VA Loans: VA loans are structured specifically for veterans and are optimal for former military service applicants who have small amounts of cash but solid credit. Minimum FICO score: None set by the USDA
Restrictions on the borrower are generally limited, but do exist: applicants must make 115% of the median income of the area, the home must be located in a specific rural target area, and the property itself must meet USDA standards. However, these loans are not available in all parts of the country as they are specified for rural areas. USDA Loans: USDA loans are loans backed by the United States Department of Agriculture (USDA), allowing for relatively low rates and no down payment requirement. Minimum FICO score: 580 (3.5% down payment) / 500 (10% down payment) You are also able to refinance FHA loans after your financial outlook improves. These loans do come with them an extra set of premiums but are still a superior option to renting.
This government-backed loan type was established in 1934 to boost a faltering American housing system, and it continues to serve that purpose today. So where to begin when looking for the right mortgage? The field can be daunting, so we’ve outlined various types of mortgages to consider when applying.įHA Loans: An FHA loan is an ideal choice if you are a first-time buyer, do not have access to much capital in hand, or are carrying more debt than you would like. This means that qualifying for a mortgage gives you the opportunity for a loan that will help cover your cost of living at a much lower rate, taking considerable pressure off of the high debt payments you have to sustain through revolving credit. The national average for a 30-year fixed mortgage, on the other hand, is 4.54%. This debt is fueled by cost of living, and the interest you pay on that debt, known as annual percentage rate (APR), could be at around 16% based on national credit card APR averages. This set up allows for more competitive interest rates than a credit card, for instance, meaning that homeownership is about far more than owning a home it’s about providing access to capital.įor example: imagine you have $8000 in credit card debt. Mortgages are therefore different from a student or personal loan because this loan is going directly towards property with a calculable value. A mortgage is a loan made possible by the fact that your home is serving as collateral.
Together, both will provide a holistic overview of what you can expect from start to finish when buying your home with Divvy.Īn important consideration with homeownership is understanding why mortgages themselves are so unique. This guide will be published in two parts: the first part will give an overview of what the mortgage field looks like, and the second will help guide you through the application process. We understand the details of the home buying process can be exciting but also a little intimidating, and that’s why we’ve outlined a comprehensive guide to your first steps into home ownership. So what does the leap into homeownership actually look like? What are the steps you need to take to continue your journey?Īt Divvy, our mission is to offer access to home ownership, and financial mentorship comes part and parcel with this access. You’re starting to learn the ropes of what home ownership really entails, and you have a clear goal in mind to purchase the place you call home. If you’re a part of the Divvy program, you’ve already taken a huge first step on your exciting journey into home ownership.
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