Mortgage
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Conventional Loan
A conventional home loan is a type of mortgage that is offered by private lenders, such as banks and credit unions. Unlike other types of mortgages, such as FHA loans, conventional home loans are not insured or guaranteed by the government. This means that borrowers are typically required to have stronger credit and income qualifications in order to be approved for a conventional loan.
Here are some key features of a conventional home loan:
- Minimum credit score: Conventional home loans require a minimum credit score of 620 or higher. This is higher than the minimum credit score for some other types of mortgages, such as FHA loans, which have a minimum credit score of 580.
- Down payment: Conventional home loans typically require a higher down payment between 5% and 20% of the purchase price. However, some lenders may offer loans with a down payment as low as 3%, although these loans may have higher interest rates and fees.
- Non-government insured: As mentioned above, conventional home loans are not insured or guaranteed by the government. This means that if a borrower defaults on the loan, the lender is responsible for any losses, rather than the government.
- Down payment assistance allowed: Some conventional home loans may allow the use of down payment assistance programs, such as grants or loans from state or local governments. These programs can help borrowers who may not have enough cash for a down payment to buy a home. However, the use of down payment assistance may affect the interest rate and other terms of the loan.
FHA Loan
An FHA home loan is a type of mortgage that is insured by the Federal Housing Administration (FHA), a government agency. FHA loans are designed to help borrowers with lower credit scores or limited funds for a down payment to buy a home. A great option for first time home buyers.
Here are some key features of an FHA home loan:
- Minimum credit score: FHA loans have a minimum credit score requirement of 580, which is lower than the minimum credit score for some other types of mortgages, such as conventional loans. This makes FHA loans a good option for borrowers who may not have the best credit.
- Down payment: FHA loans require a down payment of at least 3.5% of the purchase price of the home. This is lower than the down payment required for some other types of loans, such as a conventional investment loan or non-qm loans.
- Government insured: As mentioned above, FHA loans are insured by the government. This means that if a borrower defaults on the loan, the government will pay the lender for any losses. This makes FHA loans less risky for lenders, which can make it easier for borrowers to qualify for a loan.
- Down payment assistance allowed: Some FHA loans may allow the use of down payment assistance programs, such as grants or loans from state or local governments. These programs can help borrowers who may not have enough cash for a down payment to buy a home. However, the use of down payment assistance may affect the interest rate and other terms of the loan.
VA Loan
A VA home loan is a type of mortgage that is guaranteed by the U.S. Department of Veterans Affairs (VA), a government agency. VA loans are designed to help active-duty military members, veterans, and their families buy a home with favorable terms.
Here are some key features of a VA home loan:
- No minimum credit score: VA loans do not have a minimum credit score requirement. This means that borrowers with lower credit may still be able to qualify for a VA loan, as long as they meet other requirements, such as having a stable income and a good debt-to-income ratio.
- No down payment: One of the biggest benefits of a VA loan is that it does not require a down payment. This means that borrowers can buy a home without having to save up for a down payment, which can be a significant hurdle for many first-time homebuyers.
- Government insured: As mentioned above, VA loans are guaranteed by the government. This means that if a borrower defaults on the loan, the government will pay the lender for any losses. This makes VA loans less risky for lenders, which can make it easier for borrowers to qualify for a loan.
Non-QM / Alternative Document Loan
Non-QM home loans, also known as non-qualified mortgage loans, are a type of mortgage that is offered to borrowers who do not meet the strict qualifications required for a traditional mortgage. Non-QM loans are designed for borrowers who may have unique financial circumstances, such as self-employed individuals or those with a high debt-to-income ratio, that make it difficult to qualify for a traditional mortgage.
Here are some key features of Non-QM home loans:
- Alternative credit scoring: Non-QM loans often use alternative credit scoring methods that take into account factors other than a borrower's credit score, such as their income, assets, and debt-to-income ratio. This can make it easier for borrowers with a low credit score to qualify for a non-QM loan.
- Flexible underwriting: Non-QM loans may have more flexible underwriting standards than traditional mortgages, which can make it easier for borrowers who do not meet the strict qualifications for a traditional loan to be approved for a non-QM loan.
- Interest-only options: Some non-QM loans may offer interest-only payment options, which can reduce a borrower's monthly payment and make it easier for them to afford the loan. However, interest-only loans may have higher interest rates and may require a larger balloon payment at the end of the loan term.
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Zachary Labiak
zachary@visionmtg.com
702-419-0010
NMLS# 1897338
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6623 Las Vegas Blvd. Suite 200, Las Vegas, NV 89119
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Panorama Mortgage Group is an Equal Housing Opportunity Lender. Panorama Mortgage Group, LLC, d/b/a Alterra Home Loans, Legacy Home Loans, Americana Home Loans, New Vision Lending, Panorama Mortgage Advisors, and Inspiro Financial is located at 6623 Las Vegas Blvd. South, Suite F-200, Las Vegas, Nevada 89119, Toll Free (877)-845-4805; NMLS #133739 (www.nmlsconsumeraccess.org)
