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PARK CITY REAL ESTATE

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Which Type of Home Loan is Right for Your Next Real Estate Purchase?

June 21, 2018 by Jensen & Company

Buying real estate is exciting. Whether you are trying to find the perfect starter home, moving on to bigger and better, or investing in real estate for added income; it is a fantastic decision that can help you to secure your financial future. But without large sums of extra cash at your disposal, how do you pay for it? A variety of loans exist for the sole purpose of buying real estate.

Conventional Loan

These loans are commonly used when purchasing a home. They are not insured or guaranteed by the federal government. The guidelines for a conventional loan are set by Fannie Mae and Freddie Mac. Rates may be fixed or adjustable. For a single family home, the maximum loan amount depends on which state you live in. These maximums range from $453,200 to $1,307,175 in most states. In states with a higher cost of living, the range varies from $679,650 to $1,960,750. Conventional loans require a minimum down payment of at least 3% of the homes agreed upon price for a fixed rate loan. For an adjustable loan, the down payment requirement is at least 10%. For purchases requiring cash (primarily auctions), you can take out up to 85% of your pre approved loan for purchasing a home. Or, you can apply for a loan once you have found a home you want to buy.

FHA (Federal Housing Administration) Loan

This is a mortgage insurance backed loan, provided by an FHA-approved lender. The loan max is set per state, most reaching a maximum loan amount of $271, 050. Some states with higher cost of living have a higher max loan amount of $365,700 to $448,500. A down payment of at least 3.5% of the homes agreed upon price is required to obtain an FHA loan. Besides purchasing a single family home, an FHA loan can also be applied to 2, 3, and 4 unit homes as well as approved condos. Unlike some types of loans, the FHA loan doesn’t required proof of reserve funds. But, you will always pay for private mortgage insurance when buying with an FHA loan. There are no penalties for paying off the loan early. You can also not use an FHA loan (in most cases) to buy a home if you have an existing mortgage. To receive approval for an FHA loan, your debt-to-income ration cannot exceed 50%.

VA (Veteran Assistance ) Loan

This loan is specifically for servicemembers, veterans, and eligible surviving spouses looking to purchase a home. VA loans are secured through private lenders. The VA guarantees a portion of the loan which in return allows lenders to offer the home buyer less extensive terms. The VA loan requires no down payment. To qualify for a VA loan, past service members must have served for at least 90 days during wartime or 181 continuous days during peacetime without an dishonorable discharge. Enlisted servicememebers who began service after 9/7/1980 have a two year service requirement. Officers who began services after 10/16/1981 also have a two year service requirement to receive a VA loan. With the VA loan, buyers can receive up to 25% of a home loan to pay for their home with a max limit of $113,275. This limits the total home loan amount to $453,100. As well as meeting service requirements, VA loans will also be approved or denied based on credit and income requirements.

These are the most common forms of loans used to purchase single family homes and other personal real estate. To learn more about these types of loans, or other options including USDA and ARM loans, contact Jensen and Company.

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About Jensen and Company

Brad Jensen has been a top realtor since 1988. He is one of the most respected agents in Utah and would be happy to assist you in selling your home or buying a new home. It is Jensen and Company's goal to help make your real estate transaction as easy and stress-free as possible. Our blog has lots of great information and market intelligence to help you learn more about the Park City real estate market. Please contact us if you have any questions. We would be happy to assist you.

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1153 Center Dr Ste G200
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ftel Call : 435.901.8333

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  • About
    ▼
    • Testimonials
    • Our Videos
    • Contact Us
    • Blog
  • Search
    ▼
    • Significant Sales
      ▼
      • Luxury Mountain Living
    • Featured Properties
    • Property Search
    • Most Recent Properties
  • Park City
    ▼
    • Buy in Park City, Utah
    • Sell in Park City, Utah
    • Park City Homes & Condos For Sale
    • Park City Real Estate
  • Deer Valley
    ▼
    • All Deer Valley Real Estate
    • Deer Valley Homes & Condos For Sale
  • Communities
    ▼
    • Old Town
    • Thaynes Canyon
    • Lower Deer Valley
    • Deer Crest
    • Upper Deer Valley
    • Empire Pass
    • Aerie
    • Prospector
    • Park Meadows
    • Canyons Village & Colony
    • Sun Peak | Bear Hollow
    • Silver Springs
    • Old Ranch Road
    • Kimball Junction
    • Pinebrook
    • Summit Park
    • Jeremy Ranch
    • Glenwild | Silver Creek
    • Trailside Park
    • Promontory Area
    • Jordanelle Area
    • Midway | Charleston
    • Heber City
    • Kamas & Marion
    • Huntsville – SnowBasin
  • Buy
    ▼
    • Deer Valley Real Estate
    • Park City Homes & Condos For Sale
    • Park City Real Estate
    • Deer Valley Homes & Condos For Sale
  • Sell
    ▼
    • Why Sell With Us
  • Discover
    ▼
    • Park City Events Calendar
    • Featured Attractions
    • Local Ski Resorts
    • Park City Local Vendors
    • Our Infographics/Resources