Home Buying Loan Options
Be an educated buyer and learn more about the home buying loan options available to you.
First-Time Home Buyer?
A first-time home buyer is not just someone who’s never purchased a home before. You could qualify as a first-time home buyer if you or your spouse haven’t owned a home in three years. The term also extends to recently divorced persons who have only owned a home jointly with a spouse.
Conventional Loans
A conventional loan is a mortgage that is not guaranteed or insured by any government agency, including the Federal Housing Administration (FHA), the Farmers Home Administration (FmHA) and the Department of Veterans Affairs (VA). It is typically fixed in its terms and rate and backed by private lenders, and its insurance is usually paid by the borrower. Conventional loans are much more common than government-backed financing.
FHA Loans
The Federal Housing Administration offers a program that allows first-time buyers to purchase a home with as little as 3.5% down. One caveat—and it can be a serious one—is the mortgage insurance requirement on an FHA loan.
VA Loans
As a veteran or active service member of the United States military, you qualify for 100% financing with a VA loan, which means no down payment and no need to purchase private mortgage insurance. Most reservists, National Guard members, and spouses of military members who died while on active duty may also apply.
To qualify for a VA loan, you’ll need a certificate of eligibility and a good debt-to-income ratio, and you’ll have to meet VA and lender guidelines for credit score.
USDA Loans
The U.S. Department of Agriculture’s Rural Development Guaranteed Housing Loan Program, offers 100% financing—no down payment necessary, to those who qualify.
The properties must be in areas with a population below 35,000, so they are primarily rural areas, although some suburban areas could qualify.
These loans are available only to families demonstrating need—they are without current safe housing and have an adjusted income at or below the local limit.
National Homebuyers Fund
The National Homebuyers Fund provides down payment assistance in the form of a nonrepayable grant, for up to 5% of the loan amount. You read that right—you don’t have to pay back anything. The NHF Sapphire program is available in multiple states and has generous FICO score requirements (which is a good thing if you have a subpar credit score).
Colorado Housing and Finance Authority or CHFA
CHFA grants are available regardless if you’ve owned a home before. Borrowers also have to have a mid-credit score of 620 or higher, contribute $1,000 toward the transaction and complete a CHFA homebuyer education class.
Note, this is not an exhaustive list of loan options, other options may be available. These are the most utilized loan options. Please consult your mortgage specialist for detailed information. If you don’t have one, I can recommend some great loan specialists.