Most consumers choose to go with a fixed-rate mortgage over an adjustable-rate mortgage (ARM loan), because of the predictability that is baked into a fixed interest rate over the course of the loan. However, if mortgage rates in the market are relatively high at the time you are home shopping, or if you know that you are only going to live in the home for a few years (fewer than the length of the introductory fixed-rate period of the ARM you are considering), then an ARM loan might be the right home loan solution for you. As always, though, it is important to weigh the pros and the cons of fixed-rate mortgage programs vs. ARMs with your Fairway mortgage advisor, as every individual’s situation is unique.

Most homebuyers opt for a fixed-rate mortgage due to the predictability and perceived security that brings. With a fixed-rate mortgage, you always know how much interest you will pay over the life of the loan. In a low-interest rate atmosphere, a fixed-rate mortgage might be the best bet, because it locks in that low interest rate for the life of the loan. When interest rates in the market are relatively high, perhaps an adjustable-rate mortgage (ARM loan) is worth considering.

If you think you will stay in the home you are purchasing for the entire life of the home loan, you might be more likely to select a fixed-rate mortgage, again due to the predictability of knowing exactly how much interest you will pay for the loan. But if you think you might move or refinance in a certain number of years, an ARM loan might prove advantageous in these cases. But, as in all cases, it is a good idea to talk these decisions over with your Fairway mortgage advisor up front.

Adjustable-rate Mortgage vs. Fixed-rate Mortgage Highlights

We have described the differences between the two types of mortgage loans at length, but here are the highlights:

Fixed-rate mortgages provide more of a sense of predictability and security.

ARM loan interest rates remain fixed for the introductory period (either five, seven or 10 years).

Fixed-rate home loans show exactly how much interest you will pay over the life of the loan.

If mortgage rates go down, with an ARM loan you will see that benefit reflected in your new rate.

You may be able to qualify for a higher loan amount with an adjustable-rate mortgage loan.

There are conventional loan programs that allow for a down payment as little as 3%, so if you qualify for these programs, then yes! In fact, one of the biggest home-buying myths out there is that you need a 20% down payment to buy a home; you absolutely don’t.

Take note, however, that if your down payment is less than 20%, a private mortgage insurance (PMI) payment will be added to your monthly mortgage payment, until you have paid off 20% of the mortgage amount.

It depends on your unique financial situation and goals when buying a home. One loan type is not necessarily “better” than another; it’s really more about what loan type fits your current situation and needs. If you have relatively good credit, stable income and a little bit more saved for a down payment, a conventional mortgage loan might be the right fit for you.

If you are an active U.S. service member, veteran or surviving spouse (where a VA loan might be advantageous); or unless you are specifically looking for a home in a more rural setting (where a USDA loan might be advantageous). But as always, your Fairway mortgage loan advisor will be able to go through all this with you and help you decide which type of loan fits your specific situation best.

One of the major motivations for refinancing from an FHA loan into a conventional loan is to drop the requirement of paying monthly mortgage insurance on top of their mortgage payment. If this is your aim, it may be better to wait until you have 20% equity in the home, because if you don’t, a conventional mortgage loan will still require you to pay mortgage insurance until you do have that 20% equity stake.

Another major motivation for refinancing from an FHA loan into a conventional mortgage loan is when someone has improved their credit score or debt situation a great deal during their first years as a homeowner. If your credit score has gone up considerably or if you have paid off some debts recently, you might now qualify for a significantly better mortgage rate on a conventional loan, which could mane a conventional loan more advantageous over the life of the mortgage.

Keep in mind, though, that current market mortgage rates also have a great deal to do with what rate you may get on a refinanced mortgage. So, just because your situation has improved does not always mean now is the right time to refinance from one mortgage type to another. A Fairway mortgage advisor will be able to help you find out what benefits you may reap from refinancing from FHA loan to conventional loan and when might be the best time to do so.

There may be several ways to accomplish this, depending on your financial situation and where you are buying or refinancing your home.

Ask the seller for what is known as “seller concessions” to help pay some or all of your closing costs. You may be able to negotiate that into your contract to buy the home. Tell your real estate agent and Fairway mortgage advisor up front if you plan to ask for these seller concessions. Also, please note that due to varying real estate market conditions, these types of negotiations may or may not be feasible (ie – a “seller’s market”).

You could pay a higher mortgage interest rate in exchange for the lender’s help in covering your closing costs. This is commonly referred to as “buying up” your interest rate.

Many conventional home loan programs allow buyers to use gift money given by family members, your employer or close friends for your closing costs. Tell your Fairway mortgage advisor up front if you plan to use gift money to defray closing costs.

Apply for grants and/or forgivable loans through down-payment assistance programs. These programs tend to be governed at the county or state level and their qualifying rules vary. Ask your Fairway mortgage advisor if there might be an applicable down-payment assistance program for you.

Owing taxes* is a separate matter from having a tax lien. Tax debt is simply owing money to the IRS and/or a state, but a tax lien means that your taxes went unpaid long enough to trigger collection actions. If you have an IRS lien on your income or assets, it greatly diminishes your chances at getting approved for a conventional mortgage. It does not automatically nullify your eligibility for an FHA loan, but it does nullify eligibility for a conventional mortgage through Fannie Mae.

For people with better or more established credit profiles and low levels of debt, it may be advantageous to choose a conventional loan over an FHA loan.

For those who may not have as much established credit, a lower credit score or who may have slightly higher levels of debt, an FHA loan might be the cheaper option over the life of the mortgage loan. This often, but not always, includes first-time homebuyers.

According to FHA guidelines, the FHA generally will not insure more than one mortgage for any borrower, noting an exception for transactions in which an existing FHA mortgage is paid off and another FHA mortgage is acquired. There are other exceptions as well. One of those exceptions is provided for relocations.

If the borrower is relocating and re-establishing residency in another area not within reasonable commuting distance from the current principal residence, the borrower may obtain another FHA mortgage and is not required to sell the existing FHA-financed property. Other exceptions may be approved when a family has increased in size or for a borrower who is vacating a jointly-owned property. Exceptions are processed on a case-by-case basis.

If you put down 10% or more as a down payment, you can wait for the FHA mortgage insurance to fall off your loan, which happens after 11 years. If you put down less than 10%, the only way to get rid of the monthly mortgage insurance payments is to refinance into either a Conventional or VA loan, if you qualify for either. Read more about this at Home.com.

Use this handy calculator to get a sense of what you might be able to afford.

MORTGAGE CALCULATOR

It depends! For people with better or more established credit profiles and low levels of debt, it may be advantageous to choose a Conventional loan over an FHA loan, even if the interest rate is the same or similar, due to other advantages associated with Conventional loans. For those who may not have as much established credit, a lower credit score or who may have slightly higher levels of debt, an FHA loan might be the cheaper option over the life of the mortgage loan, or it may be an entryway into a home loan for some who may not qualify for Conventional. As always, though, a Fairway mortgage loan officer will be able to go over your specific situation more closely in a phone consultation or online, and then advise which option would be advantageous for you.

An FHA 203(k) loan is a type of FHA loan that is specifically for bundling the costs of necessary renovations or home improvements into the mortgage loan at the time of purchase or refinancing. It is a great option for people who have found a home that needs a little love before it is 100% move-in ready. Or, some borrowers choose to take out an FHA203(k) refinance loan later, when certain updates to the home become necessary.

At Fairway we offer FHA Limited 203(k) loans, which can provide up to $35,000 (including a contingency reserve) to help make non-structural home improvements or renovations, such as updating a kitchen or bathroom, replacing flooring, purchasing new appliances or repairing the roof. We also offer an FHA Standard203(k) for homes that may need more than $35,000 in renovations, or for homes where the necessary renovations may be more structural in nature.

Adjustable-rate mortgage loans are available through an FHA mortgage loan. An adjustable-rate mortgage loan, or ARM, is a home loan that starts with a lower fixed interest “teaser” rate for a period of five to 10 years, followed by periodic rate adjustments based on current market mortgage rates. Adjustable-rate mortgage loans may be the right mortgage loan option for borrowers interested in a lower introductory interest rate and greater flexibility if the borrower thinks they may only stay in the home they are buying for a few years, instead of for the entire life of the mortgage loan.

Fixed-rate mortgage loans are also available through an FHA mortgage. The stability and predictability of a fixed-rate mortgage loan are the biggest advantages associated with these mortgage loans. You will know exactly how much interest you will pay over the life of the mortgage loan even before you sign all your documents. The total monthly payment of principal and interest remains fixed over the life of the loan, and in the early years in the life of your mortgage loan, most of your payments will go toward that interest. As you pay off more and more of your fixed-rate mortgage loan over the years, the amount paid monthly toward loan principal will increase, and the amount paid monthly toward interest will decrease.

Streamline refinance refers to the refinance of an existing FHA mortgage, requiring limited borrower credit documentation and underwriting, because all that has previously been initially taken care of during the original FHA home purchase transaction. Basic requirements of a streamline refinance include (1) the mortgage to be refinanced must already be FHA insured and must be current, (2) cash in excess of $500 cannot be taken out as a result of the streamline refinance transaction and (3) the refinance must result in a net tangible benefit to the borrower.

Disclaimer: *Pre-approval is based on a preliminary review of credit information provided to Fairway Independent Mortgage Corporation, which has not been reviewed by underwriting. If you have submitted verifying documentation, you have done so voluntarily. Final loan approval is subject to a full underwriting review of support documentation including, but not limited to, applicants’ creditworthiness, assets, income information, and a satisfactory appraisal.

PROS:

Predictability is the big plus. You know going into your home mortgage loan exactly how much interest you will pay over the life of the loan. In the early years of the life of your home mortgage loan, when your monthly payments will go mostly toward that interest rather than toward the loan principal, you are able to shorten the term of the loan at will by making periodic additional payments against the principal, if you are able and if you wish to. If you choose a 15-year fixed-rate loan over a 30-year fixed-rate loan, you will own your home in half the time and, generally speaking, for less than half the total interest cost of a 30-year fixed-rate mortgage loan.

CONS:

If mortgage rates fall after you purchase your home, your mortgage rate will not go down along with the market rates. Also, the initial rate you qualify for on an adjustable-rate mortgage loan (ARM) may be lower than the rate you would qualify for on a fixed-rate home loan.

Fairway Independent Mortgage Corporation offers fixed-rate loan terms of 10 years, 15 years, 20 years, 25 years and 30 years, depending on loan type.

The term “conforming” only comes into play if your home mortgage loan is a Conventional loan  and means that the home mortgage loan in question meets the standards set by the Government Sponsored Entities (GSE) Fannie Mae and/or Freddie Mac for insuring the loan. If you are hearing the word “conforming” regarding your home mortgage loan, it means you are dealing with a conventional mortgage loan.

That, of course, depends on the underlying conditions of the real estate and mortgage market, which vary according to a number of factors, including but not limited to seasonal shifts, shifts related to the U.S. economy in general and shifts caused by certain far-reaching world events. In comparison to an adjustable-rate mortgage, though, you may find that the introductory (sometimes called a “teaser”) rate you qualify for with an adjustable-rate mortgage loan is lower than the rate you qualify for in a fixed-rate mortgage loan.

But when the introductory rate period is over (typically after 5 years, 7 years or 10 years, depending on loan type), if you chose an adjustable-rate loan at the time of purchase, your home mortgage loan’s interest rate would then be subject to fluctuations according to the volatility of the real estate and mortgage market. It could go up; it could go down. What that may mean for the total interest cost of the home mortgage loan is something that you really should speak with your Fairway mortgage advisor about.

That depends on several factors, including the purpose of the property being financed with the jumbo loan. At Fairway, our core jumbo mortgage program allows for down payments as low as 10% for the purchase of a primary residence, whereas a typical 30-year, fixed-rate Conventional conforming loan allows for a down payment as low as 3%.

But these requirements sometimes shift due to the cyclical nature of the real estate and mortgage markets, and your Fairway mortgage advisor may have access to other jumbo loans programs, so be sure to ask about all your jumbo loan mortgage options as you consult with your Fairway mortgage advisor!

Well, it’s not a jumbo loan that was born on the planet Krypton. A super-jumbo home loan is a home loan where the purchase price not only exceeds the FHFA’s conforming limits, but also exceeds the FHFA’s jumbo limits. Again, these limits are set and reviewed by the government each year.

If you’re having this conversation with your Fairway mortgage advisor, we’re talking homes that are over $1,000,000 and potentially much higher, especially in areas where real estate costs are generally more expensive.

Well, a reverse mortgage is a type of home loan reserved for borrowers over the age of 62 who either own their home outright or have significant equity in their home, which can be used to turn a portion of that equity into cash for expenses related to retirement. With that in mind, a jumbo reverse is just a reverse mortgage for a home where the loan amount is higher than the FHFA’s current conforming loan limit. Basically, it is a reverse mortgage for a larger, more expensive home.

There are multiple types of physician loan mortgages. Some of them allow Fairway to ignore your student loans altogether when calculating your DTI as long as they are deferred for another 12 months from the time of the mortgage loan application. There are other loan programs that don’t allow us to ignore the student loan debt, but that do feature higher qualification guidelines to help you qualify, even with those student loan payments.

When it comes down to it, it is your Fairway mortgage advisor’s job to review all of the different mortgage loan options, along with your unique credit and income situation, to determine what the best home loan program is for you.

This is one of the most common questions we receive, regardless of loan type. When it comes to medical professionals, especially new residents, typically these medical professional loan programs have flexible guidelines that allow you to get into your new home with less than you think upfront for a down payment. However, these program guidelines change often, so what’s best is to have a conversation with your Fairway mortgage advisor so that we can determine what the best option is for you.

Again, it is your Fairway mortgage advisor’s job to look at all the home loan options on the table, compare and contrast them and tailor fit a home mortgage plan that best fits you, your family and your financial goals. We would much rather keep all your home loan options open and guide you to make the right decision, rather than push you into a loan product just because it matches your job title.

Ultimately the timeline is up to you, and at Fairway, we want to give you as much flexibility as possible on your path to homeownership. Some of our programs allow you to close on a home as many as 90 days before the first day of your residency, as long as you can provide proof of a signed offer. This flexibility can make a huge difference for many medical professionals and their families!

Some medical professional loan programs are Conventional loan products, yes. These are specific home loan programs that allow for the consideration of future income and for Fairway to calculate your DTI a little differently in relation to your student loans when you apply.

Others are considered jumbo loans. It’s best to discuss all your options with your Fairway mortgage advisor to choose the home loan program that best fits you and your financial situation and goals.  

Yes. The rules for refinancing your home loan are the same, regardless of loan type. Typically, you must wait at least six months before refinancing your home loan.

*Pre-approval is based on a preliminary review of credit information provided to Fairway Independent Mortgage Corporation, which has not been reviewed by underwriting. If you have submitted verifying documentation, you have done so voluntarily. Final loan approval is subject to a full underwriting review of support documentation including, but not limited to, applicants’ creditworthiness, assets, income information, and a satisfactory appraisal.

The cost to refinance your loan depends on several factors. Many refinance loan programs require a new appraisal on the home. That cost can range from $400-$750 for an average-sized home, but it may not always be required under all refinance loan programs. There are also generally closing costs associated with your new refinanced home loan. Sometimes those closing costs, which can vary widely depending on the size and type of property, must come out of pocket, and other times, they can be rolled into the financing of the new home loan instead of coming out of your pocket when the new refinanced loan closes. It is important to discuss the costs, terms and conditions associated with a refinance loan with your Fairway mortgage advisor.

The short answer here is that you can refinance anytime when it benefits you as a borrower, as long as you have at least a six-month on-time payment history on your current home mortgage loan. Maybe that means when mortgage rates have decreased considerably. Maybe that means when you have built up a significant equity stake in your home, when a refi would serve to either shorten your loan term or to tap that equity by taking cash out at the time of refinancing. The answer to this question is different for each individual client. It is important to discuss your specific financial situation and goals with your Fairway mortgage advisor when considering a refi.

Yes! You may have several refinance options if you currently have an FHA loan.

An FHA Streamline Refinance is the term for when a borrower refinances from one FHA loan into another FHA loan. Since you have already been through the FHA loan process for your initial home loan, this streamlined refinance process means that you will be required to fill out less paperwork for your refinanced home mortgage loan. An FHA Streamline Refinance allows your new lender to use your existing credit and appraisal data from your initial home mortgage loan to approve the new refinanced home loan. So, if mortgage rates have decreased significantly since you bought your home, you may be in for smaller monthly payments with an FHA Streamline Refinance loan. You may also use an FHA Streamline Refinance loan to refinance out of an adjustable-rate home mortgage loan and into a fixed-rate loan product. The FHA loan rules require there to be a tangible benefit for the borrower when refinancing with an FHA Streamline, and converting from adjustable-rate to fixed-rate does qualify.

‍

You may also choose to refinance out of your FHA loan altogether and into a conventional home mortgage loan product. This may be beneficial if your credit score has improved significantly since they took out their FHA loan, because your rate on a conventional mortgage loan with your improved credit score may be better than the rate you have on your current FHA mortgage loan and better than the rate that you could get in an FHA Streamline Refinance situation. Many people also choose to refinance from their FHA loan into a conventional home mortgage loan as they approach 20-22% equity in their home. As an example, if you put down a smaller down payment (less than 10%) when you purchased your home with an FHA loan, then you know that the mortgage insurance payment that is part of your monthly mortgage payment is going to be there for the life of your FHA loan. But with a conventional mortgage loan, mortgage insurance usually is no longer required after 22% of the loan is paid off. So, as you get closer and closer to a 20-22% equity stake in your home after making monthly mortgage payments for several years, then refinancing from that FHA home mortgage loan and into a conventional mortgage loan may save you some money on your monthly payment as well.

You are required to have at least a six-month history of on-time monthly mortgage payments before you can refinance any home mortgage loan. However, it may be advantageous to wait even longer than that before refinancing your FHA home mortgage loan, for the reasons discussed in the previous answer. As always, it is important to talk your refinance options over with your Fairway mortgage advisor to make sure that you are getting the most benefit from your new home loan, because each individual’s financial situation, credit situation and goals may vary.

These terms are sometimes used in different ways by different people, so some confusion is understandable! In general, all refinance loans depend on how much equity the borrower has in their home at the time when they refinance. Whether you are looking into a rate-and-term refinance loan or a cash-out refinance loan, the more equity in the home the borrower has at the time of the refinance, the more advantages they can reap in their new, refinanced home mortgage loan. So, in that sense, yes, you can consider “home equity loan” and “refinance” synonymous. But sometimes, people say “home equity loan” when they are referring specifically to a cash-out refinance, because the funds the borrower receives at closing from a cash-out refinance come from the equity they already held in the home after paying on their first home loan for several years. We hope this clears up some confusion, but if you have any questions about either a rate-and-term refinance or a cash-out refinance, you should always talk to your Fairway mortgage advisor about your specific situation and goals.

*By refinancing your existing loan, your total finance charges may be higher over the life of the loan.

*Pre-approval is based on a preliminary review of credit information provided to Fairway Independent Mortgage Corporation, which has not been reviewed by underwriting. If you have submitted verifying documentation, you have done so voluntarily. Final loan approval is subject to a full underwriting review of support documentation including, but not limited to, applicants’ creditworthiness, assets, income information, and a satisfactory appraisal.

Renovation mortgage loans allow homebuyers and homeowners to borrow against the home’s subject-to-completion value today, rather than the value of the home in its current condition. The home’s subject-to-completion value takes into account the value added after repairs and improvements have been completed.

For example, if the Jones family found a home in their ideal location listed for sale at $250,000, they could opt for a traditional home loan to finance the purchase of the property. While the Jones family may have enough money for a decent sized down payment, they may not have the funds needed to pay for desired upgrades or repairs out of pocket at this time. This is precisely where the benefits of a renovation mortgage come into play.

Using a renovation loan at the time of purchase, the Joneses can not only finance the purchase price of the property, but the costs of the necessary repairs and home improvements as well.So if the home needed $50,000 of upgrades in the bathrooms, the Joneses could roll all $300,000 of the home’s price, plus the project price into one home loan.

Minimum down payment requirements vary from loan program to loan program, of course. But imagine the savings (in both cash and in headaches) of being able to finance 95-97% of the total$300,000 loan amount it would take to turn this home the Joneses are considering into their dream home.

Renovation mortgage loans are also a great way to upgrade your home at the time of refinance, rather than at the time of purchase. This is especially true if the home’s current value — before repairs — is significantly limiting the amount you might be able to borrow in a refinance.

If the home you are living in or the home you are looking at for purchase needs repairs, or if you simply have a wish-list of upgrades that you would like to make, a renovation mortgage might be right for you. Keep in mind that since renovation costs are being financed into your home loan along with the mortgage amount, this could result in a higher monthly mortgage payment than other mortgage loan options.

At Fairway, your renovation loan will take the form of a fixed-rate mortgage, which protects you from rising interest rates in the future. Remember, though, that renovation mortgage programs will differ in terms of their down-payment requirements and types of eligible repairs, so speak with your Fairway mortgage advisor about all your options today!

If you are active-duty military, an eligible veteran or a surviving spouse, Fairway has a VA renovation loan option available. An advantage of the VA renovation loan is that eligible borrowers may be able to borrow up to 100% of the future home value*, along with an additional $35,000 in alterations to make minor, cosmetic, non-structural improvements. There are also Conventional renovation loan programs and FHA renovation loan programs out there, for those who are not eligible for a VA home mortgage loan.

If you are not eligible for a VA loan, you may still be able to finance 100% of the purchase and necessary renovation costs with a USDA renovation loan**. Ask your Fairway mortgage advisor what you qualify for today!‍

*A down payment is required if the borrower does not have full VA entitlement or when the loan amount exceeds the VA county limits. VA loans subject to individual VA Entitlement amounts and eligibility, qualifying factors such as income and credit guidelines, and property limits.

**USDA Guaranteed Rural Housing loans subject to USDA-specific requirements and applicable state income and property limits.‍

Renovation Loan Options Also Include:

HomeStyle Renovation Loans

You can use a Fannie Mae HomeStyle Renovation loan to finance just about any type of upgrades on a primary residence, a second home or an investment property. This even includes some“luxury” items like a brand new in-ground swimming pool. There are no required improvements or restrictions on the types of repairs allowed, nor is there a minimum dollar amount for the repairs. However, repairs or improvements must be permanently affixed to the real property and be completed by a licensed contractor, according to the FannieMae HomeStyle renovation loan guidelines.

Limited 203(k) Rehabilitation Mortgage

In addition to financing the purchase of your new home, an FHA Limited 203(k) can provide up to $35,000 in additional funds for alterations to your new or existing home. Keep in mind that the scope of repairs is limited to minor, cosmetic, non-structural items, such as updating a kitchen or bathroom with new flooring or cabinets, or for purchasing new appliances.

Standard 203(k) Rehabilitation Mortgage

If the home you are considering needs more than $35,000 in repairs and improvements, or if the repairs needed are structural in nature, the StandardFHA 203(k) might be the right solution. The Standard FHA 203(k) option is ideal for more intensive home remodels and can provide additional funds*** to help with eligible repairs, including adding additional square footage.

*** Final disbursement of funds is subject to final inspection.

• Borrower(s) must be 62 years or older
• Must be homeowner and either own home outright or have significant equity
• Must live in home as primary residence (more than six months out of the year)
• Property must be a single-family home, a 2- to 4-unit dwelling or an FHA-approved condo
• Must meet minimal credit and property requirements
• Must receive reverse mortgage counseling from a HUD-approved counseling agency
• Must not be delinquent on any federal debt

The specific percentage varies by lender and the type of reverse mortgage, but the general rule of thumb is to have at least 50% equity in your home.

Reverse mortgage refinancing is an option that makes sense in certain situations. It may have been several years since you closed, and rates may have lowered, or it may make sense to switch from an adjustable rate to a fixed rate through a refinance. Perhaps your home has appreciated in value, and you have additional equity you'd like to tap into. Refinancing may increase the amount of money you are eligible to receive.

Yes. You can sella house with a reverse mortgage already in place. However, keep in mind that when you sell the home, your reverse mortgage comes due, and you will need to pay off the reverse mortgage loan balance, plus interest and fees, at the time of the sale.

Eligibility for USDA mortgage loans is based on the property size, location and condition of the home. The property must fall in a USDA designated rural area, first of all. The home must also be the loan recipient’s primary residence. Loan amount limits will vary by state and county.

Applicants must meet the USDA’s income-eligibility limit, meaning the applicant cannot exceed 115% of the area’s median household income. Since area median income varies by locale, USDA home loan income limits may vary by state and even county.

The applicant must also be a U.S. citizen, a non-citizen national or what the Department of Agriculture defines as a “qualified alien”. If you are a citizen, a permanent resident or a qualified foreign national who will live in the home as a primary residence, you will meet this requirement.

The Department of Agriculture, who guarantees USDA mortgages, dictates that the household must show that they are able to afford the mortgage payment, including property taxes, homeowners insurance and the annual USDA guarantee fee, which is payable in part at closing and the rest on a monthly basis, which is usually lumped in with the monthly mortgage payment.

For information on current USDA mortgage rates, please contact your Fairway mortgage advisor. Like interest rates for other loan types, these rates fluctuate due to many different factors in the market, as well as based on the applicant’s credit background.

But keep in mind, that outside of the attractiveness of a no-down payment option for qualified applicants, one of the biggest appeals of a USDA loan is that it is often offered at an interest rate lower than a Conventional loan. You can expect for that to be reflected in a slightly lower monthly payment amount. The government backing of a USDA mortgage typically means that lenders like Fairway can offer them at competitive interest rates.

Not exactly, but the USDA mortgage loan process does require payment of what is called a “guarantee fee”. This fee is paid both in part at closing and in part monthly. The upfront fee paid as part of the applicant’s closing costs and then a smaller amount is paid each month, usually lumped in with the applicant’s monthly mortgage payment.

Ask your Fairway mortgage advisor about specifics regarding the USDA guarantee fee. Whether the USDA guarantee fee is cheaper over the life of the loan than the private mortgage insurance associated with a Conventional loan depends on the applicant’s credit score. Typically, the lower one’s credit score, the more advantageous it would be to pay the USDA guarantee fee vs. a conventional loan’s PMI.

USDA home mortgage loans can be refinanced, just like any other type of home loan. As long as your credit remains the same or improves over time and your home loan payments are up to date, you should be able to refinance into a lower interest rate and/or monthly payment when rates go down in the market.

Qualifying homeowners may also be able to skip the credit and income approval step if they are refinancing from a USDA home loan into another USDA home loan, using the USDA Streamline program.

The short answer is no, you will not. Even if you put no money down, there is no private mortgage insurance (PMI) when you use a VA loan to buy your home. You will instead have to pay a VA funding fee, which you can pay up front at closing or it can be rolled into and financed as part of the total loan amount.

In some cases, the seller may elect to pay or the buyer’s and seller’s real estate agents may negotiate to have the seller cover the VA funding fee.

The funding fee is calculated as a percentage of your loan amount and is based on what, if any, down payment is associated with the loan. It also factors in whether the veteran associated with the loan is a first-time VA mortgage recipient or has used the VA loan option more than once.

The VA loan allows eligible borrowers to include SOME closing costs into the total loan amount. As mentioned above, the VA funding fee is one of the VA loan closing costs that you can choose to roll into the total loan amount. The other fees that are lumped into closing costs are not eligible to be rolled into the total loan amount, but you and your agent may be able to negotiate additional seller or lender concessions to bring the upfront cost of the loan down.

Before you are granted a VA home loan, you must first obtain a valid Certificate of Eligibility (COE). Your COE is based on your length of service or service commitment, duty status and character of service. Veterans, active-duty personnel and eligible surviving spouses can request their COE from the VA, or your Fairway mortgage advisor can look it up when you are ready to apply.

Your COE tells your lender whether you have your “full entitlement” available, which means you can buy a home with zero down, or “partial entitlement,” which means you would have to make a down payment for your home purchase. Click here for another resource regarding VA loan eligibility.

Yes. You can take out a VA mortgage even if you have used one before. However, if you haven’t paid off your last VA home loan, you may only have a partial entitlement remaining or no entitlement remaining. You would need to pay off the current loan to restore your full entitlement to avoid loan limits and realize all the other great benefits of the VA mortgage loan on that second loan.

You can use a VA loan to buy land as long as there is a home on the property. The VA loan rules do not limit the amount of land you can buy, but keep in mind, that similar properties in the area where you purchase must be used for residential purposes only.

For example, if you are thinking of buying a 10-acre plot with a house on it, but all the other 10-acre properties near yours are income-producing farms, you may not be able to use a VA mortgage loan for your purchase. But if you are purchasing in a rural area dotted with similarly sized hobby farms, you would more likely be in the clear.

It is possible to use a VA loan to build a house, but few lenders offer this option. VA construction loans require buyers to jump through many more hoops to qualify, including finding a VA-approved builder and then making sure the building plans qualify for VA financing.

The minimum VA loan credit score to qualify at Fairway is 580. For any borrowers whose credit score ranges from 580-599, an additional underwriting approval will be required, which just means that in many cases, additional documentation may be required during the mortgage process. As always, the higher your credit score, the more favorable the loan terms you will see. But there is more to your VA loan experience than your credit score! Make sure you are asking your Fairway mortgage advisor these questions as you are going through the mortgage process as well.