“In New York, it takes a long time to close because it’s an attorney state,” he said, referring to the intense regulatory backdrop to the state. Consequently, a process that elsewhere may take a month from signing to close typically takes two to three months in New York, he explained. “It’s a journey,” he said … [Read more…]
A handful of closely followed mortgage rates tailed off over the last week. 15-year fixed and 30-year fixed mortgage rates both declined. For variable rates, the 5/1 adjustable-rate mortgage also sunk lower.
30-year fixed mortgage: 6.93%
15-year fixed mortgage: 6.32%
5/1 adjustable-rate mortgage: 6.38%
In November, the average rate for a 30-year fixed mortgage started making sustained drops from its earlier peak of 8%. The most common home loans are now in the 6% to 7% range. Yet the mortgage market always has some level of volatility, and rates have already started inching back up at the start of this year.
“It’s not uncommon to see a shift in the pattern for interest rates in January, sometimes positive, sometimes not,” said Keith Gumbinger, vice president of mortgage site HSH.com.
The current housing market is difficult. High mortgage rates, expensive home prices and tight inventory are keeping homebuying out of reach for many. If you’re looking to buy a home, don’t try to time the market. Instead, experts recommend patience and preparation: Figure out what you can afford and take steps to improve your financial situation.
About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool features partner rates from lenders that you can use when comparing multiple mortgage rates.
Today’s average mortgage interest rates
If you’re in the market for a home, check out how today’s mortgage rates compare to last week’s. We use information collected by Bankrate to track rate changes over time. This table summarizes the average rates offered by lenders nationwide:
Today’s mortgage interest rates
Loan term
Today’s Rate
Last week
Change
30-year mortgage rate
6.93%
7.07%
-0.14
15-year fixed rate
6.32%
6.46%
-0.14
30-year jumbo mortgage rate
6.96%
7.13%
-0.17
30-year mortgage refinance rate
7.10%
7.21%
-0.11
Rates as of Jan. 15, 2024
How to choose a mortgage
When picking a mortgage, consider the loan term, or payment schedule. The most common mortgage terms are 15 and 30 years, although 10-, 20- and 40-year mortgages also exist. You’ll also need to choose between a fixed-rate mortgage, where the interest rate is set for the duration of the loan, and an adjustable-rate mortgage. With an adjustable-rate mortgage, the interest rate is only fixed for a certain amount of time (commonly five, seven or 10 years), after which the rate adjusts annually based on the market’s current interest rate. Fixed-rate mortgages offer more stability and are a better option if you plan to live in a home in the long term, but adjustable-rate mortgages may offer lower interest rates upfront.
30-year fixed-rate mortgages
For a 30-year, fixed-rate mortgage, the average rate you’ll pay is 6.93%, which is a decrease of 14 basis points from one week ago. (A basis point is equivalent to 0.01%.) A 30-year fixed mortgage is the most common loan term. It will often have a higher interest rate than a 15-year mortgage, but you’ll have a lower monthly payment.
15-year fixed-rate mortgages
The average rate for a 15-year, fixed mortgage is 6.32%, which is a decrease of 14 basis points from the same time last week. Though you’ll have a bigger monthly payment than a 30-year fixed mortgage, a 15-year loan usually comes with a lower interest rate, allowing you to pay less interest in the long run and pay off your mortgage sooner.
5/1 adjustable-rate mortgages
A 5/1 adjustable-rate mortgage has an average rate of 6.38%, a decrease of 3 basis points from seven days ago. You’ll typically get a lower introductory interest rate with a 5/1 ARM in the first five years of the mortgage. But you could pay more after that period, depending on how the rate adjusts annually. If you plan to sell or refinance your house within five years, an ARM could be a good option.
Calculate your monthly mortgage payment
Getting a mortgage should always depend on your financial situation and long-term goals. The most important thing is to make a budget and try to stay within your means. CNET’s mortgage calculator below can help homebuyers prepare for monthly mortgage payments.
What to know about mortgage rate trends
Mortgage rates were near record lows, around 3%, at the start of the pandemic. That changed as inflation surged and the Federal Reserve kicked off a series of aggressive interest rate hikes, which indirectly drove up mortgage rates. Now, mortgage rates are still more than double what they were just a few years ago.
However, with the central bank keeping interest rates steady since late July, mortgage rates finally saw some sustained decreases in the fall. With the Fed planning to announce its next policy move in late January (and again in mid-March), experts are waiting for the first interest rate cut. It may be months before that happens, but mortgage rates could stabilize and start inching even lower in the coming months.
““The history of economic cycles has taught us that when the markets believe the Fed is done hiking rates, [mortgage rates] make a big move lower before rate cuts happen,” said Logan Mohtashami, lead analyst at HousingWire.
What affects mortgage rates?
Federal Reserve monetary policy: The nation’s central bank doesn’t set interest rates, but when it adjusts the federal funds rate, mortgages tend to go in the same direction.
Inflation: Mortgage rates tend to increase during high inflation. Lenders usually set higher interest rates on loans to compensate for the loss of purchasing power.
The bond market: Mortgage lenders often use long-term bond yields, like the 10-Year Treasury, as a benchmark to set interest rates on home loans. When yields rise, mortgage rates typically increase.
Geopolitical events: World events, such as elections, pandemics or economic crises, can also affect home loan rates, particularly when global financial markets face uncertainty.
Other economic factors: The bond market, employment data, investor confidence and housing market trends, such as supply and demand, can also affect the direction of mortgage rates.
Mortgage rate forecasts from experts
While mortgage forecasters base their projections on different data, most predict rates will remain near or above 7% for the rest of 2023. Here’s a look at where some of the major housing authorities expect average mortgage rates to land at the end of the year.
Tips for finding the best mortgage rates
Though mortgage rates and home prices are high, the housing market won’t be unaffordable forever. It’s always a good time to save for a down payment and improve your credit score to help you secure a competitive mortgage rate when the time is right.
Save for a bigger down payment: Though a 20% down payment isn’t required, a larger upfront payment means taking out a smaller mortgage, which will help you save in interest.
Boost your credit score: You can qualify for a conventional mortgage with a 620 credit score, but a higher score of at least 740 will get you better rates.
Pay off debt: Experts recommend a debt-to-income ratio of 36% or less to help you qualify for the best rates. Not carrying other debt will put you in a better position to handle your monthly payments.
Research loans and assistance: Government-sponsored loans have more flexible borrowing requirements than conventional loans. Some government-sponsored or private programs can also help with your down payment and closing costs.
Shop around for lenders: Researching and comparing multiple loan offers from different lenders can help you secure the lowest mortgage rate for your situation.
“I got a new place last year and I have to do some renovating,” he explained in his post-match press conference. “The only fitting time was tonight at 10PM, so there’s going to be a Zoom call that I have to get on to decide a few different materials and so on.
“But it’s actually something I enjoy. My mother is an interior designer, as well, so ever since I was young I was quite into it. I’ve done a few projects in the past back home in Norway. This is for my own personal use.
“I like to try to stay in the zone in the Grand Slam, but just, you know, a 30-minute call in one evening shouldn’t be a problem. I’m looking forward to it. It’s small things that we do outside the tennis court that can be, in a way, helping when you’re playing.”
The 25-year-old made a few more substantive changes heading into 2024, eschewing the busy exhibition schedule that left him fatigued well into 2023 and adding a new physiotherapist, Alex Strober, to his team.
“I feel physically better than I have done in a long time now,” he said. “I was lifting too many heavy weights last year between the seasons, tried to build too much muscle. I did somewhat of a preseason kind of training after Australia before I started playing in Acapulco, so I had, like, four weeks there.
“I feel smoother around the court, moving better, and I also feel like that helps me play well.”
Up against Aussie favorite Max Purcell in the next round, can Ruud pull a proverbial “21” and make it back to the second week?
Meanwhile, CCM has been named one of Inc. 5000 America’s fastest-growing private companies for 10 years. The Cleveland-based company operates over 800 branches across all 50 states with over 7,000 employees. Read more: CrossCountry Mortgage’s down payment assistance program reaches 15 new metros “This acquisition is part of CCM’s growth strategy to increase market share … [Read more…]
There’s no one-size-fits-all mortgage. When deciding between a conventional loan vs FHA loan, you’ll have to compare costs and benefits based on your personal finances.
Compare home loan options. Start here
A conventional loan is often better if you have good or excellent credit because your mortgage rate and PMI costs will go down. But an FHA loan can be perfect if your credit score is in the high-500s or low-600s. For lower-credit borrowers, FHA is often the cheaper option.
These are only general guidelines, though. And the choice between a conventional loan vs FHA loan might be different for you. So be sure to look closely at both loan types and choose the best one for your financial situation.
In this article (Skip to…)
Conventional loan vs FHA comparison
There are plenty of low-down-payment options for today’s home buyers. But many will choose either a conventional loan with 3% down or an FHA loan with 3.5% down.
Compare home loan options. Start here
So, which type of home loan program is better? That depends on your financial situation.
Here’s an overview of what you need to know about qualifying for a conventional loan vs FHA loan.
Conventional 97 Loan
FHA Loan
Minimum Down Payment
3%
3.5%
Minimum Credit Score
620
580
Maximum Debt-to-Income Ratio
43%
50%
Loan Limit for 2024 (in most areas)
$
$
Income Limit
No income limit
No income limit
Mortgage Insurance
Annual fee
Annual and upfront fee
Down payment requirements
Both conventional and FHA mortgage programs have minimum down payment amount requirements which borrowers must meet in order to be eligible for a home loan and reach their goal of homeownership.
Compare home loan options. Start here
FHA: 3.5% down with a 580 credit score, or 10% down a score between 500-579
Conventional 97: 3% down
Like other conventional loans, conventional 97 applicants will pay private mortgage insurance (PMI) with less than 20% down. And all FHA borrowers are required to pay mortgage insurance regardless of down payment.
Credit scores
In deciding between an FHA loan and the Conventional 97 loan, your individual credit score matters. This is because your credit score determines the type of mortgage loan you’re eligible for. Credit history affects your monthly mortgage payments, too.
Compare home loan options. Start here
Minimum credit score requirements for FHA and conventional loans are:
FHA: 580 credit score with 3.5% down, or 500-579 credit score with 10% down
Conventional: 620 credit score
If your credit score is between 500 and 620, the FHA loan is best suited for you because it’s your only available option.
But if your credit score is above 620, it’s worth looking into a conventional loan with 3% down. Especially because, as your credit score goes up, your mortgage rate and PMI costs go down.
Debt-to-income ratio
Another factor you need to consider when choosing between a conventional and FHA loan is your debt-to-income ratio or DTI ratio. This is the amount of debt you owe on a monthly basis, compared to your monthly gross income.
Compare home loan options. Start here
Conventional loans usually allow a maximum DTI of 43% — meaning your debts take up no more than 43% of your gross monthly income
FHA loans allow for a higher DTI of up to 50% in some cases
However, even with FHA loans, you’ll have to shop around if your debt-to-income ratio is above 45%. Because the FHA allows mortgage lenders to set their own in-house loan requirements, some may set stricter DTI requirements that are below 50%.
Debt-to-income ratios tend to make a bigger difference in high-cost areas, like big cities, where home values are high.
If you’re buying somewhere like Los Angeles, New York, or Seattle, your monthly debt (including mortgage costs) will take up much more of your income simply because real estate is so much more expensive.
Mortgage insurance
FHA and conventional loans both charge mortgage insurance. But the cost varies depending on which type of loan program you have, and how long you keep the mortgage.
Compare home loan options. Start here
FHA mortgage insurance (MIP): The costs for MIP is the same for most borrowers: 0.55% of the loan amount per year, with a one-time upfront fee of 1.75%
Conventional loans private mortgage insurance (PMI): The costs for PMI vary depending on your credit score and loan-to-value ratio. You’ll only pay PMI when you put less than 20% down, and you’ll only continue to pay monthly premiums until you reach 20% home equity
Conventional Loans
FHA Loans
Mortgage Insurance Type
Private Mortgage Insurance (PMI)
Mortgage Insurance Premium (MIP)
Upfront Mortgage Insurance Fee
n/a
1.75% of loan amount
Annual Mortgage Insurance Rate
Up to 2.25% of loan amount
0.55% of loan amount
Duration
Until the loan reaches 80% LTV
11 years (down payment of 10% or more) OR life of the loan (down payment of 3.5% to 10%)
The cheaper mortgage insurance option for you depends on your financial situation.
Conventional 97 mortgage insurance goes away at 80% loan-to-value. You’ll also hear loan officers refer to this as 20% home equity (both terms essentially refer to the same thing).
This means that, over time, your Conventional 97 can become a better value — especially for borrowers with high credit scores.
Also, consider upfront charges.
In addition to MIP, the FHA charges an upfront mortgage insurance premium known as UFMIP. UFMIP costs 1.75% of your loan size, is added to your loan balance, and is non-recoverable except via the FHA Streamline Refinance
The Conventional 97 charges no equivalent upfront fee for mortgage insurance. It only charges monthly mortgage insurance premiums
Conventional loan vs FHA loan limits
Both the FHA and conventional loans have limits on the amount of money you can borrow.
Compare home loan options. Start here
In 2024, the FHA loan limits for a single-family home is $ in most of the U.S.
The conventional loan limit for a single-family home is $.
Any loan amount that exceeds these limits are considered non-conforming loans or jumbo loans.
Conventional loan vs FHA mortgage rates
Mortgage rates typically look lower for FHA loans than conventional loans on paper. For instance, today’s average FHA rates are as low as % (% APR)*, while conventional mortgage rates are as low as % (% APR)*.
Compare conventional and FHA mortgage rates. Start here
However, those rates can’t be taken at face value. First, because mortgage rates vary depending on your personal finances, your rate will likely be different from the average rate.
Second, PMI and credit score can also affect your interest rate and mortgage payment. For conventional loans, a lower credit score means a higher interest rate. So if your score is in the low- to mid-600s, an FHA loan might be cheaper.
Conventional loans also base mortgage insurance rates on your credit score, which contributes to a higher monthly payment as well.
*Current rates according to The Mortgage Reports’ lender network. Rates are for sample purposes only; your own rate will be different.
Conventional loan vs FHA mortgage payments
For home buyers with good credit scores, a conventional loan may be more attractive. That’s because conventional loan costs are more dependent on your credit score and down payment than FHA loan costs. And as a result, your monthly payments and PMI are lower when your credit score is higher. This is a key difference from how FHA loans work.
Compare conventional and FHA mortgage rates. Start here
With an FHA loan, your mortgage rate and MIP cost the same no matter what your FICO score.
That means in the short term, FHA loans may be more advantageous.
But over the long-term, borrowers with above-average credit scores will typically find Conventional 97 loans more economical relative to FHA ones.
Remember, mortgage insurance for conventional loans can be canceled at 20% loan-to-value ratio. But FHA mortgage insurance lasts the entire life of the loan. The only way to bypass this requirement is if you put down at least 10% down. This way you may be able to drop FHA mortgage insurance after 11 years (assuming 20% loan-to-value).
So if you’ll be staying in the home long enough to reach 20% equity — and especially if you have a good credit score — a conventional loan could be your cheaper option in the long run.
FHA vs Conventional infographic
Alternative low-down-payment loan programs
The conventional 97 loan and FHA loan aren’t the sole options for low-down-payment mortgages. Explore a variety of other mortgage loans with low or no upfront expenses to make homeownership more accessible:
Compare your home loan options. Start here
Fannie Mae HomeReady: This home loan offers below market interest rates, reduced private mortgage insurance costs, and it allows the income of everyone living in the household to qualify. However, there are income limits, loan maximums, and you’ll need a FICO score of 620 or more and a DTI of 50% or less
Freddie Mac Home Possible: Similar to HomeReady, it has income and loan limits, and it requires a minimum credit score of 660, 3% down payment, and DTI below 43%. However, Freddie Mac Home Possible offers flexible loan approval requirements that help low-income families become homeowners
VA loan: This mortgage loan requires no down payment and offers flexible credit score minimums and below-market rates. VA loans have no maximum loan amounts. Plus, bankruptcy and foreclosure are not immediate disqualifications. Yet, this program is only available to eligible service members and veterans
USDA loan: This rural housing government-backed loan requires no down payment and has no maximum home purchase price. Although there are drawbacks. This government-agency loan does have property standards that require the home to be located in a rural area. There are also income limits for the buyer, and it does carry mortgage insurance for the entire loan term
Most of these mortgage loan products can only be used to purchase a primary residence — a home in which you live in for the majority of the year.
Vacation homes and investment properties are generally not allowed.
For many first-time homebuyers, though, the choice among low-down payment loans will be between the FHA loan and the Conventional 97. This is because VA loans are available to military borrowers only. USDA loans are restricted to suburban and rural areas, with maximum loan and income limits, and HomeReady has similar income restrictions.
Conventional loan vs FHA loan FAQ
Which is a better loan, FHA or conventional?
Between FHA and conventional, the better loan for you depends on your financial circumstances. FHA might be better than conventional if you have a credit score below 680, or higher levels of debt (up to 50 percent DTI). Conventional loans become more attractive the higher your credit score is because you can get a lower interest rate and monthly payment.
Can you switch from FHA to conventional?
You can switch from an FHA to a conventional loan by refinancing your mortgage. This means you get a new conventional loan to pay off your existing FHA loan. This might make sense to do if you have at least 20 percent equity in your home and a 620 or higher credit score. Then, you may be able to save by switching from an FHA to a conventional loan with no PMI.
What are the benefits of a conventional home loan?
If you get a conventional loan with 20 percent down or more, you won’t have to pay for mortgage insurance. That’s a big benefit over FHA loans, which require mortgage insurance regardless of your down payment size. The conventional 97 loan also lets you put just 3 percent down, while FHA requires 3.5 percent at minimum. And conventional loans offer lower mortgage rates the higher your credit score is. That’s good news if you have a good credit score of 720 or higher.
Is an FHA loan bad?
FHA loans are great for borrowers who need a home loan with a lower bar of entry. The big benefits are that they allow lower down payments (just 3.5 percent) and a lower credit score (580) than many other mortgage loans.
What are the disadvantages of FHA loans?
You have to pay for FHA mortgage insurance regardless of your down payment size. And you can’t get rid of it unless you refinance. So if you have a great credit score and/or you’re putting 20 percent or more down, an FHA loan likely isn’t the right choice for you. In that case, look into a conventional loan instead.
What credit score do I need for a conventional loan?
Conventional loans require a credit score of at least 620. But some mortgage lenders might set their own requirements, starting at 640, 660, or even higher. Plus, your conventional mortgage rate will be better the higher your credit score is. So especially if your credit is on the lower end, be sure to show around with different lenders for the best deal.
What credit score do I need for an FHA loan?
FHA loans require a credit score of 580 or higher in most cases. You might be able to get an FHA loan with a credit score of 500-580 if you make a 10 percent or bigger down payment. But you’ll have to search for the right lender because few mortgage companies allow scores in that range for FHA loans.
What’s the interest rate on a conventional loan?
Conventional loan interest rates are typically a little higher than FHA mortgage rates. That’s because FHA loans are backed by the Federal Housing Administration, which makes them less “risky” for lenders and allows for lower rates. However, if you have a great credit score (above 680, in most cases) you might qualify for a lower conventional rate. But, you also have to consider the annual mortgage insurance rate with each loan. Depending on your credit score and down payment, conventional mortgage insurance rates could be higher or lower than FHA insurance rates. This will affect which loan is cheaper overall.
Who qualifies for a conventional loan?
You might qualify for a conventional loan if you have a credit score of at least 620; a debt-to-income ratio of 43 percent or lower; a 3 percent down payment; and a steady, two-year employment history proven by tax returns and bank statements. To qualify for the low-down-payment conventional 97 loan, you must buy a single-family property (no 2-,3-, or 4-units allowed).
Which loan type has a higher credit score requirement?
Generally, conventional loans have a higher credit score requirement than FHA loans. Conventional loans may require a credit score of 620 or higher, while FHA loans may allow for a credit score as low as 500 to 580, depending on the lender.
What is mortgage insurance, and how does it differ for conventional loans and FHA loans?
Mortgage insurance is a type of insurance that protects lenders in case the borrower defaults on the loan. With a conventional loan, private mortgage insurance (PMI) is generally required if the down payment is less than 20%. With an FHA loan, mortgage insurance premiums (MIP) are required for the life of the loan.
Which loan type has more flexible underwriting requirements?
FHA loans generally have more flexible underwriting requirements compared to conventional loans. They may allow for higher debt-to-income ratios, lower credit scores, and non-traditional credit histories. Conventional loans may have stricter underwriting requirements.
Can you refinance from an FHA loan to a conventional loan?
Yes, you can refinance from an FHA loan to a conventional loan. Refinancing may help you get a lower interest rate, lower monthly payments, or eliminate mortgage insurance. However, it’s important to evaluate the potential costs, benefits, and qualification requirements before proceeding with the refinance.
Conventional loan vs FHA: The bottom line
For today’s low down payment home buyers, there are scenarios in which the FHA loan is what’s best for financing; and there are scenarios in which the Conventional 97 is the clear winner. Mortgage rates for both home loans should be reviewed and evaluated.
Ready to make a home purchase? Talk with a loan officer about your mortgage options. You should compare personalized quotes for both FHA and conventional loans to see which one is cheaper for your situation and suits your needs best.
Time to make a move? Let us find the right mortgage for you
Though I love the holiday season, there’s something so satisfying about taking down the garland and stockings, giving my space a deep clean, and returning the year-round decor to its usual spot. Now that my home is “back to normal,” I want to make some changes to give it a fresh look.
Luckily, retailers like Target don’t waste any time shifting from holiday to spring decor, and after perusing its new arrivals, I stumbled on Hearth & Hand with Magnolia’s latest drop. The new collection features stylish and functional home and kitchen finds in neutral and pastel colors that easily blend with most interior design styles.
A few of my favorites include this round mirror with a pleated frame and this bundle of faux wildflowers to add to a vase on my coffee table. Keep scrolling to see everything I’m eyeing from Joanna Gaines’ spring line at Target starting at just $4. As usual with the popular brand, items in this collection are already selling out, so you’ll want to act fast.
Hearth & Hand With Magnolia Spring Collection at Target
I have a fairly small home, so I’m always looking for ways to make it feel bigger. Adding a large mirror, like this 30-inch style, not only helps the space appear larger but also brightens it up by reflecting light around the room. The round accent mirror has a pleated frame with a brass finish and is sturdy yet light enough to hang easily with the included hardware. I want to place it above my dresser in my bedroom, but you can also add it to offices, entryways, and living rooms. The 20-inch size is already sold out, so if you’re interested in the 30-inch mirror, you’ll want to add it to your cart ASAP.
Border Plaid Handmade Jute Woven Rug
While I love my home’s original wood floors, rugs are one of my favorite ways to make a space feel cozier. This handmade option from Hearth & Hand with Magnolia’s spring line warms up any area with its texture, pattern, and tan and cream design. It comes in five different sizes that can fit in any room you want to add a rug to. I’m grabbing the runner style for my hallway but might come back for the area rug for my guest bedroom.
River Landscape Sketch Framed Wall Art
I’m in the process of updating my main bedroom. I’ve been putting it off, as it’s not a room where I entertain guests, but I decided that this year I’m prioritizing making it a space I’m proud of. I purchased a new comforter, and now I’m focusing on wall decor like wedding photos, shelves, and artwork. This framed sketch of a river landscape is exactly what I was looking for, displaying the love my husband and I have for the outdoors in a subtle way that blends in with our existing decor.
Keep scrolling to see more of my favorite finds from Hearth & Hand with Magnolia’s spring collection at Target.
Product has been long in the making While the product seems to have been rolled out in response to rising rates, Doyle said it’s been in the works for a while. “We didn’t do it because interest rates rose so much,” he said. “We were planning to do it irrespective. We’ve actually created an entirely … [Read more…]
A mortgage is a loan to purchase a home. The loan is repaid with interest in monthly payments over a certain number of years, such as 15, 20 or 30. If the mortgage isn’t repaid, the borrower may lose the home in a multistage process known as foreclosure.
Banks, credit unions and other lenders offer mortgages. To apply, fill out an application and provide documentation about your finances. Lenders consider your income, debts and credit score to decide whether you qualify and the terms to offer.
Types of mortgages
There are a variety of mortgages and home loan programs. Here are some of your choices.
Fixed vs. adjustable rates
There are fixed-rate and adjustable-rate mortgages. The interest rate stays the same for the entire loan term of a fixed-rate mortgage. With an adjustable-rate mortgage, or ARM, the interest rate stays the same for a certain period, up to 10 years, and then adjusts at a specified interval, usually every six months.
15-, 20- and 30-year mortgages
The most popular mortgage term is 30 years, but 15- and 20-year mortgages are also available. Mortgage payments are spread out monthly through the term. At the end, the loan is paid off and the borrower owns the property free and clear.
Government-backed mortgages
These loans are backed by the federal government:
FHA mortgages are backed by the Federal Housing Administration. They allow down payments as low as 3.5% and have more lenient credit score requirements than other loan programs. Borrowers must pay for mortgage insurance.
USDA mortgages, backed by the U.S. Department of Agriculture and meant for rural home buyers, do not require a down payment, but borrowers must pay an upfront and annual guarantee fee, similar to mortgage insurance for FHA loans.
VA loans, backed by the U.S. Department of Veterans Affairs, are for veterans and active military members. VA mortgages require no down payment, but borrowers pay a one-time VA funding fee, which can be rolled into the loan.
Conventional loans
Conventional loans are mortgages that are not backed by the federal government. Some conventional loans have down payment requirements as low as 3% — but typically, borrowers must pay for private mortgage insurance if they put down less than 20%.
Conventional mortgages can be conforming or nonconforming. Conforming conventional mortgages fall within certain dollar amount limitations set every year by the Federal Housing Finance Agency. They also meet underwriting guidelines set by Fannie Mae and Freddie Mac, the government-sponsored entities that buy conforming loans.
Nonconforming loans don’t abide by those limits and guidelines. For example, jumbo loans are conventional mortgages that exceed the conforming loan limits. They also typically have stricter criteria for approval than other mortgages.
What’s the credit score needed for a home loan?
The credit score needed to buy a home depends on the type of loan and the lender. Most borrowers have scores in the high 600s to 700s. FHA loans generally have the most lenient credit score requirements.
How to compare mortgage rates
You can check current mortgage rates to see the average of what lenders are offering. Then get initial quotes online from some lenders based on your location, loan term, purchase price, down payment amount and other factors.
To get a firm quote, you’ll need to apply for preapproval. During the preapproval process, the lender will check your credit and verify your financial information, such as income, assets and debts.
How to shop for a mortgage lender
The time to shop for a mortgage lender is before you start house hunting. Getting preapproved for a mortgage will show real estate agents and sellers that you’re a serious buyer. It’s smart to get preapproved and then get Loan Estimates from more than one lender. The Loan Estimate provides details about the loan terms, monthly payment and estimated closing costs. With those pieces of information, you can compare offers and choose the best deal.
Home equity loans and lines of credit
Homeowners who want to access their home equity without refinancing or selling can take out second mortgages.
A home equity loan offers access to cash based on the value of the home for any expenses, although it is recommended homeowners use the funds for upgrades and repairs that add value to the home. This loan is paid out in a lump sum that is then repaid over a specific amount of time.
A home equity line of credit, or HELOC, also offers cash but works more like a credit card, allowing a homeowner to withdraw funds multiple times, up to the limit of their credit line, during a specific period and then pay it back.
Because both of these options use the home as collateral, a homeowner must understand that failure to make payments could result in loss of the home. As with purchase loans, it’s wise to compare offers from more than one home equity lender.
If you ever want to learn how to make your own home decor out of iron and steel, we have just the place for you.
James Groh joined us live from Milwaukee Blacksmith. Groh was at the new location right by the airport near 10th and Layton.
Milwaukee Blacksmith hosts public and private classes where you can make hearts, beer holders, fire pokers, can openers, and more. It’s all about getting things hot and hitting them hard. You’re guaranteed to leave with something cool. It’s perfect for dates, family fun, and company bonding.
[Watch the videos at the top of this article to learn more]
It’s about time to watch on your time. Stream local news and weather 24/7 by searching for “TMJ4” on your device.
Available for download on Roku, Apple TV, Amazon Fire TV, and more.
That was not the fate of Orion Lending’s mission statement. Lenny Spatola (pictured), Orion’s vice president national sales manager, has it right beside his desk. He signed it when he came on board, and regularly consults it – even during a recent interview. “Everyone has this on their desk,” he said, holding the statement up … [Read more…]