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types of mortgage loans available

Buying your First Home

Buying a house for the first time that can be called a home, it's probably one of the most exciting things you can possibly do in your life.

When the time to buy comes, one of the main obstacles for you as a potential home buyer, is the limitation in Capital that you might experience, in this case, the qualification and pre-approval for a loan thru a Mortgage is the only hope you have to get to buy a house.


Home Buyer Mortgage loan Options

When you are pre-approved for a mortgage, it means a lender has determined how much you can borrow, the loan programs that you may qualify for, as well as the interest rate you qualify for. This assessment is based on things like credit score, income, debts, and employment history.

Even if you receive a pre-approval letter from a lender, you may  end not getting  the loan  and you are not guaranteed a specific rate or loan term. Regardless of pre-approval, a lender may require additional income and asset verification, as well as the satisfaction of other conditions, before extending you a loan.

Pre-approval letters are subject to modification or cancellation if your financial situation or other conditions change during the pre-approval process.


When it comes to getting a mortgage loan, you as a homebuyer  have a few loan options to choose from depending on your economic situation:


FHA stands for "Federal Housing Administration"

This type of Loan is mainly for first time home buyers and its financing its focused mainly on single-family home properties.
FHA loans are meant to help first time home buyers with low credit scores and to do small down payments and refinancers with little equity.
There is a limitation on the type of properties you can buy with this type of loan, FHA loans were created to promote homeownership, typically FHA loans cannot be used to finance a second home, a rental home, a vacation home or investment property.
Most High Rises and Condos or investment properties are not covered under the FHA.
However, there are a few exceptions to the general rule.


Some of the advantages of an FHA loan are:

  • It has Less rigorous lending standards and lower down-payment requirements than other types of loans.
  • Minimum credit scores for FHA loans depend on the type of loan the borrower needs. To get a mortgage with a down payment as low as 3.5 percent of the purchase price of the home, the borrower needs a credit score of 580 or higher.
  • FHA allows home sellers, builders and lenders to pay some of the borrower’s closing costs, such as an appraisal, credit report or title expenses.
  • An FHA loan is a mortgage insured by the Federal Housing Administration. Borrowers with FHA loans pay for mortgage insurance (MI or PMI) which protects the lender from a loss if the borrower defaults on the loan.

Two mortgage insurance premiums are required on all FHA loans:

  • The upfront premium is 1.75 percent of the loan amount — $1,750 for a $100,000 loan. This upfront premium is paid when the borrower gets the loan. It can be financed as part of the loan amount.
  • The second is called the Annual Premium, although it is paid monthly. It varies based on the length of the loan, the loan amount and the initial loan-to-value ratio, or LTV. The following premiums are for loans of $625,500 or less.


NOTE: FHA is not a lender, but rather an insurer, borrowers need to get their loan through an FHA-approved lender (as opposed to directly from the FHA). Not all FHA-approved lenders offer the same interest rate and costs — even on the same FHA loan.

VA Loans

(Veterans Affairs  mortgages )Veterans and military families have a multitude of home buying benefits at their fingertips thru this type of loan. Most active-duty military and veterans qualify for Veterans Affairs mortgages. Many reservists and National Guard members are eligible. Spouses of military members who died while on active duty or as a result of a service-connected disability may also apply.
No Down Payment
No down payment is required from qualified borrowers buying primary residences. The VA does not lend money, but guarantees loans made by private lenders.

Lower payments
Competitive interest rates and no private mortgage insurance mean lower monthly payments.
VA loans have had a lower average interest rate than both conventional and FHA loans
This is the signature benefit of VA home loans. Qualified buyers can purchase up to $424,100 in most parts of the country before needing to put money down.
No Mortgage Insurance
This is another big expense that VA buyers don’t face, VA doesn’t set a credit score requirement for these loans. But the private companies actually making these loans typically will have a score cutoff, albeit a lower one than conventional lenders often require.
VA borrowers can qualify for 100 percent financing. Veterans do not have to be first-time buyers and may reuse their benefit.

Conventional Loans

A conventional loan is not made or insured by a government entity and they can be used for investment properties.
It's what we refer to as a non-GSE loan ( non-government sponsored entity)
Conventional mortgages are ideal for borrowers with good or excellent credit, despite this condition the interest rate on Conventional loans it's usually a little higher than FHA and VA loans.
Conventional loans often require a 5 percent down payment of the total price value of the purchased property.

Conventional mortgages generally are generally easier to process than Federal Housing Administration or Veterans Affairs mortgages, which may take longer to get processed.

If you've filed for or had any bankruptcies in your credit history, this bankruptcy record might affect your eligibility to get you qualified for the Conventional loan.



Information Disclaimer

The information provided using this web site is only intended to be general summary information to the public.
It is not intended to take the place of either a Licensed professional in specific fields of expertise, the written law or regulations.

Want to buy a House?

If you have any questions about getting a Mortgage, please feel free to contact us.

We have a team of Professional Loan Officers ready to help you to get you qualified as soon as possible.

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