How much home can you afford? Use our finance center to learn about your loan options below. There are several loan programs available, and depending on your credit history, there is bound to be one that is perfect for you. Here are a few examples of the most popular programs offered today:
A conventional mortgage is a private-sector loan, not guaranteed or insured by the U.S. government.
In almost all cases, a conventional loan will be made according to agency underwriting standards set by Fannie Mae and Freddie Mac. Conventional mortgages usually require a minimum down payment of 5% to 20%, while some government programs require smaller, or in some cases, zero down payment. While the down payment requirement is higher than that of the government-backed programs, a conventional mortgage usually requires less paperwork and may have lower costs. A conventional mortgage may require a higher credit score to qualify for the best interest rates and fees.
For borrowers with available down payment funds and high credit scores, a conventional loan will often be the best option, provided the loan size falls within conforming loan limits.
An FHA loan, backed by the Federal Housing Administration, may be a good option for borrowers with a smaller down payment or lower credit score than those required for a conventional loan.
The Federal Housing Administration provides government backing to these loans, which are available as fixed or adjustable-rate loans. (HomeStreet Bank has been continuously producing FHA insured loans since 1937. We have more experience and expertise in processing and closing FHA loans than many lenders.)
Government-insured loans increased in popularity in the wake of the recent financial crisis and became more mainstream, rather than being thought of as an option just for first-time buyers. FHA loan limits increased, down payment requirements lowered and changes were made to the qualifying criteria, making them a good alternative for more borrowers than in the past. In short, for more and more home buyers, an FHA loan may be the best choice.
Some features of FHA loans include:
- Down payments as low as 3.5%
- Easier qualification guidelines than those of conventional mortgages
- Parents able to co-borrow with a child earning minimal or no income without being an occupant of the home
- FHA 203(k) loans provide funds for renovation along with the home purchase or refinance
Veterans Affairs (VA)-backed loans have been around for a long time and may be a good option for active-duty military and veterans.
Qualified borrowers can borrow up to current VA limits with zero down, and roll the VA funding fee right into their loan. No other loan today can offer this claim. Most active-duty service member and veterans are eligible for VA loan benefits.
The many advantages of VA home loans include:
- No down payment
- May have easier qualification requirements than other types of loans
- Does not require private mortgage insurance, regardless of down payment amount
- The seller can pay off buyer’s debt to help them qualify, up to 6% of the loan amount
- The buyer can finance the VA funding as part of the loan
- Closing costs are comparable to those of other loan types, and may even be lower
- Special concessions available for disabled veterans
Do you have a borrowing situation that doesn’t fit traditional mortgage underwriting standards? If so, a HomeStreet Bank Portfolio Loan might be a good option for your needs.
As a direct lender, HomeStreet has the option of offering a Portfolio Loan to borrowers with unique needs. A Portfolio Loan is one that’s not backed by an agency or government program, but instead is made from HomeStreet’s own funds. Our deposit product base provides us with the resources to offer Portfolio Loans when necessary — something you won’t find with mortgage brokers or lenders that are not associated with a full-service bank.
Since we make the loan from our own portfolio and keep it on our books (thus the name “Portfolio Loan”), we can be more flexible with this type of loan. As part of the process of working with you to find the right loan, we’ll evaluate all the available programs to see if one fits. If not, we may offer you a Portfolio Loan, based on your needs and qualifications.
Adjustable-rate mortgages or ARMs appeal to some borrowers who plan to be in their homes for only a few years, anticipate significant pay increases or believe that interest rates will trend down over time.
An ARM may also help you qualify for a larger loan than a fixed-rate mortgage. Popular ARMs currently have their payments fixed for an initial period of between one and 10 years. Adjustments may be made every year after the initial period, with the new rate based on an index and margin. Most ARMs provided by HomeStreet Bank use the LIBOR index. ARMs have interest rate caps, per adjustment and lifetime.
FHA, VA and conventional loans are all available with either a fixed rate or an adjustable rate. HomeStreet Bank offers FHA and VA loans as fixed-rate loans, VA 3/1 ARMs and FHA one year, 3/1 and 5/1 ARMs. Conventional loans have a wide variety of fixed-rate, adjustable rate and even interest-only options.
A USDA Rural Development Loan is a unique government-insured financing program that can make home ownership possible for many low- to moderate-income families.
Qualified borrowers in selected areas can take advantage of the USDA Rural Development Loan program to get a fixed-rate home loan with zero down.
Some benefits of USDA loans include:
- Finance up to 100% of the value of the home
- No down payment required
- Seller can pay up to 100% of the closing costs
- Low private mortgage insurance (PMI) required, reducing monthly payment amount
Many of the states where we do business offer special State Bond Loans, which typically provide eligible borrowers with a below-market interest rate.
The many benefits of State Bond Loans include:
- Lower monthly house payments or increased purchasing power for eligible borrowers
- Often can be combined with down payment assistance programs to further benefit the borrower
Generally, State Bond Loans are available to first-time buyers or those who have not owned a home in the past three years, but there may be “target areas” where this requirement is waived. Buyers need to meet the applicable income and maximum purchase price limits for the area in which the property is being purchased. State Bond Loans also require that the home be owner-occupied as the borrower’s primary residence.
Requirements and availability of State Bond Loans change frequently, so please contact Ryan Deschryver at HomeStreet to learn about the current availability in your area.
Provided by Ryan DeSchryver