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Available Loan Programs
You're making one of the largest financial decisions of your life. We don't take that lightly. That's why everything is presented to you in a way that is easy to understand. No jargon here. We make it clear so you can move forward with confidence.
Conventional Mortgage
Conforming loans are mortgages that meet Fannie Mae and Freddie Mac guidelines.
Jumbo Mortgage
A jumbo mortgage is a loan that exceeds a particular county's loan limits. These usually include stricter underwriting guidelines .
Dentist and Physician Mortgage
A physician mortgage or "doctor loan" is a mortgage for medical professionals with no PMI, no/low down payment, and preferred student loan treatmment.
FHA Mortgage
Federal Housing Administration (FHA) mortgages are insured by the FHA. Advantages here include more flexibility on both the down payment and underwriting guidelines.
Veterans Administration Mortgage
Veterans Administration (VA) mortgages are guaranteed by the VA with very flexible underwriting and down payment guidelines for only veterans and their spouses.
USDA Mortgages
USDA loans are backed by the U.S. Department of
Agriculture (USDA) as part of its USDA Rural Development Guaranteed Housing
Loan program.
Self-Employed Mortgages
Someone may be self-employed and not showing a lot of income on their tax returns.
First/Second Combo Mortgages
These are mortgages that fund at the same time. The first one is usually a loan-to-value of 80% or less, while the second one accounts for the portion above 80%.
Conventional, conforming mortgages.
A conforming mortgage "conforms" to Fannie Mae and Freddie Mac underwriting guidelines and is therefore eligible to be purchased for purchase by them. Fannie and Freddie are both home mortgage companies created by the United States Congress, and they each set up a secondary market for mortgages outside of banks alone.
You should know that most U.S. mortgages are conforming. These loans must comply with the loan limits in your county.
Important things to know about conforming financing:
• A minimum down payment for a primary residence is usually 5%, but eligible first-time homebuyers can put as little as 3% down.
• An impound (a.k.a. escrow) account is required when loan-to-value ratios are 90% or greater
• Monthly mortgage insurance is required when loan-to-value ratios are over 80%
• Down payments can be entirely gift funds for primary residences and second homes
• They can be used to purchase a primary residence, investment property, or second home
Conforming mortgages vs. conventional mortgages.
Conventional and conforming mortgages can overlap, but it's important to understand that they are not the same. Simply put, conventional mortgages are not guaranteed or insured by the government.
Conventional mortgages are ANY loans offered through a private lender, as opposed to the government. The term "conventional mortgage" is also much broader. In short, all conforming loans are conventional loans. But not all conventional loans are conforming.
Put simply, a conforming mortgage meets the dollar limits set by the government and funding criteria for Freddie Mac and Fannie Mae. Some conventional loans meet those. Other conventional mortgages do not. Jumbo mortgages are one example.
Jumbo Mortgages
A jumbo mortgage is a loan that exceeds a particular county's loan limits. These usually include stricter underwriting guidelines because they are not backed by Fannie Mae or Freddie Mac. They are instead held by large banks or private funds.
These stricter guidelines include tighter debt ratio requirements, larger down payment, and reserve requirements, along with tighter credit standards. You can purchase a primary residence, investment property, or a second home with a jumbo loan. Did you know that Jumbo loans used to carry higher interest rates? The good news is highly qualified borrowers won't be faced with those. In fact, some competitive jumbo loans include rates that are a half-percent lower than those of conforming loans.
If you want to qualify for those competitive jumbo loans, you'll need both excellent credit and substantial liquid reserves after the close of escrow. How substantial? At least 12 full housing payments. Don't have that? Don't worry, these guidelines don't apply to all jumbo loans.
We offer a wide variety of jumbo loans to all types of borrowers. The only thing to know is that there will be higher interest rates, and we want to be transparent about that.
Another thing to know is that many jumbo lenders allow loan limits to overlap Fannie Mae's upper loan limits. That means highly qualified buyers can qualify for jumbo financing even when their loans are within the limits of a conforming loan.
Finally, know that we offer jumbo loans in the form of 30-year fixed and adjustable rate mortgages.
Dentist and Physician Mortgages.
A physician loan (also known as a "doctor loan") is a mortgage for medical professionals that typically doesn't require a down payment. Doctors can also avoid private mortgage insurance (PMI).
New medical professionals just beginning their careers typically have a large debt-to-income ratio. They may also struggle to provide proof of employment and income if they've just started their residency or finished their education.
That's why these physician loans are aimed at them, designed with special allowances that understand the genesis of a medical career. Lenders are comfortable offering these special mortgages because they know how lucrative a doctor's career can become down the pike.
FHA Mortgages.
Federal Housing Administration (FHA) mortgages are insured by the FHA. Advantages here include more flexibility on both the down payment and underwriting guidelines.
You don't need to be a first-time homebuyer; anyone who qualifies can obtain one for either purchases or refinancing.
Here's a quick rundown:
• Minimum down payment is 3.5% for all property types
• An impound (a.k.a. escrow) account is always required
• Both an up-front mortgage insurance premium and a monthly mortgage insurance payment are always required
• The up-front mortgage insurance premium is typically financed into the loan amount
• The down payment can be entirely from gift funds
• Offers lower interest rates than conforming loans
• It can only purchase as a primary residence
• Condos must be FHA-approved
VA mortgages.
Veterans Administration (VA) mortgages are guaranteed by the VA with very flexible underwriting and down payment guidelines for only veterans and their spouses.
Here are the basic facts:
• No down payment required
• Impound (a.k.a. escrow) account is always required
• No monthly mortgage insurance
• A one-time funding fee is required at close. This fee can be folded into the loan amount
• Offers lower interest rates than conventional loans
• It can only purchase a primary residence
• Condos must be VA-approved
USDA mortgages.
USDA loans are backed by the U.S. Department of Agriculture (USDA) as part of its USDA Rural Development Guaranteed Housing Loan program. These loans are available to low-to-moderate-income home buyers who are purchasing a home in an eligible area.
One of the biggest benefits of this loan is you don't need a down payment. This has made home buying possible for many people who otherwise couldn't afford it.
These loans also offer 100% financing and low-interest rates. Lenders feel comfortable with this because the backing of the USDA provides a safety net in case the borrower defaults on the loan.
Non-traditional mortgages.
Let's start with a little bit of terminology. "QM" stands for "Qualified Mortgage." It's a term associated with most of the mortgages we see underwritten today, including FHA, VA, Jumbo, and Fannie Mae and Freddie Mac loans.
However, we offer a wide variety of "non-QM" loans. They're also known as "non-traditional" loans that are designed for people (maybe like you?) who find themselves in unique situations. For example, someone may be self-employed and not showing a lot of income on their tax returns.
Here are some examples of non-QM loans:
• Loans that use bank statement deposits for income verification
• Loans that use liquid assets (paid off over a period of time) for income verification
• Loans with 40-year payoffs
• Loans with interest-only payments
• Loans for unusual properties, such as those with large acreages
To be clear, these non-QM loans aren't a return to sub-prime lending, which occurred in 2008 and led to catastrophe. These loans require large down payments and quite a bit of income documentation in some cases. Rates and fees are also higher than QM loans.
These non-QM loans are also much more competitive than the alternatives non-QM borrowed had to previously chase down.
First/second combo mortgages.
These are mortgages that fund at the same time. The first one is usually a loan-to-value of 80% or less, while the second one accounts for the portion above 80%.
First/second combo mortgages allow buyers to avoid both mortgage insurance requirements and jumbo loan restrictions.
Allow us to explain using an example: A 90% loan-to-value purchase of a $700,000 home can be structured as a $560,000 first mortgage and a $70,000 second mortgage. Mortgage insurance is not required because the first mortgage is at an 80% loan-to-value ratio.
Adjustable mortgage rates
Many people go with a 30-year fixed-rate mortgage, but you should know it's not the only option on the table. There are also 3-, 5-, 7- and 10-year adjustable-rate mortgages (ARMs). Most 5, 7, and 10-year ARMs are paid off over 30 years and are "fixed" for just their initial periods. They become adjustable after those fixed periods end.
Our advice is to only consider an ARM if the spread between the 30-year fixed rate and the ARM is significant and you're sure you'll be living in that home for only a short time.
It's also important to know that 15-year fixed-rate mortgages offer lower interest rates than 30-year mortgages. However, you need to be sure you'll be able to afford the higher payments that will be due within the shorter term.
