit score requirement, VA lenders may expect to see a minimum 620 credit score. Additionally, the VA no longer has loan limits for borrowers who have never used their VA loan benefits or have paid their existing VA loans in full.
Key features:
- Provide opportunities for members of the military, veterans and eligible spouses to buy a home.
- Don’t require a down payment in most cases
Pros
- No income or loan limits
- No mortgage insurance requirement
- Competitive interest rates
- Offers loans for buying or building a home, renovating or buying a manufactured home
Cons
- Must pay a VA funding fee
- Must use VA-approved appraisers and, if building a custom home, VA-approved builders
- Ideal for: Qualified military borrowers who need a no-down-payment loan option.
TRADITIONAL LOAN PROGRAMS
USDA Loans
The U.S. Department of Agriculture (USDA) insures USDA loans provided to low- and moderate-income buyers looking to purchase homes in designated rural areas. No down payment or mortgage insurance is required for these types of home loans, but there are income limitations.
Key features:
- Cater to borrowers interested in buying homes in USDA-designated rural areas.
- Don’t require a down payment or mortgage insurance
Pros
- Available for a wide range of home types ranging from single-family homes to condos, modular and manufactured homes and newly constructed homes
- No down payment
- No mortgage insurance
Cons
- Some USDA loans have limitations on how big the property can be and what amenities it can have
- The home must be your primary residence
- Must pay an annual guarantee fee
- Ideal for: Borrowers with a modest income looking for a 0%-down-payment loan.
TRADITIONAL LOAN PROGRAMS
Reverse Mortgages
Homeowners age 62 and older may qualify for a reverse mortgage, a mortgage loan type that differs from a traditional “forward” home loan. Instead of you making payments to your lender, your reverse mortgage lender makes payments to you — from your available equity — in a lump sum or monthly.
The home equity conversion mortgage (HECM) is the most common type of reverse mortgage. It’s insured by the FHA and comes with several upfront and ongoing costs. HECMs, like FHA loans, also have loan limits. For 2023, the maximum loan limit for an HECM is $1,089,300. You have many options for repaying a reverse mortgage, including selling your home or refinancing to take out a new, forward mortgage to cover what’s owed.
Key features:
- Don’t require payments until the home is sold or the borrower (or eligible surviving non-borrowing spouse) moves out or dies.
- Require borrowers to have at least 50% equity in their home.
- Require borrowers (or surviving spouses) to continue to maintain the home, live in it as a primary residence and pay property taxes and homeowners insurance
Pros
- No income or DTI ratio requirements
- No monthly payments unless you move out of the house
- Income from the reverse mortgage payouts won’t be taxed
- Your heirs won’t inherit an underwater home
- You can pay off a first mortgage with the reverse mortgage
- You can use the funds to purchase a home
Cons
- For married couples, the youngest spouse’s age determines qualification
- Failure to properly maintain the house or pay property taxes or home insurance can lead to foreclosure
- Come with significant costs and fees including: Lender fees (up to $6,000), an upfront mortgage insurance premium (2% of your home’s value) and annual mortgage insurance premiums (0.5% of the loan amount).
- Ideal for: Older homeowners (62 and older) with a substantial amount of equity who need supplemental retirement income.
TRADITIONAL LOAN PROGRAMS
Fixed-Rate Mortgages
A fixed-rate mortgage is exactly what it sounds like: a home loan with a mortgage interest rate that stays the same for the entire loan term. The rate included on your closing disclosure is the same rate you’ll have for the length of your repayment term, unless you refinance your mortgage.
Two common fixed-rate options are 15- and 30-year mortgages. Unlike some other types of mortgage loans that have variable rates, fixed-rate loans offer more stability and predictability to help you better budget for housing costs.
Key features:
- Include a fixed interest rate that won’t change over the life of the loan.
- Usually come in repayment terms of five-year increments, though some lenders let you pick from custom loan terms
Pros
- Your monthly principal and interest payments won’t change because your interest rate won’t change
Cons
- Longer term lengths mean paying more interest overall
- Interest rates are initially higher than adjustable-rate mortgages (ARMs)
- Ideal for: Borrowers who prefer stable principal and interest payments on their mortgage.
TRADITIONAL LOAN PROGRAMS
First Time Home Buyers
Buying your first home is a very exciting step! HomePrime Mortgage loan specialists are here to guide you through every step of the loan process.
Our variety of loan options allow you to buy your first home with little money down and we will work to ensure the loan payments meet your unique needs.
First time home buyers have a lot of questions and our loan specialists are always available to provide personal attention. They can explain the application process, provide tips to use during your home search, and make sure that you find the perfect home for your needs and budget.
Popular Loan Programs for First-Time Home Buyers:
30-Year Fixed Rate Mortgage
The most secure loan program. Lock in a low payment and sleep tight knowing that your rate will not change.
FHA Loan
Perfect for the buyer that wants to put less money down. Purchase your house with as little as 3.5% down!
VA Loan
An amazing deal for veterans and military members. Those who qualify for this loan can purchase with no down payment and no PMI.
TRADITIONAL LOAN PROGRAMS
Low Down Payment Options
FHA Loan
You can purchase a single-family home or condominium with as little as 3.5% down payment using an FHA loan, but there is a price for lower down payments on conforming loans: mortgage insurance (often called PMI, private mortgage insurance).
Mortgage insurance is required when the conforming loan amount is MORE than 80% of the purchase price (practical translation: down payment is less than 20%). Also, the lower the down payment, the higher the premium ratio charged.
USDA Loan
Is your dream home surrounded by pasture and farmland? Buyers in rural and suburban markets may be able to use a USDA loan, which requires no money down.
Household income limitations do apply and buyers should expect to pay PMI if their down payment is less than 20%.
VA Loan
Military veterans who qualify for a VA loan can purchase a home with no money down. VA loans can provide up to 100% financing for qualified military personnel and veterans.
There are also non-conforming mortgage loan programs available that allow for 80/20 set-ups, which allow borrowers to obtain a second mortgage to cover the 20% down payment.
Have less than perfect income and credit? We may have a program that fits your needs!
How much should I use for a down payment?
There are costs and benefits to any option, including those with low down payments. You should carefully consider your options and discuss your plan with a professional.
Talk to one of our loan specialists today to come up with a customized solution that best fits your needs and budget.
Cost of a Lower Down Payment
Low or no down payment programs have two primary costs that result in a higher monthly payment:
- Higher interest rates.
- Higher mortgage insurance premiums
Mortgage insurance can be removed once sufficient equity is produced. For example, if the property shows at least 20% equity in a few years, the mortgage insurance can be refinanced away.
Benefits of Lower Down Payments
Though the disadvantages of low down payments seem serious, there are also advantages.
Take time to weigh the two and assess which is the best for you.
The chief benefits of lower down payment include the following:
- Less money out of pocket at the time of purchase.
- Higher rate of return. Your property’s appreciation will be the same whether you put 3%, 5%, or 20% down. In fact, your rate of return actually decreases as you make a larger down payment, as discussed below.
- Opportunity cost. In some cases, the smart investor can make more money from available cash by placing it in other investments.
During the first few years of the mortgage loan, the bulk of your monthly payments go towards paying interest – which is usually tax-deductible. So you get quite a bit of your monthly payments back at the end of the year in the form of tax deductions.
Personal Consideration
Carefully consider the amount of money that you want to put down.
Your lender will qualify you for a certain level based on your income; however, that amount may be different from the level that you feel comfortable paying each month. You must decide what you can afford.
NON-TRADITIONAL LOAN PROGRAMS
Conventional Loans
A conventional loan is any mortgage that’s not backed by the federal government. Conventional loans have higher minimum credit score requirements than other loan types — typically 620 — and are harder to qualify for than government-backed mortgages. Borrowers who make less than a 20% down payment are typically required to pay private mortgage insurance (PMI) on this type of mortgage loan.
The most common type of conventional mortgage is a conforming loan. It adheres to Fannie Mae and Freddie Mac guidelines and has loan limits, which often change annually to adjust for increases in home values. The 2023 conforming loan limit is $726,200 for a single-family home in most of the U.S.
Key features:
- Require a minimum 620 credit score.
- Require borrowers to provide in-depth income, employment, credit, asset and debt documentation for approval.
- Typically require PMI for a down payment of less than 20%.
Pros
- Can be used for a wide variety of purchases, from a primary home to an investment property
- You can get rid of PMI once you reach 20% equity
Cons
- Must have at least a 3% down payment
- You must pay PMI if you put down less than 20%.
- Ideal for: Borrowers with a steady income and employment history, strong credit and at least a 3% down payment.
NON-TRADITIONAL LOAN PROGRAMS
Adjustable-Rate Mortgages
An adjustable-rate mortgage (ARM) is a type of mortgage loan that has a variable interest rate. Instead of staying fixed, it fluctuates over the repayment term. One popular ARM option is the 5/1 ARM, which is considered a hybrid mortgage because it has both a fixed-rate period and a period where the rate adjusts on a recurring basis.
With a 5/1 ARM, the interest rate is fixed for an initial period of five years and then adjusts annually for the remainder of the loan term. ARMs usually start off with lower rates than fixed-rate loans but can go as high as five percentage points above the fixed rate when they adjust for the first time.
- Additional fees on ARMs
You may also have to pay higher interest rates or an extra fee at closing if you choose a conventional ARM. The extra cost will apply to those borrowing more than 90% of their home’s value and will be 0.25% of the loan amount.
Key features:
- Include a variable rate, which can change based on market conditions
- Typically begin with a mortgage rate that is lower than fixed-rate loans
- Come with a lifetime adjustment cap, which often means the variable rate can’t jump by more than five percentage points over the life of the loan
Pros
- Monthly payments will be more affordable than a fixed-rate loan during the initial period
- Can help you pay significantly less in interest over the life of the loan
Cons
- A riskier loan option because you don’t know exactly what payment amounts you're signing up for
- If you have a plan to refinance or sell before the loan adjusts, you may be in trouble if the home’s value falls or the market takes a downturn
- Ideal for: If you have a plan to refinance or sell before the loan adjusts, you may be in trouble if the home’s value falls or the market takes a downturn
NON-TRADITIONAL LOAN PROGRAMS
High-Balance Loans
A high-balance loan is another type of conventional loan. In a nutshell, it’s a loan with a balance that exceeds the standard conforming loan limit, but it is still considered to be conforming because it stays within the loan limit that the Federal Housing Finance Agency (FHFA) has set for localities it recognizes as high-cost areas.
The high-balance loan limit for single-family homes in 2023 is $1,089,300, which is 150% of the standard loan limit mentioned above.
Key features:
- Adhere to Fannie Mae and Freddie Mac guidelines.
- Allow borrowers to borrow above standard loan limits in high-cost counties.
Pros
- Puts conforming loans in reach for borrowers buying in especially expensive markets
- Often offers lower interest rates and down payment requirements than jumbo loans
Cons
- May have higher interest rates than a typical conventional loan
- Under Fannie Mae guidelines, every co-borrower on a loan has to have a credit score
- You won’t be able to use Fannie Mae’s 3% down-payment loan options
- Can only be used in designated locations
- Ideal for: Borrowers who want a conventional loan in an area where home prices are higher than average.
NON-TRADITIONAL LOAN PROGRAMS
Jumbo Mortgages
A jumbo mortgage is a larger conventional loan, typically used to buy a luxury home. Jumbo loan amounts exceed all conforming loan limits and often require a large down payment of at least 20%.
Jumbo loans differ from high-balance conforming loans in that jumbo loans don’t conform to the guidelines put in place by Fannie Mae and Freddie Mac. You may also qualify to borrow more with a jumbo loan than a high-balance loan — perhaps $1 million or more — if you’re eligible.
In recent years, jumbo mortgage rates haven’t been significantly higher or lower on average when compared with conforming conventional loans.
Key features:
- Allow for larger loan amounts, even if they exceed the limits for conforming loans.
- Have stricter credit score and down payment requirements than conforming loans.
- Require a large down payment
Pros
- Can be used for a wide range of property types
- Interest rates are similar to conforming conventional loan rates
Cons
- A larger down payment is required if you want to use it for a second home or investment property
- Require high credit scores (typically 680 to 700 and above)
- Ideal for: Borrowers who need a mortgage that exceeds conforming loan limits.
NON-TRADITIONAL LOAN PROGRAMS
Second Mortgages: Home Equity Loans And HELOCs
A second mortgage is a different type of mortgage loan that allows you to borrow against the equity you’ve built in your home over time. Similar to a first mortgage, which is the loan you use to buy a home, a second mortgage is secured by your home. However, a second mortgage takes a subordinate position to a first mortgage, which means it’s repaid after a first mortgage in a foreclosure sale.
Both home equity loans and home equity lines of credit (HELOCs) are types of second mortgages. A home equity loan is a lump-sum amount. It typically comes with a fixed interest rate and is repaid in fixed installments over a set term. A HELOC is a revolving credit line with a variable rate that works similarly to a credit card. The funds can be used, repaid and reused as long as access to the credit line is open.
- Rates could be higher on second mortgage loans
Second mortgage loans — including the home equity loans and HELOCs often used as piggyback loans — may be more expensive for some borrowers. Fees for a subordinate loan depend on the LTV of your first mortgage, but you are only charged these fees if the combined loan-to-value (CLTV) ratio of both loans is higher than the LTV for the first loan. This could be a positive for borrowers with home equity lines of credit with a balance of zero.
Key features:
- Allow borrowers to tap their home equity for any purpose, including debt consolidation or home improvement.
- Include lump-sum and credit line options.
- Use a borrower’s home as collateral, just like a first mortgage.
Pros
- Can be used to purchase or refinance a home
- Can be used by homeowners without a first mortgage in some cases
Cons
- Rates and qualification requirements are more stringent than for first mortgages
- Ideal for: Borrowers who want to use their existing equity to fund other financial goals.
NON-TRADITIONAL LOAN PROGRAMS
Rehab
If you have found the perfect home but it needs renovation, you can purchase the home and roll the costs of the renovation into your loan.
An FHA 203(k) Loan, also called a Renovation Loan, allows buyers to finance the cost of the home and the renovation in one mortgage with a low rate.
The VA also offers a similar option for military and veterans to purchase a home and finance the required renovations to bring it up to standards set by the VA.
Rehab loans have similar qualification requirements to a standard FHA or VA loan, with additional documentation needed related to the renovation.
- Ideal for: Borrowers who want to purchase and renovate.
NON-TRADITIONAL LOAN PROGRAMS
Investment Property
Ready to reach financial independence through real estate? Whether you are looking for an investment property or a vacation home to spend relaxing days, HomePrime Mortgage can bring the same level of personalized attention and service to all of your real estate purchases.
Your dream home might be within reach. HomePrime Mortgage can help with investment property loans.
- 30-Year Loan:
Take advantage of low rates by locking into a low payment with a traditional 30-year loan. You may be able to qualify for owner-occupied financing with lower interest rates, based on your use of the home. Talk to a loan specialist to find out what programs offer the best terms for your situation.
- 15-Year Loan
Get the same security of a 30-year fixed rate mortgage, but pay your mortgage off in half the time. This means paying less in interest and owning your home sooner! This translates to greater monthly income from your investment.
NON-TRADITIONAL LOAN PROGRAMS
Self-Employed Home Loan
While you certainly can get a mortgage if you’re self-employed, you will likely have additional underwriting requirements to prove your income. Learn more about the application process for a self-employed home buyer, how to get a mortgage if you’re self-employed, and the pros and cons.
Key Takeaways
- Getting a mortgage if you’re self-employed will require additional documentation to verify income.
- Lenders with experience working with self-employed borrowers can help the process go more smoothly.
- Strengthening your credit, debt-to-income ratio, and down payment can help you get the best mortgage terms.
There are nearly 17 million self-employed workers in the United States, representing more than 10% of the workforce (which is about 157 million people).
Despite the rising popularity of being self-employed, mortgage lenders tend to make the application process easier for W-2 employees.
Here’s a snapshot of the process:
- Determine if you’re considered self-employed by the IRS.
- Understand the self-employed mortgage requirements.
- Compile proof of self-employed income.
- Determine how much of your self-employed income qualifies.
- Shop around for a mortgage provider.
NON-TRADITIONAL LOAN PROGRAMS
Debt Service Coverage Ratio (DSCR) Loan
A DSCR loan allows real estate investors to secure financing based on the rental income of a property rather than their personal income. If you cannot qualify for a conventional loan, DSCR loans are a great option. Without having to submit tax returns and W-2s, you can secure capital to invest in rental properties with a DSCR loan
Qualify for a home loan without using your tax returns with a DSCR loan program.
As a real estate investor, you can avoid high rates and high points of private loans, lengthy approval processes, and strict lending criteria with a debt service coverage ratio loan, which is a type of no-income loan.
Qualify for a loan based on your property’s cash flow, not your income.
Key Takeaways
- The debt service coverage ratio (DSCR) is a number that measures a property’s current rental income compared to its debt obligations. A DSCR above 1.0 indicates positive cash flow, while a DSCR below 1.0 indicates negative cash flow.
- A DSCR loan allows a borrower to qualify for financing based on the projected rental income of a property rather than personal income.
- DSCR loans are designed for real estate investors and can only be used to purchase income-generating properties. DSCR loans can’t be used to buy a primary residence or a fixer-upper.
The debt service coverage ratio measures a property’s annual gross rental income against its annual mortgage debt, including principal, interest, taxes, insurance, and HOA (if applicable).
Lenders use DSCR to analyze how much of a loan can be supported by the income coming from the property and to determine how much income coverage there will be at a specific loan amount.
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