An unconventional loan is a government backed program that offers more flexible qualifications such as a lower credit score requirement, loan amounts, debt-to-income ratios but also require a larger down payment when purchasing your home. We have all heard about the two most popular unconventional loans; Federal Housing Administration (FHA) and Veterans Affair Loans (VA).
Unconventional loans go by many names in the industry; non-conventional, non-conforming are terms used by lending agents.
Sponsored government programs are funded by firms such as, Fannie Mae and Freddie Mac. Each funding program has specific requirements to purchase a property. These set of rules determine what the homeowner can purchase when looking for their home financed through one of these programs. Speak with your loan officer to discuss the benefits and requirements.
Aside from the most common well-known loans, FHA and VA, here are other options in the unconventional loan category that are available:
USDA: This loan helps those in rural areas help develop those towns with less than 20,000 population.
Seller Financing: You borrow from the seller of the home to purchase the house but usually at a high interest rate. This type of loan means you are not required to stay within the strict rules of mortgage loans.
Jumbo Loans: A jumbo loan has extremely strict criteria a lender must follow and must fall outside the lending limit of a Fannie Mae or Freddie Mac backed loan. Surprisingly, the interest rates with jumbo loans are equivalent to conventional loans.
Hard Money and Private Lenders: Finding money from these two options is becoming a growing benefit for investors. This loan means that interest is directly paid to the lender, but the lender finances the transaction bypassing some mortgage approval requirements.
If you are looking for create ways to finance goal of homeownership with flexible options, contact us to discuss your financing options with an Unconventional Loan.