Federal Housing Association (FHA) Loans
FHA loans provide mortgages for low and moderate income borrowers. FHA loans are only available from an FHA approved lender, like F&M Mortgage. Generally, these loans are available with low down payment options. Occasionally, closing costs can be included in the loan amount to further reduce up-front costs.
In order to qualify for an FHA loan with the lowest down payment option, you must have a credit score of at least 580. At this level, you will be required to pay a 3.5% down payment. If your credit score is under 580 and not less than 500, you can still qualify for an FHA loan with an initial 10% down payment.
FHA loans require you to also have:
- A Mortgage Insurance Premium (MIP)
- A steady income
- Proof of employment
- A Debt-to-Income Ratio of less than 43%
Finally, because these loans are designed to help people who are buying a home, your mortgage must be for your primary residence.
Why You Should Consider an FHA Loan
Compared to other government-sponsored loan programs, FHA loans offer some of the lowest rates and down payments. Most of the time, FHA loans are most popular with first-time homebuyers. However, FHA loans can also be a good option if you have experienced foreclosure or bankruptcy.
Another benefit of an FHA loan is access to loan relief. If during your loan term, you experience financial hardship from extenuating circumstances like loss of income, you may be able to adjust your payment amounts through the FHA Home Affordable Modification Program.
Veterans Affairs (VA) Loans
VA financing available to qualified military veterans with at least six months of active duty. This loan is also available to the unmarried spouses of a deceased veteran whose death was service related, or spouse of an MIA or POW.
How Do I Qualify for a VA Loan?
The requirements for a VA loan will depend on which branch of the military you served in and for how long. Active duty members generally have shorter service requirements than reserve members.
If you do not meet the minimum service requirements, you may still be eligible if you were discharged on certain grounds. For example, hardship, early out, medical conditions, and service-connected disability will allow you eligibility.
You will also need to apply for a Certificate of Eligibility (COE), as a part of the loan application process.
What Are The Benefits of VA Home Loans?
These types of loans allow VA to act as intermediaries between you and the mortgage lender. What this means is that the VA guarantees a portion of your mortgage to the lender, providing more security for you and the lender.
VA-backed mortgage loans also give you access to better terms and conditions. For instance, most of these loans can be obtained with no down payment. There’s a variety of VA plans available, so be sure to talk with an advisor or bank associate as you explore your options.
Tennessee Housing Development Association (THDA) Loans
First-time buyers, or those who have not owned a home within at least three years, may qualify for these lower-down-payment loans (financing is subject to the availability of state funding).
The loans from this homeownership program, like FHA loans, are intended for low and moderate-income borrowers. These mortgage plans offer fixed rates over a 30 year period in order to keep your costs down. The minimum credit score for these loans is 640. Additionally, there are limits on your maximum household income, but these limits depend on which county you live in.
If you decide to take advantage of a THDA loan, you will be required to pay some down payments. Also, you will need to either have proof of income or some savings. If your plan falls under a Great Choice, Great Choice Plus, or Homeownership for the Brave, you will need to enroll in a homebuyer education program.
USDA-Rural Development Loans
These loans are distributed by the Department of Agriculture in an effort to help rural families buy new homes or upgrade their current homes. It allows people who do not have easy access to mortgages to obtain financial assistance. However, if you plan to build a new home, you will have to purchase a construction loan.
With this program, financing is available for rural properties provided program guidelines are met. The rates are very competitive and you do not have to be a first time homebuyer. In order to qualify for a USDA Rural Development loan, you must take the mortgage out on your primary residence.
If you qualify for the minimum credit score, your payments will be 29% or less of your monthly income. Should you have a credit score above 680, the USDA may consider allowing you to have a debt ratio of 41% or more.
You must also have a steady income for at least two years, and a good credit score. If you have a credit score above 640, the process should be easier and faster. For more information about a Rural Development loan, please contact the F&M Bank near you.
*For all of the products listed (i.e., FHA, VA, THDA, and USDA Program) the interest rate and terms are subject to credit review and approval.
THDA'S Take Credit MCC Program
THDA.ORG -- TAKE CREDIT is a Mortgage Credit Certificate (MCC) program administered by Tennessee Housing Development Agency. The MCC Program was authorized by Congress in the 1984 Tax Reform Act. An MCC is not a loan. A MCC permits eligible homebuyers to take a federal tax credit up to $2,000 maximum per year based on the mortgage interest paid by the homebuyer. The tax credit may be used to lower a homebuyer’s income tax liability each year the home remains owner occupied by the certificate holder (the homebuyer).