Tristan Sherrill NMLS 299820

Thrive Mortgage LLC   NMLS #286020

5601 Granite Parkway, Suite 550, Plano Tx 75024

FHA continues to be one of the most commonly used finance options.  FHA stands for "Federal Housing Administration" and is a loan program created by the federal government in 1934.  FHA loans account for nearly 25% of loans originated and are a favorite of first time home buyers due to the low down payment requirements and flexible credit standards while still  maintaining low rates.  

Great for first time homebuyers

FHA 

Conventional loans are not guaranteed nor backed by any government agency.  Underwriting guidelines are set by Fannie Mae and Freddie Mac allowing the purchase of primary residences as well as investment and 2nd home properties.   Typically conventional loans will require better credit and down payments to qualify.  Conventional mortgages make up more than 60% of all loans originated in the U.S.  

Great for high credit borrowers

Conventional

Military home buyers and veterans can take advantage of zero down financing through the Veterans Administration loan.   While it requires an up front VA funding fee to be rolled into the loan, there is no monthly M.I.  Couple that with flexible underwriting guidelines and low rates and it's one of the best loan products available.   Additional discounts can be utilized for VA home buyers with service related disability.   

Zero down and no M.I. for military

VA

USDA is only available in certain areas based on the most recent census tract information.  Typically these areas are rural.  It requires strict maximum income requirements based on area and number of family members and considers all household income in the calculation.  You are not allowed to own another home and be eligible but you are not required to be a first time home buyer.  It's a fantastic option if you make less than the maximum and find a home in a USDA eligible area. 

No down payment for rural properties

USDA

Jumbo loans, also called non-conforming, due to being above the conventional conforming loan limit, typically have very similar underwriting parameters that would be found in the smaller conventional loans.  However jumbo does typically have stricter guidelines, higher minimum credit standards and may require reserves to qualify due to the larger amount being loaned.  In the past always requiring 20% down payment but now offer alternatives to put down less than 20%. 

Larger home purchases

Non-conforming(Jumbo)

Non-QM stands for non qualified mortgage.  Meaning it falls outside the definition set by the CFPB and therefore not granting the lender the same liability protections given to standard loan programs.  These programs are made up of loans that use alternative documentation or credit requirements to approve borrowers for loans.  For example, a self-employed borrower who cannot document income may utilize a 12 month bank statement program to document income, a source not allowed through conventional or government loan programs.  There are many different forms of non-QM loans so if you are having issues with standard loan programs this may provide you the alternative needed to get your new home. 

Outside the box solutions

Non-QM (Portfolio) 

Pros 

  • Low down payment requirement - 3.5% minimum

  • Eligible to be underwritten as low as 580 FICO

  • Flexible Underwriting

  • Low rates

  • Higher qualifying debt ratios

Cons

  • Up front mortgage insurance of 1.75% required

  • PMI required regardless of down payment amount. 

  • PMI required for the life of the loan.

  • Appraisals must meet HUD appraisal standards.

Pros 

  • As little as 3% - 5% down payment required (3% if qualified)

  • PMI not required if putting down 20% or more.

  • Offers products to purchase investment properties and 1-4 unit properties. 

Cons

  • Credit requirements more rigid.

  • Down payment and credit scores can drastically affect rate.

  • Debt ratios are much more rigid

Pros 

  • Zero down payment required

  • No monthly mortgage insurance required

  • Eligible for underwriting review with as low as 600 FICO

  • Flexible Underwriting

  • Low Rates

  • Higher Qualifying Debt Ratios

Cons

  • Only available to eligible enlisted and veteran military members

  • Requires up-front VA funding fee

  • Requires you to meet specific residual income parameters

Pros 

  • Zero down payment required

  • Very low monthly mortgage insurance required

  • Eligible for underwriting review with as low as 620 FICO

Cons

  • Maximum income limit requirements

  • Can only lend in an eligible "rural" area

  • Strict credit and ratio guidelines

  • Must be reviewed by USDA prior to underwriting, adding significant time to the process

Pros 

  • Provides financing options for loans above the conventional loan limit

  • Allows financing of primary residence, second homes and investment properties

Cons

  • Underwriting guidelines vary by program

  • Credit, Debt Ratios, and required reserves are much more rigid

Pros 

  • Offer solutions for borrowers with a unique situation that may make them ineligible for conventional or government financing

Cons

  • Higher rates

  • Higher reserve requirements

  • Alternative documentation requirements