Looking for a mortgage loan during these stressful times in a pandemic can be extremely overwhelming. Not to mention searching for a home in this market has become undeniably competitive. But thankfully, there are several types of unique mortgages available that you may not have known exist.
Take a look at these six different types of mortgages.
Fannie Mae’s HomeStyle Renovation Mortgage
This is a unique mortgage that is meant for people who are looking to renovate a single-family home that is considered a “fixer-upper.” Because these are riskier situations, the down payment is usually at the higher end of around 5%.
Yes, you will have a higher interest rate and will have to work with Fannie Mae’s HomeStyle team to oversee the project at hand. But in the end, you could have the dream home you’ve always wanted. The other benefit is that in the long run, when you are ready to sell your home, you’ll receive a substantially larger asking price than what you initially purchased it for.
VA Mortgage Loan
This type of loan is specifically for the United States military. Also known as a Veterans Affairs Loan, this type of mortgage is supported by the government which requires no down payment and no private mortgage insurance (PMI). The qualifications for this type of loan are rather specific. You must be a veteran who either:
- Has served 90 consecutive days during wartime
- Has served 180 consecutive days during peacetime
- Has served 6 years in the reserves
Also, note that this type of loan is not allowed for a “fixer-upper” like the HomeStyle Renovation Mortgage.
USDA Mortgage Loan
The United States Department of Agriculture has a specific loan for those who may be able to afford their monthly mortgage payments but are unable to present a down payment.
There is no minimum FICO score required for these types of loans but they are primarily in rural areas. Occasionally, there are a few suburban areas that qualify, but don’t necessarily get your hopes up as it is a loan provided by the USDA.
If you’re in the market for buying a house but your credit score might become an issue, there is an alternative you may be eligible for. An FHA loan is supported by the Federal Housing Administration. These loans offer fixed or adjustable-rate mortgages that only require a 3.5% down payment.
Your credit score only needs to be at least 580. However, if you have at least a credit score of 500, you can still be eligible for this loan, but you will be required to put down a higher amount upfront.
Physician Mortgage Loans
Otherwise known as a doctor loan, a physician mortgage loan is a type of mortgage that specifically caters to professions in the medical field. Dentists, surgeons, or nurses more than likely have larger amounts of debt from student loans and have started their debt later in life.
This is because these professions take several more years than a standard bachelor’s degree to pursue. A doctor loan offers jumbo loan balances, relaxed debt-to-income ratios on your monthly payments, and does not require PMI as a conventional loan might request.
HUD’s Good Neighbor Next Door Program
This is a unique type of mortgage that is specifically for teachers, law enforcement, firefighters, and paramedics or EMTs. The goal of this government program is to provide housing opportunities in a community that is in need of renovation or revitalization. Houses are sold to them at a 50% discount off the listed price.
The resident who purchases the home must commit to living in the property for at least 3 years with no interest to them, granted they fulfill the 36-month requirement. The catch for these properties is that HUD requires new residents to sign on a second mortgage.
No matter your circumstance, there is a loan out there that is right for your needs. Look into government funding options or research if your profession may be eligible for a type of loan you may not have known about.