Direction Mortgage can help you find the right loan, from the right lender, at the right time. There are so many choices out there – FHA, USDA Rural Development, VA, and Conventional. Each one of these programs has unique criteria, and our loan officers can help you determine which one is best for you.
If you have less-than-perfect credit with a score ranging from 620-640, there are three loan programs that you can still qualify for: USDA Rural Development, FHA, and if you served our country, VA.
Having enough money for a down payment on a home is a concern for many. The good news is that there are programs out there where you do NOT need a down payment. USDA Rural Development and VA loans are great options for those that do not have the savings or want to deplete their reserve.
A conventional mortgage is a type of mortgage in which the terms and conditions meet the funding criteria of Fannie Mae and Freddie Mac. These loans can offer a fixed-rate or an adjustable rate. As a borrower, you must have a credit score above 640, and you must have at least 5% of the value of the loan to put down. The down payment must be your own funds – they cannot be gifted to you.
With a conventional mortgage, the seller can help pay closing costs. They are able to pay up to 3% of the purchase price.
An FHA loan is insured by the Federal Housing Administration; however, they do not loan the money directly to borrowers. The FHA provides lenders protection through mortgage insurance (MIP) in case the borrower defaults on their obligation. Available to all buyers, an FHA loan is designed to help credit worthy low- to moderate- income families who do not meet the requirements for conventional loans.
FHA programs are particularly beneficial to those with limited cash reserves. The rates on FHA loans are generally market rates, while the down payment requirement is less than a conventional – 3.5% of the purchase price is required as a down payment; however, the down payment can be gifted to you.
USDA Rural Development (also called RD) loans are designed to assist families to purchase a home in a rural area. The program has property and income requirements which must be met to ensure the funding of this loan. Nearly all of Pickaway County is eligible, and if you have credit score of 620 or above, RD is a great loan program to consider. There is no down payment requirement and the seller can help pay closing costs - up to 6% of the purchase price.
VA guaranteed loans are made by lenders and guaranteed by the US Department of Veteran Affairs (VA) to eligible veterans for the purchase of a home. In most cases, there is no down payment required with a VA loan, and the borrower can receive a lower interest rate than with other loans.
There is no monthly PMI (private mortgage insurance) through the VA program, and you simply need a credit score of 580 and above. There is a funding fee that is charged at closing, but that can be financed in the loan amount.
A Certificate of Eligibility from the VA must be presented to qualify for this loan.