» Loan Programs
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Battle of the Home Mortgage Products: FHA vs. Fannie Mae HomePathRecently I have had several inquiries about a number of special loan programs available. The latest, attractive looking product in the market is the Fannie Mae HomePath loan. Depending on your individual needs, this product could be the right fit. However, compared to FHA, the HomePath loan does have some drawbacks.
Here is a comparison of the two loan products:
FHA:
- Down payment requirement: 3.5% down payment minimum.
- Requires financed upfront mortgage insurance premiums and monthly mortgage insurance premiums.
- FHA appraisal conditions required.
- No declining market conditions.
- Interest rates are extremely competitive.
- Minimum 620 credit scores with most investors.
- Primary residences only, no 2nd homes or investors.
- Financing available to FHA county loan limits.
- Eligible properties: FHA approved condos, single family homes, planned unit developments and manufactured housing.
- Seller concessions: 6% toward buyers closing costs and prepaid expenses.
Fannie Mae HomePath:
- Down payment requirement: 3% minimum on primary residences and 10% down minimum on 2nd homes and investment properties.
- Does not require any mortgage insurance premiums.
- No appraisal required, home must be Fannie Mae owned.
- No declining market conditions.
- Interest rates are less competitive.
- Pricing of the loan is less competitive.
- Minimum 660 credit score requirements.
- Primary residences, 2nd home or investors are eligible.
- Financing available to conforming loan limits.
- Eligible properties: Fannie Mae approved condos, single family homes, planned unit developments.
- Seller concessions: 6% for primary residences, 6% for 2nd homes and 2% for investors.
As illustrated, both of these loan products have benefits and drawbacks. For a typical homeowner planning to buy a home for their primary residence, FHA is by far a superior product allowing lower costs of the loan and payments. However, if you are looking for a great investment loan alternative, the HomePath product is an excellent fit.
The HomePath loan has much more flexibility with certain options, but could be challenging given the higher interest rates, cost of loans and minimum credit score requirements. These factors all depend on your specific financial needs.
If you have specific questions and need further advice, please feel free to call or email me. Every situation can be different.
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USDA: Rural Housing Program: Another Alternative For Zero or Nothing Down Borrowers
Well it sounds like Down Payment Assistance might be back but with changes. Until this does take effect I have been scouring through loan programs looking for good alternatives for clients with little or nothing down.
The USDA Rural Housing Program is another viable mortgage option to help clients with nothing down.
Here are the Pros: 100% financing, Zero Down. No monthly Mortgage Insurance, FHA Mortgage guidelines.
Here are the Con’s: Home must be in a rural housing area. This is all of Pinal County and parts of Maricopa County. So Queen Creek is in place. Some income restriction apply.
Again, I think the mortgage lender who has workable options to help clients get into homes will win the business at the end of the day.
Please call me if you are looking for some of these options to discuss your unique situation.
