How do you determine which loan program is best for you?
Often times my first question is “how much money do you have to invest”?
My second question is “what is your budget for monthly payments”?
Last but not least, credit scores are used to determine your eligibility for a particular loan program. There are four different loan programs as explained below:
- USDA loans are often used because a down payment is not required, and the USDA program allows the seller to pay your closing costs. However, USDA does have income restrictions and is for properties in smaller communities. USDA does not have a credit score requirement, but you must have a good pay history.
- VA loans are a great program for military families. It, too, doesn’t require a down payment, and the seller can pay some of your closing costs. Guild Mortgage requires a 600 credit score for a VA loan.
- FHA loans are available with only a 3.5% down payment. If you don’t have your own down payment it can come from a grant, gift from a relative, retirement funds, or a collateralized loan. The seller may assist with your closing costs. A credit score of 600 is required with a FHA loan with Guild Mortgage.
- Conventional loans typically require at least a 5% down payment. Some programs with Fannie Mae and Freddie Mac requires less. The amount of closing costs the seller can pay on your behalf is limited, depending on your down payment. In order to obtain mortgage insurance, a 660 credit score is required if your down payment is less than 20%.
These are the basic differences in the four programs. A qualified loan officer can help you decide what’s best for you.
Michelle Castle provides mortgage loans to all of North Texas and Southern Oklahoma. Call Michelle Castle at (903) 892-1998 if you are looking for a home loan in North Texas and Southern Oklahoma.