Types of Home Loans Offered by Mortgage Firms in Dallas | an Updated 2023 Guide
Every homebuyer is different and so are their goals. Some people spend a lot on home renovations and improvements, while others like to keep it in line with their savings and existing budgets. Some have zero to little savings to put down initially but a steady income to meet the monthly mortgage requirements, while others want to pay a good amount of money at the start, so they have to bear low mortgage payments monthly. So it depends.
But regardless of your needs and financing goals, there’s a loan program out there from which you can benefit. This article will list all the available home loan options a Dallas mortgage buyer can apply for. Once you know which specific loan type is best for you, you must contact a reliable mortgage firm in Dallas that can help turn your dream of homeownership into a living reality.
Traditional Home Loans Category
Let’s begin with one of the most popular loan categories – Traditional home loans. Both conventional mortgages and Jumbo Loans are part of this loan type. We’re going to talk about both of them down below briefly:
- Conventional Mortgage
Conventional mortgages are quite popular among potential homeowners and investors, all thanks to their less-restrictive nature and nominal fee structure. Unlike other loan types, the Federal Government does not guarantee conventional loans. Instead, they’re backed by two private agencies, Freddie Mac and Fannie Mae.
Conventional loans that need buyers to follow the guidelines set by these agencies are called Conforming Loans, while loans that do not follow them fall under the Non-Conforming Loans category.
Speaking of the benefits, conventional loans usually land with a lower fee structure. This is because the lenders set the rates. Also, unlike FHA and USDA loans, you don’t have to pay a funding fee in advance.
You may, however, need to showcase a minimum of 620 credit score or higher to be eligible for this type of loan. Besides this, you must also be ready to put at least 10% down initially (some lenders may even ask for a 20% downpayment). But obviously, you wouldn’t have to pay a PMI if you initially put 20% down on your conventional loan.
- Jumbo Loans
Another popular traditional loan category is Jumbo Loans. As its name suggests, these loans enable borrowers to have more money than set by FNMA and FHLMC. With a Jumbo Loan, you can easily finance a luxury villa or a multi-unit property you’ve dreamt of for years.
Not only this, but you can also refinance your Jumbo Loan and enjoy lower mortgage payments every month. Wondering how much you can borrow with this type of loan? You can apply for a Jumbo Loan if your financing needs exceed $548,250. Not to forget, the associated products are usually capped at $3000,000.
The biggest advantage of a Jumbo Loan is that it allows you to purchase a property that wouldn’t otherwise have been possible if you took a conventional mortgage route.
Government-Backed Loans
The name says it all. Government-backed loans are loans that the Federal Government guarantees. The most popular loan types under this category include:
- FHA
Don’t have an impressive credit history to lure your lender? Don’t worry.
The FHA loan is designed to facilitate borrowers with mediocre credit history and insufficient savings to pay as a down payment. The best part? The rest of the terms and conditions are quite lenient too. Sounds too good to be true? Well, it is.
While several advantages come in handy when you apply for an FHA loan, there are some downsides too, which makes this loan type a not-so-favorable option for many borrowers. For instance, despite its low down payment requirements, you’re still bound to put some money in the start. Besides that, you must also pay a higher MIP when you opt for an FHA loan. Lastly, FHA loans do not offer higher loan limits, which can be an issue if you want to invest in a high-value property in Dallas.
All in all, If you’re looking for a Government-backed loan with lower interest, less down payment, and lower income requirements, FHA loans are something you should consider.
- VA Loans
If you’re a veteran or an active military member with a Certificate of Eligibility, a Veterans Administration Loan (VA) can be a good option for you. The Veterans Administration administers this loan and offers amazing facilities to service members and their surviving spouses, including no down payment and PMI options. The program has been immensely successful and aided millions of veterans and their families in achieving their homeownership goals.
- USDA Loans
USDA Loans are named after the US Department of Agriculture. However, their goal is not to facilitate farmers only. These loans are available for properties located in the suburban/rural areas of the United States, and one needs to fulfill certain criteria to be eligible for this type of loan.
Specialty Loans
Besides traditional and government-backed loan categories, several specialty loans are available for Dallas residents. We’ll list a few of those here for you:
- First-Time Homebuyer Loan
Many First-Time Homebuyer loans are available on the market with easy qualification requirements. Borrowers may even benefit from low-interest rates and lower down payment requirements.
- FHA 203K Loans
FHA 203K loan programs aim to facilitate two types of buyers:
- Those who want to improve/renovate their existing home (FHA 203K Rehab Loan)
- Those who want to buy a new home and renovate it according to their preferences (FHA 203K Purchase and Renovation Loan)
Which Type of Loan is Right For You?
Well, it depends. As discussed above, not all homebuyers are created alike. Some have low income and more savings, while others have zero savings and a steady flow of income. The selection of a mortgage also depends on whether you need finances to buy a new home, refinance your existing mortgage, or renovate/repair your house. The type of property you’re willing to invest in may also play a role in deciding which type of loan is better for you.
Thus, make sure you analyze your needs and discuss your requirements with a reliable Dallas mortgage lender before you make a final decision.
