Purchase

Buying a home to occupy as your primary residence, of an investment property can be exciting.  There are some general factors to keep in mind regarding different loan products.

Down Payment:

If you are buying the property for yourself or your family there are many options to choose from:

  •  FHA loan have some of the lowest down-payment programs.
  • Conventional loans require more for a down-payment compared to an FHA loan.  But if you can put at least 20% of the purchase price down then you would not need mortgage insurance.  So that is a good threshold to shot for.
  • Veterans have options with the VA loan.  There is a program that allows you to buy a home without a down-payment if you are eligible.

Credit Scores:

  • 500 – This is what is typically referred to as, Non-prime, and would likely require 35% down-payment, and would be offered at a higher than normal interest rate.
  • 600 – This score opens the door to GSE type loans like FHA and Va loans.
  • 620 – Is usually the score needed to get a fannie, Freddie Mac type loan.

If you are purchasing the property for investment purposes, underwriting guidelines for Credit Scores are not as formulated, but factor in to the investor’s analysis of the property and the terms they are willing to offer.

Income:

If you are purchasing a home for yourself then you must show your ability to repay your loan. That is typically based on a 43% debt-to-income ratio. There are some products that will go as high as a 50% debt-to-income ratio.

Complete a quick loan inquiry, and we can help you determine how much home you can afford. 

 

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