Government Mortgage Versus
Conventional Home Loans - Mortgage |
By Maria Ny |
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This article summarizes the differences between conventional and
government loans for first-time buyers, homeowners looking for
mortgage refinancing, and those looking to cash out on equity for
loan consolidation, debt consolidation or home improvement through
home equity loans (second mortgages).
Conventional
Mortgages
Not guaranteed or insured by the Federal
Government.
Features 0% to 20% down payment options.
Usually fixed mortgage rates for 15 to 30 years or adjustable rate
mortgages (ARMs).
Maximum conforming limit is $417,000.
Otherwise, it's a jumbo or non-conforming conventional loan.
Government Mortgages
Insured against default by the
Federal Government, making qualification less stringent:
-
FHA loans are insured by the Federal Housing Administration.
- VA loans are guaranteed by the Department of Veteran Affairs.
FHA loans require 3% down payments and are 15 and 30 year fixed
rate loans or 1 year ARMs.
VA loans are only available to
eligible veterans or surviving spouses of deceased veterans.
No down payment required up to 100% financing allowed.
Maximum loan amounts for government loans are set geographically.
Mortgage refinancing into government loans is only available to
existing holders of government mortgages.
Stated Income
Mortgage Loans
"Stated-income mortgages are for people
who make the money they say they make, but that amount doesn't show
up on the bottom line of their income taxes," says Hugh McLaughlin,
president and CEO of KMC Mortgage Services Inc., a lender and broker
in Naples, Florida. They are non-conventional loans with higher
rates than conventional mortgages--borrower interest rates depend on
several factors: income stability, debt-to-income ratio, credit
score, down payment and property appraisal value. Stated income
mortgages can be 15 or 30 year fixed rate loans or adjustable rate
mortgages. |
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