LOAN PROGRAMS
Purchase Loans
Purchase Loans – How do you Get Financing to Buy a Home?
Buying a home is exciting, but unless you have the cash to pay for it in full, you’ll need financing. Many people mistakenly think a purchase mortgage is hard to get or that you need perfect credit to qualify.
Choice is good, but sorting through different loan programs, lenders, and rates can be overwhelming. We offer several purchase loan programs to help you fulfill your dreams of homeownership. Whether you have perfect credit or not, there are purchase loan programs to consider.
Steps in financing a Home
Before we talk about the loan programs available for homebuyers, let’s look at the steps to buy a home.
1. Get pre-approved
Let us pre-approve you for a loan. This way you know how much you can borrow, how much money you’ll need down, and what your loan costs will be. A pre-approval also helps you get your foot in the door with sellers. Most sellers won’t accept an offer from someone that isn’t pre-approved.
2. Find a home
With your pre-approval letter in hand, it’s time to look at homes! Share your letter with your real estate agent so you look at homes within your budget, narrowing down your options.
3. Sign a purchase contract
When you find your dream home, make an offer and if it’s accepted, sign a purchase contract. Work with your real estate agent on this step to ensure your rights are protected and you have any contingencies in the contract that you need.
4. Continue underwriting
Submit the purchase contract to us along with documentation to satisfy any outstanding conditions on your pre-approval letter. We’ll order the title work and appraisal on the property to make sure the home is a good risk.
5. Work with your loan officer to clear conditions
Throughout the underwriting process, other conditions may pop up. Your loan officer will tell you what’s needed to clear them.
6. Close on your loan
With all conditions cleared, you’re ready to close on your loan! At the closing, you’ll sign paperwork that includes the mortgage note and deed, both of which are legal documents assigning the home as collateral for your loan.
7. Become a homeowner
With loan documents signed and funds exchanged, you’ll receive the keys to your new home!
How do you borrow money? Here are your purchase loan options!
Conventional Loans
Conventional purchase loans are the ‘traditional’ purchase loan most people think of when they hear the word mortgage financing.
These loans are for good credit borrowers with low debt-to-income ratios. In other words, they are for low-risk borrowers or borrowers who aren’t likely to default on their loans.
You can use conventional loans for most purchase types including:
- Primary residence purchases.
- Investment home purchases.
- 2nd home or vacation home purchases.
In addition, you can use conventional loan financing for many property types including:
- Single-family homes.
- Multi-family homes.
- Manufactured homes.
Government-Backed Loans
Government-backed loans aren’t conventional loans, but they have the backing of their respective government entity.
Government-backed loans have slightly looser underwriting guidelines because of the government-backing. Lenders are able to accept looser guidelines because they know if the borrower defaults, the government entity will cover them.
Homebuyers have a few government-backed program options:
- Federal Housing Administration (FHA) Loans
This is the most common government-backed loan used by homebuyers. FHA loans allow the borrower to purchase a house with as little as 3.5% down. FHA does not make home loans, it insures a loan; should a homebuyer default, the lender is paid from the insurance fund.
- Veterans Affairs (VA) Loans
A Home Loan Program offers military veterans and their families the opportunity to buy a home with no down payment. This can be especially helpful for veterans who may not have a lot of savings or other assets, as it allows them to buy a home without having to come up with a large down payment.
Non-QM or Non-Conforming Loans
Not everyone can qualify for a loan with the typical documentation, such as W-2s and/or tax returns. If you don’t have ‘regular income’ or you live off your assets, you may be able to afford a mortgage, but don’t have the income required to qualify.
That’s where non-QM or non-conforming loans help. These alternative loan options help borrowers who don’t fit the ‘normal mold’ get approved for a mortgage.
There are many different types of non-QM loans, but the most common include:
- Bank Statement Loans: These loans are based on the borrower’s bank statements, rather than pay stubs or tax returns, which can make them a more flexible and accessible financing option for self-employed individuals. Bank statement non-QM loans allow self-employed borrowers to use their bank statements as proof of income, rather than traditional income documentation such as pay stubs or tax returns.
- Stated Income Loans: Designed for borrowers who may not have access to traditional forms of income documentation, such as pay stubs or tax returns. These loans are based on the borrower’s stated income, rather than verified income documentation, which can make them a more flexible and accessible financing option for certain borrowers. Stated income non-QM loans allow borrowers to use their stated income, rather than traditional income documentation, as proof of income.
Jumbo Loans
Jumbo non-QM loans are a type of mortgage loan that is designed for high-value properties that exceed the conforming loan limits set by government-sponsored enterprises Fannie Mae and Freddie Mac. These loans are considered to be non-qualified mortgages, as they do not meet the strict underwriting guidelines of traditional conforming loans.
One of the key advantages of jumbo non-QM loans is that they allow borrowers to finance the purchase of high-value properties that may not be eligible for a traditional conforming loan. This can be especially helpful for borrowers who are looking to purchase luxury homes or properties in high-cost areas.