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Different Loans for Different Folks...
Conventional Loan
Best for: Long Term Buyers
Popular home financing option offered by banks and lenders, designed for buyers with solid credit who want flexibility, stable payments, and competitive interest rates.
Down Payment: Typically 3–5%; less than 20% down requires Private Mortgage Insurance (PMI).
Credit Score: Minimum 620; for stronger approval odds and better rates, aim for 680–700+.
Debt-to-Income Ratio (DTI): Preferred under 43%; lower DTI can help you qualify more easily and improve terms.
FHA Loan
Best for: Buyers with lower credit scores or smaller down payments
Designed to make homeownership more accessible for buyers who may not qualify for a conventional loan, offering flexible credit guidelines and low down payment options.
Down Payment: As low as 3.5% with qualifying credit; higher down payment may be required with lower scores.
Credit Score: Often more flexible than conventional loans; buyers with scores in the mid‑500s to 600+ range may be eligible, depending on the lender.
Debt-to-Income Ratio (DTI): Typically allows higher DTIs than conventional loans; many borrowers can be approved with DTI up to the mid‑40% range or higher with strong compensating factors.
HELOC
Best for: Owners with equity who want to leverage it to buy another property
Flexible credit line secured by your current home’s equity that you can draw from for a down payment or costs on a new property.
Equity: Typically need at least 15–20% equity remaining in your current home after the HELOC is added.
Credit Score: Generally better for borrowers with good credit (often mid‑600s and above) to access stronger rates and limits.
Debt-to-Income Ratio (DTI): Commonly targeted at or below the low‑40% range to help with approval and favorable terms.
Construction Loans
Best for: Buyers building a new home or doing major renovations
Short-term financing to build or heavily renovate a home, with funds released in stages and typically converted into a regular mortgage after construction.
Down Payment: 10–20% or more, depending on the project, builder, and lender requirements.
Credit Score: many lenders look for scores in the mid‑600s or higher for the best options.
Debt-to-Income Ratio (DTI): Often preferred under 43%; some lenders may require lower DTIs given the added risk and complexity of construction projects.
Renovation Loans
Best for: Buyers or homeowners who want to upgrade, repair, or customize a home
Financing that combines the home purchase (or refinance) and renovation costs into a single mortgage, so you can fund upgrades without separate out-of-pocket loans.
Down Payment: Typically 3–5%; less than 20% down requires Private Mortgage Insurance (PMI).
Credit Score: Minimum 620; for stronger approval odds and better rates, aim for 680–700+.
Debt-to-Income Ratio (DTI): Preferred under 43%; lower DTI can help you qualify more easily and improve terms.
VA Loan
Best for: Veterans, active-duty service members, and certain surviving spouses
Home loan benefit that helps qualified military borrowers buy with no down payment, no monthly PMI, and competitive interest rates, often with more flexible credit and income guidelines.
Down Payment: 0% down for most eligible buyers, subject to lender approval and VA entitlement.
Credit Score: Lenders commonly look for scores around 620+, but many are more flexible case by case for qualified VA borrowers.
Debt-to-Income Ratio (DTI): Benchmark around 41%; higher DTIs may be approved when there are strong compensating factors (reserves, strong credit, stable income).
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