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| Conventional Loan |
| FHA Loan |
| My Community 100 |
| Rural Developement Loan |
| VA Loan |
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Conventional Loan
A conforming loan adheres to the guidelines established by Fannie Mae or Freddie Mac. These guidelines establish maximum loan amounts, down payment, credit and income requirements and acceptable property types. Lenders that make loans according to these guidelines may sell them to Fannie Mae or Freddie Mac. Conforming loans make up the majority of loans in the U.S.
Conventional loans for purchase may be in the form of a traditional single loan, or in the form of 2 loans, if advantageous to the borrower. For example, an 80% first mortgage and a 20% second mortgage for a total of 100% financing, with no mortgage insurance as opposed to a single 100% loan with high monthly mortgage insurance. There are many options for conventional loans, consult your loan officer for more information on conventional loan types.
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FHA Loan
FHA, also known as the Federal Housing Administration, operates under the control of the Department of Housing and Urban Development (HUD) and has the primary responsibility for administering the government home loan insurance program. This program allows buyers who might otherwise not qualify for a home loan to obtain one because the risk is removed from the lender by FHA.
The most popular FHA home loan program nationwide is the 203(b) FHA home loan that only requires a minimum of 3% from the borrower and permits 100% of their money needed to close to be a gift from a relative, non-profit organization, or government agency.
The main advantage to a FHA home loan is that the credit criteria for a borrower are not as strict as FNMA or FHLMC. Someone who has had a few credit problems might not have a problem obtaining FHA financing. In addition, the seller must pay for part of the "traditional" closing costs (called non-allowable costs) while a borrower's allowable costs can partially be wrapped into the loan. 100% of the down payment and closing costs can be gifted
*Loan Limits vary depending on the County. Please call one of your friendly Loan Consultants for more information about loan limits in your County at 601-362-8493.
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My Community 100
My Community 100 is a form of financing requiring no down payment. Additionally, borrowers who may not qualify for Conventional or FHA loan types may qualify for a My Community loan. Mortgage insurance rates are also lower than many loan types. Until recently, My Community loans have been restricted to certain income limitations, however, through Dec. 2007, areas of MS are exempt from this restriction.
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Rural Developement Loan
Under the terms of the program, an individual or family may borrow up to 100% of the appraised value of the home, which eliminates the need for a down payment. Since a common barrier to owning a home for many low-income people is the lack of funds to make a down payment, the availability of the loan guarantees from RHS makes the reality of owning a home available to a much larger percentage of Americans. The home must be located in specific rural areas as determined by the local Rural Developement office, but this can cover areas that you might not consider as rural, making this loan type worth investigation.
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| | | There is no maximum loan amount for Rural Development Loans. There are, however, income limits for each individual County. |
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VA Loan
These loans are often made without any down payment at all, and frequently offer lower interest rates than ordinarily available with other kinds of loans. Aside from the veteran's certificate of eligibility and the VA-assigned appraisal, the application process is not much different than any other type of mortgage loan. If the lender is approved for automatic processing, as more and more lenders are now, a buyer's loan can be processed and closed by the lender without the wait time typical of VA loans in the past.
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