What is a Conventional Loan?

This is the type of loan that appeals to most buyers.

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What is a Jumbo loan?

Whether you have a large family and need room for everyone, or your Houston dream home is in a more expensive city or neighborhood in Houston, you will likely need to borrow a sizeable amount of money. Conventional lenders are subject to limitations on the amount of money they can lend. Unless you have the available cash to place a down payment that would reduce the principal borrowed, you may not be eligible for a conforming loan.

A jumbo loan is one where the amount borrowed is more than the conforming loan limits defined by the Federal Housing Finance Agency (FHFA). In 2020, the loan limit on conforming loans is $510,400 in most locations. For areas where home costs are higher, the 2020 limit is $765,600. Unlike conventional loans backed by government programs such as FHA, Freddie Mac, or Fannie Mae, jumbo loans are issued by private lenders.

• Jumbo loans can be for a Home Purchase, Rate or Term Refinance, Cash-Out Refinance, or Investment Properties
• .If your loan will exceed $1 million, you may or may not need to obtain two separate appraisals. If it exceeds $2 million, you must get two appraisals.
• Refinance: The amount of equity you must have in the home will vary with the loan amount. For example, you would be required to have a minimum of 20% equity for a loan of up to $1.5 million and 40% to borrow up to $3 million
• The amount of cash you can take from a refinance depends on the amount of equity in your home. You must maintain a minimum amount of capital based on the loan amount.
  • • Under 40% equity in your house — up to $350, 000 cash
    • 40%-50% equity in your house — up to $500,000 cash
    • 50% or more equity in your home — up to $750,000 cash
• Investment Property: You may get a jumbo loan for investment properties of 1-2 units with a 40% down payment or equity for a loan up to $1 million.
• Land Purchase: You may get a jumbo loan for homes with land up to 40 acres. However, special conditions apply when the amount of land exceeds 20 acres.
  • • It requires 10% additional down payment
    • The appraiser must have two comparable properties within 5 acres of the property you want to buy
    • The value of the land must not exceed 35% of the combined value of the house and land

What is a va loan?

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What is an fha loan?

The Federal Housing Administration has helped American families secure homes since 1934. It was created by the National Housing Act to address widespread mortgage loan defaults across the country during the Great Depression. Its focus on making homeownership affordable has endured into modern times and plays an indispensable role in the American economy.

Private lenders issue FHA loans that are backed by insurance from the Federal Housing Administration. Federal backing provides lenders with the reassurance they need to finance homes for buyers who might not otherwise qualify for a conventional mortgage or other available programs.

Unlike USDA and VA loans, this is not a zero-down mortgage program. Instead, Houston homeowners are required to make a down payment that is at least 3.5% of the total financed amount. Note that when homeowners include closing costs in the loan, this forms part of the total used for the down payment as well.

FHA loans are especially useful for first-time homebuyers, lower-income buyers, and people with lower credit scores. However, it’s not exclusively reserved for this demographic. 

• The FHA backs loans for homebuyers with a credit score as low as 580 if you plan to put a minimum of 3.5% down. If you are willing to make a down payment of 10% or more, then the FHA makes allowances for credit scores as low as 500.
• There are no income limits for FHA loans, but buyers must show an ability to meet their monthly obligations. This depends on a buyer’s debt-to-income ratio. Local housing prices may also determine how much a lender is willing to fund.

What is a usda loan?

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