Mortgage Loan Programs
There are three Main Residential Loan Categories:
1) Primary Residence
2) Second Home, or
3) Investment Property
When you apply for a residential loan, it will be in one of these ownership categories.
All loans we originate fall into one of these 3 categories.
All three of these properties types may include 1, 2, 3 or 4 units in one building,
but when you get above 4 units, it becomes Multi-family or Commercial.
The Purpose for a Residential 1st mortgage includes these 3 choices:
2) Refinance, or
You may have a variation from one of these, such as a Renovation loan (a type of construction loan) or
using the equity in your home to build a swimming pool or consolidate other debts (a Cash-out Refinance).
Here's where it begins to get more complicated and the type of loan you need will depend on more factors,
such as your credit score and down payment.
This is the regular Fannie Mae or Freddie Mac loan.
Maximum Loan Amount: $548,250 (with some exceptions)
Term: 30, 25, 20, 15 or 10 year Fixed Rate loans, or 3, 5, 7 or 10 year Adjustable Rate loans.
Further division within the Conventional Loan type:
1. 97% Loans – HomeReady (Fannie Mae) and Home Possible (Freddie Mac) – A 3% down payment program where the down payment may come from a gift. A 640-680 minimum middle credit score is needed depending on Reserves and Debt ratio. The Seller is only allowed to pay 3% of the sales price toward loan closing costs. Private Mortgage Insurance (PMI) is required.
2. 95% Loan - Standard 95 – A 5% down payment is required and now a gift is allowed for the downpayment. A 620 minimum middle credit score is required and the Seller is allowed to pay a maximum of 3% of the sales price toward loan closing costs. Private Mortgage Insurance is required, although more options are available than with a 97% loan.
3. 90% Loan - Standard 90 – A 10% down payment is required and it may be a gift. A 620 minimum middle credit score is required and the seller is allowed to pay up to 6% of the sales price towards closing costs. PMI is required but at a reduced rate.
4. 80% and below – A 20% down payment is required and may all be a gift. The seller can pay up to 6% of the sales price towards closing costs and no PMI is required. An escrow account for taxes and insurance is not required.
This is a government loan insured by HUD and is probably the most popular lower down payment program available.
Maximum loan amount: $356,352- Glynn, McIntosh, Brantley, Camden, Wayne and other outlying counties; $412,850 – Metro Atlanta counties.
The minimum down payment is 3.5% and can come from a gift. The minimum middle credit score required is 620, although lower scores can be approved with additional requirements and the Seller is allowed to pay 6% of the sales price towards closing costs.
An FHA loan is allowed to be coupled with a Community Second Mortgage, such as those in Brunswick and Savannah, for a possible 100% loan. There are geographic and income restrictions on these programs.
Mortgage Insurance for FHA consists of both an up-front premium of 1.75% added to the loan amount, plus a .85% of the loan amount (annual) divided by 12 for the monthly amount to be included in your payment.
This is a loan benefitting qualified Veterans and is a 100% loan. The maximum 100% loan is $548,250 and if the Sales Price is higher, the Veteran must put down 25% of the amount above $548,250. The minimum middle credit score is 620 and the Seller is allowed to pay all of the closing costs. The VA Funding Fee (Mortgage insurance) is required and consists only of an up-front premium added to the loan and this premium varies based on number of previous uses and if the Veteran has a service-connected disability.
This is a 100% loan in targeted rural areas and does have income limitations. The minimum middle credit score is 620 and the Seller is allowed to pay all the closing costs.
To determine both the geographic boundaries and the income limits, visit the Rural Development website here. Borrowers may not own other real estate, and Mortgage Insurance is required.
A Reverse Mortgage allows borrowers age 62 and older to pull equity from their home and the amount available is based on age and the appraised value of the home.
The proceeds are generally available either in a lump sum, a line of credit or monthly payments. There are some credit and income requirements to ensure the taxes and insurance will be paid on the property. It is possible to have a LESA (Life Expectancy Set Aside) required as a part of your proceeds.
Typically a reverse mortgage is a refinance, although Reverse for Purchase program is becoming more popular. Click here for more information on Reverse Mortgages.
A Jumbo loan program is for loans over $548,250, commonly referred to as "Jumbo" loans and for loan amounts in excess of $650,000, commonly referred to as "Super Jumbo" loans.
Jumbo loans have been making a comeback after they practically went away following the financial crisis in 2008. Lenders seemed united in their desire for 20% down on these loans and want 700+ scores. They are available in various fixed rate terms as well as ARM programs where the rate is fixed for 3, 5, 7 or 10 year terms on a 30 year amortization.
Specialty - Condominium
Condominium financing has become more restrictive over time but we still specialize in financing them on Conventional, FHA and VA loan programs.
They typically involve a little more paperwork, such as Condo Questionnaires as well as a budget and other condo specifics. Most of the condo complexes on St. Simons are eligible for normal financing. Fannie Mae imposes a pricing hit of .75% until a down payment of at least 25% is reached, and that .75% will increase a rate about .125% (1/8).