If you’re in the market to purchase a new home, your first step will most likely be seeking out a mortgage. 5280 Lend, a mortgage company in Denver, CO, shares that 80 percent of millennials dream of becoming homeowners but believe they won’t be able to afford it. For one reason or another, today’s young people feel they can’t qualify for or keep up with the loans that would enable them to own their own homes.
However, that is not necessarily the case. There are several types of mortgages for which one might qualify, and the requirements for them vary. With help from the right mortgage company, you’ll be able to find a mortgage that can help you achieve your dream of home ownership.
The FHA loan has a reputation as being intended for first time home buyers, and it is true that younger borrowers may find this loan more useful. It brings along the benefits of lower required down payments, lower credit score requirements, and a more simplistic loan process. However, being on your first home is not a necessary criterion to qualify for the FHA loan. The criteria that FHA loan borrowers must meet are as follows:
- A credit score of at least 500. This score qualifies borrowers for a 10% down payment. If your credit score is above 580, the required down payment drops to 3.5%. This is hugely beneficial to younger homebuyers, who may not have much money saved up
- Proof of employment and sufficient income. This is required for any loan.
- You must apply with the Uniform Residential Loan Application.
- The property in question must be inspected and must meet Housing and Urban Development’s minimum safety standards.
Fixed Rate Loan
The fixed rate loan is the most common type of loan available. This is a good option because it’s very straightforward. You and the mortgage lender will settle on a rate, and that will be the amount you agree to pay for the duration of the loan until it’s paid off. It’s predictable and safe. You’ll be able to look at a calendar on the day you take out your loan and know exactly when it will be paid off. The requirements, however, are more strenuous. They include:
- A high-end limit to the amount you can borrow.
- A required down payment of at least 5%, and an optimal down payment of at least 20%.
- A recommended credit score of 740 or higher.
Other Loan Types
If neither the FHA nor the conventional loan is right for you, discuss your options with your lender. There are other types of loans out there that might better suit your specific needs. You might find that you qualify for:
- Adjustable rate loan – good for home buyers with lower credit scores who are still capable of making a sizeable down payment.
- VA loan – good for veterans, who can benefit from this no money down offers
- USDA loan – for families in rural areas who are having financial troubles.
No matter what your situation, it’s likely there’s a loan out there for you. Talk to a mortgage lender today and find out more.
February 27, 2019