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What options are available for financing your home purchase?

Deciding to buy a house is one of the the biggest financial decisions you’ll ever make. Regardless if you’re a first-time buyer or a seasoned pro, the lending landscape is often an ever-evolving enigma. That may sound daunting, but before you give up on the dream of homeownership, let’s break down the barrier and help determine the best option for your individual situation.

First ask yourself the following questions:

  • How much money can you use for a down payment?
  • What is your credit score?
  • Do you have a bunch of debt?
  • Have you served in the military?
  • Are you a first time buyer?

Next, take a look at the loan types below. Some may be a better fit for you depending on your answers from the questions above.

Conventional Loan

To qualify for a conventional loan, you’ll typically need a credit score above 640, and should plan for a down payment of at least 5% of the home’s purchase price. If you can get the cash for a 20% down payment (gifts from family members count!), you’ll cut your monthly mortgage payment by a few hundred dollars a month, due to the fact you will not have to pay Private Mortgage Insurance, or “PMI”. To put it simply, a higher credit score and a higher down payment means lower monthly mortgage payments.

FHA Loan (Federal Housing Administration Loan)

Perhaps you have some old blemishes on your credit score, or just don’t have a barrel full of cash laying around to make a 20% down payment? That’s OK! You may still qualify for an FHA loan with a credit score as low as 580 and a down payment of 3.5% of the purchase price. This loan is insured by the Federal Housing Authority, which basically gives lenders more security in the event a Buyer decides to stop making payments (pro tip: don’t do that). While a low down payment may sound attractive, keep in mind that also means your monthly mortgage payments will be substantially higher.

VA Loan (United States Department of Veteran Affairs Loan)

If you’ve served our country, or are a surviving spouse of a veteran who has, this is probably the best option for you. Some of the great benefits include low interest rates, no mortgage insurance requirement, and perhaps the best part of all – no down payment! You’ll typically need to make sure your credit score is 620 (although we have trusted lenders who can go as low as 580), and that the home is being used as your primary residence.

Although this is a basic summary of the main options you’ll likely choose from during your home purchase, the very first step is to speak with a qualified Lender and discuss the best option for you.

Team Vivi Can help! We work with a great team of lenders that can walk you through the maze of lending and walk you through the process. Contact us today at 303.847.1868, and find your dream home tomorrow!

By - Nov 3, 2017

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