A Look At Conventional, FHA, and VA Loans

We’re pleased to be partnering with Tim and Dave at Trusted Lending Advisors as our current sponsor!  My husband, Jeremy, is a local Realtor and highly recommends Tim and Dave if you’re considering purchasing a home or refinancing – they’re easy to work with and provide service – and rates – that you can’t get just anywhere.

So far we’ve looked at the things you need to have ready if you’re looking to purchase a home or refinance your current home.  Today, we’re going to take a look at the types of loans that are available so that you’re familiar with the basic options when you call to talk to Tim or Dave.

Right now rates are running as low as 3.75% on 30-year fixed FHA and VA loans, and around 4.0% on 30-year fixed Conventional loans.  10 and 15-year loans are running in the low 3% range on most loan programs.

→ Conventional Loan

A conventional loan is typically the best loan program for people with good credit and a larger down payment.  Conventional loan programs are available starting with as little as 5% down.

If your down payment is less than 20%, ask Tim about their option to “pre-pay” mortgage insurance, as this option can be much cheaper overall than an FHA loan if you can afford to pay the mortgage insurance up front.

→  FHA Loan

An FHA loan typically allows for the smallest down payment – usually 3.5%.  You can do as little as $1,000 down with an FHA CHFA loan.  (CHFA stands for Colorado Housing and Finance Authority, which provides down payment assistance to qualified buyers.)

FHA loans are more lenient on credit standards and debt ratios than a conventional loan, and can be used to purchase a home up to $325,000 in El Paso County. However, FHA loans require both up-front mortgage insurance as well as monthly mortgage insurance, and those mortgage insurance rates are going up significantly on all new FHA loans after April 9th, 2012.  So, this is still a great program for many first-time buyers or buyers with lower credit scores or lower down-payments.

→ VA Loan

If you are eligible for a VA (Veterans Affairs) loan, this is often your best option.  VA loans allow for 0% down while at the same time having among the best rates available.  Like FHA loans, they are more lenient on credit standards and debt ratios.  VA loans also require up-front mortgage insurance (called a VA Funding Fee), but do not require any monthly mortgage insurance, which is another attractive feature on this type of loan.

VA funding fees range from 2.15% to 3.3% of the loan amount depending on first-time or repeated use of this loan program.  VA refinances (for clients in an existing VA loan) run as low as .5% of the loan amount, and for veterans with a  10% or higher disability rating the VA funding fee is waived altogether.

VA loans are sometimes more flexible in treating specific situations, such as rental income from a past residence (common among military families who have moved).  There are no limits as to the price of home you can purchase with a VA loan.

Get in touch with Tim and Dave!

Obviously, this is a very brief look at the three basic types of loans, but it gives you a general idea of what options might be available for your situation.

If you’re thinking about purchasing a home, I would love for you to call Tim or Dave at Trusted Lending Advisors at 719-266-8183 to see what kind of loan would work best for you.

Right now rates are running as low as 3.75% on 30-year fixed FHA and VA loans, and around 4.0% on 30-year fixed Conventional loans.  10 and 15-year loans are running in the low 3% range on most loan programs.

You can call Tim and Dave at Trusted Lending Advisors at (719) 266-8183 or visit their website to contact them via email.

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