FHA mortgage loans have been helping homeowners since 1934. The Federal Housing Administration (FHA) insures the loan so your lender can offer you low down payments, low closing costs and less restrictive credit qualifying. AIM has several DPA Programs to where you may qualify to purchase a home with as little as $1000.00 down. FHA offers Rehab loans to have your home upgraded prior to moving in on a purchase by offering up to $35,000.00. FHA also offers the popular Reverse Mortgage for purchases. With most FHA loans your down payment can be gifted from a family member, employer bonus, DPA Grants or seller contributions.
In an FHA mortgage the customer must put at least 3.5% of the sales price into the transaction. Some of this money may be used for down payment and the rest for closing costs . Keep in mind, however,that the total cost to close on an FHA is commonly over the 3.5%.
FHA allows the borrower to get the funds necessary to close from several sources. They include such areas as personal savings, gifts, grants, down payment assistance programs, loans from retirement accounts and seller contributions.
The VA mortgage loans are one of the best and safest methods to use when buying a home. Now even active duty personnel can qualify. If you are a Disabled Veteran, you may qualify for additional benefits on a VA home mortgage loan. The VA Home Mortgage Program does not limit the number of times a veteran may use the program.
The VA mortgage loans extend to not only the Army, Navy, Air Force and Marines but also to Reservists and National Guardsmen.
The Veterans Benefit Act, allows a Veteran a loan with no money down. It also increased the eligibility for Veterans and active duty personnel and increased the benefits to Disabled Veterans.
Some of the benefits of the VA Mortgage Loan Program are:
- The VA Mortgage Loans is guaranteed for no money down
- No Monthly Mortgage Insurance is required
- Many VA Mortgage Loans are assumable
- It is easier to qualify for a VA Loan than a conventional loan
- VA Mortgage Loans can be refinanced to 100% LTV
No Money Down
You do not have to put any money down to qualify for a VA Home Mortgage Loan. If the seller or lender agrees to pay the closing cost you may be able to purchase the home with no out of pocket costs. The loan and sales contract can be set up so that the VA Home Mortgage Loan cover 100% of the selling price and the seller covers the closing cost.
The VA Funding Fee
The Veterans Administration assesses a Funding Fee to all VA loans between .5% and 3.3. In an FHA mortgage the customer must put at least 3.5% of the loan amount. The fee is added into the amount of the loan to be paid over the life of your VA home mortgage loan. The VA Funding Fee replaces the much higher priced Mortgage Insurance required when you get a conventional home loan. If you are a Disabled Veteran, you may qualify to get the fee waived completely. Assumable VA Mortgage Loans
VA loans are also assumable. If the person assuming the mortgage is a veteran with VA eligibility, the original veteran will not be giving up the amount of eligibility that they used to get the loan at the beginning.
Qualifying for a VA Mortgage Loan
The VA offers excellent qualifying standards. The VA does not use credit scoring in their analysis of the loan. Even if you have experienced some financial difficulties in your life that caused your scores to be low but have maintained a good payment record over the past year or so, you may qualify for a VA mortgage loan. This can be a tremendous savings compared to the cost of conventional loans when the borrower’s credit scores are low. You may also get Cash Out to 100% value of your home with a VA Loan.
VA Mortgage Loans may be refinanced
VA mortgage loans have built in features allowing a loan to be refinanced to a lower interest rate without all of the criteria normally associated with a conventional loan. This is called an Interest Rate Reduction Loan (IRRL); the veteran may secure a lower interest rate without, appraisal, and income or asset verification and can roll the costs of the transaction into the loan so there are no out of pocket costs.