Loan Programs

FHA Loans & VA Loans

There are many factors to consider when applying for a government loan. We will be by your side every step of the way. Below is some helpful information to help get you started. To get started immediately click here for our on-line application.

Federal Housing Administration’s Mission

The Federal Housing Administration was started in 1934 as part of the New Deal. The New Deal was the name President Franklin D. Roosevelt gave to the series of programs between 1933-37 with the goal of relief, recovery and reform of the United States economy during the Great Depression. The FHA’s goals have remained the same throughout the years and they remain to contribute to building and preserving healthy neighborhoods and communities, maintain and expand homeownership, and to stabilize credit markets in times of economic disruption.

Details of an FHA Home Loan

The FHA now offers a variety of loan programs to a large population and FHA mortgages can have fixed or adjustable interest rates. Many find these home loans attractive because they require very small down payments, gifts can be used for down payments and closing costs, and because the FHA regulates the closing costs. These loans also have qualifications that are easier to meet than traditional mortgages. The FHA does not require a minimum FICO score to meet qualifications and the programs will allow home purchase two years after a bankruptcy filing.

Energy Efficient Mortgages

Energy Efficient Mortgages, EEMs, allow a borrower to incorporate costs associated with a home’s energy efficiency or proposed efficiency improvements into the cost of the home loan. FHA will allow home buyers to finance the energy efficiency of a new home above its appraised value when the borrower has met energy efficiency standards. Energy efficient mortgages offer home buyers opportunities to upgrade the home they are purchasing or refinance their home at a higher value. The borrower will also net a better return when selling because of the higher resale value.

FHA EEMSs provide mortgage insurance for a person to purchase or refinance a principal residence and incorporate the cost of energy-efficient improvements into the mortgage. The borrower does not have to qualify for the additional money and does not make a down payment on it. A lending institution, such as a mortgage company, bank or savings and loan association, funds the mortgage loan and the mortgage insured by HUD. FHA insures loans but does not provide loans.

Rehabilitation Mortgage Insurance (203K)

Section 203(k) insurance enables homebuyers and homeowners to finance both, the purchase (or refinancing) of a house and the cost of its rehabilitation through a single mortgage- or to finance the rehabilitation of their existing home. FHA approved lending institutions, which include many banks, savings and loan associations, and mortgage companies can make loans covered by Section 203(k) insurance.

Reverse Mortgages

Reverse mortgages are becoming popular in America. Reverse mortgages are a special type of home loan that lets a homeowner convert the equity in his/her home into cash. They can give older Americans greater financial security to supplement social security, meet unexpected medical expenses, make home improvements, and more.

FHA Refinance Requirements

FHA has permitted streamline refinances on insured mortgages since the early 1980’s. The “streamline” refers only to the amount of documentation and underwriting that needs to be performed by the lending, and does not mean that there are no costs involved in the transaction. The basic requirements of a streamline refinance are:

The mortgage to be refinanced must already be FHA insured
The mortgage to be refinanced should be current (not delinquent).
The refinance is to result in a lowering of the borrower’s monthly principal and interest payments.
No cash may be taken out on mortgages refinanced using the streamline refinance process

Why a VA Loan?

The Veteran’s Administration has created a program to help Veteran purchase a home. Some of the advantages of a VA Loan can be no down payment needed, competitive interest rate and assurance that you can pay off all of part of the loan in advance without penalty. The more you know about your home loan program, the more you will realize how little “red tape” there really is in getting a VA loan. These loans are often made without any down payment at all, and frequently offer lower interest rates than ordinarily available with other kinds of loans. Aside from the veteran’s certificate of eligibility and the VA-assigned appraisal, the application process is not much different than any other type of mortgage loan. If the lender is approved for automatic processing, as more and more lenders are now, a buyer’s loan can be processed and closed by the lender without waiting for VA’s approval of the credit application.

Additionally, if the lender is approved under VA’s Lender Appraisal Processing Program (LAPP), the lender may review the appraisal completed by a VA-assigned appraiser and close the loan on the basis of that review. The LAPP process can further speed up the loan closing time.

What is a VA Guaranteed Loan?

A lender, such as a mortgage company, savings and loan or bank, makes these loans. VA’s guaranty on the loan protects the lender against loss if the payments are not made, and is intended to encourage lenders to offer veterans loans with more favorable terms. The amount of guaranty on the loan depends on the loan amount and whether the veteran used some entitlement previously. With the current maximum guaranty, a veteran who hasn’t previously used the benefit may be able to obtain a VA loan up to $240,000 depending on the borrower’s income level and the appraised value of the property. The local VA office can provide more details on guaranty and entitlement amounts.

Who is Eligible?

Veterans who served on active duty and were discharged under conditions other than dishonorable, during World War II and later periods are eligible for VA loan benefits. World War II (September 16, 1940 to July 25, 1947), Korean conflict (June 27, 1950 to January 31, 1955), and Vietnam era (August 5, 1964 to May 7, 1975) veterans must have at least 90 days' service. Veterans with service only during peacetime periods and active duty military personnel must have had more than 180 days' active service. Veterans of enlisted service, which began after September 7, 1980, or officers with service beginning after October 16, 1981, must, in most cases, have served at least 2 years. VA regional office personnel may assist with additional eligibility questions.

VA Loan Applications

The application process for VA financing is no different from any other type of loan. In fact, the VA application form is the same as that used for HUD/FHA and conventional loans. The mortgage lender verifies the applicant's income and assets and obtains a credit report to see that other obligations are being paid on time. If all is well and the appraised value of the property is enough to cover the loan needed, the lender, in most instances, can then close the loan under VA's automatic procedure. Only about 10 percent of VA loan applications have to be submitted to a VA office for approval before closing.

VA Loan Uses

You may use VA-guaranteed financing:

To buy a home.
To buy a townhouse or condominium unit in a project VA has approved that.
To build a home.
To repair, alter, or improve a home.
To simultaneously purchase and improve a home.
To improve a home through installment of a solar heating and/or cooling system or other energy efficient improvements.
To refinance an existing home loan.
To buy a manufactured (mobile) home and/or lot.
To buy and improve a lot on which to place a manufactured home which you already own and occupy.

VA Loan Costs

A basic funding fee of 2.0 percent must be paid to VA by all but certain exempt veterans. A down payment of 5 percent or more will reduce the fee to 1.5 percent and a 10 percent down payment will reduce it to 1.25 percent.

All eligible Reserve/National Guard individuals must pay a funding fee of 2.75 percent. A down payment of 5 percent or more will reduce the fee to 2.25 percent and a 10 percent down payment will reduce it to 2.0 percent.

The funding fee for to refinance an existing VA home loan with a new VA home loan, in order to lower the monthly interest, is 0.5 percent.

Veterans who are using entitlement for a second or subsequent time, who do not make a down payment of at least 5 percent, are charged a funding fee of 3 percent.