Loan Programs

There are many loan programs available – too numerous to cover them all, we’ve highlighted the programs more commonly offered today. Characteristics of each loan program are unique, so consult your mortgage professional for more information and to become familiar with the details of the programs available to you.

To help determine the best loan program for you, consider the following:

• How important is payment certainty? If knowing that your payment will be the same every month is important, consider a fixed-rate mortgage.
• How important is rapid equity buildup? If rapid equity buildup is a factor, consider a shorter amortization period, such as a 15-year, fixed-rate mortgage.
• Do you anticipate increasing or stable income? If income growth is anticipated, you could take advantage of a lower start rate on an ARM or a temporary buydown.

Other factors to consider include:

• Ability to qualify at market rates for loan amount selected
• Anticipated term of occupancy
• Possibility of significant rate changes
• Existence of up-front costs

Loan Programs and Characteristics

15- and 30-Year Fixed-Rate Mortgages

• Interest rate does not change.
• Principal and interest (P & I) does not change.
• Fixed-rate mortgages fully amortize over a defined period of time and are paid in-full at the end of the loan term.
• Different loan terms are available (15- and 30-year terms are most popular).
• The shorter the term, the faster equity is built and the loan is paid off.

Fixed-Rate Balloons

• P & I payment and interest rate do not change.
• Regular monthly P & I payments are based on 30-year amortization, while the unpaid balance (balloon) is due at the end of a shorter, predetermined term, typically 5, 7 or 10 years.
• Interest rate is typically less than fixed-rate loans.
• Most borrowers anticipate refinancing or selling prior to the end of the balloon term.

Fixed-Rate with Temporary Buydown

• Borrowers or the seller may pay to temporarily “buy down,” or lower, the interest rate.
• Decreased interest rate reduces the monthly payment.
• Lower interest rate may help borrowers qualify more easily; qualifying factors may vary.
• Interest rate/payment is typically reduced for 1, 2 or 3 years

Adjustable-Rate Mortgages (ARMs)

• There is potential for the interest rate/ payment to fluctuate.
• ARMs transfer to borrowers a portion of the risk associated with a changing economy.
• In exchange for sharing the risk, ARMs offer borrowers initial interest rates that are substantially lower than fixed-rate mortgages.
• The lower interest rate may help borrowers qualify more easily; qualifying factors may vary.

FHA Loans

• As little as 3% down.
• First Time & Low Down Payment borrowers.
• FHA-provided mortgage insurance.

USDA Loans

• $0 down.
• Non-military eligibility.
• Rural, non-farm, single-family homes.
• USDA-provided mortgage insurance.

VA Loans

• A VA (Veterans Administration) guaranteed home loan is the preferred loan program for active, non-active, Reserve, National Guard, and retired military of the armed forces because there is no down payment needed and no private monthly mortgage insurance required.
• More than 27 million veterans and service personnel are eligible for VA financing, and most are unaware of it or do not know that it may be possible to buy or refinance their home using this financing program.
• A VA home loan can be used to purchase a home or refinance an existing mortgage. You can also build a home or make energy-efficient home improvements approved by the lender and VA.