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Rene Ramos
(310)386-1693 Call/Text
Sr. Loan Officer
NMLS # 1004421 DRE Lic #02133360
A home loan is also called a mortgage.
A mortgage is a type of loan used to finance the purchase of real estate. This includeds homes, land, and commercial properties.
The most common mortgage loans used by first-time homebuyers are FHA, Conventional, and VA loans.
The type of mortgage loan that a homebuyer will use to purchase a home will depend on lending guidelines and the homebuyer’s ability to meet these requirements.
FHA Loans
FHA stands for the Federal Housing Administration. This is a department within the Department of Housing and Urban Development (HUD).
FHA loans are loans that are insured by the federal government. This insurance protects the lenders who issue these loans in case a homebuyer defaults on their mortgage. This type of insurance is called mortgage insurance.
Highlights of FHA Loan
- Great for first-time buyers
- Down payment as low as 3.5 percent of the purchase price
- Flexible credit scores and credit debt requirements
Conventional Loans
Conventional loans are also great loans for first-time homebuyers. However, conventional loans can also be used to purchase a second home and investment properties.
Unlike FHA loans, which are insured by the federal government, conventional loans are insured by private insurance companies.
Highlights of Conventional Loans
- Down Payment can be as low as 3 or 5 percent.
- Mortgage insurance may not be required after a 20% down payment.
- Can be used to finance second homes and investment properties.
VA Loans
If the borrower defaults on their mortgage loan, The Department of Veteran affairs will pay the debt to the lender.
VA loans are loans that are guaranteed by The U.S. Department of Veteran Affairs. The Department of Veteran Affairs works with mortgage lenders to issue loans to qualified US Military personnel and their qualified spouses.
Highlights of VA Loans
Zero down payment requirement for most VA loans.
Mortgage insurance is not required.
Flexible credit score and debt requirements.
Bank Statement Loan Program
This loan is for self-employment homebuyers only. This program requires a history of 12 to 24 months of bank statements from the homebuyer to document their income.
The lender will typically use only 50 percent of the deposits and subtract non-business related deposits to calculate the buyers loan qualifying income.
Debt Service Coverage Ratio Program
This loan is for investment properties only. Most often, as far as income requirements go, this program may only require that the rental income covers the monthly mortgage payment, plus property taxes and insurance.
Non-Traditional Home Loans
Non-Traditional loans are mortgages that may not require full income dislcosure, such as tax returns.
These types of loans are primarily used by self-employed homebuyers and seasoned investors.
Because full disclosure of income is not always necessary, these mortgages may be considered higher risk loans for lenders and may require higher down payments and have higher interest rates.
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