FHA Loans

FHA home loans are mortgage loans that are insured against default by the Federal Housing Administration (FHA). FHA loans are available for single family and multifamily homes. These home loans allow banks to continuously issue loans without much risk or capital requirements. The FHA doesn't issue loans or set interest rates; it just guarantees against default.

FHA loans allow individuals who may not qualify for a conventional mortgage obtain a loan, especially first-time home buyers. These loans offer low minimum down payments, reasonable credit expectations, and flexible income requirements.

Conventional Loans

A conventional loan is a type of mortgage that is not backed by the federal government, but rather issued by a private lender such as a bank, credit union, or other financial institution. Conventional loans can be used to buy or refinance homes, and they are the most popular type of mortgage in the United States, accounting for roughly 80% of the home loans that closed in August 2021.

Conventional loans can be divided into two categories: conforming and nonconforming. A conforming loan meets the requirements to be sold to Fannie Mae or Freddie Mac, the government-backed housing finance giants that buy mortgages from lenders and sell them to investors. A nonconforming loan fails to meet the criteria for purchase by Fannie or Freddie.

VA Home Loans

The VA Loan provides veterans with a federally guaranteed home loan which requires no down payment (0% Down). This program was designed to provide housing and assistance for veterans and their families.

The Veterans Administration provides insurance to lenders in the case that you default on a loan. Because the mortgage is guaranteed, lenders will offer a lower interest rate and terms than a conventional home loan. VA home loans are available in all 50 states. A VA loan may also have reduced closing costs and no prepayment penalties.

VA home loans are available to military personal that have either served 181 days during peacetime, 90 days during war, or a spouse of serviceman either killed or missing in action.

USDA Loans

USDA loans are low-interest mortgages with zero down payments designed for low-income Americans who don't have good enough credit to qualify for traditional mortgages. You must use a USDA loan to buy a home in a designated area that covers several rural and suburban locations.

This is a great program to use when you are looking to purchase in the areas designated by the USDA. You can search the areas that qualify here:
Eligibility (usda.gov)

Non-QM Loans

A Non-QM loan is a type of mortgage that does not meet the requirements of a typical qualified mortgage. Non-QM loans are designed for borrowers who have financial profiles that do not meet traditional lending requirements, such as inconsistent or nontraditional income structures, major credit events, or high debt.

Non-QM loans have their own distinct set of criteria, including flexible income and credit requirements.

In exchange, borrowers may need to make a larger down payment and pay a higher interest rate.

Non-QM loans are not backed by the federal government and cannot be purchased by Fannie Mae or Freddie Mac. As a result, they are often more expensive than qualified mortgages, with higher interest rates and down payment requirements. However, they offer flexibility to borrowers who may not qualify for traditional lending options.

Depending on the lender’s requirements, borrowers may demonstrate their ability to repay the loan using tax returns, bank statements, asset qualifiers, or 1099s.