Date AuthorEric ZhouCategory Mortgage Sense Share:

Which Type of Borrower Are You?

Matching you with the best loan for your situation

Borrowers like you deserve to reach their homeownership or refinance goals. To do that, let’s explore what type of borrower you might be and what loan could be the best fit for you. The great news is that there are more options than ever to get you into your own home.

Conventional Borrower

If you’re looking for a more traditional kind of home ownership program—especially if you have a W2-type of employment—a conventional loan might be your best bet. You’d be looking at either a 15, 20 or 30-year fixed rate, a cash-out refinance up to 80% LTV, and as low as a 3-5% down payment. Additionally, if you’re someone whose credit isn’t exactly in the best shape, you may still be able to qualify for a loan with a credit score as low as 620.

Gift-Funded Borrower

Let’s say you’ve been collecting birthday money over the years and you plan to use that as a down payment on a home. An FHA Loan could be a great option for you. An FHA is a flexible mortgage option you can use to purchase or refinance your home with a small up-front investment. If you’ve been collecting money from gifts and saving up, this allows you to purchase a home with as little as 3.5% down. Not bad, right? Other benefits include being able to refinance up to 97.5% LTV (if you qualify), credit scores can be as low as 620, and if you prefer, 100% of your down payment can come from gift funds. All that saving will make it even easier to qualify for a loan.

US Military Veteran Borrower

If you served in the US military—thank you to those who served—then you have access to additional home financing through the VA. Veterans who finance with the VA are able to purchase with as little as 0% down, you’re able to cash out up to 90% LTV, Mortgage Insurance (PMI) isn’t required, and just like the FHA Streamline Program, an appraisal or income documentation may not be required through the VA IRRRL Program.

Rural Resident Borrower

If you want to ditch the too-close-for-comfort neighborhood life in exchange for the peace and serenity of a more rural area, a USDA Loan Program might have your name written all over it. Down payment? As little as 0% down. Credit scores as low as 620? That may qualify. Even though your income level is taken into account, there would be minimal out of pocket closing costs and an appraisal may not be required. Wide open spaces, here you come!

Large Amount Borrower

If you’re looking at a much higher amount, say up to $3 million, then you might be interested in a Jumbo Loan Program. You can cash out up to $500,000 with credit scores being as low as 660. Purchase or refinance options, as well as 30-year fixed rate options, are available.

Unique Situations Borrower

Let’s say instead of spending money on a big wedding, you decide to put that money towards a down payment on your dream home. Everyone’s situation is going to have a unique aspect to it, so for these special situations, a Non-Agency Loan Program could end up being a great fit for you. You’d have the ability to qualify using 12- or 24-month personal bank statements, qualify using 24-month business bank statements, or you could use the cash-flow from an investment property as well as income to qualify. You also have the ability to qualify with a credit score as low as 620, non-warrantable condos can be accepted, and 30-year fixed and 10 year-interest-only options are available.

The main point here is that whether you’re a Veteran, a traditional borrower, or have a one of a kind situation, you have options.

Not sure which borrower you might be? When in doubt, reach out!