Veterans Affairs loans are for military service members and their families. To obtain a VA loan, you must be able to prove your eligibility, plan to purchase an eligible property, plan to move in within 60 days and meet the minimum requirements for income and credit score. There are additional qualifications, so be sure to contact me to learn more.
VA loans have a lot of advantages, including no down payment, no need for private mortgage insurance, higher limits allowed for debt-to-income ratios, more flexibility if you’ve had previous financial hardships or bankruptcy and there’s no penalty for paying off your loan early. On the flipside, VA loans typically require a VA funding fee and sellers do not have to accept VA loans if they don’t want to, especially with short sales and foreclosures.
The United States Department of Agriculture (USDA)’s Rural Housing Service (RHS) offers loans for single-family homes to people living in rural areas with low to moderate incomes. To qualify, you must agree to purchase within a specific area, be a U.S. citizen, have a monthly house payment that equals 29 percent or less of your monthly income, be able to meet the minimum credit score requirements and your income cannot exceed a certain level, which is determined by your specific area.
Benefits of USDA loans include no down payment requirement, no penalty for paying off your loan early, no restrictions on lot size and modular and manufactured homes could also be eligible. Disadvantages include restrictions on location and income and the purchase requirement of private mortgage insurance if you don’t make a down payment.
First-time homebuyer loans
If you have not owned a home for at least three years, you may qualify for a first-time homebuyer loan. One of the most popular first time buyer loans is an FHA loan, backed by the Federal Housing Administration. FHA loans require a minimum credit score of 620, a down payment of 3.5 percent and a debt-to-income ratio that doesn’t exceed 41 to 43 percent of your gross monthly income.
Advantages of FHA loans include a smaller down payment requirement, low closing costs, down payments can be gifted from qualified sources and lower credit scores are accepted.
These loans are available for newly licensed medical doctors, residents and fellows that are hampered by heavy student loan debt and little savings. Requirements for physician loans vary between lenders, but many require an employment contract as proof of loan repayment and also a loan-payment-to-income ratio equal to or less than 38 percent.
Physician loans come with their own advantages, including low down payment options, no down payment required, no private mortgage insurance requirement, more flexible repayment terms, and student loans can be omitted from your total monthly debt if they’re deferred for at least 12 months at the time of closing. However, to receive full financing, many lenders will require a minimum credit score of 700. Furthermore, a down payment could be required if the house is in a declining market. Physician loans are not always available in every state, and they sometimes carry a higher interest.