Mortgage Loan Program Options:
One of the most important parts of the mortgage process is making sure that you’re utilizing the best possible mortgage loan program for your specific financing needs. We’ll always take the extra time to fully understand your situation to ensure you end up with the loan program that is best suited to your needs. Interest rates definitely matter, but working with a lender with plenty of product knowledge, experience and expertise matters just as much because getting the best rate from a lender on a loan program that is not best suited to your needs can cost you a lot of money in the long run. Give us a call at 207-893-2900 to discuss your options.
Conventional loans are available with as little as 3% down and there are many options available under the umbrella of conventional loans that can make qualifying easier for first-time homebuyers and lower income buyers. (Some of these options are subject to income limitations.) Conventional loans are the standard of lending and conventional programs are utilized more than any other type of mortgage loan. There are options to not pay monthly PMI payments with less than 20% down, and if you are paying a monthly PMI payment then another great aspect of conventional lending is the ability to get rid of the PMI payments at some point by having enough equity in your home. The minimum credit score allowed for conventional loans is 620, but most conventional loans can be pretty punitive with regard to rates/costs with lower credit scores so a conventional loan might not be the best option for borrowers with lower credit scores. For 2022 the maximum loan amount allowed for conventional loans is $647,200.
Jumbo loans are utilized for loan amounts greater than the current conventional/conforming loan limit of $647,200. There are lots of different aspects and niches to different jumbo loan programs, most require a down-payment of 20% and sometimes more but other programs can allow down-payments as low as 3.5%. We work with many different lenders, all with different niches available on their jumbo programs, so by comparing options we can help you find the right loan for your scenario.
Available only to eligible Veterans, VA is an excellent and very lenient loan program. There is no down-payment required, no monthly mortgage insurance (aka PMI) payments, guidelines are lenient with regard to how much a borrower can qualify for, and VA interest rates aren’t typically as punitive towards lower credit scores as conventional loans might be. VA jumbo loans are also available for loan amounts in excess of $647,200. VA loans can only be utilized for the purchase of a primary residence which can be a single-family home or up to an owner-occupied 4-unit home.
FHA (Federal Housing Authority) loans are available for the purchase of a primary residence with a minimum down-payment of 3.5%. The biggest benefit to FHA lending is that it is extremely flexible with how much of a home that you can qualify for and FHA interest rates tend to be more friendly towards less-than-perfect credit scores than conventional loans are. There are no income limits with FHA lending. Can be used for the purchase of a single-family home or an owner-occupied home with up to 4 units.
USDA/Rural Development loans:
USDA Guaranteed loans (frequently called “RD” or Rural Development) allow you to buy a primary residence with zero down-payment. Income limits vary throughout Maine, and there are geographic restrictions also that require that the home being purchased be in a rural area. (Most of Maine, though, is considered rural for the purposes of this loan program.) The program can only be used for the purchase of a single-family home. The main benefits of the program are the zero down-payment option and also that the monthly mortgage insurance payment is lower than FHA and also lower than some conventional loan programs. A downside is that the program is fairly conservative in how much a borrower would qualify for so typically the sales price that a borrower could qualify for might be less with a RD loan that it would be for a FHA or conventional loan.
Portfolio loans mainly exist to cover lending needs that don’t fit within the guidelines of other loan programs, whether that is because of the loan amount or property type, etc. (The other loan programs mentioned above, for example, typically won’t allow for the financing of a camp or seasonal property whereas a portfolio loan might.) Some portfolio loans also have niches for certain borrowers such as Physicians.