Conventional Loans
Benefits
Predictable Payments: Fixed-rate structure ensures constant interest rates and consistent monthly payments, simplifying budgeting.
Fully Amortized Structure: Monthly payments cover both principal and interest, guaranteeing the loan is paid off by the end of the term.
Flexible Loan Terms: Choose from repayment lengths of 15, 20, or 30 years to fit your financial goals.
Eligibility Criteria
Credit Score: A minimum score of around 620 is typically required, with better rates for higher scores.
Debt-to-Income Ratio: Most lenders expect a ratio of 43% or lower.
Down Payment: Usually starts at 5%, with some programs allowing as little as 3%. A 20% down payment avoids private mortgage insurance (PMI).
Special Features
Adjustable Rate Mortgages (ARMs): Initial fixed interest rate that adjusts after a set period, ideal for buyers planning to move or refinance soon.
Maximum Loan Amount: The current maximum loan amount is $453,100 in most areas served by Pacor Mortgage.
VA Loans
Benefits
No Down Payment: The most significant advantage is the ability to purchase a home without any down payment, making homeownership more accessible.
No Private Mortgage Insurance (PMI): Borrowers avoid PMI, a common expense for conventional loans, reducing monthly payments.
Competitive Interest Rates: VA loans often feature lower interest rates compared to conventional mortgages, saving borrowers money over time.
Flexible Debt-to-Income Ratios: VA loans allow for higher allowable debt-to-income ratios, accommodating a broader range of financial situations.
Eligibility Criteria
Credit Score: While specific requirements may vary, a minimum credit score of around 620 is generally expected.
Service Eligibility: Borrowers must meet specific service requirements set by the Department of Veterans Affairs.
Special Features
No Prepayment Penalties: Borrowers can pay off their loans early without incurring additional fees, offering flexibility in repayment.
Closing Cost Assistance: Sellers can contribute up to 6 percent toward closing costs, easing the financial burden on the buyer.
Jumbo Loans
Benefits
Higher Loan Amounts: Jumbo mortgages allow for borrowing above the conforming limits, providing access to larger properties.
Flexible Financing Options: Borrowers can often find customized terms that suit their financial situations, accommodating various income levels.
Potentially Lower Down Payments: Some lenders may offer lower down payment options, increasing accessibility for buyers.
No Loan Limits: Unlike conforming loans, jumbo mortgages don’t have maximum loan amounts set by Fannie Mae or Freddie Mac.
Eligibility Criteria
Credit Score: Generally, a minimum credit score of 700 or higher is required, but this may vary by lender.
Debt-to-Income Ratio: Jumbo loans often require a lower debt-to-income ratio than conventional loans, enhancing approval chances for qualified borrowers.
Special Features
Customizable Loan Structures: Borrowers can often negotiate terms that align with their financial goals.
Interest Rates: While rates may be higher, they can be competitive based on market conditions and borrower profiles.
Federal Housing Administration (FHA) Loans
Benefits
Flexible Credit Requirements: FHA loans cater to borrowers with lower FICO scores, increasing accessibility for those with credit challenges.
No Private Mortgage Insurance (PMI): Mortgage insurance costs are lower than traditional PMI, reducing overall monthly payments.
High Financing Limits: Borrowers can finance a significant portion of the home purchase, with down payments as low as 1% in some cases.
Higher Debt-to-Income Ratios: FHA loans allow for more flexibility in debt-to-income ratios compared to conventional loans.
Eligibility Criteria
Credit Score: A minimum score requirement is typically around 580, but lower scores may be accepted under certain conditions.
History After Bankruptcy/Foreclosure: Applicants must demonstrate good credit behavior for a few years following bankruptcy or foreclosure to qualify.
Special Features
Reasonable Repair Guidelines: FHA repair requirements have become more manageable, facilitating smoother transactions.
Closing Cost Assistance: Sellers can contribute up to 6% toward closing costs, helping to ease the financial burden on buyers.
Reverse Mortgages
Benefits
No Monthly Payments: Borrowers do not have to make monthly mortgage payments, making it easier to manage finances.
Access to Home Equity: Seniors can access their home equity as a lump sum or in monthly payments, providing financial flexibility.
Tax-Free Proceeds: Funds received from a reverse mortgage are not considered taxable income.
Non-Recourse Loan: The loan is secured by the home, limiting liability for borrowers and their heirs.
Eligibility Criteria
Age Requirement: Borrowers must be at least 62 years old.
Home Ownership: The property must be the borrower's primary residence and maintained in good condition.
Special Features
HECM for Purchase: This allows seniors to buy a new home using reverse mortgage proceeds in a single transaction.
Jumbo Reverse Mortgages: Available for higher-valued properties, offering larger loan amounts, though typically uninsured by FHA.
Flexible Use of Funds: Borrowers can use the proceeds for various expenses without restrictions.
USDA Loans
Benefits
100% LTV Financing: Buyers can finance the entire purchase price with no mortgage insurance required.
No Down Payment: Down payment can be waived if funds are unavailable.
Payment Assistance: May lower monthly payments by reducing the effective interest rate.
Fixed Interest Rate: Ensures predictable payments over the life of the loan.
Flexible Loan Use: Funds can be utilized for new construction or purchasing existing homes.
Eligibility Criteria
Low-Income Requirement: Designed for individuals or households with limited financial means.
Primary Residence: Property must be the borrower's primary residence and kept in good condition.
Special Features
Escrowed Costs: Real estate taxes and insurance can be included in the loan.