A Conventional mortgage is sold to Fannie Mae or Freddie Mac and are not insured by any government agency, namely the Federal Housing Authority (FHA) or the Veterans Administration (VA). Therefore, these loans must meet Fannie & Freddie Guidelines and limits, such as:
While both conforming and High Balance loans are considered Conventional, they differ based on the minimum and maximum loan amount and underwriting guidelines. High Balance loans were created to allow increased loan limits for all high-cost areas. In Massachusetts, the maximum limit under this program for single-family residences is $765,600. However, the actual limit varies for each county within the state (e.g. Plymouth County is $690,000).
Conventional Mortgages can either have “fixed” or “adjustable” interest rates and the terms are available in 8-30 year lengths. Fixed Interest rate loans ensure the Principal and Interest payments stay consistent throughout the entire mortgage. Adjustable Rate Mortgages (ARMs) are based on a 30-year loan term with the interest rate adjusting to market rates during the life of the loan. Adjustment periods range from 1-10 years. These loans are attractive to borrowers who don’t plan to keep their property over the long term and will benefit from a lower initial interest rate. Initial rates on ARMs are typically lower than comparable fixed rates.
Construction loan programs vary just as greatly as the homes and designs to be built. Whether you’d like to build a home on land you own, purchase land and develop it, or buy in a subdivision or community, we have options to help you.
Fannie Mae HomeStyle
The HomeStyle by Fannie Mae and HomeChoice by Freddie Mac are loans very similar to FHA’s 203k, but with a few major difference: the allowed repairs, the occupancy-type allowed, and the total costs. These loans allows more flexibility in the type of repairs that can be made. One major bonus is that this loan can be used to install or repair in-ground swimming pools and any other permanently affixed improvement that adds value (like an outdoor kitchen or garage).
This program allows renovation to second homes and investment properties. Also, because Fannie Mae and Freddie Mac do not have an up front Mortgage Insurance Premium, like FHA those who choose this program save by avoiding the 1.75% Up-Front fee.
This is a great option for those with higher FICO scores, or a large down payment, looking to install a pool or other “luxury items”, have lower debt to income, or for those who want to perform the work to a house they aren’t occupying.
FHA Loans are mortgages insured by the Federal Housing Authority. Due to this government backing, FHA loans typically have slightly lower interest rates, compared to Conventional loans. Here are some of the standard guidelines:
FHA Loans are available with both Fixed and Adjustable Interest Rates. Terms are available in 15 and 30-year lengths.
FHA 203k Standard & 203k Limited Construction Loans
The FHA 203k is the most commonly used renovation/construction loan. Before the Conventional Fannie Mae HomeStyle loan, it was virtually the only option on the market. On properties that need minor or major repairs, home buyers or owners can use the 201k Renovation loan to make desired and required repairs. Luxury updated are not allowed and certain repairs MUST be completed. FHA offers a limited version of the 203k which caps the renovation cost to $35,000- but also has fewer requirements.
This is a great option for those who may not qualify for a conventional loan, are looking to perform the work on an owner-occupied multi-family home with a small down payment, and/or have FICO scores that are below 680.
VA Mortgages are insured by the Veterans Administration and are reserved for veterans, active duty service members, members of the National Guard or Reserves, and the widows/spouses of veterans. This earned benefit from U.S. military service allows 100% financing for qualified veterans.
VA Mortgages are insured by the Veterans Administration and are reserved for veterans, active duty service members, members of the National Guard or Reserves, and the widows/spouses of veterans. This earned benefit from U.S. military service allows 100% financing for qualified veterans. The renovation aspect of the loan is very similar to the FHA 203k LIMITED program. It is an ideal renovation loan for those looking to do minor non structural repairs
Buying your first home can seem like an overwhelming step. There are dozens mortgage terms and even more loan options. Navigating through this new world can be challenging if you haven’t done it before. But with the right guidance and information, you’ll learn the home buying experience can be a fun, enjoyable, and quick process. Remember, never be afraid to ask a “dumb question” because we don’t believe they exist! Not once through the process will you feel alone or unheard. We take great pride in the trust hundreds of families have put in us over the years and we ensure it’s repaid in stellar service.
Jumbo Mortgage Loans refer to all loans that exceed Fannie Mae’s loan limits. Typically, these loans are sold to institutional investors and carry a higher interest rates over conventional loans. These program requires a larger down payment and are more commonly used to purchase or refinance single-family homes or condos.
Jumbo Fixed Rate Mortgages are available in 15-30 year loan terms. They have traditionally been the most popular choice for people who intend to own their property for 7 years or more. Due to the fixed interest rate, the monthly mortgage payment remains consistent over the life of the loan.
Jumbo Adjustable Rate Mortgages (ARMs) are based on a 30-year loan term, with the interest rate adjusting to market rates over the life of the loan. Adjustment periods can range from 1-10 years. These loans are attractive to borrowers who don’t plan to keep their property over the long term and can benefit from a lower initial interest rate. Typically, initial adjustable rates are lower than comparable fixed rates.