You’re ready to make your dream of homeownership a reality. But the steep price of real estate today has you worried that you might not be able to afford any of the homes you’ve favorited on Zillow, Trulia, and the many other property search apps you’ve been combing through. That’s where Community Credit Union (CCU) comes in. We have developed an expertise in mortgage lending, especially for first-time homebuyers, and we are committed to helping you figure out how you can afford and finance a home. A member of our mortgage lending team would be happy to speak with you about a variety of home loan products we offer. But if you’d like to get a head start, you can read through the following overview of four home mortgages that we believe are typically best for first-time homebuyers and their budgets.
As you read through this information, you may come across some mortgage-related terms that you’re not completely familiar with. Exactly for this reason, we put together a list of common home mortgage terms that you can refer to now and throughout your journey to becoming a homeowner.
4 Home Mortgages That May Help You Buy Your Dream Home
1. What Is a Conventional Loan?
Any home mortgage that is guaranteed by a private lender or a government-sponsored enterprise, like Fannie Mae, is considered a conventional loan. They are very popular loans among first-time homebuyers for many reasons, including that they generally offer lower interest rates that can be either fixed or adjustable, and, depending on the loan, down payments as low as 3% of a home’s purchase price. CCU is happy to help you evaluate your potential eligibility for a conventional loan. Some of the things we will review are your credit score, your debt-to-income ratio, your income stream, and the amount of savings you have set aside for a down payment. Together, we can determine whether getting a conventional loan is the best route for you to take to help turn your dream of homeownership into a reality.
2. What Is a Jumbo Loan?
The closer your home search gets to Boston, the higher the price of real estate is likely to be. If you fall in love with one of these more expensive properties, you may no longer be able to qualify for conforming loans—those that adhere to the lending limits set by the Federal Housing Finance Agency (FHFA). But that doesn’t mean you have to give up on your dream home! Instead, you may be able to qualify for a jumbo mortgage. These loans typically offer more flexible financing options, such as allowing borrowers to choose from fixed-rate and adjustable-rate structures. In general, though, jumbo loans have stricter eligibility requirements, including higher credit score standards and larger down payments, and may come with a higher interest rate. The CCU team is happy to help you carefully weigh the pros and cons of going with a jumbo loan.
3. What Is a Veterans Affairs (VA) Home Loan?
This is a special home mortgage option available exclusively to veterans, service members, and surviving spouses who aspire to be homeowners and who meet the VA home loan eligibility requirements. Because part of a VA home loan is guaranteed by the U.S. Department of Veterans Affairs, private lenders are able to offer qualifying homebuyers more favorable terms, such as competitive interest rates, often without requiring a down payment or private mortgage insurance. This VA-Guaranteed Home Loan program may also provide you with the opportunity to retain your home if you are facing a temporary financial hardship. CCU can assist you in determining whether you qualify for a VA home loan and, if you do, help you navigate the entire process.
4. What Is a Federal Housing Administration (FHA) Loan?
FHA loans are government-backed and insured by the Federal Housing Administration, enabling lenders, like CCU, to offer more favorable terms to borrowers, including lower interest rates. In addition, the credit score and down payment eligibility requirements for an FHA loan are generally lower, making it easier for first-time buyers to meet them. While an FHA loan is just one of the borrowing routes you can take, it may be a very good fit for you, particularly if you’re investing in a multifamily home.
Let CCU Help You Find the Best Mortgage for Your First Home
Now that you’ve learned more about several of the home mortgage options CCU offers, we’d love to help you narrow down your choices. Feel free to send us an email or fill out our contact form and one of our local mortgage lending experts will respond to you shortly. Our team looks forward to assisting you in making an informed (and exciting) decision about the mortgage that aligns best with your goals and dreams.