Home Purchase Loans In Juneau

The average increase in property values for single-family homes in Juneau during the past year was 16%. The surge in value was propelled by a significant demand for residential properties, limited availability of newly constructed dwellings, and a sharp escalation in construction expenses.

Purchase Loan Programs in Juneau

Juneau, Alaska, home buyers have various mortgage options when financing the purchase of a home. The most common purchase home loan programs in Juneau are the following:

• Conventional Loans

A conventional mortgage in Juneau, Alaska, refers to a form of residential loan that lacks insurance coverage from a governmental entity. Typically, a minimum down payment is required, and the option of fixed or adjustable interest rates may be available. Private lenders usually provide these loans, which may or may not meet the criteria established by Fannie Mae and Freddie Mac, determining whether they are conforming loans.

The primary distinction between a conventional conforming loan and a non-conforming loan is the lending restrictions and underwriting standards established by Fannie Mae and Freddie Mac. Non-conforming loans exceed these boundaries and standards, whereas conforming loans meet them. Non-conforming loans have more onerous eligibility restrictions and may have higher interest rates due to their heightened risk.

Borrowers in Juneau typically require a minimum credit score, frequently 620 or higher, and a steady income. The benefits include lower interest rates and the chance to get the loan with as little as a 5% down payment, sometimes as little as 3%. Conforming loan maximum lending limits are determined annually and may vary by area.

Juneau’s 2023 conforming loan limits are $1,089,300 for a single-family home, $1,394,775 for a duplex, $1,685,850 for a triplex, and $2,095,200 for a quadplex.

• FHA Loans

In Juneau, Alaska, an FHA home loan is a mortgage insured by the Federal Housing Administration under the direction of the United States Department of Housing and Urban Development, also known as HUD. Unlike conventional loans, FHA loans are designed to facilitate borrowers who may not meet conventional loans’ stricter criteria, such as those with lower credit scores or smaller down payments. These loans typically necessitate mortgage insurance premiums (MIP) to safeguard the lender against default.

The main distinctions between FHA and conventional loans are the qualifying requirements and mortgage insurance. Conventional loans are not government-backed and frequently have higher credit score requirements, whereas FHA loans have more flexible qualifying rules and require government-backed mortgage insurance. Conventional loans typically require private mortgage insurance (PMI) if the down payment is less than 20%. However, this can be eliminated after the borrower has 20% equity in the home. On the other hand, FHA loans demand mortgage insurance for the life of the loan unless a 10% down payment is made at the outset of the loan.

The basic eligibility requirements for an FHA loan in Juneau are typically a minimum credit score (generally around 580), a stable income, and a down payment as low as 3.5%. The benefits of choosing an FHA loan include a reduced down payment and more liberal credit standards, making it available to a broader spectrum of borrowers. However, these advantages come at the cost of paying mortgage insurance fees for the life of the loan.

For 2023, the FHA loan limits in Juneau are $533,600 for a one-unit home, $683,100 for a duplex, $825,700 for a triplex, and $1,026,150 for a quadplex.

• VA Loans

In Juneau, Alaska, a VA home loan is a mortgage loan guaranteed by the United States Department of Veterans Affairs (VA). This loan is intended to offer long-term funding to qualified American veterans and, in some situations, their surviving spouses. One differentiating aspect of VA loans is that they often do not need a down payment, which can significantly reduce borrowers’ upfront costs.

A VA loan has no down payment, no private mortgage insurance (PMI), and often lower interest rates when compared to conventional loans. VA loans also have a one-time VA funding fee, which varies depending on the amount of the down payment and the type of veteran. This cost is typically included in the loan amount. Lower upfront and recurring fees, looser qualification conditions, and the possibility of refinancing to a cheaper rate through the VA’s Interest Rate Reduction Refinance Loan (IRRRL) program are among the benefits.

The basic VA qualifications for eligibility include completing a minimum period of service, which varies according to the time of service and the branch of the military. To be eligible for a VA loan, you must first get a Certificate of Eligibility (COE). In addition, while the VA does not impose a minimum credit score, lenders frequently have their own requirements that borrowers must achieve to receive the loan.

• Jumbo Loans

A jumbo home loan in Juneau, Alaska, is a type of mortgage that exceeds the Federal Housing Finance Agency’s (FHFA) conforming loan limits. Private lenders typically provide such loans and are not guaranteed by the federal government. The principal characteristic distinguishing jumbo loans from conforming loans is the more significant loan amount.

The capacity to finance luxury residences or properties in high-cost areas, typically at competitive interest rates, is one of the primary benefits of jumbo loans. However, they have stricter underwriting standards, higher credit score requirements, and larger down payments. Because lenders consider jumbo loans riskier, borrowers may incur higher interest rates and costs than conforming loans.

A higher credit score, typically above 700, a lower debt-to-income ratio, and a larger down payment, typically 20% or more of the purchase price, are typical eligibility requirements for jumbo loans in Juneau. In addition, borrowers must provide extensive documentation of their income, assets, and employment history.

• Construction Loans

A construction home loan is a short-term, interim loan used to finance the construction of a residence. In contrast to conventional mortgages, construction loans are disbursed in stages as construction milestones are met. The primary advantage is that you only pay interest on the disbursed amount, which is advantageous for the borrower.

The number of closings and loan applications distinguishes a one-time close construction loan from a regular two-time close construction loan. In a one-time close loan, the application and approval process is completed only once, and the construction loan automatically converts to a permanent mortgage upon completion. In contrast, a two-time close requires you to file for the construction loan first and then refinance into a permanent mortgage after completion. This requires two closings, two sets of fees, and possibly different interest rates.

A one-time close construction loan, usually called a construction-to-permanent loan,  provides financing that flows seamlessly from the construction phase to the permanent mortgage. The benefits include a single approval and closing, fixed interest rates for both the construction and permanent portions, and reduced associated fees. This loan type is especially advantageous for debtors who favor straightforward transactions and wish to lock in their interest rates.

• Non-Qualified Mortgage Loans

In Juneau, Alaska, a non-qualified mortgage (non-QM) loan is a mortgage that does not adhere to the Consumer Financial Protection Bureau’s guidelines for qualified mortgages. Non-QM loans are more flexible than standard qualified mortgages, which require precise income documentation, a stable income-to-debt ratio, and other underwriting standards. This allows borrowers who do not meet the traditional criteria to obtain home financing.

Non-QM loans include interest-only loans, loans with stated income, and loans with balloon payments. Borrowers with interest-only loans pay only the interest for a set amount of time, making it more affordable in the short term. Because they do not require standard income verification, stated income loans benefit self-employed individuals.

The fundamental characteristics and benefits of non-QM loans are flexibility and accessibility. These loans appeal to a broader range of financial scenarios, from unpredictable revenue streams to higher debt-to-income ratios. While they sometimes have higher interest rates, they allow those who would otherwise be unable to obtain a mortgage to become homeowners. For many, the extra cost is a worthwhile trade-off in exchange for the ability to engage in real estate.

Apply for a Juneau Home Purchase Loan

Capital Home Mortgage Alaska is a well-known Juneau mortgage lender and servicer that offers a wide range of mortgage options to meet different needs. Our team of mortgage experts has a lot of knowledge and experience in the field. This lets us help you choose the best loan program for your budget and needs. Because every loan is different, our loan officers give customers the information, help, and flexibility they need to choose the best mortgage package. 

Call  (907) 531-5048 to speak with our Juneau Home Loan Specialists today!