FHA 203(k) Loans
FHA 203(k) loans are government-backed loans that allow buyers to purchase a home in need of substantial repairs or renovations, otherwise known as a fixer-upper, and repair it while they live in it. This loan helps first-time buyers by allowing them to make costly repairs without paying cash or breaking the bank. Other requirements include:
- You need a credit score of at least 500.
- Your down payment and closing costs must be less than 10 percent of the home’s purchase price.
- You must be able to prove that you have enough money to pay for the repairs.
- You have to use an FHA-approved lender to obtain this loan.
USDA Rural Development Loans
USDA loans are government-backed mortgage loans that offer excellent interest rates and flexible down payment requirements, but they are only available to certain rural and suburban areas. In order to qualify for this loan, you must live in or near an eligible rural area, have a credit score of 580 or higher, and have a down payment of between 3 percent and 5 percent of the home’s purchase price. USDA loans are backed by the USDA and are available to any member of the military, veteran, or eligible non-profit organization. This loan program is a great option for those who live in designated rural and suburban areas and have a strong credit score.
Federal Housing Administration (FHA) Loans
FHA loans are owned and insured by the Federal Housing Administration, and this loan program is considerably more flexible than other government-backed mortgage loans. FHA loans allow buyers to put down as little as 3.5 percent and depend on their credit scores to determine the interest rate. Because FHA loans are backed by the government, they are particularly beneficial to first-time homebuyers who may not have enough money for a sizable down payment. FHA loans also allow non-traditional loans with down payments as low as 3.5 percent, which can help buyers achieve that very important 20 percent down payment needed to avoid paying mortgage insurance.
Veterans Affairs (VA) Loans
VA loans can only be obtained by military veterans or qualified surviving spouses. In order to qualify for this type of loan, you must not have received a VA loan to buy, build, or improve your home in the past. There are no-down-payment requirements for VA loans. This loan is ideal for veterans and military members who have already served their country by protecting our freedoms.
Fannie Mae and Freddie Mac
Fannie Mae and Freddie Mac are organizations that purchase loans from lenders for resale to investors, thereby expanding the number of loans available for home buyers. These loans, called retained loans, are offered to home buyers by private lenders who have bought the loan from a lending institution. You might also hear these loans called “conventional loans” because they are not government-owned. Unlike FHA and VA loans, these loans can have higher interest rates and down payments of up to 20 percent.
Your Team at Desert Springs Mortgage
The right home loan can help you save money or even make money over time. Spending the time to find the best loan for your situation can also help you avoid issues later on. Whether you are looking for FHA, VA, USDA, or conventional loans, we’re here to help. At Desert Spring Mortgage, we can assist you as a first-time home buyer in Phoenix to get the best loan to finance your purchase. Let us help achieve your dream home ownership. Get in touch with us today!
