Getting a FHA/VA mortgage can help you get a loan with a low interest rate if you are a veteran, if you have a disability, or if you have a low income. Although you will need to complete some additional paperwork in order to obtain one of these loans, the extra work is worth it if you do not qualify for a more conventional mortgage loan.
Understanding VA Mortgages
If you meet specific guidelines, you may qualify for a VA mortgage loan. In order to be eligible for one of these loans, you have to meet at least one of these qualifications:
- Completing at least 24 months of continuous active duty with the military
- Serving active duty for at least 90 days during the Korean War, the Gulf War, the Vietnam War, World War II
- Serving for at least 181 continuous days during peacetime without being dishonorably discharged
- Completing at least six years in the National Guard or Selected Services
These VA loans typically have caps of $144,000, whether you are acquiring a loan for construction or purchase. In some cases, Freddie Mac will also provide an additional 25% toward the value of the home. If you don't qualify for this program, however, you will need to find another source to help pay the balance of the purchase price.
Understanding FHA Mortgages
Another option is the FHA, or Federal Housing Administration, mortgage loan. Individuals with disabilities or with low incomes may qualify for one of these loans. In order to be eligible for an FHA loan, you also need to be purchasing a home for the first time.
The exact terms for these loans vary according to the state, particularly when it comes to how much you ca borrow. Most states average about $200,000, but some states will allow you to borrow more. In California, for example, you may be able to receive a loan of up to $300,000 to $400,000 depending upon the location of the home and its size. Florida and Pennsylvania may allow you to take out anywhere from $200,000 to $400,000.
In order to apply for one of these loans, you will need to provide a great deal of information and documentation. This includes:
- Balance sheets if you are a self-employed worker
- Credit report
- Current residence and your addresses for the past two years
- List of assets
- List of loans and savings accounts
- Pay stubs to demonstrate your monthly salary
- Social security numbers
- Two years of tax returns
If you do qualify for an FHA loan, there are six different types of loan programs you will need to choose from. These include Adjustable Rate Mortgages, Energy Efficiency Mortgages, Fixed Rate Mortgages, Graduated Payment Mortgages, Growing Equity, and Mortgages for Condos. Determining which of these loans is right for you depends upon your individual needs as well as your future plans. The Graduated Payment Mortgage, for example, is ideal for those with a lower income that expect to see an increase in income over the next ten years. A Fixed Rate Mortgage, on the other hand, may be a better choice if you do not anticipate seeing much of an increase in your income.
Regardless of the loan type, you will need to pay a small portion of the purchase price on your own. There are grants available, however, that can help you pay these costs if you absolutely do not have the money to spend. To learn more about these mortgage loan programs and how you can use them to help you buy the home of your dreams, contact FiveStarHomeMortgages today. Our professionals will be happy to help!