Traditional Loan Programs
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.
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.
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.
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.
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.
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.
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.
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.