FINANCING

Owner Occupant: 

 

Conventional:  Homeowner will put down 3%-20% of the purchase price, therefore cutting or eliminating the mortgage insurance requirement.  Generally credit requirements are higher than those of a FHA product and lender requirements for home condition are less strict than FHA and VHDA.  This product can also be used for financing a second home.  Can also be used for new construction if the builder owns the lot.  

 

FHA:  One of the most common for first-time buyers, FHA loans generally require 3.5% downpayment.  This downpayment can also be in the form of a gift with proper documentation.  In general, credit score requirements are lower than those of conventional products and property condition requirements are more strict (must have a working stove, no peeling paint on the exterior, etc).  Private mortgage insurance typically applies for the life of the loan (until the home is sold or the purchaser refinances into another loan product).  This loan can also be used for new construction if the builder owns the lot. 

 

USDA:  Used in areas deemed "rural", this loan allows 100% financing for qualifying properties.  Property eligibility can be confirmed on USDA's website using the following link: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do.  Select "Single Family Housing Guaranteed" at the top left of the page, then type in the property address.

VA:  This loan allows veterans and active-duty military to purchase a home with 100% financing and no mortgage insurance.  Buyer will need proof of VA eligibility and cannot have two VA loans at the same time unless they total less than their eligibility amount.  In general interest rates are low and property condition requirements resemble those of FHA and VHDA.

 

VHDA:  This loan is often used by first-time buyers, or individuals who have not owned a home in the past three years.  These loans are usually serviced by VHDA directly for the life of the loan.  VHDA products have income caps based on the area and number of residents in the household.

 

Jumbo:  A jumbo loan is one in which the loan amount exceeds the conforming city or county limits.  Jumbo renovation loans are also available, where the buyer can add renovation costs into the total loan amount and finance them with the house.

 

Homestyle:  The Homestyle loan is a conventional renovation product, which allows the buyer to purchase a home needing repairs/renovations and finance the cost of the them in with the loan.  This can include lender required repairs such as HVAC and roof, but also cosmetic updates, appliances, etc.  Typically the purchaser will be required to put down 5-20% of the after-improved value (purchase price plus repair costs).  Some buyers find this a great option to help keep more cash on hand versus paying out of pocket for repairs after closing.

 

FHA 203K Standard: FHA's renovation loan, allowing a buyer to put down 3.5% of the total of the purchase price plus repair amount.  This product allows a minimal downpayment while financing repairs into the purchase.  Repair monies are held in an escrow account and paid directly by the bank in drafts after closing. Typically repairs are completed in 30-60 days, but the timeline can vary depending on the scope of work.  This loan can be used to finance not only cosmetic updates and lender required repairs, but also for structural renovations.

 

FHA 203K Streamline:  This type of FHA renovation loan is limited to $35,000 in repairs, and will not cover anything structural.

 

Construction Perm-This loan allows you to build on your own lot, however you must use a builder licensed to do the scope of work.  This is a two closing loan, having a closing 30-45 days in (generally paying interest only for the amount borrowed at the current time).  This amount increases as the builder gets drafts for completed work.  When all work is completed, the second closing occurs, and payments are based on the full loan amount.

Investor: 

 

Conventional:  Most common loan type for investor purchases, this product will typically require a down payment of 15-25%.  Due to size of the down payment, there is generally little to no mortgage insurance required.  This product can be used for financing a second home, rental, or other property not used as the purchaser's primary residence. 

 

Conventional with repair escrow:  This loan is similar to Homestyle, but has a maximum renovation amount of $35,000.  Down payment can range from 5-25%, the larger the down payment the better the interest rate.  Generally offers a lower rate than the Homestyle loan as the renovation cap is lower and renovations are generally completed more quickly.  Cannot be used for structural repairs.

 

Jumbo:  A jumbo loan is one in which the loan amount exceeds the conforming city or county limits.

 

Homestyle:  The Homestyle loan is a conventional renovation product, which allows the investor to purchase a home needing repair and finance the cost of the repairs in with the loan.  Typically the investor will be required to put down 20-25% of the after-improved value (purchase price plus repair costs).  This is a great option to help keep more cash on hand versus paying out of pocket for repairs after closing.

 

Hard Money:  Hard money is private financing, and is generally used for flipping properties.  Hard money loans are typically short term (six months is common) and interest rates are generally higher (10% and up).  The typical time for a hard money loan to close is thirty days, and the loan may or may not be contingent on an appraisal (that is a choice of the private investor).  Interest-only payments are common with private financing.

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Mortgage Information Disclaimer: Any mortgage information contained herein is provided for informational purposes only and is not to be relied upon. The Agent/Brokerage supplying this information is not a mortgage lender. Please contact the lender directly to learn more about its mortgage products and eligibility for such products.

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Clocktower Realty Group

(804) 505-4274 

info@clocktowerrealtygroup.com

1561 E Main Street, Richmond, VA 23219