Home Purchase Loans In South Hill

Homebuyers on South Hill should anticipate a highly competitive housing market. However, homebuyers can expect a diverse selection of available properties. 

Purchase Loan Programs in South Hill

Numerous home loan programs are available to South Hill, Washington residents. These are some of the most prevalent programs:

• FHA Loans

The Federal Housing Administration (FHA), a United States Department of Housing and Urban Development (HUD) division, insures FHA loans. The purpose of these loans is to make homeownership more accessible to individuals who may have difficulty qualifying for conventional loans. FHA loans have lenient requirements, allowing borrowers with lower credit ratings and smaller down payments to qualify.

FHA loans offer several benefits, including reduced down payment requirements, flexible credit qualifications, competitive interest rates, streamlined refinancing options, and additional safeguards for purchasers. To meet the eligibility criteria for an FHA loan in the state of Washington, the value of your house loan must be within the prescribed restrictions set by the Federal Housing Administration (FHA) specific to your local area. In conjunction with the imposition of loan limits, the eligibility criteria for obtaining an FHA loan necessitates that the borrower primarily reside in the property.

The 2023 FHA loan limits in South Hill, Pierce County, are $977,500 for a single-family residence, $1,251,400 for a 2-unit property, $1,512,650 for a 3-unit home, and $1,879,850 for a 4-unit residence.

• Conventional Loans

A conventional mortgage in South Hill, Washington, is a loan that the government does not guarantee. Instead, it is provided by private lenders who adhere to Fannie Mae and Freddie Mac’s guidelines. Conforming conventional loans require a minimum FICO score of 620 and a down payment between 3 and 5 percent, whereas non-conforming loans do not meet these requirements. Numerous options are available, such as manufactured home loans, cash-out, and refinancing.

The flexibility of mortgage insurance is one of the advantages of a conventional home loan in Washington. For example, private mortgage insurance (PMI) may be required, but a 20% down payment would eliminate the need for PMI. Conventional loans also offer competitive rates of interest and flexible repayment terms. Some debtors may be eligible for as little as a 3% down payment and variable interest rates. The eligibility requirements for these loans typically include a strong credit history, stable income, adherence to Fannie Mae and Freddie Mac standards, proof of income, and an appraisal.

• VA Loans

A VA home loan is a mortgage loan program that assists veterans, active-duty service members, and certain National Guard and Reserves members in purchasing a property. It offers advantages such as competitive interest rates, minimal closing costs, and often no down payment if the price matches the appraisal. VA home loans in South Hill, Washington, are supported by additional rules and property requirements, such as local conditions and energy rating considerations.

The benefits of a VA home loan include better terms than private loans, no down payment if the price matches the appraised value, low or minimal costs, refinancing options, and more. The VA eligibility requirements include active-duty criteria, credit history, income, and service records. Service period requirements vary, with specific durations outlined for various periods, such as World War II and post-World War II, and exceptions for service-connected disabilities. Other qualifying categories include National Guard and Reserve requirements, certain positions, and spouses. Restoration of eligibility can be accomplished by selling a property, transferring a loan, or repaying a previous loan, using the appropriate forms, and contacting the VA regional loan center for assistance.

• Construction Loans

A construction loan is a short-term loan used to finance the construction of a dwelling or other real estate endeavor. Before obtaining long-term financing, the contractor or homebuyer obtains a construction loan to cover the project’s costs. Construction loans typically have higher interest rates than conventional mortgage loans because they are viewed as riskier.

One-time close construction loans, also referred to as single-close loans, permit you to obtain both loans (the construction loan and the permanent loan) simultaneously. When construction is complete, your construction loan converts to a conventional mortgage. This simplifies the process, allowing you to finalize your home loan only once instead of securing multiple loans for the property, construction, and home financing. There is a single qualification, appraisal, loan originator, and closing process. This reduces the time required to build and move into your new home, protects you from future unforeseen circumstances, and prevents you from incurring double the closing costs.

• Native American Home Loans

The Native American Home Loan program in South Hill, Washington, is centered predominantly on the Section 184 Indian Home Loan Guarantee Program. Established in 1992, this program helps American Indian and Alaska Native families, tribes, and housing entities become homeowners. It provides advantages such as low down payments, flexible underwriting, and coverage for housing requirements such as new construction, rehabilitation, purchases, and refinancing on and off native lands. The program is administered by HUD’s Office of Native American Programs and aids lender repayment during foreclosures by guaranteeing loans for Native borrowers.

Native Americans, Alaska Natives, members of federally recognized tribes, and those affiliated with tribally designated housing entities and Indian Housing Authorities are eligible for this program. The application must be submitted through Section 184 lenders approved by HUD. The program offers fixed-rate loans with terms of up to 30 years and loan limits that vary by county. It applies to single-family homes but excludes adjustable-rate mortgages and commercial properties. Other options, such as the One Time Close Construction Loan, and numerous refinance options, such as rate & term, are also available in Washington. Credit score may be less critical, but creditworthiness is evaluated, and various down payments and a Debt-to-Income (DTI) ratio of 41% are requirements of the program.

• Jumbo Loans

A jumbo loan refers to a mortgage category beyond the predetermined lending restrictions established by the Federal Housing Finance Agency (FHFA). South Hill’s designated threshold for conforming loans in 2023 is $977,800. Consequently, any loan over this specified limit is categorized as a jumbo loan. 

Jumbo loans are intended to assist borrowers in financing high-priced homes that exceed the limits established by Fannie Mae and Freddie Mac. Since jumbo loan lenders assume more risk, borrowers must demonstrate excellent financial standing. Lenders want assurance that their loans will be repaid despite financial hardship. A high credit score, low debt-to-income (DTI) ratio, and adequate cash reserves are three primary requirements for jumbo loans. To qualify for a jumbo loan, you typically need a credit score of 680 or higher (most lenders prefer 700 or higher) and a limit DTI ratio of 38% to 43%.

• Non-Qualified Mortgage

A non-qualified mortgage (non-QM) is a loan designed to assist homebuyers who do not satisfy the stringent requirements for a qualifying mortgage. For instance, if you are self-employed or lack the required documentation for a conventional mortgage, you may need to consider non-qualified mortgages. Non-QM loans are mortgages that do not satisfy the Consumer Financial Protection Bureau (CFPB) requirements to be considered qualified mortgages. A qualified mortgage complies with the CFPB’s “ability to repay” rule, which mandates that lenders evaluate your financial situation and set loan terms that you are likely to be able to repay.

Non-QM loans offer greater underwriting flexibility, no personal income calculations are required, no employment history is required (in some cases), as little as 10% down is required, no reserves are needed (in some cases), credit scores as low as 620 are permitted (580 with compensating factors), and investment properties have a low debt-service-coverage ratio (DSCR). Retirees, self-employed individuals, real estate investors, business owners, foreign nationals, buyers who live off investments or have high assets and low income, buyers with a high debt-to-income ratio, and buyers with less-than-perfect credit may benefit from a non-QM loan.

Apply for a South Hill Home Purchase Loan

Capital Home Mortgage is a full-service mortgage corporation that serves Washington homeowners, including South Hill. We provide Native Americans with various mortgage options, including FHA, VA, Conventional, USDA, Jumbo, and HUD 184 loans.

Because we are a direct mortgage lender, we can offer you competitive rates and fees while still providing the necessary level of service. Our mortgage professionals are available to answer any queries and expedite the mortgage application process for your convenience. 

Call (253) 528-4417 to speak with our South Hill Home Loan Specialists about your home purchase loan needs.