Loan Paths & Payment Models

• Conventional Loans: For buyers with solid credit (typically 620+) and savings. Down payments as low as 3% for first-time buyers, 5-20% standard. No mortgage insurance required with 20%+ down.
• FHA Loans: Federal Housing Administration loans ease down payment (as low as 3.5%) and credit requirements (580+). Includes mortgage insurance but allows lower credit scores and higher debt-to-income ratios.
• VA Loans: For eligible veterans, active service members, and surviving spouses. No down payment required, no mortgage insurance, competitive rates. Funding fee may apply.
• USDA Loans: For certain rural and suburban areas. No down payment required, income limits apply. Designed to help low-to-moderate income buyers in eligible locations.
• Renovation & Construction: FHA 203(k) and conventional renovation loans let you finance purchase + improvements. Construction loans fund building projects with phased disbursements.

It's not just about the sticker price. Together with your lender you can talk through:

• Monthly Payment Comfort: Your payment should leave room for life—emergencies, savings, and breathing room. Many lenders suggest keeping housing costs under 28% of gross income.
• Interest Rate Impact: A 0.5% rate difference on a $300,000 loan can mean $80-100/month difference. Points can buy down rates but require upfront cash.
• Term Length Trade-offs: 15-year loans = higher payments but less interest. 30-year loans = lower payments but more interest over time. Your lender can show exact numbers.
• Taxes & Insurance: Property taxes and homeowners insurance are often escrowed (included in payment). These can change annually, affecting your total monthly cost.
• Extra Payment Power: Even $100-200 extra per month toward principal can shave years off your loan and save thousands in interest. No penalties on conventional loans.

• 20% Down (Conventional): Eliminates private mortgage insurance (PMI), lowers monthly payment, shows strong financial position to sellers.
• 3-5% Down (First-Time Buyers): Conventional programs allow lower down payments. PMI required until you reach 20% equity, but gets you into a home sooner.
• Gift Funds: Family can gift down payment funds. Documentation required to show it's a gift, not a loan. Lenders have specific rules.
• Down Payment Assistance: State and local programs offer grants, low-interest loans, or tax credits for first-time buyers. Income and location restrictions apply.
• 401(k) Loans: Some plans allow borrowing against your 401(k) for down payment. Understand repayment terms and potential tax implications.