The Many Types of Loan Programs

There are a seemingly endless array of home loan programs available today. Here is a handy list of some of the more popular products:

Conventional Conforming Loans

• • Conventional Conforming Loans have maximum loan amounts that are set by the government.
  • Other rules and guidelines are set by Fannie Mae and Freddie Mac. Although, it is important to note that some lenders add additional guidelines which means not all conventional loans are underwritten the same. That’s why Blue Skye has multiple relationships with wholesale lenders to better serve our clients.
  • Minimum down payment on a purchase: 3% for First-time homebuyers;  5% for primary residence; 10% for second/vacation home; 15% for an investment property. (Note: The property type may require more down payment.)
  • Typically, if your down payment is less than 20%, you will need mortgage insurance.

Non-Conforming Loans

Non-Conforming Loans are any loans that don’t adhere to Fannie Mae or Freddie Mac requirements. FHA, VA, USDA, Jumbo and Non-QM loans are all examples of non-conforming loans.

FHA (Federal Housing Administration) Loans

• • FHA Loans are backed by the government and open to all qualified homebuyers.
  • FHA loans allow for down payments as low as 3.5% and credit scores lower than most conventional loans allow.
  • FHA loans have limits that change annually. To determine the FHA loan limit, click the link and input the county and state.
  • FHA loans require mortgage insurance.
  • Already have a FHA loan and want to refinance to a lower rate or shorter term? FHA allows for a streamline refinances for current FHA borrowers without having to provide income or a new appraisal in most cases.
  • FHA loans are assumable by qualified borrowers.

VA (Veterans Affairs) Loans

• • VA Loans are available to eligible veterans, current service members, and surviving spouses.
  • The VA does not lend the money directly. These loans are made by private lenders and guaranteed by the VA.
  • VA Loans do not require monthly mortgage insurance premiums, but generally require an upfront VA funding fee at closing.
  • Jumbo VA loans are available.
  • They are available with low or no down payments.

USDA (US Department of Agriculture) Loans

• • USDA Loans require zero down payment on homes in qualified USDA rural areas.
  • Borrowers must meet USDA income eligibility requirements – among other lending criteria – in order to be eligible.
  • Borrowers will pay an upfront fee at closing as well as ongoing mortgage insurance premiums to the USDA.

Jumbo Loans

• • Jumbo Loans – Like their name implies, are loans that exceed the conventional loan limits which vary by geographical area.
  • Jumbo loans are offered by lenders and banks. They are not a government program. Therefore, Jumbo loan guidelines can vary quite a bit from lender to lender.
  • Jumbo loans typically require good credit scores and more money down. However, there are exceptions. For instance, some allow as little as 10% down in certain circumstances.

Non-QM (Non-Qualified Mortgage) Loans

Non-QM loans do not conform to the Qualified Mortgage provisions set by the Dodd-Frank Act.

There are many types of non-QM programs available. For instance,

• • Borrowers can use financial assets as income.
  • Self-employed borrowers can use bank deposits for proof of income.
  • Investors can qualify based on the property’s cash flow. The borrower’s income and debt is not considered. These loans are known as DSCR (loans.
  • Plus, more than we can list.

Construction-to-Permanent (a.k.a. Construction-Perm) Loans

Construction-perm loans provide financing through construction and convert to permanent financing upon the home’s completion.

• • Borrowers payments are interest-only through construction.
  • Conventional, FHA, VA, USDA products available.
  • Minimum down payment requirements depend on the loan product and other qualifying factors.

Florida’s Hometown Heroes Program

Florida recognizes the importance of having quality frontline workers living in our beautiful state. They want them to be comfortable and settled in their own home. 

Rapidly increasing home prices over the past few years have made home affordability more difficult. That is why the State of Florida has created the Florida Hometown Heroes Program to help individuals in these occupations who have not owned a home for at least 3 years, if ever.

The State offers:

• • up to 5% (max $25,000) of the first mortgage to use toward down payment and/or closing costs. 
  • lower than market rates for first mortgages
  • reduced upfront fees

Borrowers must:

• • work full-time in a qualified occupation.
  • be within the areas income limit,
  • repay the 5% (up to $25,000) when they sell or refinance so that others can have the same opportunity. Zero interest is charged.

Note: Funds for this program may run out annually based on the amount allocated for the year.

There are lots of loan products available in Florida, so we encourage you to reach out to us! Our knowledgeable and friendly loan originators will help you select the best program that works for you (and not just the bank).