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Home Loan Options For Texas Home Buyers
If you’ve never purchased a home before, it may come as a surprise to hear that multiple financing options are available.
You have several types of home loans to choose from when buying a new home in Texas, each with pros and cons. As a prospective homebuyer, thoroughly research and understand your mortgage options. The home loan process can be extensive; determining early on which mortgage best meets your needs can make it easier for you to find the right property.
Mortgage Loan Options For Homebuyers In Texas
Before you begin your search for a new home to buy, you will need to find the most suitable mortgage to finance the purchase.
Here are some of the most popular options among Texas homebuyers:
1. Conventional Loans
Conventional loans refer to mortgages not guaranteed by the federal government. They come in two types: conforming and non-conforming.
As the name suggests, conforming loans conform to the credit, debt, and loan size standards established by the Federal Housing Finance Agency (FHFA). The conforming loan limits for 2022 are currently at $647,200 for most areas in the country and $970,800 in pricier cities.
On the other hand, non-conforming loans do not adhere to FHFA standards. They may be over the loan size limit for a particular area, or they may be offered to borrowers with not-so-perfect credit or who have undergone severe financial setbacks, such as bankruptcy.
A conventional mortgage is likely the best option for homebuyers with high credit scores and who can afford a significant down payment.
2. Jumbo Loans
Jumbo loans are a type of non-conforming loans. They are aptly named because these home loans are used to finance the purchase of more expensive homes, those that exceed FHFA limits. Jumbo loans are popular in areas where homes are generally pricier, such as Los Angeles, San Francisco, New York City, and Hawaii.
A jumbo loan could be your best bet if you wish to finance a sum more than the most recent conforming loan restrictions. However, consider that these loans are typically more stringent and demand more extensive documentation to qualify. Compared to most conventional loans, jumbo loans require a larger down payment, a higher FICO score, and a lower DTI ratio.
3. Government-Backed Mortgages
The United States government is not a mortgage lender but offers plenty of opportunities to more Americans to become homeowners.
FHA Loans –
These mortgages backed by the Federal Housing Administration are meant to make homeownership possible for people who don’t have the sizable down payment or impeccable credit required for most conventional loans. FHA loans offer maximum financing of 96.5 percent with a 3.5% down payment for borrowers with a FICO score of at least 580. However, those with scores of 500 – 579 may still qualify for an FHA loan with a 10% down payment; certain restrictions will apply.
USDA Loans –
USDA loans help borrowers with moderate to low incomes purchase homes in rural areas. To qualify, you must acquire a house in a USDA-eligible location and meet specific income requirements. Qualified borrowers may obtain a USDA-guaranteed home loan with zero down payment.
VA Loans —
The FHA and USDA-Guaranteed home loans are excellent alternatives for those who cannot qualify for a traditional loan owing to a low credit score or insufficient down payment funds. VA loans are reserved and the best choice for military service members, veterans, and spouses because of their excellent mortgage terms.
If you’re planning to purchase a fixer-upper, you may check out the FHA 203k loan or research other Texas home renovation loan programs.
Take A Step Closer To Your Dream Home
Although these options may initially appear daunting, you do not have to figure them out independently. Your Capital Home Mortgage loan specialist would gladly sit down with you, detail the differences, and suggest solutions that make the most sense for you.
You can count on our home loan experts to help you find a mortgage that meets your financial and lifestyle needs. Whether you are a first-time buyer or an experienced homeowner, we offer choices that will work for you.
Are you buying a new home? Get prequalified with Capital Home Mortgage now!
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Texas Home Purchase
Texas Fixed Rate Mortgage Loans
All Fixed Rate Mortgage Loans are designed to have equal payments for the specified term. These loans offer predictability and are deemed to be less risky for borrowers. Fixed Rate Mortgage Loans are available with all mortgage products and are typically offered in 15 year and 30 year terms. However, Fixed Rate Mortgage Loans are also offer in 10 year, 20 year and 25 year terms although less common due to demand.
Texas Adjustable Rate Mortgages
Adjustable Rate Mortgage Loans known as ARM s are also available with all mortgage products although are limited with FHA Home Mortgages, VA Home Mortgages and USDA Home Mortgages. ARM’s are great fit for home buyers who plan to sell or refinance their home between 1 and 10 years and are looking for the lowest possible payment. ARM’s are also a product the offers a lower rate during times where fixed rates are demanding higher rates. An adjustable rate mortgage begins as fixed rate for a specific period of time then adjusts the rate on a predetermined time period and a predetermined amount based on financial index and a fixed margin.