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Community First National Bank - McAllen, TX
Committed to World Class Service

Purchase Loans

Purchase Loans

CONVENTIONAL MORTGAGE LOANS

A Conventional Mortgage is simply any mortgage loan that is not insured or guaranteed by the federal government. Conventional Mortgages typically require a higher down payment, usually 5%-20%. They also have higher income and credit score requirements than government loans.

Conventional Mortgages can have a fixed interest rate or an adjustable interest rate. Typical fixed-rate loans have a term of 30 or 15 years. However, Community First National Bank offers 30-year, 25-year, 20-year, 15-year, and 10-year fixed-rate options.

What are the benefits of a Conventional Mortgage?

Conventional Mortgages offer the following features:
  • Buyer has immediate equity in the property.
  • No private mortgage insurance is required with a 20% down payment, which is a great advantage.
  • No Up-Front Mortgage Insurance fee.
  • Closing costs and fees may be included in the loan.
  • Repayment terms are generally more favorable.
  • Fewer bureaucratic hurdles, making the loans quicker to process.
  • No government stipulations and prepayment penalties if you sell or refinance your house.

JUMBO MORTGAGE LOANS

Jumbo mortgages are home loans that exceed conforming loan limits. A jumbo loan is one way to buy a high-priced or luxury home. If you have a lower debt-to-income ratio and a higher credit score, a jumbo loan may be right for you.

The limit on conforming loans is $453,100 in most areas of the country, but jumbo mortgages can exceed these limits. Even so, if you're considering a home in a high-cost area, you may still be able to obtain a conforming fixed-rate mortgage or adjustable-rate mortgage for up to $679,650. FHA loans have limits up to $721,050. Contact a mortgage loan officer to learn more.

Requirements and qualifications

  • Credit history - Conventional loans are a good choice for borrowers with very good credit, which generally means a FICO score of 740 or higher. There are also established guidelines for income and other personal financial information.
  • Financial strength - When applying for a jumbo mortgage, the maximum debt-to-income ratio for jumbo loans is 45 percent.
  • Property appraisal - The property appraisal must support the purchase price for the home and the mortgage the borrower wants.
Jumbo mortgages are a good solution for borrowers who are looking to buy a higher-priced home. Compare mortgage options, to learn more contact one of our mortgage loan officers to find out whether a jumbo loan may be right for you.

FHA LOANS

An FHA loan is a mortgage that's insured by the Federal Housing Administration (FHA). They are popular especially among first time home buyers because they allow down payments of 3.5% for credit scores of 580+. However, borrowers must pay mortgage insurance premiums, which protects the lender if a borrower defaults.

Borrowers can qualify for an FHA loan with a down payment as little as 3.5% for a credit score of 580 or higher. It's important to remember though, that the lower the credit score, the higher the interest borrowers will receive.

FHA Loan Requirements

For borrowers interested in buying a home with an FHA loan with the low down payment amount of 3.5%, applicants must have a minimum FICO score of 580 to qualify. However, having a credit score that's lower than 580 doesn't necessarily exclude you from FHA loan eligibility. You just need to have a minimum down payment of 10%.

The credit score and down payment amounts are just two of the requirements of FHA loans. Here's a complete list of FHA loan requirements, which are set by the Federal Housing Authority:
  • Borrowers must have a steady employment history or worked for the same employer for the past two years.
  • Borrowers must have a valid Social Security number, lawful residency in the U.S. and be of legal age to sign a mortgage in your state.
  • Borrowers must pay a minimum down payment of 3.5 percent. The money can be gifted by a family member.
  • New FHA loans are only available for primary residence occupancy.
  • Borrowers must have a property appraisal from a FHA-approved appraiser.
  • Borrowers must have a minimum credit score of 580 for maximum financing with a minimum down payment of 3.5 percent.
  • Typically, borrowers must be two years out of bankruptcy and have re-established good credit. Exceptions can be made if you are out of bankruptcy for more than one year if there were extenuating circumstances beyond your control that caused the bankruptcy and you've managed your money in a responsible manner.
  • Typically, borrowers must be three years out of foreclosure and have re-established good credit. Exceptions can be made if there were extenuating circumstances and you've improved your credit. If you were unable to sell your home because you had to move to a new area, this does not qualify as an exception to the three-year foreclosure guideline.
  • The property must meet certain minimum standards at appraisal. If the home you are purchasing does not meet these standards and a seller will not agree to the required repairs, your only option is to pay for the required repairs at closing (to be held in escrow until the repairs are complete).

Benefits of FHA Loans

Low Down Payment & Less Strict Credit Score Requirements

Typically, an FHA loan is one of the easiest types of mortgage loans to qualify for because it requires a low down payment and you can have less-than-perfect credit. For FHA loans, down payment of 3.5 percent is required for maximum financing. Borrowers with credit scores as low as 500 can qualify for an FHA loan.

Borrowers who cannot afford a 20 percent down payment, have a lower credit score, or can't get approved for private mortgage insurance should look into whether an FHA loan is the best option for their personal scenario.

Another advantage of an FHA loan it is an assumable mortgage which means if you want to sell your home, the buyer can "assume" the loan you have. People who have low or bad credit, have undergone a bankruptcy or have been foreclosed upon may be able to still qualify for an FHA loan.
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