Did you know that there are a wide variety of FHA loan and down payment assistance programs available to buyers of all types that can save you significant amounts of money? Let’s take a moment to see what is available to you…
First and foremost, I want to stress that I am a real estate agent and not a mortgage broker. I have training and professional experience with all loan types from conventional, to FHA, to VA, and many others in between, but that does not make me the most qualified person to determine what product is best for you. I wanted to provide the information on this page to let you know there are a lot of financing options available that you do not normally hear about through conventional sources, and to give you a place to begin your search for the perfect loan product for you.
I believe the first step in the home-buying process is an accurate, realistic assessment of your financial strength and a plan to either improve your buying power with the intention of buying in the future, or discovering if there are already loan products that are advantageous to you now. This is best handled by professional financial planners, or by mortgage brokers who work for reputable, honest companies. If you are interested, I can help you make a very general assessment of your financial strength, and then point you towards an industry professional who can give you highly accurate details and guidance. I do provide this service for free, but I want to emphasize that I cannot be responsible for the actions of any person you choose to work with on these matters. I will tell you, though, I only recommend persons with whom I have had successful transactions in the past, and who treat my clients like gold.
The three major types of financing are FHA, conventional, and VA. FHA stands for Federal Housing Administration and the FHA provides insurance for lenders who loan money under very specific guidelines using approved mortgage brokers. The FHA has many terrific programs for all types of buyers and is couple with several different down payment assistance programs (there are many others besides these examples). These programs are the great secret of financing that can help a majority of qualified buyers get into a home. Conventional loans are not secured by the FHA and usually have higher credit score requirements, but will allow higher debt-to-income ration. These loan options can provide excellent terms if you meet the strict underwriting requirements. VA loans are available to veterans, veterans families, and active-duty members of the armed forces. These loans have significant underwriting restrictions and requirements that make it very important you use an approved lender with a lot of experience with these types of loans.
Most of the financing options that will be available to you will be based on your credit scores, your debt-to-income ratios, your income level, the price range of the home, and really what products are being offered that particular day. You can see your credit report once a year for free from FreeCreditReport.com, and you can pay a small one-time fee to actually get your scores. You will need to have your composite credit scores above 620 to get FHA financing with down payment assistance, so if you are below that number you must fix your credit before buying a home. If you do not do this, you will be limited in your loan product selection and will pay more in interest.
If you have excellent credit (scores above 680), you will have a tremendous number of loan products available to you, plus you will have the ability to do conventional 100% financing. I caution you to fully understand the implications of 100% financing if you choose that route, but it can and does work if you know what you are doing. Scores above 620 will get you into Kentucky Housing Corporation conventional loans at 100% financing, but there are going to be several restrictions that the house will have to meet, as well as the buyer and seller. You can get some idea of your buying power and ability to qualify for an FHA loan from the Kentucky Housing Corporation’s website here. I recommend doing further research on the Kentucky Housing Corporation’s website regarding the entire home buying process as they have done a great job simplifying and compiling lots of useful information.
Researching and securing financing is one of the toughest aspects of buying a home. It involves learning new terminology, understanding complicated loan requirements, and taking the time to learn about all of your options before signing any documents. I am always available to discuss financing and to help guide you through the process in an effort to get you the best deal possible. Please feel free to contact me at any time with your questions, or for further assistance.