Which Loan Program or Mortgage Program is Best For Me?

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 Fixed Rate terms feature constant interest rates and payments may be a good choice if you plan to stay in your home for 7+ years.

Buyers with a good credit score and money for a down payment.

When it comes to loan programs, the traditional 30-year fixed-rate conventional mortgage is one of the most popular. With a constant interest rate and monthly mortgage payments, it is a great option for those looking for consistency in their payment program. For prior homeowners, the down payment can be as low as 5%, and for first-time home buyers it can reach as low as 3%.

Keep in mind that if the down payment is less than 20%, Private Mortgage Insurance (PMI) will be required, but will drop off once your loan reaches 80% loan-to-value (LTV).

Unlike government loans, conventional loan programs place more importance on the borrower’s financial qualifications. Meaning, that when you apply for a conventional loan, you will get a better rate if you have better qualification factors. These factors can include: higher credit score, significant liquid assets in your bank account, and low debt-to-income ratio.

Low Monthly payments
3% and 5% Down Payments Available
PMI will cancel once 20% equity is reached

Heavily dependent on credit score and income.
Potentially higher interest rate, in contrast to other loan programs.

Unsure which mortgage program will best fit your needs? contact us and one of our home loan advisors will help find a program that best fits your unique situation.

THDA created Great Choice Home Loan programs to make homeownership available and affordable for Tennesseans of middle/moderate income.

• 30-Year Term - Your monthly payments are spread out across 30 years to keep them affordable.
• Fixed Interest Rate - The interest rate never changes throughout the entire life of the loan.
• Minimum Credit Score - The credit score of everyone on your loan application must be at least 640. If you do not know your credit store, your lender can check for you. If your credit score does not meet the minimum requirement, you can work with a THDA-Approved Counselor to improve your score.
• Household income and purchase price limits - The maximum of your total household income and the price you can pay for a home and still qualify for the Great Choice Home Loan program varies by county. See the full chart of income and purchase price limits.
• Down Payment Assistance - Most Great Choice Home Loans are insured by FHA or USDA-RD, which means you may be eligible to borrow up to 96.5% of the total price of the home you’re buying. This means you need a minimum of 3.5% for a down payment. You can use our Great Choice Plus down payment assistance for any loan-related costs, including your down payment and/or closing costs.
• Off-Site Manufactured Housing - You can use your Great Choice Home Loan to purchase off-site manufactured homes! Learn more here!

Are you working on getting established? FHA loans can be a good option for those with less-than-ideal savings and lower credit scores.

First time homebuyers with less-than-perfect credit.

FHA loans are loans insured by the Federal Housing Administration. With a down payment as low as 3.5% and interest rates generally lower than conventional loans with the same terms, this type of loan is perfect for those who may not meet the qualification factors required for a traditional conventional loan program. FHA loans encourage home ownership, by providing affordable housing opportunities with low down payments and flexible credit requirements.

An FHA loan is particularly beneficial to those borrowers with less cash available to them, because of their allowance of gift funds and seller credits in the transaction.

3.5% down payment
Easier credit and income qualification
Up to 6% in seller credits allowed
Gift funds available

Required Upfront and monthly mortgage insurance
Mortgage insurance is permanent for life of loan.

 Looking to avoid the hustle and bustle of big city life? USDA Loans offering 100% financing for those purchasing in rural areas.

Buyers looking to purchase a home in a rural or suburban area with no down payment and minimal investment.

A USDA loan is one that is backed by the U.S. Department of Agriculture. This type of mortgage loan offers many advantages for borrowers who may not qualify for other programs, such as flexible credit guidelines and low monthly mortgage insurance costs. It is important to note that properties that qualify for USDA funding must fall within certain geographical areas.

No down payment option
Flexible credit and qualifying guidelines
Ability to finance repairs and closing costs into loan

Geographical restrictions
Income limits
Single family, owner occupied homes only – no investment properties

Are you a Veteran or in Active Duty in the United States Military? VA loans are great option for anyone who has served our nation.

Veterans or active-duty military who are looking to purchase a home.

A VA loan is a one backed by the U.S. Department of Veteran Affairs. This type of loan can offer low interest rates with zero down payments and no monthly mortgage insurance. With an upfront funding fee that can be rolled into the loan amount, veterans are not required to pay out of pocket.

The VA loan program is an excellent choice for first time and repeat buyers alike. With zero down payment and up to 6% seller concessions available to cover closing costs and pre-paids, it is possible to structure a VA loan with little to no money out of the borrower’s pocket at closing.

Zero down payment required
No monthly mortgage insurance
Low monthly payment

Not available to everyone - Limited to veterans or military personnel
Has upfront funding fee (VA’s version of mortgage insurance)

A VA (Veterans Administration) guaranteed home loan is the preferred loan program for active, non-active, Reserve, National Guard, and retired military of the armed forces because there is no down payment needed and no private monthly mortgage insurance required.

A 3/1, 5/1 or 7/1 ARM may be a good choice for you if you expect to move (or refinance) before or shortly after your first rate adjustment.  

Buyers who expect to move (or refinance) before or shortly after their first rate adjustment.

Unlike fixed-rate mortgages, adjustable rate mortgages (ARM) have fluctuating rates. Your interest rate is fixed for a specific period. However, the rate may change depending on the market. Which means that your monthly mortgage payments could increase or decrease. In many cases, ARMs come with rate caps that limit how high the rate can be or how the payments can change.

Interest rate or the fixed-rate portion is usually lower than a 30-year fixed rate.
Flexibility – ARMs may be a good option if you plan to move or pay off your mortgage in a few years.
Payments could decrease if interest rates fall.

Payments could increase if rates rise.
ARMs are a complex loan that have rules, fees, and structures not found in other programs.

 Contact us to see if you qualify.