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January 15, 2024 by Brett Tams

Buying a house with low income is possible

While the dream of homeownership might seem elusive on a tight budget, the availability of low income home loans offers a beacon of hope.

These specialized loans come in handy, particularly when the obstacles of saving for a down payment loom large—a common hurdle if you’re already strapped with rent payments.

So if you’re wondering how to bridge the financial gap between renting and owning, read on to explore the various low income home loan programs that could unlock the door to your future home.

Verify your home buying eligibility. Start here

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Can I buy a house with low income?

Yes, you can buy a house with a low income by qualifying for housing assistance programs and special mortgage loans. That’s because there is no minimum income requirement to buy a house.

However, your ability to do so will depend on a variety of factors specific to your financial situation. A mortgage lender will examine your credit score, debt-to-income ratio, and down payment to determine if you qualify.

Check your mortgage eligibility. Start here

What are low income home loans?

The path to homeownership can be fraught with challenges, particularly for those with limited financial resources. Enter low income home loans—a specialized type of mortgage designed to level the playing field for buyers facing financial barriers.

Low-income mortgage programs focus on addressing the common challenges that low-income earners encounter, such as managing debt, maintaining less-than-stellar credit scores, and struggling to save for a significant down payment.

Verify your home buying eligibility. Start here

Minimal down payment requirements: One of the most daunting aspects of buying a home is accumulating a large down payment. Low income home loans often require smaller down payments, making it easier for buyers to make the initial leap.
Lenient credit criteria: Having a perfect credit score is not always feasible, especially when living on a limited income. These loans often have more flexible credit requirements, allowing for a broader range of credit histories.
Reduced costs at closing: High closing costs can be another hurdle. Low income home loan programs may offer reduced or even waived closing costs in certain circumstances.
Competitive mortgage interest rates: High interest rates can quickly make a mortgage unaffordable. Low income home loans often feature competitive interest rates, reducing long-term costs.
Lower mortgage insurance premiums: Some programs offer reduced premiums for mortgage insurance, further lowering monthly payments.

Interestingly enough, some of these programs often have income caps, essentially barring applicants who have incomes that are considered too high. This ensures that the programs benefit those who need them most.

Requirements for low income home loans

Your ability to qualify for a loan is not solely based on your income. Lenders will assess your debt-to-income (DTI) ratio, a key metric that represents your monthly debts as a percentage of your monthly income. Generally, a DTI under 35% is viewed as favorable, making you a more appealing candidate for a mortgage.

If saving a down payment is your chief concern, don’t worry; there are plenty of options that require minimal, or sometimes zero, down payments. Despite common misconceptions, a 20% down payment is not a universal requirement.

Additional Assistance

Beyond the loan itself, there are various homebuyer assistance programs that can help with the down payment and closing costs. Some of these are structured as grants that don’t require repayment, making it easier to achieve the dream of owning a home.

Navigating the complexities of mortgages and home buying can be intimidating, but low income home loans and assistance programs offer a lifeline to those who dream of owning their own home. These financial products and services are tailored to alleviate the most common obstacles, offering a viable path to homeownership for those who may have thought it was out of reach.

Low income home loans

Low income home buyers have plenty of loan options and special assistance programs to help with a home purchase. Here’s what you can expect.

Check your mortgage eligibility. Start here

Loan Type	Credit Score	Down Payment	Unique Requirements
HomeReady	Generally 620	As low as 3%	Income limits based on area, homebuyer education course required
Home Possible	Generally 660	As low as 3%	Must be primary residence, income limits may apply, can include 1-4 unit properties
FHA Loans	580 for 3.5% down, 500 for 10% down	3.5% with a 580+ score, 10% with a 500-579 score	Primary residence required, mortgage insurance necessary
VA Loans	Varies by lender, often 580+	No down payment required	Must be a qualifying service member, veteran, or eligible spouse; primary residence only
USDA Loans	Usually 640	No down payment required	Must be in a qualifying rural area, income limits apply, primary residence only

HomeReady and Home Possible mortgages

Fannie Mae’s HomeReady program and Freddie Mac’s Home Possible loan are geared toward lower-income home buyers. You need only 3% down to qualify, and there is no minimum “required contribution” from the borrower. That means the money can come from a gift, grant, or loan from an acceptable source.

Even better, the home seller can pay closing costs worth up to 3% of the purchase price. Instead of negotiating a lower sales price, try asking the seller to cover your closing costs.

Private mortgage insurance (PMI) may also be discounted for these low income home loans. You’re likely to get a lower PMI rate than borrowers with standard conventional mortgages, which could save you a lot of money from month to month.

“This is the biggest benefit,” says Jon Meyer, The Mortgage Reports loan expert and licensed mortgage loan originator. “The PMI is offered at a lower rate than with a standard conventional loan.”

Finally, Home Possible and HomeReady might make special allowances for applicants with low incomes. For instance, HomeReady lets you add income from a renter on your mortgage application, as long as they’ve lived with you for at least a year prior. This can help boost your qualifying income and make it easier to get financing.

You might qualify for HomeReady or Home Possible if your household income is below local income limits and you have a credit score between 620 and 660.

FHA loans

FHA loans offer flexible approval requirements for repeat and first-time home buyers alike. This program, which the Federal Housing Administration backs, relaxes borrowers’ standards to get a mortgage. This can open up the home-buying process to more renters.

You might be able to get an FHA home loan with a debt-to-income ratio (DTI) up to 45% or a credit score as low as 580 while paying only 3.5% down
Select FHA lenders even allow credit scores as low as 500, provided the buyer can make a 10% down payment

Thanks to these perks and others, the FHA loan is one of the most popular low-down-payment mortgages on the market.

Check your FHA loan eligibility. Start here

VA loans

Veterans Affairs-backed VA loans provide military homebuyers with a number of advantages.

No down payment requirement. You can finance 100% of the purchase price. You can also refinance 100% of your home’s value using a VA loan
No mortgage insurance. But you will pay a one-time VA Funding Fee. You can wrap it into the loan amount.
No minimum credit score. Although lenders are allowed to add their own minimums. Those that do often require a FICO score of at least 580 to 620.
Sellers can pay up to 4% of the purchase price in closing costs. So if you find a motivated seller, you could potentially get into a home with nothing out of pocket

If you’re a veteran, active-duty service member, or surviving spouse, the VA mortgage program should be your first stop.

Check your VA loan eligibility. Start here

USDA loans

If you’re not buying in a large city, you may qualify for a USDA home loan. Officially called the Single-Family Housing Guaranteed Loan Program, the USDA loan was created to help moderate- and low-income borrowers buy homes in rural areas.

With a USDA loan, you can buy a home with no money down. The only catch is that you must buy in a USDA-approved rural area (though these are more widespread than you might think). You can find out if the property you’re buying is located in a USDA-eligible rural area and whether you meet local income limits using the USDA’s eligibility maps.

Your monthly payments might be cheaper, too. That’s because interest and mortgage insurance rates are typically lower for USDA loans than for FHA or conforming loans.

There are two types of USDA loans.

The Guaranteed Program is for buyers with incomes up to 115% of their Area Median Income (AMI)
The Direct Program is for those with incomes between 50% and 80% of the AMI

Standard USDA-guaranteed loans are available from many mainstream lenders. But the Direct program requires borrowers to work directly with the U.S. Department of Agriculture.

You typically need a credit score of 640 or higher to qualify.

Check your USDA loan eligibility. Start here

Low income home loan programs

Aside from mortgages that are designed to help people with low incomes buy a home, there are also a number of other programs that offer help to make homeownership more accessible.

Verify your home buying eligibility. Start here

Program	Description	Who Is Eligible
Hud Homes	Discounted homes sold by the Department of Housing and Urban Development.	Low- to moderate-income families, with preference for those who will make it their primary residence. May include single-family homes.
Housing Choice Voucher Program	Vouchers to subsidize the cost of housing in the private market.	Low-income families; must meet income and other criteria set by state and local housing programs.
Good Neighbor Next Door	Significant discounts on homes for teachers, firefighters, police officers, and EMTs.	Must commit to living in the property as a primary residence for at least 36 months. Includes single-family homes.
HFA Loans	Loans offered by state Housing Finance Agencies with reduced interest rates and down payment assistance.	First-time or repeat buyers with low to moderate incomes must meet income requirements. Often, it must be a primary residence.
Down Payment Assistance	Grants or loans to cover the down payment and sometimes closing costs.	Typically for low- to moderate-income families, though criteria can vary by program. Often for single-family homes.
State or Local Assistance	Various grants, loans, or tax credits are offered at the state or local level.	Eligibility varies but usually targets low- to moderate-income families. May include single-family homes.
Mortgage Credit Certificates	Tax credit to reduce federal income tax liability.	First-time homebuyers who meet income requirements; must be primary residence.
Manufactured and Mobile Homes	Loans or grants specifically for manufactured or mobile homes.	Low- to moderate-income families; must meet criteria set by specific housing programs. Usually must be primary residence.

Hud Homes

When the FHA forecloses on homes, those properties are often put up for sale as HUD Homes. And, you can generally purchase one at a steep discount. To qualify for a HUD Home, it will need to be your primary residence for at least 12 months. Additionally, you must not have purchased another HUD in the past 24 months.

Keep in mind that HUD Homes are sold as-is. Many are fixer-uppers. Moreover, HUD Homes are purchased through a bidding process. You’ll need a real estate agent or mortgage broker licensed with HUD to bid on an FHA property.

You can find HUD Homes on the official HUD website, hudhomestore.com. There, you’ll see all HUD real estate owned (REO) single-family properties in your area.

Good Neighbor Next Door

The Good Neighbor Next Door program offers unique benefits for nurses, first responders, and teachers. If you’re eligible, you can buy HUD foreclosure homes at a 50% discount. Use an FHA mortgage, and you only need $100 for a down payment.

You can find the homes on the U.S. Department of Housing and Urban Development website. You’ll also need a HUD-licensed real estate agent to put your offer in for you.

If your offer is accepted and you qualify for financing, you get the home. The 50% discount makes homeownership a lot more affordable. However, be aware that this discount is actually a second mortgage. But it has no interest and requires no payments. Live in the home for three years, and the second mortgage is forgiven entirely.

HFA home loans

Not to be confused with FHA loans, HFA loans are offered in partnership with state and local Housing Finance Authorities.

Many HFA loans are conventional mortgages backed by Fannie Mae and Freddie Mac. They may require as little as 3% down, and many HFA programs can be used with down payment assistance to reduce the upfront cost of home buying.

Borrowers who qualify for an HFA loan might also be in line for discounted mortgage rates and mortgage insurance premiums. To qualify, you’ll typically need a credit score of at least 620. But eligibility requirements vary by program.

Find and contact your state’s public housing finance agency or authority to learn more and see if you qualify. Also, be aware that this type of loan program will require additional approval steps that may make loan closing take longer.

Down payment assistance programs (DPAs)

Down payment assistance is exactly what it sounds like. It provides help with down payments on home purchases and often closing costs. Government agencies, nonprofits, and other sources commonly offer down payment and closing cost assistance. They are usually in the form of a grant or loan (though the loans may be forgiven if you stay in the house for five to ten years).

Most DPA programs target low-income home buyers and have guidelines that make qualifying easier. Some, however, provide assistance to people who buy in “underserved” or “redevelopment” areas, regardless of income. Many DPA programs offer assistance worth tens of thousands of dollars.

Talk to a lender about your options. Start here

Mortgage Credit Certificates (MCCs)

Mortgage credit certificates (MCCs) can stretch your home-buying power. If you meet income requirements, you could get a tax credit equal to some percentage of your mortgage interest. Lenders are allowed to add this credit to your qualifying income when underwriting your mortgage. This allows you to qualify for a higher mortgage amount than you otherwise could.

There are numerous states, counties, and cities that issue mortgage credit certificates, and their regulations and amounts vary greatly. Check with your local housing finance authority to find out whether MCCs are available where you live.

Housing Choice Voucher Program

The Housing Choice Voucher homeownership program (HCV) provides both rental and home buying assistance to eligible low-income households. Also known as Section 8, this program allows low-income home buyers to use housing vouchers to purchase their own homes.

Because local public housing agencies run these voucher programs, eligibility varies depending on location. Still, you’ll likely need to meet the following requirements:

Program-specific income and employment conditions
Being a first-time home buyer
Completing a pre-assistance homeownership and counseling program

Keep in mind that not all states offer voucher programs, and some programs have waiting lists. Also, these programs could limit how much you can sell the home for later on. To find out if your area offers a participating program, use the HUD locator web tool.

Manufactured and mobile homes

A manufactured home usually costs less than a traditional, site-built home. When placed on approved foundations and taxed as real estate, manufactured homes can be financed with mainstream mortgage programs.

Many programs require slightly higher down payments or more restrictive terms for manufactured homes. HomeReady, for example, increases the minimum down payment from 3% to 5% if you finance a manufactured home. Other programs require the home to be brand new.

Additionally, there are often requirements regarding the year the home was built and the property’s foundation. These guidelines will vary between lenders. Mobile homes that are not classified as real estate can be purchased with personal loans like the FHA’s Title 2 program. These are not mortgages because the homes are not considered real estate.

Check your mortgage options. Start here

Tips for buying a house with low income

Whether you’re buying a new home or your first home, these tips can help you achieve your homeownership goals.

Verify your home buying eligibility. Start here

Improve your credit history

Improving your FICO score is the best way to increase your chances of loan approval and qualify for lower mortgage rates.

The credit score needed to purchase a home varies depending on the type of loan you apply for. Conventional loans typically require a score of at least 620, while FHA loans often require at least 580.

Start by pulling free credit reports from annualcreditreport.com to determine your current score. Next, consider a few of the common methods for increasing credit scores. The amount of work that you’ll need to do will depend on your personal financial situation.

As an example, if your credit score is low because you’re using too much of your available credit, you may benefit from a debt consolidation loan to tame your high-interest account balances and improve your credit utilization.

On the other hand, if your credit history reveals missed payments, you’ll need to show at least 12 months of regular, on-time payments to improve your score.

Save for a down payment

The average first-time home buyer puts just 13% down on a new home. Yet, many loan programs require as little as 3% down or no down payment at all.

Remember that you still have to pay closing costs, which are typically around 2% to 5% of your mortgage loan amount. If you put less than 20% down, you’ll almost certainly have to pay for mortgage insurance.

In addition, you may need cash reserves in your savings account. This assures lenders that you can make your monthly mortgage payments should you suffer a financial setback. However, don’t let the down payment scare you away from homeownership. Many buyers qualify without even knowing it.

Pay down debts

Paying down debts will lower your debt-to-income ratio and improve your odds of mortgage approval. This is especially true for those with high-interest credit card debt.

You’ll likely qualify for lower rates when you have:

A low debt-to-income ratio (DTI)
High credit score
3% to 5% down payment
Stable income for the past two consecutive years

Use a first-time home buyer program

First-time buyer programs offer flexible guidelines for qualified buyers. Plus, these special programs exist in every state to help low-income households achieve homeownership.

Unlike traditional conventional loans, the government backs many first-time buyer mortgages. This allows mortgage lenders to offer loans with better rates and lower credit score requirements than they normally would be able to.

Verify your low income home loan eligibility. Start here

Model your budget

Owning a home requires more than qualifying for a loan and making monthly mortgage payments. Homeowners are responsible for a variety of ongoing costs, including:

Homeowners insurance
Property taxes
Mortgage insurance (in many cases)
Utility bills
Ongoing home maintenance
Home improvements
Appliance repair and replacement

Home buyers who have experience paying these ongoing costs of homeownership will be better prepared for the big day when they get the keys to their dream home.

Plus, sticking to this model budget in the months and years before purchasing a home and then saving the money you would spend on housing costs, such as insurance premiums and utilities, is a great way to build cash reserves and save for a down payment.

Use a co-signer

If you’re on the edge of qualifying for your own loan, using a co-signer may be an option.

Essentially, when you buy a house with a co-signer, you and your co-signer are both responsible for making the monthly payments. You’ll both also build and share in the home’s equity. Purchasing a home with a co-signer is quite common among unmarried couples, friends, and family members.

FAQ: Low income home loans

Verify your home buying eligibility. Start here

How do you buy a house with low income?

To buy a house with a low income, you have to know which mortgage program will accept your application. A few popular options include: FHA loans (allowing low income and as little as 3.5 percent down with a 580 credit score); USDA loans (for low-income buyers in rural and suburban areas); VA loans (a zero-down option for veterans and service members); and HomeReady or Home Possible (conforming loans for low-income buyers with just 3 percent down).

I make $25K a year; can I buy a house?

Mortgage experts recommend spending no more than 28 percent of your gross monthly income on a housing payment. So if you make $25K per year, you can likely afford around $580 per month for a house payment. Assuming a fixed interest rate of 6 percent and a 3 percent down payment, that might buy you a house worth about $100,000. But that’s only a rough estimate. Talk with a mortgage lender to get the exact numbers for your situation.

How do I qualify for a low-income mortgage?

Whether or not you qualify for a low income home loan depends on the program. For example, you might qualify for an FHA mortgage with just 3.5 percent down and a 580 credit score. Or, if your house is in a qualified area and you’re below local income caps, you might be able to get a zero-down USDA mortgage. Veterans can qualify for a low-income mortgage using a VA loan. Or, you can apply for the mortgage with a co-borrower and qualify based on combined incomes.

What programs are available for first-time home buyers?

Low income home loans can help first-time home buyers overcome hurdles like low credit or income, smaller down payments, or high levels of debt. A few good programs for first-time home buyers include Freddie Mac’s Home Possible mortgage, Fannie Mae’s HomeReady mortgage, the Conventional 97 mortgage, and government-backed loans like FHA, USDA, and VA. First-time home buyers can also apply for down payment assistance grants through their state or local housing department.

Can the government help me buy a house?

There are a number of ways the government can help you buy a house. Perhaps the most direct way to get help is by applying for down payment assistance. This is a grant or low-interest loan to help you make a down payment. You can also buy a house using a government-backed mortgage, like the FHA or USDA. With these programs, the government essentially insures the loan, so you can buy with a lower income, credit score, or down payment than you could otherwise.

How do I buy a house without proof of income?

You can no longer buy a house without proof of income. You have to prove you can pay the loan back somehow. But there are modern alternatives to stated-income loans. For instance, you can show “proof of income” through bank statements, assets, or retirement accounts instead of W2 tax forms (the traditional method). Many people who want to buy a house without proof of income these days find a bank statement loan to be a good option.

How do you rent to own?

A lease option or rent-to-own home isn’t exactly what it sounds like. You don’t simply rent until the house is paid off. Instead, you usually pay a higher rent for a set period of time. That excess rent then goes toward a down payment when you buy the house at a later date. Rent-to-own might help you buy a house if you don’t have a lot of cash on hand right now or if you need to improve your credit score before applying for a mortgage. However, rent-to-own requires seller cooperation and comes with unique risks.

Can I rent-to-own with no down payment?

Rent-to-own does not mean you can buy a house with no down payment. When you rent-to-own, you’re paying extra rent each month that will go toward your down payment later on. And usually, rent-to-own contracts include an option fee that’s a lot like a down payment. The option fee is smaller. Think 1 percent of the purchase price instead of 3 to 20 percent. And that fee eventually goes toward your purchase. But it’s still a few thousand dollars you must pay upfront to secure the right to buy the home later on.

Can I get a grant to buy a house?

Qualified buyers can get a grant to buy a house. These are called down payment assistance grants. They won’t pay for the whole house, but they can help cover your down payment to make a mortgage more affordable. You’re most likely to qualify for a grant to buy a house if you have a low to moderate income and live in a target area.

What type of low income home loan is the easiest to qualify for?

FHA loans are generally the easiest low income home loan to qualify for. The federal government insures these loans, which means lenders can relax their qualifying rules. It’s possible for a home buyer with a credit score of 500 to get approved for an FHA loan, but most FHA lenders look for scores of 580 or better. And a FICO score of 580 lets you make the FHA’s minimum down payment of 3.5 percent.

How can I get a home loan with low monthly payments?

To get the lowest possible monthly payment, choose a 30-year loan term, find a cheaper home, put more money down, and make sure you have excellent credit before applying for your mortgage. If you can afford a 20 percent down payment, you can avoid PMI premiums, which lower your monthly payments even more. Veterans can get VA loans that require no PMI, regardless of their down payment size.

What’s the lowest amount you can put on a house?

Some home buyers can put no money down with a VA or USDA loan. Conventional loans will require at least 3 percent down, and FHA loans will require at least 3.5 percent down. Down payment assistance grants and loans could help you cover some or all of this down payment.

How much house can I afford if I make $30K a year?

If you make $30,000 a year, you could probably spend about $110,000 on a house, assuming you get a 30-year fixed-rate mortgage at 6 percent. This is a rough estimate. Your unique financial situation may be different. Getting a pre-approval from a lender is the only way to find your actual price range.

What are today’s mortgage rates for low income home loans?

Many low-income mortgage programs have lower interest rates than “standard” mortgage loans. So you might get a great deal.

However, interest rates vary depending on the borrower, the loan program, and the lender.

To find out where you stand, you’ll need to compare loan offers from several lenders and then choose your best deal.

Time to make a move? Let us find the right mortgage for you

Source: themortgagereports.com

Apache is functioning normally

January 15, 2024 by Brett Tams

Home loans for disabled buyers are widely available

Contrary to popular belief, people with disabilities are not only eligible for mortgages but also have access to specialized home loans and grants to help disabled people buy a home.

These specialized disability home loans often feature more lenient credit score requirements and lower down payments. Some even offer grants to cover closing costs or modifications to make the home more accessible.

Verify your home buying eligibility. Start here

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Can I buy a home on disability income?

Yes, you can buy a home on disability income, as long as it is stable, reliable, and expected to continue for the foreseeable future. Lenders, including those offering government-backed loans like FHA and VA loans, accept disability income as a qualifying source for mortgage applications.

According to the Fair Housing Act, lenders can’t inquire about your disability. However, they will inquire about your income, which can be a major barrier for disabled home buyers.

Staying within your lender’s debt-to-income ratio limits can be difficult if you have little or no income from standard employment. Fortunately, many mortgage programs will accept disability income on your application.

Verify your home buying eligibility. Start here

Can I buy a house on SSDI or SSI?

You can buy a house on Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI). Both SSDI and SSI are stable sources of income, and lenders accept them as qualification for home loans for disabled.

Eligible income sources for a mortgage can come from:

Long-term disability income from an employer or insurer
Supplemental Security Income (SSI) through Social Security
Social Security Disability Insurance (SSDI)

These types of income are allowed under all the major home loan programs, including conforming, FHA, VA, and USDA mortgages.

However, mortgage lenders set their own lending guidelines and may choose not to accept certain kinds of income. So if you’re denied due to disability income on your application, try again with a different lender. You might receive approval elsewhere.

Disability income requirements

Like any other form of income, disability income needs to be properly documented for a mortgage lender to count it on your home loan application.

The most important thing is that you can verify your disability income will continue for at least three years or that you have a guaranteed job once you’ve recovered at the same income level as before. In the latter case, you would qualify for the lower of the two monthly income streams.

Check your home loan options. Start here

If you receive long-term disability income or insurance benefits, your lender will need to see a disability policy or statement from the payer of the benefits (typically the insurance company or a former employer).

The documentation requirements for SSI and SSDI depend on who is applying for the loan.

If the mortgage applicant is the person receiving SSI or SSDI income, you can document it one of two ways:

The Social Security Administrator’s (SSA) Award Letter; or
Proof of current receipt

If the mortgage applicant is not the person receiving Social Security benefits (for example, a parent buying a home for a disabled child), they will need to present both of the documents above. They’ll also need to prove the income will continue for at least three years—for example, by verifying the recipient’s age.

Home loans for disabled home buyers

People with disabilities and parents who want to buy a home for a disabled child can get special mortgages.

Homeownership assistance programs exist for people who are not disabled but live with qualified disabled people. A caregiver or home health care provider who lives with a disabled family member often qualifies for a special mortgage offering.

Verify your home buying eligibility. Start here

If you qualify for Medicaid in your state or get disability payments from the government, you may be able to use one of a number of special mortgage programs. That still holds true if you have a low income despite working.

Who will own and occupy the property and how they will pay their mortgage will determine the program’s requirements. In addition, they vary depending on whether the program is local, state, or federal.

Here are several of the best-known home loan programs for disabled persons.

1. Fannie Mae HomeReady Loan

Fannie Mae HomeReady is a special conventional loan program that helps people with low to moderate incomes and good credit get affordable financing options, including disabled people.

The program aims to help people who want to buy their own home by giving them competitive interest rates, lower down payment requirements (as low as 3%), and more flexible credit rules. HomeReady also helps disabled borrowers by taking into account non-traditional income sources like Social Security and long-term disability benefits.

In fact, Social Security Disability Insurance (SSDI) and Supplemental Security Insurance (SSI) are both acceptable income sources for the HomeReady loan program.

Who qualifies for HomeReady?

To qualify, disabled home buyers need the following:

A credit score of 620 or higher
At least a 3% down payment
Low- to moderate-income (no more than 80% of their area’s median income)
Must occupy the home as a primary residence

The good news is that your down payment money doesn’t have to come out of your own savings. HomeReady lets you cover the entire down payment using grants, down payment assistance funds, or money gifted from a family member or caretaker.

However, many other mortgage programs require the buyer to pay at least some of the purchase price out of pocket. It can be a challenge if your income is fixed.

Buying with non-occupant co-borrowers under HomeReady

Along with its low down payment, HomeReady offers a big benefit: It allows “non-occupant co-borrowers.” A non-occupant co-borrower does not live with you but is included in your mortgage application process.

You can use your non-occupant co-borrower’s credit history or income to help you qualify for a loan if you don’t meet the credit or income limits on your own.

For example, a parent or sibling with strong credit and a high income are often added to their disabled family member’s mortgage. Remember that the total income counted toward your mortgage qualification must remain below HomeReady income limits.

Fannie Mae does not offer HomeReady loans directly, allowing home buyers to shop among lenders for the best rate.

Check your eligibility for Fannie Mae loans. Start here

2. FHA home loans for disabled persons

FHA loans, the Federal Housing Administration backs, make it easy and affordable to become a homeowner by offering government-insured mortgages with low credit scores and low down payment requirements.

These loans are made for people with low credit scores or low incomes who may have trouble getting traditional mortgages. This includes people with disabilities.

FHA loans accept disability income as a qualifying source, provided it is stable and well-documented. FHA loans help disabled people achieve their dream of homeownership by offering low down payment options (as low as 3.5% for qualified borrowers), flexible credit rules, and competitive interest rates. This gives everyone the same opportunities.

Who qualifies for an FHA loan?

FHA loans allow both SSI and SSDI income on your mortgage application. FHA rules say that you can use any of the following documents to prove disability income:

Federal tax returns
The most recent bank statement showing receipt of income from social services programs
A Proof of Income Letter, also known as a “Budget Letter” or “Benefits Letter” that shows income from the SSA
A copy of the borrower’s Social Security Benefit Statement

Another benefit of the FHA loan is that you can cover 100% of the down payment and closing costs using down payment assistance or gifted money. This eliminates the need to save up a large amount of money before you can buy a home.

On the downside, you’d probably have to pay the FHA’s mortgage insurance until you pay off the house—unless you refinance out of the loan sooner.

Verify your FHA loan eligibility. Start here

3. VA home loans for disabled veterans

The U.S. Department of Veterans Affairs-backed VA loan program is among the best home loan programs available. In addition to having some of the lowest mortgage rates available, VA loans don’t require a down payment. This makes VA loans appealing to any veteran or service member.

But there are more VA loan benefits for veterans with medical problems or disabilities caused by their service:

You can include VA disability income on your mortgage application.
You are exempt from paying the VA loan funding fee. Spouses of veterans who died in the line of duty may also be exempt
There are no minimum service requirements. If you have a service-connected disability, there is no minimum time to serve before you’re eligible for a VA home loan
You may be eligible for a property tax exemption and/or a mortgage tax credit to reduce your taxable income. Requirements vary by state, level of disability, and other factors. Check with your state’s tax authority for more information

You’ll also need to meet the VA’s standard lending requirements to qualify for one of these loans.

Income from disability benefits can be used to satisfy VA loan income requirements. Technically, there’s no minimum credit score to qualify for a VA loan. However, many lenders require a FICO score of at least 580 to 620.

Check your VA loan eligibility. Start here

4. USDA home loans for disabled persons

The USDA loan program, which the U.S. Department of Agriculture backs, is another zero-down mortgage that enables qualified borrowers with disability income to purchase a home. The USDA offers two loan programs: USDA Direct and USDA Guaranteed.

USDA Guaranteed Loans

While the USDA backs these loans, they don’t come directly from the federal government. They come from private lenders that the USDA has approved. Many mainstream mortgage lenders can offer USDA Guaranteed loans.

USDA Guaranteed loan requirements typically include the following:

Income is no higher than 15% above your area’s median income
A credit score of at least 640
The home you’re buying must be in a USDA-approved “rural area”

USDA Direct Loans

Homebuyers with disabilities whose income falls below the area’s median income may qualify for a USDA Single Family Housing Direct Loan.

The Direct Loan is a subsidized mortgage program, meaning that the USDA will help pay for a portion of the homeowner’s monthly mortgage payments. The applicant’s household income determines their eligibility for this housing program and how much payment assistance they will receive.

Another significant advantage of the USDA Direct mortgage program is that fixed interest rates can be as low as 1% (when modified by payment assistance).

Who qualifies for a USDA Direct Loan?

USDA-subsidized home loans are available to borrowers, including disabled borrowers, who:

Do not have safe, decent, or sanitary housing
Are unable to get an affordable mortgage
Meet citizen or eligible non-citizen requirements
Are not barred from federal loan programs
Have qualifying low income for their area

In addition, the home being purchased must meet the following guidelines:

Square footage usually can’t exceed 2,000
The home price must be within local loan limits
The home must not be designed for “income-producing activities”

Those who qualify for a USDA Direct Loan can use the funds to purchase a new or existing home. In addition, they can build, repair, or renovate a house.

The payback period ranges between 33 and 38 years. This extended repayment with the low rate help make payments affordable.

How to apply for a USDA Direct Loan

Unlike USDA Guaranteed loans, private lenders do not offer the USDA Direct Loan. You’ll have to apply with your local Rural Development Office. Be aware that application processing times could be longer and the process could be less convenient. Buyers who can qualify for the USDA Guaranteed loan program should try that first.

Buyers with moderate incomes who don’t qualify for the USDA’s subsidized program can still access a USDA Rural Housing loan. It has looser guidelines but still allows zero down and offers below-market mortgage rates.

Check your USDA loan eligibility. Start here

5. HUD Housing Choice Vouchers (Section 8 homeownership voucher program)

The Section 8 program run by the U.S. Department of Housing and Urban Development (HUD) is best known for offering rental housing assistance to low-income families.

But there’s also a lesser-known Section 8 housing program for home buyers, called the “Housing Choice Voucher (HCV) homeownership program.” What’s more, this program provides housing assistance to disabled buyers who meet its eligibility requirements.

“Keep in mind that not all lenders underwrite these types of loans,” cautions Jon Meyer, The Mortgage Reports loan expert and licensed MLO. “You’ll need to use one of the program’s participating lenders.”

People who are eligible for Section 8 rental assistance can use their voucher to buy a home instead, thanks to the homeownership voucher program. In this case, HUD would assist in covering mortgage payments and other homeownership costs instead of rent.

Who qualifies for HUD’s Housing Choice Voucher program?

To qualify for this housing assistance program, you’ll need a current Section 8 voucher. If you do not have one, you can talk to your local public housing authority about meeting with a housing counselor to start the process.

Keep in mind that not all PHAs participate in the HCV homeownership program. Section 8 voucher waiting lists can be lengthy.

Other requirements for the Section 8 homeownership program include:

Household income not below the monthly federal Supplemental Security Income (SSI) benefit for an individual living alone
Buying an acceptable property according to HUD’s guidelines
Participation in PHA’s pre-assistance homeownership and housing counseling program

For qualified home buyers, the homeownership voucher funds can be used for:

Mortgage principal and interest, real estate taxes, and homeowners insurance
Mortgage insurance
Utilities, maintenance, and major home repairs
Costs to make the home accessible for independent living if needed. Home improvements can include building ramps

As a housing voucher holder, you’ll pay around 30% of your adjusted monthly income for housing.

Financial assistance and grants for disabled home buyers

Unless you qualify for a zero-down USDA or VA loan, you’ll likely need to come up with cash for the down payment and closing costs on your new home. Luckily, many programs can help reduce or get rid of these out-of-pocket costs. Additionally, disabled homebuyers have greater access to these programs than other buyers.

Check your home loan options. Start here

Down payment assistance grants

Every state has a selection of down payment assistance programs (DPAs), which offer funds to help cover home buyers’ down payment and/or closing costs. These are typically geared toward first-time home buyers and home buyers with low incomes.

Down payment assistance comes in two different forms:

Grants: Assistance that never has to be repaid
Loans: Assistance that must be repaid. DPA loans typically have low or no interest, and many are forgivable if the homeowner keeps the home a set number of years (often 5-10)

These assistance programs will typically be offered by your state’s Housing Finance Agency or county and local governments. Some non-profit organizations also provide DPAs.

You can learn more about down payment grants here, or ask your real estate agent or loan officer to help you find programs once you’ve started the home-buying process.

VA grants for disabled veterans

The Department of Veteran Affairs has home loan programs and home modification grants to help disabled veterans buy a home or make their current home more accessible.

To qualify for these programs, the veteran must have a service-connected disability and currently live in or purchase the home in question.

Specially Adapted Housing (SAH) Grants: The VA’s largest grant, used to “buy, build, or change your permanent home” (a home you plan to live in for a long time). This grant is only available to 120 disabled veterans each year
Special Housing Adaptation Grants (SHA) Grants: A lower grant amount than the SAH grant, used to “buy, build, or change your permanent home”
Temporary Residence Adaption (TRA) Grants: Intended to help disabled veterans make accessibility upgrades to a family member’s home they’re living in temporarily. To qualify for a TRA grant, you must be eligible for either an SAH or SHA grant

USDA Single-Family Housing Repair Grant

The U.S. Department of Agriculture offers a Housing Repair Grant to help low-income families “repair, improve, or modernize homes, or remove health and safety hazards.”

The USDA Housing Repair Grant can provide eligible homeowners with a grant of up to $10,000 or a loan of up to $40,000 to pay for home repairs and upgrades. The more popular choice, loans, have a 20-year repayment period and a fixed interest rate of just 1%. You can also combine grants and loans to receive up to $50,000 in total assistance.

To qualify, the borrower must:

Be the homeowner and occupy the house
Be unable to obtain affordable credit elsewhere
Have a family income below the “very low limit by county”
For grants, be age 62 or older and not be able to repay a repair loan

Nonprofit help for disabled home buyers

Four major national programs can help low-income families and disabled people become homeowners.

Verify your home buying eligibility. Start here

National Disability Institute

The NDI’s mission is to build better financial futures for people with disabilities and their families. They do so through employment initiatives, technical housing assistance, financial education, and additional resources.

The NDI works with financial institutions, programs run by local and state governments, and other groups to help people with disabilities find housing.

Habitat for Humanity

Habitat for Humanity builds accessible homes as defined by the Americans with Disabilities Act (ADA). It can also provide affordable mortgages to those approved for its program.

You apply through your local Habitat for Humanity affiliate, and you must be willing to take an active role in the process of constructing your new home. This is known as “sweat equity.”

Note that sweat equity is not limited to the physical construction of the home. Habitat says, “Sweat equity can also include taking homeownership classes or performing volunteer work in a Habitat ReStore.” Homebuyers with disabilities qualify for this program.

Rebuilding Together Americorps

Another option is Rebuilding Together AmericaCorps. This agency prides itself on building affordable housing for families with one or more disabled members.

According to its site, 51% of households served by Rebuilding Together “have a resident with a disability, many of whom have mobility issues that make it difficult to remain safely at home.”

In addition to building affordable housing, the organization works to improve existing homes to make them safer and more accessible, so disabled individuals can remain at home more easily.

Homes for Our Troops

Homes for Our Troops gives veterans hurt while fighting overseas after September 11, 2001 a place to live without a mortgage. The program provides “custom homes that are specially adapted” so they can live in “a safe and barrier-free environment.”

To qualify, you must be retired or in the process of retiring and pass a criminal and credit background check. On the Homes for Our Troops website, you can ask for help and find more information about housing for veterans.

Parents buying a home for a disabled child

Parents and caretakers of people with disabilities can access special mortgage programs to buy a home for their adult child.

These programs allow parents to buy the home as an “owner-occupied residence” even though they won’t live in it. This means they can get better mortgage rates and loan terms than if they bought the property as a second home.

Check your home loan options. Start here

Fannie Mae loans for buying a house for your child

Parents who want to buy a home for their disabled child can choose a Fannie Mae-backed conforming loan as one option. With a Fannie Mae-backed loan, a home purchase counts as owner-occupied if it’s a “parent or legal guardian wanting to provide housing for their handicapped or disabled adult child.”

Fannie’s guidelines state, “if the child is unable to work or does not have sufficient income to qualify for a mortgage on his or her own, the parent or legal guardian is considered the owner/occupant.”

Fannie Mae offers a wide range of conforming mortgage loans for parents or guardians wanting to buy a home for their child. Options include:

3% down “Conventional 97” loans
5% down “Conventional 95” loans
10% down “piggyback loans” with no private mortgage insurance (PMI)
20% down conventional mortgages with no PMI

Since the home is owner-occupied, you can finance it at a low rate without the interest rate markups that come with second homes and investment properties.

If a parent or legal guardian gets disability benefits from Social Security for a child or other dependent, they can use this income to qualify for a mortgage.

In order for the disability income to be eligible, the parent or guardian needs to show an SSA award letter, proof of current receipt, and proof that the income will continue for at least three years.

Options for disabled buyers unable to purchase a home

Navigating the housing market is a unique journey for everyone, and the reality is that not all are in a position to purchase a home.

However, for disabled individuals, there’s a silver lining. While the challenges they face can be multifaceted, many may qualify for special housing assistance designed to address their specific mental illness or physical disabilities. Let’s explore these options.

Receiving Social Security Disability Insurance (SSDI) benefits can be a lifeline, especially for those with mental illnesses. These benefits, while primarily serving as income replacement, can be a pivotal resource in securing housing opportunities.

However, keep in mind that Social Security, while providing crucial old age, survivor, and disability benefits, does not directly extend housing assistance to its beneficiaries.

Nevertheless, there exists a range of social programs designed to cater to the needs of low-income individuals, persons with disabilities, and seniors by offering vital housing support.

As a result, a lot of people who get Social Security can use these different programs because they often fall into one or more of these eligible groups. This gives them access to the important housing help they need.

Housing Choice Voucher Program (Section 8)

Section 8 Housing Choice Vouchers are a godsend for many, especially non-elderly disabled individuals. Designed to assist very low-income families and those with disabilities, these vouchers provide subsidies to rent in the private market.

Public housing agencies distribute these vouchers, and they can be a significant step towards accessible housing.

Income, including SSDI benefits, and disability status are taken into account when determining eligibility.

HUD’s Continuum of Care (CoC) program

The CoC program goes beyond just offering shelter. It’s about creating a comprehensive support system that addresses the root causes of homelessness. By offering specialized supportive services tailored to individual needs, the CoC ensures that everyone, from extremely low-income people to very low income individuals, has a shot at stable, accessible housing.

In situations where individuals with disabilities find themselves facing homelessness, the local CoC becomes a vital lifeline, offering essential assistance in finding immediate shelter for safety and rest. Moreover, the CoC goes beyond providing temporary relief and aims to foster long-term stability by connecting disabled individuals to transitional housing programs.

HUD-Veterans Affairs Supportive Housing (HUD-VASH)

The HUD-VASH program provides supportive housing for our disabled veterans, especially those who are at risk.

This initiative, a collaboration between HUD and the VA, provides both housing options and case management services. The combined effort ensures participants receive the care and support they need.

HUD-VASH vouchers function similarly to other Housing Choice Vouchers (HCVs), but with additional benefits and assistance such as dedicated assistance during your housing search.

National Housing Trust Fund and Section 811

The National Housing Trust Fund, along with Section 811, focuses on creating housing options for the most vulnerable, including those with mental illness, physical disabilities, and extremely low income households.

Section 811, in particular, offers supportive housing for non-elderly people with disabilities. These programs provide subsidies and supportive services, ensuring participants have access to affordable and accessible housing.

Allocations of NHT funds are distributed on a state-by-state basis, tailoring support to the specific needs and priorities of each region. If you are interested, the best course of action is to get in touch with your state’s housing finance agency.

HUD’s $212 Million Boost for Section 811 Program

The U.S. Department of Housing and Urban Development (HUD) has recently announced a $212 million funding opportunity aimed at increasing affordable housing options for persons with disabilities. This funding will not only help in creating new housing but also in rehabilitating existing units.

The funds are specifically designated for the Section 811 Supportive Housing for Persons with Disabilities program. This initiative seeks to both expand housing availability and offer supportive services for those with very-low to extremely-low incomes, making it a significant development in the realm of home loans and grants for disabled individuals.

For those interested in taking advantage of this opportunity, further details can be found in the funding notices for the Section 811 Capital Advance Program and Section 811 Project Rental Assistance. It’s important to note that the deadline for submitting applications is February 8, 2024, so timely action is essential.

If you or someone you know is in need of housing assistance, it’s crucial to gather the necessary contact information for these programs. Local public housing agencies, community centers, and online platforms often have directories and resources.

Remember, subsidies, supportive housing, and other services are within reach. It’s all about taking that first step.

Home loans for disabled buyers FAQ

Check your home loan options. Start here

Can someone with a disability get a home loan?

Yes, common home loans for disabled buyers include government-backed options such as FHA loans and VA loans, which offer lenient credit requirements, lower down payments, and competitive interest rates. Also, programs like Fannie Mae’s HomeReady Mortgage and Freddie Mac’s Home Possible Program are designed to meet the needs of disabled and low- to moderate-income borrowers, making homeownership more accessible and affordable.

What assistance is available for disabled people who want to buy a home?

There are special programs like Fannie Mae’s HomeReady Mortgage and Freddie Mac’s Home Possible Program that can help disabled people buy homes. There are also government-backed loans, like FHA and VA loans, that have easier credit requirements and lower down payments. Also, different state and local housing agencies, non-profit organizations, and grants help disabled people become homeowners by giving them money and resources. Disabled homebuyers can also find help through HUD’s local home-buying programs and the National Council of State Housing Agencies.

Are there home loans for disabled people with bad credit?

Yes, there are home loan options available for disabled people with bad credit. Even though it can be harder to get a mortgage if you have bad credit, FHA loans are well suited for disabled people who want to buy a new home. This type of loan is an attractive option for disabled individuals with bad credit, as they accept credit scores as low as 500 with a 10% down payment or 580 with a 3.5% down payment.

Do FHA loans accept disability income?

Yes, FHA loans accept disability income, as long as it is stable, reliable, and likely to continue for at least three years from the date of the mortgage application. Borrowers using disability income to qualify for an FHA loan need to provide proper documentation to verify the source and amount of the income. This documentation may include: award letters, bank statements, and medical documentation, to name a few.

How does the government define disability?

The U.S. government defines disability through the Social Security Administration (SSA) and the Americans with Disabilities Act (ADA). A person is considered disabled by the SSA when they have a medical condition that keeps them from doing substantial gainful activity for at least 12 months or is expected to result in death. The ADA defines a person with a disability as someone who has a physical or mental impairment that substantially limits one or more major life activities. Both of these definitions focus on how the disability affects a person’s ability to do important tasks or take part in everyday activities.

What is disabled as defined by HUD?

The U.S. Department of Housing and Urban Development (HUD) defines a person with disabilities as someone who has a physical or mental impairment that substantially limits one or more major life activities, has a record of such impairment, or is regarded as having such an impairment. This definition excludes individuals currently using illegal controlled substances, those addicted to a controlled substance, or those convicted for the illegal manufacture or distribution of a controlled substance.

What are the requirements to be eligible for disability housing assistance?

To be eligible for disability housing assistance through HUD, an individual must meet HUD’s definition of “disabled,” have a very low income (generally below 50% of the area median income), be a U.S. citizen or have eligible immigration status, and meet other program-specific requirements, which can vary depending on the specific housing assistance program.

Does HUD have a disability assistance program?

Yes, HUD offers several disability assistance programs. One primary program is Section 811, the Supportive Housing for Persons with Disabilities program. This program provides funding to develop and subsidize rental housing with supportive services for very low and extremely low-income adults with disabilities. Additionally, HUD offers other programs and initiatives that cater to individuals with disabilities, ensuring they have access to affordable, accessible housing and supportive services.

Explore all your home buying options

Mortgage lenders can connect you with loan programs that help people with disabilities become homeowners.

Shop with several competing lenders to find the best program and most competitive interest rate for you. There are many assistance programs for disabled home buyers and especially for low-income families or individuals.

In addition, be sure to ask your loan officer, real estate agent, or Realtor about financial assistance programs available in your area. These programs can make buying your own home more affordable than many people expect.

Time to make a move? Let us find the right mortgage for you

Source: themortgagereports.com

Apache is functioning normally

January 14, 2024 by Brett Tams

Today’s mortgage rates

Average mortgage rates fell moderately yesterday. That was a bit of a surprise (though a welcome one) because yesterday’s inflation report would normally have pushed them higher. Read on for why markets might have reacted unexpectedly.

Earlier this morning, markets were signaling that mortgage rates today might fall. But these early mini-trends often switch direction or speed as the hours pass — as we saw yesterday.

Current mortgage and refinance rates

Find your lowest rate. Start here

Program	Mortgage Rate	APR*	Change
Conventional 30-year fixed	7.015%	7.03%	-0.07

Conventional 15-year fixed	6.28%	6.31%	-0.1

Conventional 20-year fixed	6.91%	6.93%	-0.065

Conventional 10-year fixed	6.09%	6.125%	-0.14

30-year fixed FHA	5.875%	6.545%	-0.3

30-year fixed VA	5.99%	6.14%	-0.085

5/1 ARM Conventional	6.31%	7.56%	-0.005

Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions See our rate assumptions here.

Should you lock your mortgage rate today?

Yesterday’s fall in mortgage rates showed markets continuing to have faith in a “soft landing,” which will occur if we continue to see falling inflation together with a resilient economy. Indeed, it suggests that faith can’t be shaken even by occasional unfriendly data.

I think a soft landing remains the most likely scenario for 2024.

So, my personal rate lock recommendations are:

LOCK if closing in 7 days
FLOAT if closing in 15 days
FLOAT if closing in 30 days
FLOAT if closing in 45 days
FLOAT if closing in 60 days

However, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So let your gut and your own tolerance for risk help guide you.

>Related: 7 Tips to get the best refinance rate

Market data affecting today’s mortgage rates

Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data are mostly compared with roughly the same time the business day before, so much of the movement will often have happened in the previous session. The numbers are:

The yield on 10-year Treasury notes tumbled to 3.93% from 4.04%. (Good for mortgage rates.) More than any other market, mortgage rates typically tend to follow these particular Treasury bond yields
Major stock indexes were rising this morning. (Bad for mortgage rates.) When investors buy shares, they’re often selling bonds, which pushes those prices down and increases yields and mortgage rates. The opposite may happen when indexes are lower. But this is an imperfect relationship
Oil prices increased to $74.42 from $72.80 a barrel. (Bad for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
Gold prices climbed to $2,065 from $2,036 an ounce. (Good for mortgage rates*.) It is generally better for rates when gold prices rise and worse when they fall. Gold tends to rise when investors worry about the economy.
CNN Business Fear & Greed index — inched lower to 73 from 75. (Good for mortgage rates.) “Greedy” investors push bond prices down (and interest rates up) as they leave the bond market and move into stocks, while “fearful” investors do the opposite. So lower readings are often better than higher ones

*A movement of less than $20 on gold prices or 40 cents on oil ones is a change of 1% or less. So we only count meaningful differences as good or bad for mortgage rates.

Caveats about markets and rates

Before the pandemic, post-pandemic upheavals, and war in Ukraine, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.

So, use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today look likely to decrease. However, be aware that “intraday swings” (when rates change speed or direction during the day) are a common feature right now.

Find your lowest rate. Start here

What’s driving mortgage rates today?

Yesterday

I suspect that Wall Street has bought the narrative of a soft landing (see above) and, for now, is prepared to stick to it through thick and thin. That’s my only real explanation for why mortgage rates fell yesterday despite an unfriendly inflation report.

True, some saw the report as less unfriendly than others. The New York Times (paywall), for example, reported it under the headline, “Price Increases Tick Higher, but Show Moderation.”

But the consumer price index (CPI) was undeniably worse than expected. And that would normally exert some upward pressure on mortgage rates. Still, let’s not give this gift horse too close a dental inspection.

Today

Producer price indexes (PPIs) are typically less important than CPIs. But they still sometimes affect mortgage rates.

Today’s PPI showed factory-gate and wholesale prices rising more slowly than expected. And that would normally be good for mortgage rates. However, as we saw yesterday, markets don’t always follow such “rules.”

Next week

Rather like this week, next week starts slowly but contains an important economic report. Things are especially quiet on Monday because bond markets are closed for Martin Luther King Day. And closed bond markets mean mortgage rates shouldn’t move. (So, we shall not be publishing this daily report on Monday.)

Tuesday’s similarly dull with no economic reports scheduled for release.

However, Wednesday is potentially next week’s big day for mortgage rates, led by the retail sales report for December. But, after that, things tail off again.

Don’t forget you can always learn more about what’s driving mortgage rates in the most recent weekend edition of this daily report. These provide a more detailed analysis of what’s happening. They are published each Saturday morning soon after 10 a.m. (ET) and include a preview of the following week.

Recent trends

According to Freddie Mac’s archives, the weekly all-time lowest rate for 30-year, fixed-rate mortgages was set on Jan. 7, 2021, when it stood at 2.65%. The weekly all-time high was 18.63% on Sep. 10, 1981.

Freddie’s Jan. 11 report put that same weekly average at 6.66%, up from the previous week’s 6.62%. But note that Freddie’s data are almost always out of date by the time it announces its weekly figures.

Expert forecasts for mortgage rates

Looking further ahead, Fannie Mae and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.

And here are their rate forecasts for the last quarter (Q4/23) and the following three quarters (Q1/24, Q2/24 and Q3/24).

The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s were updated on Dec. 19 and the MBA’s on Dec. 13.

Forecaster	Q4/23	Q1/24	Q2/24	Q3/24
Fannie Mae	7.4%	7.0%	6.8%	6.6%
MBA	7.4%	7.0%	6.6%	6.3%

Of course, given so many unknowables, both these forecasts might be even more speculative than usual. And their past record for accuracy hasn’t been wildly impressive.

Important notes on today’s mortgage rates

Here are some things you need to know:

Typically, mortgage rates go up when the economy’s doing well and down when it’s in trouble. But there are exceptions. Read ‘How mortgage rates are determined and why you should care’
Only “top-tier” borrowers (with stellar credit scores, big down payments, and very healthy finances) get the ultralow mortgage rates you’ll see advertised
Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the broader trend over time
When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
Refinance rates are typically close to those for purchases.

A lot is going on at the moment. And nobody can claim to know with certainty what will happen to mortgage rates in the coming hours, days, weeks or months.

Find your lowest mortgage rate today

You should comparison shop widely, no matter what sort of mortgage you want. Federal regulator the Consumer Financial Protection Bureau found in May 2023:

“Mortgage borrowers are paying around $100 a month more depending on which lender they choose, for the same type of loan and the same consumer characteristics (such as credit score and down payment).”

In other words, over the lifetime of a 30-year loan, homebuyers who don’t bother to get quotes from multiple lenders risk losing an average of $36,000. What could you do with that sort of money?

Verify your new rate

Mortgage rate methodology

The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.

How your mortgage interest rate is determined

Mortgage and refinance rates vary a lot depending on each borrower’s unique situation.

Factors that determine your mortgage interest rate include:

Overall strength of the economy — A strong economy usually means higher rates, while a weaker one can push current mortgage rates down to promote borrowing
Lender capacity — When a lender is very busy, it will increase rates to deter new business and give its loan officers some breathing room
Property type (condo, single-family, town house, etc.) — A primary residence, meaning a home you plan to live in full time, will have a lower interest rate. Investment properties, second homes, and vacation homes have higher mortgage rates
Loan-to-value ratio (determined by your down payment) — Your loan-to-value ratio (LTV) compares your loan amount to the value of the home. A lower LTV, meaning a bigger down payment, gets you a lower mortgage rate
Debt-To-Income ratio — This number compares your total monthly debts to your pretax income. The more debt you currently have, the less room you’ll have in your budget for a mortgage payment
Loan term — Loans with a shorter term (like a 15-year mortgage) typically have lower rates than a 30-year loan term
Borrower’s credit score — Typically the higher your credit score is, the lower your mortgage rate, and vice versa
Mortgage discount points — Borrowers have the option to buy discount points or ‘mortgage points’ at closing. These let you pay money upfront to lower your interest rate

Remember, every mortgage lender weighs these factors a little differently.

To find the best rate for your situation, you’ll want to get personalized estimates from a few different lenders.

Verify your new rate. Start here

Are refinance rates the same as mortgage rates?

Rates for a home purchase and mortgage refinance are often similar.

However, some lenders will charge more for a refinance under certain circumstances.

Typically when rates fall, homeowners rush to refinance. They see an opportunity to lock in a lower rate and payment for the rest of their loan.

This creates a tidal wave of new work for mortgage lenders.

Unfortunately, some lenders don’t have the capacity or crew to process a large number of refinance loan applications.

In this case, a lender might raise its rates to deter new business and give loan officers time to process loans currently in the pipeline.

Also, cashing out equity can result in a higher rate when refinancing.

Cash-out refinances pose a greater risk for mortgage lenders, so they’re often priced higher than new home purchases and rate-term refinances.

Check your refinance rates today. Start here

How to get the lowest mortgage or refinance rate

Since rates can vary, always shop around when buying a house or refinancing a mortgage.

Comparison shopping can potentially save thousands, even tens of thousands of dollars over the life of your loan.

Here are a few tips to keep in mind:

1. Get multiple quotes

Many borrowers make the mistake of accepting the first mortgage or refinance offer they receive.

Some simply go with the bank they use for checking and savings since that can seem easiest.

However, your bank might not offer the best mortgage deal for you. And if you’re refinancing, your financial situation may have changed enough that your current lender is no longer your best bet.

So get multiple quotes from at least three different lenders to find the right one for you.

2. Compare Loan Estimates

When shopping for a mortgage or refinance, lenders will provide a Loan Estimate that breaks down important costs associated with the loan.

You’ll want to read these Loan Estimates carefully and compare costs and fees line-by-line, including:

Interest rate
Annual percentage rate (APR)
Monthly mortgage payment
Loan origination fees
Rate lock fees
Closing costs

Remember, the lowest interest rate isn’t always the best deal.

Annual percentage rate (APR) can help you compare the ‘real’ cost of two loans. It estimates your total yearly cost including interest and fees.

Also, pay close attention to your closing costs.

Some lenders may bring their rates down by charging more upfront via discount points. These can add thousands to your out-of-pocket costs.

3. Negotiate your mortgage rate

You can also negotiate your mortgage rate to get a better deal.

Let’s say you get loan estimates from two lenders. Lender A offers the better rate, but you prefer your loan terms from Lender B. Talk to Lender B and see if they can beat the former’s pricing.

You might be surprised to find that a lender is willing to give you a lower interest rate in order to keep your business.

And if they’re not, keep shopping — there’s a good chance someone will.

Fixed-rate mortgage vs. adjustable-rate mortgage: Which is right for you?

Mortgage borrowers can choose between a fixed-rate mortgage and an adjustable-rate mortgage (ARM).

Fixed-rate mortgages (FRMs) have interest rates that never change unless you decide to refinance. This results in predictable monthly payments and stability over the life of your loan.

Adjustable-rate loans have a low interest rate that’s fixed for a set number of years (typically five or seven). After the initial fixed-rate period, the interest rate adjusts every year based on market conditions.

With each rate adjustment, a borrower’s mortgage rate can either increase, decrease, or stay the same. These loans are unpredictable since monthly payments can change each year.

Adjustable-rate mortgages are fitting for borrowers who expect to move before their first rate adjustment, or who can afford a higher future payment.

In most other cases, a fixed-rate mortgage is typically the safer and better choice.

Remember, if rates drop sharply, you are free to refinance and lock in a lower rate and payment later on.

How your credit score affects your mortgage rate

You don’t need a high credit score to qualify for a home purchase or refinance, but your credit score will affect your rate.

This is because credit history determines risk level.

Historically speaking, borrowers with higher credit scores are less likely to default on their mortgages, so they qualify for lower rates.

For the best rate, aim for a credit score of 720 or higher.

Mortgage programs that don’t require a high score include:

Conventional home loans — minimum 620 credit score
FHA loans — minimum 500 credit score (with a 10% down
payment) or 580 (with a 3.5% down payment)
VA loans — no minimum credit score, but 620 is common
USDA loans — minimum 640 credit score

Ideally, you want to check your credit report and score at least 6 months before applying for a mortgage. This gives you time to sort out any errors and make sure your score is as high as possible.

If you’re ready to apply now, it’s still worth checking so you have a good idea of what loan programs you might qualify for and how your score will affect your rate.

You can get your credit report from AnnualCreditReport.com and your score from MyFico.com.

How big of a down payment do I need?

Nowadays, mortgage programs don’t require the conventional 20 percent down.

In fact, first-time home buyers put only 6 percent down on average.

Down payment minimums vary depending on the loan program. For example:

Conventional home loans require a down payment between 3%
and 5%
FHA loans require 3.5% down
VA and USDA loans allow zero down payment
Jumbo loans typically require at least 5% to 10% down

Keep in mind, a higher down payment reduces your risk as a borrower and helps you negotiate a better mortgage rate.

If you are able to make a 20 percent down payment, you can avoid paying for mortgage insurance.

This is an added cost paid by the borrower, which protects their lender in case of default or foreclosure.

But a big down payment is not required.

For many people, it makes sense to make a smaller down payment in order to buy a house sooner and start building home equity.

Verify your new rate. Start here

Choosing the right type of home loan

No two mortgage loans are alike, so it’s important to know your options and choose the right type of mortgage.

The five main types of mortgages include:

Fixed-rate mortgage (FRM)

Your interest rate remains the same over the life of the loan. This is a good option for borrowers who expect to live in their homes long-term.

The most popular loan option is the 30-year mortgage, but 15- and 20-year terms are also commonly available.

Adjustable-rate mortgage (ARM)

Adjustable-rate loans have a fixed interest rate for the first few years. Then, your mortgage rate resets every year.

Your rate and payment can rise or fall annually depending on how the broader interest rate trends.

ARMs are ideal for borrowers who expect to move prior to their first rate adjustment (usually in 5 or 7 years).

For those who plan to stay in their home long-term, a fixed-rate mortgage is typically recommended.

Jumbo mortgage

A jumbo loan is a mortgage that exceeds the conforming loan limit set by Fannie Mae and Freddie Mac.

In 2023, the conforming loan limit is $726,200 in most areas.

Jumbo loans are perfect for borrowers who need a larger loan to purchase a high-priced property, especially in big cities with high real estate values.

FHA mortgage

A government loan backed by the Federal Housing Administration for low- to moderate-income borrowers. FHA loans feature low credit score and down payment requirements.

VA mortgage

A government loan backed by the Department of Veterans Affairs. To be eligible, you must be active-duty military, a veteran, a Reservist or National Guard service member, or an eligible spouse.

VA loans allow no down payment and have exceptionally low mortgage rates.

USDA mortgage

USDA loans are a government program backed by the U.S. Department of Agriculture. They offer a no-down-payment solution for borrowers who purchase real estate in an eligible rural area. To qualify, your income must be at or below the local median.

Bank statement loan

Borrowers can qualify for a mortgage without tax returns, using their personal or business bank account. This is an option for self-employed or seasonally-employed borrowers.

Portfolio/Non-QM loan

These are mortgages that lenders don’t sell on the secondary mortgage market. This gives lenders the flexibility to set their own guidelines.

Non-QM loans may have lower credit score requirements, or offer low-down-payment options without mortgage insurance.

Choosing the right mortgage lender

The lender or loan program that’s right for one person might not be right for another.

Explore your options and then pick a loan based on your credit score, down payment, and financial goals, as well as local home prices.

Whether you’re getting a mortgage for a home purchase or a refinance, always shop around and compare rates and terms.

Typically, it only takes a few hours to get quotes from multiple lenders — and it could save you thousands in the long run.

Time to make a move? Let us find the right mortgage for you

Current mortgage rates methodology

We receive current mortgage rates each day from a network of mortgage lenders that offer home purchase and refinance loans. Mortgage rates shown here are based on sample borrower profiles that vary by loan type. See our full loan assumptions here.

Source: themortgagereports.com

Apache is functioning normally

January 14, 2024 by Brett Tams

If you’re on the cusp of buying a home, one of the first and most significant considerations you’ll encounter is the down payment. This initial investment can influence not just your ability to purchase a home, but also the terms of your mortgage and your financial flexibility in the years to come. Understanding the ins and outs of down payments is more than a financial formality; it’s a critical step in making one of life’s biggest decisions.

In this guide, we explore the essential aspects of making a down payment on a house. From traditional norms to modern options, you’ll learn about the factors influencing down payment requirements and their implications. This article is designed to assist both first-time buyers and experienced investors in understanding the impact of various down payment sizes on the home buying process and their financial future.

The journey to homeownership is filled with important decisions. Our aim is to provide you with the insights needed to make informed choices, aligning your dream of owning a home with your financial objectives. Let’s delve into the importance of down payments and how they play a pivotal role in your home buying adventure.

What is a down payment on a house?

A mortgage is a loan used to purchase a house. But there are very few mortgages available that will cover the total cost of the home.

Instead, most mortgage lenders require that you pay a percentage of the home’s purchase price and finance the rest with a loan. The amount you pay upfront is called a down payment.

This provides the lender with the assurance that you are vested in the property. Otherwise, you may be more likely to default on the mortgage because you didn’t spend any of your own money on the house. Most people won’t miss their monthly mortgage payment and end up in foreclosure. However, lenders typically require it across the board.

Check Out Our Top Picks for 2024:

Best Mortgage Lenders

20% Down Payment

Traditionally, banks required individuals to have a 20% down payment on a house to qualify for a loan. But it wound up making homeownership extremely exclusionary.

After all, that amounts to $40,000 on a $200,000, and most people don’t have that kind of money lying around. So while 20% remains the standard down payment preferred by most lenders, it’s no longer the norm.

In fact, data shows that the average down payment amount is shrinking due to young first-time home buyers. But there are some benefits to saving up a larger down payment of 20% before buying a home, and they can add up to some pretty significant savings over time.

Even beyond financial reasons, putting in an offer letter with a 20% down payment with a conventional loan can make you a more attractive buyer when you’re competing for a specific house.

Why? Because it will give you a lower loan-to-value ratio (LTV.) Your loan looks less likely to fall through because you have a more substantial cash flow and assets than someone with a low down payment. All other things equal, a seller will probably select your offer in a competitive market.

Avoid Paying Private Mortgage Insurance

Another major perk of a large down payment? You avoid paying private mortgage insurance (PMI). Any mortgage for a home you own with less than 20% equity is subject to additional insurance to protect the bank.

The amount depends on your loan type, but it’s usually an annual amount divided out as part of your monthly payments. To get rid of the mortgage insurance, you typically have to refinance the loan, which can be costly.

You also get a better interest rate with a higher down payment. On top of that, having a smaller loan amount lowers your monthly mortgage payment, giving you more money left in your pocket each month.

Low Down Payment Mortgage Options

Most lenders these days don’t expect you to have a full 20% down payment saved up. How much down payment you’ll need for a house depends on the type of loan you choose. The exact amount you’ll need varies based on several factors.

Here’s a rundown of the most common types of mortgages and the down payment requirements for each one. Start here to begin your selection process. It’s also wise to ask potential lenders to provide different scenarios for each loan type you qualify for.

Conventional Loans

Even if you don’t have a 20% down payment, you can qualify for a conventional loan. The minimum down payment is 3%, although you can also do any amount higher than that.

On a $200,000 home, you would pay $6,000 with the minimum down payment. Until a few years ago, at least a 5% down payment was required.

However, Fannie Mae studies indicated that saving up that much money was creating an obstacle to homeownership for many creditworthy individuals. So they created a 97% loan-to-value option that lenders can offer to mortgage applicants.

2% may not seem like a huge difference, but it adds up quickly when dealing with such large dollar amounts. In the scenario above, a 5% down payment on the same house would require a $10,000 down payment — $4,000 more than the 3% option.

Conventional Mortgage Lender Requirements

To qualify for a conventional mortgage, you’ll need to meet certain lender requirements, which can be strict compared to other loan types. For example, credit score requirements generally start around 620, although some lenders may accept as low as 580.

You’ll receive a higher interest rate with both a lower credit score and a small down payment, another factor in determining how much to save for your home. Of course, as with any down payment under 20%, you will have to pay mortgage insurance.

The exact rate can vary, but here’s an example of how much it could cost you. If your loan amount is $194,000 (after your 3% down payment) and your annual mortgage insurance rate is 0.5%, you’d have to pay $970 each year. Split up over 12 monthly mortgage payments, your PMI would add just over $80 to your bill.

FHA Loans

An FHA loan is another option for a loan with a low down payment. FHA loans are backed by the Federal Housing Administration, and insured by the federal government. They allow you to qualify for a mortgage without as many restrictions as conventional loans.

With an FHA loan, you only need a 3.5% down payment. So on that same $200,000 house, you’d only need to supply $7,000 in upfront cash.

FHA Loan Lender Requirements

You also get to take advantage of lower credit score requirements, with the minimum at only 580. Plus, you can qualify with a higher debt-to-income ratio. Conventional lenders only allow 43% of your monthly income to go towards debt payments, including your mortgage.

On the other hand, an FHA lender might let that number creep up between 45% and 50%. So, this is another example of a couple of percentage points making a difference in how much home you can afford.

Mortgage Rates and Private Mortgage Insurance

Again, lower mortgage application standards, including a smaller down payment, typically result in higher costs elsewhere. As a result, you’re likely to see higher interest rates and a higher PMI. With an FHA loan, you’ll have to pay that PMI in two different ways.

The first is a one-time payment at closing. This amounts to 1.75% of your loan amount. Again, say that you’re taking out a $190,000 loan; part of your closing costs would include a $3,325 PMI payment. On top of that, you’ll pay about 0.85% annually.

In this example, that amounts to $1,615, adding $134 to your monthly mortgage payment. So making a low down payment can cost you when it comes to paying PMI each month! Still, it may be a better option, especially if you can quickly reach a 20% loan-to-value and refinance the home loan in a few years.

VA Loans

If you’re a military veteran or active military member, you can qualify for a loan backed by the VA. The great thing about this type of loan is that it doesn’t require any down payment at all.

It also has lower credit score requirements, and no mortgage insurance is required. You do, however, have to pay a one-time funding fee. It can either be paid at closing or rolled into your mortgage amount.

The fee amount varies depending on a few different factors, including your down payment amount, your type of service, and whether you’ve used a VA loan in the past. But if you are regular military personnel and a first-time user of the VA loan with a zero dollar down payment, your funding fee will total 2.15% of the loan amount.

For the sake of comparison, let’s look at the $190,000 loan again. In this scenario, your funding fee comes to $4,085. Since it’s just a one-time fee, the impact on your monthly payment would be fairly minimal since it’s spread out over 30 years.

USDA Loans

A USDA loan is backed by the U.S. Department of Agriculture and promotes homeownership in rural areas. But you don’t have to buy a farm to qualify for this loan type. In fact, many peripheral suburban areas are included.

The great thing is that there is no down payment required for a USDA loan. However, you must meet certain income requirements and may only earn a certain amount each year, which varies depending on where you live.

Like VA loans, USDA loans don’t require PMI, but you have to pay an upfront premium if your down payment is less than 20%. The premium amount is 2% of your loan amount. That would be $3,800 on a $190,000 loan.

Again, you can either pay it up front as part of your closing costs or roll it into your mortgage amount. Check out the eligibility map to see if any properties near you qualify for a USDA loan.

HomeReady Loans

Our final low down payment loan is the HomeReady loan. This loan helps potential homeowners in low-income areas to get the financing they need for a mortgage.

The required down payment on a house is just 3%, and your debt-to-income ratio can be as high as 50%. There’s no income limit, but the property does have to be located in a low-income census tract.

You also have to complete an online education program about homeownership. You will need to pay mortgage insurance with the minimum down payment. However, the program claims to offer lower premiums compared to other loans.

If you find a home you love in an approved area, it’s definitely worth comparing to other available options.

See also: How to Buy a House With No Down Payment

What other costs are associated with buying a home?

We’ve talked a lot about private mortgage insurance adding to the total cost of your loan. But it’s also important to remember that there are fees and expenses to consider.

Some you’ll have to pay upfront, while others are paid over the course of the loan. But, first, remember that your monthly payment includes not only principal and interest but also taxes and insurance.

PITI

Cumulatively, this is called PITI (principal, interest, taxes, and insurance), and those add-ons are often overlooked when using a mortgage calculator. City or county taxes are owed every year, but most lenders charge you monthly and then make the payment on your behalf.

Homeowners Insurance

Homeowners insurance is also required for a loan and can easily tack on an extra $300 to $1,000 per year, depending on the value of your home.

Closing Costs

You should also consider closing costs. Many buyers may try to negotiate that the seller covers these costs, but this tactic isn’t always successful, particularly in competitive real estate markets.

Closing costs cover various services and fees and usually amount to 3-5% of the home’s purchase price. So on that $200,000 home, you could end up paying between $6,000 and $10,000 in closing costs.

If you don’t have the cash up front, you can typically roll them into the loan, but you’ll end up with higher monthly payments. Don’t be afraid of closing costs or any other fees associated with a mortgage, especially if you don’t have much saved for a down payment.

Bottom Line

Understanding down payments is crucial in your home-buying journey. The ideal down payment for your new home hinges on your financial circumstances and the types of loans you’re considering. While a larger down payment can reduce long-term costs through lower interest rates and mortgage insurance, balancing this with your available savings and overall budget is key.

Remember to account for additional expenses like closing fees, taxes, and insurance. These play a significant role in the overall cost of purchasing a home. Utilizing tools like mortgage calculators can help you grasp the implications of different down payment amounts.

In the end, whether you choose a minimal down payment or aim for 20%, the most vital aspect is making an informed decision that suits your financial situation and long-term housing plans. Stay informed, seek guidance when needed, and confidently take this important step towards homeownership.

Frequently Asked Questions

What is the ideal credit score to qualify for a mortgage with a low down payment?

While the minimum credit score required for a mortgage can vary depending on the lender and the type of loan, generally, a score of 580 or higher is needed to qualify for more favorable low down payment options like FHA loans. Higher scores can secure better interest rates and terms.

How can I improve my credit score before applying for a mortgage?

Improving your credit score involves several steps: pay your bills on time, reduce your debt-to-income ratio, avoid opening new credit accounts before applying for a mortgage, and check your credit report for errors. Consistently managing these areas can gradually improve your score.

Are there any down payment assistance programs available?

Yes, there are various down payment assistance programs available, often based on location, income level, or first-time homebuyer status. These programs can offer grants, low-interest loans, and other forms of assistance. It’s advisable to research local and state programs for eligibility.

Can gift funds be used for a down payment?

Yes, many loan types allow the use of gift funds for down payments. However, there are specific rules regarding the source of these funds and documentation required. It’s important to discuss this with your lender to ensure compliance with their guidelines.

What is the difference between pre-qualification and pre-approval for a mortgage?

Pre-qualification is an initial step where a lender gives you an estimate of how much you might be able to borrow based on basic financial information you provide. Pre-approval is more comprehensive, involving a detailed review of your finances and a more concrete offer of loan amount and terms.

How long does the mortgage application process typically take?

The duration of the mortgage application process varies, but generally takes between 30 to 45 days from application to closing. This timeline can be influenced by the complexity of your financial situation, the type of loan, and the efficiency of your lender.

What happens if I make a down payment of less than 20%?

If you make a down payment of less than 20%, you’ll likely need to pay for Private Mortgage Insurance (PMI), which protects the lender in case of default. PMI is typically required until you have at least 20% equity in your home.

Can I withdraw from my retirement account for a down payment without penalty?

In some cases, you can withdraw funds from certain retirement accounts, like an IRA, for a down payment without incurring early withdrawal penalties, especially if you’re a first-time homebuyer. However, there are limits and tax implications to consider.

What are the risks of putting down a smaller down payment?

A smaller down payment on a house can mean larger monthly mortgage payments, higher interest rates, and the necessity to pay PMI. It may also affect your competitiveness as a buyer in a strong market.

How can I estimate my monthly mortgage payment?

Your monthly mortgage payment can be estimated using online mortgage calculators. These calculators take into account the loan amount, down payment, interest rate, and loan term, giving you a rough idea of what to expect.

Source: crediful.com

Apache is functioning normally

January 11, 2024 by Brett Tams

Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors’ opinions or evaluations.

Currently, the current average mortgage rate on a 30-year fixed mortgage is 7.30%, compared to 7.29% a week ago.

For borrowers who want to pay off their home faster, the average rate on a 15-year fixed mortgage is 6.44%, up 0.09 percentage points from the previous week.

Homeowners who want to lock in a lower rate by refinancing should compare their existing mortgage rate with current market rates to make sure it’s worth the cost to refinance.

Current Mortgage Rates for January 9, 2024

30-Year Mortgage Rates

Borrowers will pay more in interest this week as the average rate on a 30-year mortgage is 7.30% compared to a rate of 7.29% a week ago.

The annual percentage rate (APR), which includes the interest and all of the lender fees, on a 30-year, fixed-rate mortgage is 7.19%. The APR was 7.22% last week.

If your mortgage is $100,000 and you have a 30-year, fixed-rate mortgage with the current rate of 7.30%, you will pay about $686 per month in principal and interest (taxes and fees not included), the Forbes Advisor mortgage calculator shows. That’s around $146,806 in total interest over the life of the loan.

15-Year Mortgage Rates

The average interest rate on a 15-year mortgage (fixed-rate) sits at 6.44%. This same time last week, the 15-year fixed-rate mortgage was at 6.35%.

The APR on a 15-year fixed is 6.37%. It was 6.30% this time last week.

At today’s interest rate of 6.44%, a 15-year fixed-rate mortgage would cost approximately $868 per month in principal and interest per $100,000. You would pay around $56,177 in total interest over the life of the loan.

Jumbo Mortgage Rates

On a 30-year jumbo, the average interest rate is 7.20%, higher than it was at this time last week. The average rate was 7.18% at this time last week.

Borrowers with a 30-year fixed-rate jumbo mortgage with today’s interest rate of 7.20% will pay $679 per month in principal and interest per $100,000. That means that on a $750,000 loan, the monthly principal and interest payment would be around $5,090 and you’d pay approximately $1.08 million in total interest over the life of the loan.

How Much House Can I Afford?

Buying a house is a huge purchase and can put a big dent in your savings. Before you start looking, it’s important to calculate how much house you can afford and you’re willing to spend.

Not only do you want to consider your income and debt, but you also want to factor in emergency savings and any long-term financial goals such as retirement or college.

These are some basic financial factors that go into home affordability:

Income
Debt
Debt-to-income ratio (DTI)
Down payment
Credit score

How Are Mortgage Rates Determined?

Home loan borrowers can qualify for better mortgage rates by having good or excellent credit, maintaining a low debt-to-income (DTI) ratio and pursuing loan programs that don’t charge mortgage insurance premiums or similar ongoing charges that increase the loan’s annual percentage rate (APR).

Comparing rates from different mortgage lenders is an excellent starting point. You may also compare conventional, first-time homebuyer and government-backed programs like FHA and VA loans, which have different rates and fees.

For the most part, several economic factors influence the trajectory of rates for new home loans. The recent Federal Reserve rate hikes don’t directly cause mortgage rates to rise but have indirectly caused the interest rates for many long-term loans to increase. Rates are more likely to decrease when the Fed pauses or decreases its benchmark Federal Funds Rate.

Further, the inflation rate and the general state of the economy directly impact interest rates. High inflation and a strong economy typically signal higher rates. Cooling consumer demand or inflation may help rates decrease.

What Is the Best Type of Mortgage Loan?

As you compare lenders, consider getting rate quotes for several loan programs. In addition to comparing rates and fees, these programs can have flexible down payment and credit requirements that make qualifying easier.

Conventional mortgages are likely to offer competitive rates when you have a credit score between 670 and 850, although it’s possible to qualify with a minimum score of 620. This home loan type also doesn’t require annual fees when you have at least 20% equity and waive PMI.

Several government-backed programs are better when you want to make little or no down payment:

FHA loans. Borrowers with a credit score above 580 only need to put 3.5% down and applicants with credit scores ranging from 500 to 579 are only required to make a 10% down payment with FHA loans.
VA loans. Servicemembers, veterans and qualifying spouses don’t need to make a down payment when the sales price is less than the home’s appraisal value. VA loan credit requirements vary by lender.
USDA loans. Applicants in eligible rural areas can buy or build a home with no money down using a USDA loan. Moderate-income borrowers can qualify for a 30-year fixed-rate term through the Guaranteed Loan Program. Further, buyers with a very low or low income can receive a 33-year term and payment assistance is available through the agency’s Direct Loans program. Credit requirements differ by lender.

Frequently Asked Questions (FAQs)

What is a good mortgage rate?

A competitive mortgage rate currently ranges from 6% to 8% for a 30-year fixed loan. Several factors impact mortgage rates, including the repayment term, loan type and borrower’s credit score.

How to get a lower mortgage interest rate?

Comparing lenders and loan programs is an excellent start. Borrowers should also strive for a good or excellent credit score between 670 and 850 and a debt-to-income ratio of 43% or less.

Further, making a minimum down payment of 20% on conventional mortgages can help you automatically waive private mortgage insurance premiums, which increases your borrowing costs. Buying discount points or lender credits can also reduce your interest rate.

How long can you lock in a mortgage rate?

Most rate locks last 30 to 60 days and your lender may not charge a fee for this initial period. However, extending the rate lock period up to 90 or 120 days is possible, depending on your lender, but additional costs may apply.

Source: forbes.com

Apache is functioning normally

January 9, 2024 by Brett Tams

Investing in real estate is some of the oldest and most reliable financial advice in the books. Few other assets can compete with real estate’s vast array of benefits. These benefits include tax advantages, appreciation, relative impunity to market shifts, and even the potential for passive income.

But even if you have every intention of investing in real estate, it can be challenging to get started. After all, even a modest home usually requires a substantial down payment. And it can take years to save up those five-figure sums. The term “real estate investor” may bring to mind a multi-millionaire who manages several properties, leaving you feeling overwhelmed enough to give up the ghost entirely.

Fortunately, it is possible to invest in real estate with little or no money, even if you aren’t swimming in discretionary income. For instance, with an Opportunity Fund or REIT (Real Estate Investment Trust) you can get your foot in the door even if you can’t afford to purchase an entire property. There are also a host of ways to leverage your own home. These include house hacking, renting vacation space on Airbnb, and more.

In this post, we’ll break down everything you need to know about how to invest in real estate. We’ll go over some of the most common types of real estate investing. We’ll also break down how they can help you make money. And we’ll explain how you can begin, no matter how much capital you have in hand.

Why Invest in Real Estate?

Before we dig into the meat of the post, let’s take a moment to backtrack. Why is real estate investing such a well-worn piece of financial advice?

You’ve probably heard that diversifying your portfolio of real estate investments is essential. But your “portfolio” doesn’t just have to live on the stock market! Real estate investing gives you, as the name suggests, a real, tangible asset. And it’s much less vulnerable to the capriciousness of the market.

Real estate investing can help you not only build home equity but also generate passive cash flow. Both through the process of appreciation and the more intentional, hands-on approaches we’ll study further below. And owning your own home can help you reap financial benefits while simultaneously providing for one of your most basic needs.

How to Invest in Real Estate with Little Money

When a down payment might cost as much as $60,000, it’s understandable that many first-time property shoppers feel overwhelmed. They say you have to spend money to make money. Yes, but that’s quite a hefty figure for the average American earner.

To be sure, some real estate investment strategies require a good deal of cash upfront to be workable. But there are other tactics that don’t necessitate such a large lump sum to begin with. This means you don’t have to be a real estate mogul to be a property owner. We’ll break down various strategies at both ends of the spectrum below.

Types of Real Estate Investing

Let’s get into the nitty-gritty. What types of real estate can you invest in?

There are three main types of investment properties available to real estate investors.

Residential properties are probably the ones you’re most familiar with. They are exactly what they sound like: buildings used by individuals and families as residential living spaces. These properties include single-family homes, duplexes, apartments, condominiums, and townhouses, and multi-family homes (so long as they’re being used residentially and don’t exceed four units).
Commercial real estate are properties used to conduct business. They may include offices, storefronts, retail spaces, farmland, and large multi-family houses or apartment buildings.
Industrial real estate are properties that serve industrial business purposes, such as factories, power plants, or storage and shipping warehouses.

Furthermore, there are both active and passive forms of real estate investing.

Active investing is, well, active. It requires a good deal of time, energy, and commitment from the investor. Active investing may become a part- or even full-time job for the investor. They usually share ownership with few (or no) other people and thus bears a lot of responsibility for the success of the investment.

Passive investing, on the other hand, allows the investor to reap the benefits of investing without taking on the pressure and responsibility of full ownership of a tangible property. In most cases, passive investing involves supplying capital to a larger investment pool. You earn capital gains on loan interest through dividends paid to shareholders.

We’ll go into it all of this in more detail, including specific ways you can invest in real estate, both active and passive.

How Real Estate Investing Can Help You Earn

Before we break down the specific ways you can get started investing in real estate, let’s talk about how it can help you make money. (After all, that’s the whole point!)

You can invest in real estate in several ways, depending on what type of investing you’re participating in.

Equity and appreciation

Purchasing real estate equips the owner with a “hard asset”; the tangible property or building. Owning this kind of asset confers equity, or value. It isn’t as vulnerable to the fluctuations of the market as stocks, bonds, and other securities. Furthermore, property has a longstanding history of increasing in value over time, or appreciating.

On the contrary, other types of purchases (like automobiles) depreciate, or lose value. Thus, purchasing a property may allow you to earn income passively simply through the process of appreciation. It more or less ensures that the cash value of your home is a safe and stable part of your overall net worth.

Rental income

Chances are, you’ve had to pay rent to a landlord at some point in your life. Well, if you become the landlord, someone’s paying you the rent. And as long as that rental price eclipses your total expenses, including your mortgage and maintenance costs, the rest is profit!

Aside from managing the investment property, you can also collect rental income by sharing your space on platforms like Airbnb or house hacking, which we’ll explain below.

Sale profit

This happens when you buy a home with the intention to fix it up and sell it down the line (also known as “house flipping”.) It’s the difference between your sale cost and your purchase cost (minus all the expenses put into maintenance and improvements) is pure profit.

Loan interest

The interest charged on home and property loans can increase the value of real estate investments made through REITs, investment platforms, and private equity firms.

Ways to Invest in Real Estate

Now we know a bit about the different types of properties available to investors and how those real estate investments stand to help you earn cash.

So, what are the specific ways to go about real estate investing? There are several in both the “active” and “passive” categories.

Active:

House flipping, or rehabbing, is when an investor purchases a property with the sole intent of fixing it up to sell it later on.
Wholesaling is similar to flipping houses, but less work intensive. Wholesaling occurs when an investor purchases a property they believe is underpriced, so they can quickly sell it to another investor at a profit.
Rental properties give investors a long-term way to draw profit from their investments, though they do require lots of hands-on management and maintenance over time.
Airbnb, Vrbo, and other vacation rentals can often be listed for substantial per-night prices. They can be especially lucrative in high-demand travel destinations.

Passive:

Private equity funds pool the assets of many investors, which creates a larger, more powerful investment fund. These funds are usually overseen and allocated by a dedicated manager. They may have high minimum investment thresholds and requirements to join.
Opportunity funds also pool investors’ assets, but with the specific purpose of making investments in qualified Opportunity Zones. These are low-income, up-and-coming communities that would benefit from private investments and economic development.
REITs are companies that invest in commercial properties. Private investors can purchase shares of the company and earn income on capital gains in the form of dividends.
Online REIT platforms can make real estate investing accessible to beginning investors, often carrying no net worth or accreditation restrictions. They may allow you to invest in specific properties or in pre-built, diversified portfolios of real estate.

We’re going to break down these different investment options in even more detail below. But first, let’s start a bit closer to home—literally.

Starting with Your Own Home

One of the most straightforward ways to invest in real estate is probably already on your financial to-do list, anyway: purchasing your own home.

Purchasing a home of your own allows you to kill two birds with one stone. You’re taking care of the basic need of shelter, while also leveraging the purchase to reap a host of financial benefits.

Here are just a few ways that owning a home can help you save and earn money.

Build equity: As discussed above, property ownership confers relatively immutable equity to the purchaser—that is, your home is a fairly safe, tangible asset to add to your overall investment portfolio.
Receive tax benefits: Certain homeowners’ expenses, including real estate taxes and home mortgage interest, are tax-deductible. And if you sell your home, you may exclude up to $250,000 of capital gains (or $500,000 if filing jointly) from your taxes.
Take advantage of appreciation: Even accounting for the 2008 crisis, the cost of homes and other properties have steadily increased over time for the past 50 years. So, the home you purchase today will likely be worth more than the price you paid for it in the future.
Stop paying rent: Although you’ll likely still have a mortgage payment and other expenses to cover as a homeowner, you won’t be paying rent to live in another person’s property. It’s a cost that is essentially entirely wasted, since you aren’t building home equity in the rental property.
Keep the value of your home improvements: When you own a home of your own, any improvements you make will add to the property’s total value, beefing up your asset as well as beautifying your living space.

House Hacking

Another way to make money by purchasing your own home is known as “house hacking“. It’s a real estate investment strategy wherein you leverage rental income from your primary residence to live there cost-free.

The term was originally coined by entrepreneur and author Brandon Turner, who wrote “The Book on Investing in Real Estate with No (and Low) Money Down” and “The Book on Rental Property Investing.”

House hacking may be done, for example, by purchasing a duplex. The investor rents out one unit at a price that covers the mortgage cost while living in the second unit. Some homeowners have also used space-share platforms like Airbnb to offset their housing costs in the same manner.

Real estate investors can use this strategy to pay off the property and even create a profit margin. This will eventually allow them to invest in more rental properties. Thus, house hacking is a great way to combine the personal financial benefits of homeownership with the long-term earning potential of other types of property investment.

Buying a Home Without a Huge Down Payment

Given the recent trends in the housing market, you may feel daunted by the prospect of becoming a homeowner. In 2023, the U.S. housing market experienced significant challenges, with home prices rising to near-record highs.

But there are many incentives and programs designed to make this large investment more feasible for first-time home buyers.

FHA (Federal Housing Administration) Loans may allow borrowers to purchase a home with a down payment as small as 3.5% of the purchase price and with credit scores as low as 580. (You may also be approved for an FHA loan with a lower credit score, but your minimum down payment may be higher.)
The USDA also offers low-cost loans to low- and moderate-income households purchasing homes in qualified rural areas.
Down Payment Assistance Programs offered by local governments and private firms can provide grants, loans, and educational materials to prospective home buyers

Many other financial institutions and organizations also have special incentives for those purchasing their first homes or low-income families in the housing market. Make sure you check with your local housing authority to learn more about what’s available in your area.

Active Investment Opportunities

Want to get hands-on? Here are the details on some of the most popular and accessible active real estate investment opportunities.

House Flipping

If you’ve ever watched more than thirty minutes of HGTV, chances are you’re at least passingly familiar with the idea of flipping houses. It’s basically where you purchase a home with the express intent of fixing it up and selling it (at a higher cost) later.

House flipping is a great way for investors to earn a significant profit. However, they do need to know how to complete the flip successfully without incurring too many costs. Expenses can quickly eat into the investment’s return.

Finding a Home to Flip

House flippers have to be able to recognize a home that may be slightly undervalued but would be able to sell well given the proper upgrades. This involves both an understanding of the area’s desirability and the types of improvements that generate increased home value.

House flippers are responsible for the entire cost of the home purchase. They must also pay for all the upgrades, which they may either do themselves or hire out to professionals.

Either way, flipping houses incurs a hefty up-front cost, and it does come at a risk. Even after you make all the improvements, it’s possible that the house will languish on the market.

This can mean racking up maintenance, taxes, and other expenses for the real estate investor. However, a properly executed, short-term flip can create a substantial profit margin in a relatively small period of time.

Wholesaling

Like house flippers, wholesalers purchase homes with the intent of selling them quickly. But, they aren’t planning to do any heavy lifting along the way.

Instead, wholesalers find properties that are undervalued for their market. They scoop them up and resell them to other investors at a price closer to their true value. Thus, earning the difference as a profit.

Rental Properties

While managing rental properties may seem like a straightforward and reliable way to earn income, it’s one of the most work-intensive approaches on this list. It does require enough up-front capital to purchase the property (or properties) in the first place. However, landlords do stand to see substantial and steady returns in exchange for the work and effort they put into their properties.

After purchasing a viable property, which needs to be well-maintained, in a desirable location, and well-advertised, landlords are responsible for filling that property with qualified tenants. This can involve a time-consuming and labor-intensive screening process.

After all, as a landlord, you’re giving your renters the keys to your investment—literally! It can be a very risky move if you don’t take the time to ensure your tenants are well-qualified.

Finding & Qualifying Tenants

Along with running a standard background check, landlords may also conduct interviews with and request credit reports from prospective renters, all of which takes time. And don’t forget: every month your rental property is unfilled is a waste of potential income.

Once you do find qualified tenants, you’ll be responsible for a host of obligations unless you hire a property management company. You’ll need to provide maintenance and repairs. You’ll also need to stay on top of rent collection and record-keeping. It can quickly become unwieldy once you have several properties.

You’ll also need to be sure you’re in compliance with all the renters’ rights that exist in your jurisdiction, including laws that regulate the eviction process. Of course, you’ll need to put in the work to find good renters and a well-maintained property in the first place. When done so, managing rentals can provide a smooth and steady source of income for relatively little active work.

Seller Financing

Want to buy an investment property with no money down? Look into seller financing or a land contract. This is where the seller acts as the bank. You make your mortgage payments, including interest, to the seller.

After a few years or so, you will have enough equity in the home to get a bank loan. You can then make a lump sum payment to the seller.

Private & Hard Money Lenders

Private money lenders generally charge between 6% to 12% on the money borrowed. Hard money lenders usually charge 10% to 18%. Hard money loans are not from banks. They are from individuals or businesses aimed at financing real estate investments for a return on their money.

Hard money loans are used by investors who don’t qualify for conventional financing. They are typically used to fund renovations. Once the house is finished or has some equity in it, the borrower then refinances to a conventional mortgage with a lower interest rate.

Managing a traditional property, wherein renters sign a multi-month lease, is not the only way to make money from an investment property. Platforms like Airbnb have revolutionized the real estate market. They allow homeowners (and sometimes even renters) to make money by renting out their space on a temporary, per-night basis as a vacation rental.

What’s more, you don’t necessarily have to rent out an entire home or unit to participate. A private room, or even a couch in a shared living room, is acceptable for some travelers using these services.

Airbnb and other vacation rental platforms make it simple for a novice renter. You don’t need to have a huge amount of know-how to start earning money this way. In fact, you don’t even necessarily have to “invest” in any property at all. Some landlords may allow their renters to list their housing on Airbnb as a sublet.

Airbnb Laws

However, as this new form of investment property has expanded, it’s created housing crunches in some cities. It’s resulting in “Airbnb laws,” or short-term rental legislation. These laws may limit your ability to use your housing in this way.

Always check your local regulations before you list your space on Airbnb or another of these types of platforms. If you don’t own the space, ensure that short-term sublets are allowed. Check your lease or ask your landlord directly.

Real Estate Investing Groups and Passive Investing

You may have noticed that many of the active real estate investment opportunities listed above do require substantial upfront capital to get started. You can’t wholesale or flip a house if you can’t purchase the house in the first place!

Furthermore, these active strategies generally involve a high level of skill, effort, and responsibility. It may not be feasible for those committed to other full-time careers.

Fortunately, there are still other ways to get involved with real estate investing, even if you don’t want to own or manage tangible property. (Or if doing so is out of financial reach for you right now). These passive investment tactics can help you glean the benefits of real estate investing without taking on quite as much of a fiscal and physical burden.

Private Equity Funds

A private equity, or PE fund, pools contributions from various investors to make larger investments. They’re often limited liability partnerships. That means there are fixed periods during which investors do not have access to their holdings.

Instead, PE funds allow investors to earn gains on debt and equity assets passively, without putting in much active work or research. Asset allocation and investments are managed by a dedicated individual or group. They earn money through annual fees as well as profit sharing.

PE funds come in various types, including the following:

Core equity funds generally invest in established commercial properties. They don’t carry risks like needing major improvements or experiencing losses for lack of consumer demand. The core strategy is simultaneously the least risky among PE funds and, typically, the least gainful.
Core plus equity funds generally follow the core strategy, but take a few more risks on properties that may require minor upgrades. This leads to a higher risk-return ratio on average.
Value added equity funds may invest in commercial properties that require substantial upgrades or new management to operate at their full potential. They may also seek to sell the property after improvements are made to create an additional profit margin.
Opportunistic equity funds offer the highest potential rewards, along with the highest risk. Investment properties purchased via these funds may need new construction or even land acquisitions. The payoff of such a new business venture is all but guaranteed. Furthermore, these developments take time, which means your investment capital may be tied up for longer. However, when they pay off, opportunistic equity funds see some of the best returns of the bunch.

Although PE funds are powerful real estate investment engines, they do often have high minimum investment requirements, generally not less than $100,000. Some funds may also be limited to accredited or institutional investors who can demonstrate available means.

Opportunity Funds

Opportunity funds operate on a similar model to private equity funds but are specifically used to make investments in qualified Opportunity Zones. These are economically distressed areas designated by the state and certified by the Secretary of the U.S. Treasury. Opportunity funds are legally required to invest 90% of their assets into properties in these Opportunity Zones.

Because these areas tend to be up-and-coming (and because tax benefits can incentivize investors to support them), opportunity funds often see substantial capital gains for their investors. And taxes incurred on those gains can be deferred until December 26, 2026.

That means the longer the investment is held before that date, the lower your overall tax liability will be. And opportunity fund investments held for at least ten years prior can expect their capital returns to be permanently excluded from capital gains taxes.

Of course, this strategy requires parting with your investment capital for a significant period of time. It’s best for those who can afford to put down the money to play the long game. If you can, however, investing in one is a great way to see substantial returns for almost zero effort.

Real Estate Investment Trusts (REITs)

A real estate investment trust(REIT) is a company that invests in commercial properties. As an investor, you purchase shares of this company just as you would any other. You earn income through its debt and equity assets in the form of shareholder dividends.

REITs operate similarly to mutual funds. They provide an excellent way for the average earner to experience the benefits of real estate investing. You don’t have to have a huge amount of capital to get started, as minimum investment requirements may be quite low.

However, they may carry high investment fees, especially in the case of private REITs (i.e., those not publicly traded on the stock market). Fees at these companies may run as high as 15%. REITs may also be illiquid and keep your money locked up for longer periods of time.

Online Real Estate Investment Platforms

In this digital, all-sharing-all-the-time age, most of us have already heard of crowdfunding. Real estate investments are no exception to the rules of the new millennium.

Online real estate investment platforms have begun springing up. They can make real estate gains achievable for average investors who may not have the towering net worth or accreditation status necessary to buy into more formal funds. Depending on the specific company, you might be able to choose specific investment properties to fund or buy into a diversified portfolio of investments.

Fees and minimum investment requirements are relatively low on real estate crowdfunding platforms. For instance, Fundrise lets you get started with just $500. That is much less than you’d have to pay to get in on most types of active investments! Check out our full review of Fundrise here.

Ready to Get Started Investing in Real Estate?

As you can see, there are several ways to start investing without saving up a five- or six-figure sum. And if you do it right, your investments can actually help you reach those high savings goals. You can then fund other types of investment projects!

However, as with any financial objective, planning and strategizing is key. Saving up as much capital as possible will help you get the best return on your investment once you’re ready.

You can’t allocate your assets without first keeping track of them, and to achieve that, you need to create a budget. If you’re in debt, aggressively paying it off will free you of a weighty financial anchor, so check out these powerful debt relief options.

Finally, if you intend to purchase property either to live in or as an investment opportunity, your credit score matters. It’s as simple as that. If your credit score isn’t quite where you want it to be, take these steps to raise it. Doing so will allow you to get the best interest rate once you’re ready to make the big purchase.

Source: crediful.com

Apache is functioning normally

January 9, 2024 by Brett Tams

Mortgage rate forecast for next week (Jan. 8-12)

Mortgage interest rates inched up this week, following nine straight declines totaling a decrease of 118 basis points (1.18%).

The average 30-year fixed rate mortgage (FRM) rose from 6.61% on Dec. 28 to 6.62% on Jan. 4, according to Freddie Mac.

“Given the expectation of rate cuts this year from the Federal Reserve, as well as receding inflationary pressures, we expect mortgage rates will continue to drift downward as the year unfolds,” said Sam Khater, Freddie Mac’s Chief Economist.

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In this article (Skip to…)

Will mortgage rates go down in January?

Mortgage rates fluctuated significantly in 2023, with the average 30-year fixed rate going as low as 6.09% on Feb. 2 and as high as 7.79% on Oct. 26, according to Freddie Mac.

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The range can be largely attributed to the Federal Reserve’s ongoing fight against inflation, juxtaposed with uncertainty in the banking sector sparked by Silicon Valley Bank’s collapse. However, with duress permeating the financial market and the fallout from U.S. debt ceiling talks, the Fed may continue making hikes to bring interest rates down.

With the economy likely heading into a recession, it’s possible we’ve already seen the peak of this rate cycle. Of course, interest rates are notoriously volatile and could tick back up on any given week.

Experts from CoreLogic, Home Qualified, Realtor.com and others weigh in on whether 30-year mortgage rates will climb, fall, or level off in January.

Expert mortgage rate predictions for January

Craig Berry, branch manager at Acopia Home Loans

Prediction: Rates will moderate

“As inflation is the no. 1 item on the Federal Reserve’s radar right now, the Feds may choose not to lower the federal funds rate until inflation comes down. And, while Fed rate cuts aren’t a must-have in order for mortgage rates to come down, interest rates are affected by the federal funds rate.

The Feds continue to seek a balance between inflation and maximum employment so as not to cause significant damage to the economy which could trigger a recession. Recent momentum has been positive, and as long inflation cooperates, mortgage rates may see a slight decline in January. However, it isn’t likely that we’ll see significant drops to longer-term rates until we get further into 2024.”

Ralph DiBugnara, president at Home Qualified

Prediction: Rates will fall

“Rates finally shifted down some in December and stabilized lower. U.S. payrolls came in lower than anticipated, unemployment was up and building of new homes was down. These are good signs that inflation may have reached its peak and could trigger a lowering of rates. I expect the Fed to stay neutral for the time being and possibly through the first quarter of the year with possible cuts coming only if we see a drastic shift in the economy. For January, I believe the average 30-year fixed will land at 7.125% and the 15-year fixed will be 6.75%.”

Selma Hepp, chief economist at CoreLogic

Prediction: Rates will fall

“Mortgage rates should continue to decline, albeit very gradually and given there are no surprises with inflation. We should see rates fall below 7% mark.”

Hannah Jones, senior economic research analyst at Realtor.com

Prediction: Rates will fall

“If inflation and employment data continue to show signs of slowing, mortgage rates are likely to ease in January, though at a slower clip than in recent weeks. As incoming data confirms that the economy is indeed cooling, the upward pressure on mortgage rates will continue to let up and buyers will enjoy lower rates than in recent months.

However, if inflation or employment data come in stronger than expected, we could see rates pick up steam once again. Investors expect the Fed to hold steady at the current target rate in next week’s meeting, which would signal the Committee’s confidence in the current policy stance to bring inflation down to the target 2%. As inflation reaches the target level, mortgage rates will continue to drift lower.”

Jess Kennedy, COO at Beeline

Prediction: Rates will fall

“We expect rates to continue to ease as we kick off 2024. You can see the signaling of a rate cut from the Fed in many ways. For example, it is harder to find long-term CDs at the higher interest rates we were seeing 45-60 days ago). Publicly traded companies are also seeing their stock prices move higher on the expectation of rate relief in 2024. All these signs signal rates start to tick down even ahead of an official rate cut.”

Odeta Kushi, deputy chief economist at First American

Prediction: Rates will fall

“In light of favorable trends in inflation and labor market data, the Federal Reserve appears to be on a path towards its goals, although achieving its 2% inflation target will take some time. Consequently, the Fed is expected to maintain a restrictive stance, which will keep mortgage rates elevated. However, given slowing inflation and a cooling labor market, and barring any unforeseen developments, modest reductions in mortgage rates are possible in January.”

Rick Sharga, CEO at CJ Patrick Company

Prediction: Rates will fall

“With inflation moving in the right direction, wage growth slowing, and the jobs market softening a bit, it seems likely that the Federal Reserve has finished rate hikes for this cycle. That, coupled with weakening bond yields, should create an environment where mortgage rates can start a gradual, but steady decline throughout 2024. January rates for 30-year fixed-rate loans will probably straddle 7% — ranging from 7.1% to about 6.9% as the market finds its footing to begin the year.”

Mortgage interest rates forecast next 90 days

As inflation ran rampant in 2022, the Federal Reserve took action to bring it down and that led to the average 30-year fixed-rate mortgage spiking in 2023.

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With inflation gradually cooling, the Fed adjusted its policies with smaller and skipped hikes. Additionally, the economy showing signs of slowing has many experts believing mortgage interest rates will gradually descend in 2024.

Of course, rates could rise on any given week or if another global event causes widespread uncertainty in the economy.

Mortgage rate predictions for 2024

The 30-year fixed-rate mortgage averaged 6.62%% as of Jan. 4, according to Freddie Mac. All five major housing authorities we looked at project 2024’s first quarter average to finish above that.

The National Association of Home Builders sits at the low end of the group, predicting the average 30-year fixed interest rate to settle at 7.04% for Q1. Meanwhile, Fannie Mae had the highest forecast of 7.6%.

Housing Authority	30-Year Mortgage Rate Forecast (Q1 2024)
National Association of Home Builders	6.77%
Wells Fargo	6.85%
Fannie Mae	7.00%
Mortgage Bankers Association	7.00%
National Association of Realtors	7.50%
Average Prediction	7.02%

Current mortgage interest rate trends

Mortgage rates came down for the ninth consecutive week.

The average 30-year fixed rate increased from 6.61% on Dec. 28 to 6.62% on Jan. 4 The average 15-year fixed mortgage rate fell, going from 5.93% to 5.89%.

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Month	Average 30-Year Fixed Rate
December 2022	6.36%
January 2023	6.27%
February 2023	6.26%
March 2023	6.54%
April 2023	6.34%
May 2023	6.43%
June 2023	6.71%
July 2023	6.84%
August 2023	7.07%
September 2023	7.20%
October 2023	7.62%
November 2023	7.44%
December 2023	6.82%

Source: Freddie Mac

After hitting record-low territory in 2020 and 2021, mortgage rates climbed to a 23-year high in 2023. Many experts and industry authorities believe they will follow a downward trajectory into 2024. Whatever happens, interest rates are still below historical averages.

Dating back to April 1971, the fixed 30-year interest rate averaged around 7.8%, according to Freddie Mac. So if you haven’t locked a rate yet, don’t lose too much sleep over it. You can still get a good deal, historically speaking — especially if you’re a borrower with strong credit.

Just make sure you shop around to find the best lender and lowest rate for your unique situation.

Mortgage rate trends by loan type

Many mortgage shoppers don’t realize there are different types of rates in today’s mortgage market. But this knowledge can help home buyers and refinancing households find the best value for their situation.

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Which mortgage loan is best?

The best mortgage for you depends on your financial situation and your goals.

For instance, if you want to buy a high-priced home and you have great credit, a jumbo loan is your best bet. Jumbo mortgages allow loan amounts above conforming loan limits, which max out at $ in most parts of the U.S.

On the other hand, if you’re a veteran or service member, a VA loan is almost always the right choice. VA loans are backed by the U.S. Department of Veterans Affairs. They provide ultra-low rates and never charge private mortgage insurance (PMI). But you need an eligible service history to qualify.

Conforming loans and FHA loans (those backed by the Federal Housing Administration) are great low-down-payment options.

Conforming loans allow as little as 3% down with FICO scores starting at 620. FHA loans are even more lenient about credit; home buyers can often qualify with a score of 580 or higher, and a less-than-perfect credit history might not disqualify you.

Finally, consider a USDA loan if you want to buy or refinance real estate in a rural area. USDA loans have below-market rates — similar to VA — and reduced mortgage insurance costs. The catch? You need to live in a ‘rural’ area and have moderate or low income to be USDA-eligible.

Mortgage rate strategies for January 2024

Mortgage rates displayed their famous volatility in 2023. Uncertainty in the banking sector led to downtrends, but ongoing inflation battles, Fed hikes and a hot job market drove growth.

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At its September and November meetings, the central bank held off on a rate hike, preferring to see if the economy would keep cooling organically. In December, the FOMC skipped a hike and projected cuts for 2024. As always, the committee said it would adjust its policies as necessary — which could mean additional hikes or possibly none at all.

Here are just a few strategies to keep in mind if you’re mortgage shopping in the coming months.

Be ready to move quickly

Indecision can lead to failure or missed opportunities. That holds true in home buying as well.

Although the housing market is becoming more balanced than the recent past, it still favors sellers. Prospective borrowers should take the lessons learned from the last few years and apply them now even though conditions are less extreme.

“Taking too long to decide to make an offer can lead to paying more for the home at best and at worst to losing out on it entirely. Buyers should get pre-approved (not pre-qualified) for their mortgage, so that the seller has some certainty about the deal closing. And be ready to close quickly — a long escrow period will put you at a disadvantage.

And it’s definitely not a bad idea to work with a real estate agent who has access to “coming soon” properties, which can give a buyer a little bit of a head start competing for the limited number of homes available,” said Rick Sharga.

Buyer demand is lower than a typical year, but the market usually heats up in spring and summer. Being decisive (and prepared) should only play to your advantage.

Shopping around isn’t only for the holidays

Since interest rates can vary drastically from day to day and from lender to lender, failing to shop around likely leads to money lost.

Lenders charge different rates for different levels of credit scores. And while there are ways to negotiate a lower mortgage rate, the easiest is to get multiple quotes from multiple lenders and leverage them against each other.

“For potential home buyers, it’s important to get quotes from multiple lenders for a mortgage, as rates can vary dramatically, especially during such a volatile period,” said Odeta Kushi.

As the mortgage market slows due to lessened demand, lenders will be more eager for business. While missing out on the rock-bottom rates of 2020 and 2021 may sting, there’s always a way to use the market to your advantage.

How to shop for interest rates

Rate shopping doesn’t just mean looking at the lowest rates advertised online because those aren’t available to everyone. Typically, those are offered to borrowers with great credit who can put a down payment of 20% or more.

The rate lenders actually offer depends on:

Your credit score and credit history
Your personal finances
Your down payment (if buying a home)
Your home equity (if refinancing)
Your loan-to-value ratio (LTV)
Your debt-to-income ratio (DTI)

To figure out what rate a lender can offer you based on those factors, you have to fill out a loan application. Lenders will check your credit and verify your income and debts, then give you a ‘real’ rate quote based on your financial situation.

You should get three to five of these quotes at a minimum, then compare them to find the best offer. Look for the lowest rate, but also pay attention to your annual percentage rate (APR), estimated closing costs, and ‘discount points’ — extra fees charged upfront to lower your rate.

This might sound like a lot of work. But you can shop for mortgage rates in under a day if you put your mind to it. And shaving just a few basis points off your rate can save you thousands.

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Mortgage interest rate FAQ

What are current mortgage rates?

Current mortgage rates are averaging 6.62% for a 30-year fixed-rate loan and 5.89% for a 15-year fixed-rate loan, according to Freddie Mac’s latest weekly rate survey. Your individual rate could be higher or lower than the average depending on your credit score, down payment, and the lender you choose to work with, among other factors.

Will mortgage rates go down next week?

Mortgage rates could decrease next week (Jan. 8-12, 2024) if the mortgage market takes a cautious approach to a possible recession. However, rates could rise if lenders account for the Federal Reserve taking measures to counteract inflation or if a global event brings economic uncertainty.

Will mortgage interest rates go down in 2024?

If inflation continues to dissipate and the economy cools or goes into a recession, it’s likely mortgage rates will decrease in 2024. Although, it’s important to remember that interest rates are notoriously volatile and are driven by many factors, so they can rise during any given week.

Will mortgage interest rates go up in 2024?

Mortgage rates may continue to rise in 2024. High inflation, a strong housing market, and policy changes by the Federal Reserve have all pushed rates higher in 2022 and 2023. However, if the U.S. does indeed enter a recession, mortgage rates could come down.

What is the lowest mortgage rate right now?

Freddie Mac is now citing average 30-year rates in the 7% range. If you can find a rate in the 5s or 6s, you’re in a very good position. Remember that rates vary a lot by borrower. Those with perfect credit and large down payments may get below-average interest rates, while poor-credit borrowers and those with non-QM loans could see much higher rates. You’ll need to get pre-approved for a mortgage to know your exact rate.

Will there be a housing crash?

For the most part, industry experts do not expect the housing market to crash in 2023. Yes, home prices are over-inflated. But many of the risk factors that led to the 2008 crash are not present in today’s market. Low inventory and massive buyer demand should keep the market propped up next year. Plus, mortgage lending practices are much safer than they used to be. That means there’s not a subprime mortgage crisis waiting in the wings.

What is the lowest mortgage rate ever?

At the time of this writing, the lowest 30-year mortgage rate ever was 2.65%. That’s according to Freddie Mac’s Primary Mortgage Market Survey, the most widely used benchmark for current mortgage interest rates.

Should I lock my rate now or wait?

Locking your rate is a personal decision. You should do what’s right for your situation rather than trying to time the market. If you’re buying a home, the right time to lock a rate is after you’ve secured a purchase agreement and shopped for your best mortgage deal. If you’re refinancing, you should make sure you compare offers from at least three to five lenders before locking a rate. That said, rates are rising. So the sooner you can lock in today’s market, the better.

Is now a good time to refinance?

That depends on your situation. It’s a good time to refinance if your current mortgage rate is above market rates and you could lower your monthly mortgage payment. It might also be good to refinance if you can switch from an adjustable-rate mortgage to a low fixed-rate mortgage; refinance to get rid of FHA mortgage insurance; or switch to a short-term 10- or 15-year mortgage to pay off your loan early.

Is it worth refinancing for 1 percent?

It’s often worth refinancing for 1 percentage point, as this can yield significant savings on your mortgage payments and total interest payments. Just make sure your refinance savings justify your closing costs. You can use a mortgage calculator or speak with a loan officer to crunch the numbers.

How do I shop for mortgage rates?

Start by choosing a list of three to five mortgage lenders that you’re interested in. Look for lenders with low advertised rates, great customer service scores, and recommendations from friends, family, or a real estate agent. Then get pre-approved by those lenders to see what rates and fees they can offer you. Compare your offers (Loan Estimates) to find the best overall deal for the loan type you want.

What are today’s mortgage rates?

Mortgage rates are rising, but borrowers can almost always find a better deal by shopping around. Connect with a mortgage lender to find out exactly what rate you qualify for.

Time to make a move? Let us find the right mortgage for you

¹Today’s mortgage rates are based on a daily survey of select lending partners of The Mortgage Reports. Interest rates shown here assume a credit score of 740. See our full loan assumptions here.

Selected sources:

https://www.blackknightinc.com/category/press-releases
https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm
http://www.freddiemac.com/research/datasets/refinance-stats/index.page

Source: themortgagereports.com

Apache is functioning normally

January 7, 2024 by Brett Tams

The Federal Housing Administration (FHA) faces a potential loss of roughly $7 billion in receipts in 2024, and a failure by Congress to come to terms on certain spending agreements could force across-the-board cuts to non-defense spending of roughly 5-to-9%.

This is according to a letter published this week by the Congressional Budget Office (CBO), submitted to the chairman and ranking member of the U.S. House of Representatives budget committee.

CBO projections for FHA

“This letter provides CBO’s assessment of the effects of the caps on discretionary funding in fiscal year 2024,” the letter reads. “Those effects will depend on the nature and timing of appropriation legislation and on decisions by [OMB]. If necessary, the caps will be enforced by OMB through sequestration, the process by which across-the-board reductions are applied to budgetary resources.”

If Congress is unable to come to a compromise on government funding — with current continuing resolutions in place in two phases — sequestration would force cuts to both defense and nondefense government spending. The latter would see far more severe cuts, according to CBO.

“In the scenarios CBO examined, if enacted funding equaled the annualized amount of funding under the continuing resolution, sequestration would be required and would result in across-the-board reductions ranging from 5 percent to 9 percent for nondefense funding and from zero to 1 percent for defense funding, depending on when appropriations were enacted and what form they took,” the letter said.

FHA’s lower expected receipts in 2024 are cited by CBO as one of the reasons that nondefense spending could see more severe cuts in 2024, but both housing groups and the agencies themselves have explained that additional resources from Congress are needed to adequately handle the housing challenges across the country today.

MBA, NRMLA advocate for full FHA, Ginnie Mae funding

Leaders in Congress have been entertaining the notion of a 1% cut to housing agencies. In December, leaders at housing advocacy groups including the Mortgage Bankers Association (MBA) and the National Reverse Mortgage Lenders Association (NRMLA) submitted a letter urging leaders in Congress to fully fund FHA and Ginnie Mae.

“The [budget agreement] enacted this past spring contained an overall discretionary spending level of 1% below FY 2023 spending levels,” the letter said. “At this time, it is unclear whether FY 2024 HUD funding will be approved through a traditional conference report, a continuing resolution, or a reversion to the budget agreement default process.”

FHA, the groups said, provides “the most important mortgage option for affordable mortgage loans for first-time, minority, and other underserved homebuyers – responsibly serving qualified borrowers with low down payment requirements or minor credit blemishes,” while Ginnie Mae maintains a “critical role” in the housing ecosystem with its mortgage-backed securities (MBS) program and its other important roles in rural housing and loans for veterans.

A one percent cut to these agencies, the letter said, would “prove inadequate and substantially undermine FHA’s ability to fulfill its baseline responsibilities and pursue the initiatives identified above,” and would “result in harmful mortgage market impacts and taxpayer risks” for Ginnie Mae.

Possible reverse mortgage impacts

A reduction in FHA’s budget could negatively impact the administration of the Home Equity Conversion Mortgage (HECM) program, but another reverse mortgage impact could be from potential cuts to Ginnie Mae due to liquidity challenges being faced in the reverse mortgage business.

After assuming control of Reverse Mortgage Funding (RMF)’s portfolio of HECM-backed securities late last year, Ginnie Mae officials explained throughout last year that the assumption of a large portfolio — estimated to contain as much as one-third of all HMBS issuance as of mid-2023 — necessitated more appropriations from Congress to adequately manage it.

In its 2024 budget request submitted to Congress last March, Ginnie Mae explained some of the challenges inherent in managing the RMF portfolio.

“We continue to spot new issues as we take the RMF portfolio in-house,” Ginnie’s budget request document said. “It has become clear that the HECM program requires enhanced governance across how Ginnie Mae makes decisions […] because the HMBS program presents a heightened set of operational risks for Ginnie Mae, we require additional staff to work through these issues.”

A continuing resolution keeps Ginnie Mae ‘flat’

<img data-attachment-id="435980" data-permalink="https://www.housingwire.com/articles/ginnie-mae-president-offers-commitment-to-reverse-mortgage-securities-program/alannamccargo_gnma_hires/" data-orig-file="https://www.housingwire.com/wp-content/uploads/2024/01/alannamccargo_gnma_hires.jpg" data-orig-size="819,1024" data-comments-opened="1" data-image-meta=""aperture":"0","credit":"","camera":"","caption":"","created_timestamp":"0","copyright":"","focal_length":"0","iso":"0","shutter_speed":"0","title":"","orientation":"0"" data-image-title="alannamccargo_gnma_hires" data-image-description="

Alanna McCargo, president of the Government National Mortgage Association (Ginnie Mae).

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Alanna McCargo

” data-medium-file=”https://www.housingwire.com/wp-content/uploads/2024/01/alannamccargo_gnma_hires.jpg?w=240″ data-large-file=”https://www.housingwire.com/wp-content/uploads/2024/01/alannamccargo_gnma_hires.jpg?w=819″ decoding=”async” width=”819″ height=”1024″ src=”https://www.housingwire.com/wp-content/uploads/2024/01/alannamccargo_gnma_hires.jpg?w=819″ alt=”Alanna McCargo, president of the Government National Mortgage Association (Ginnie Mae).” class=”wp-image-435980″ srcset=”https://www.housingwire.com/wp-content/uploads/2024/01/alannamccargo_gnma_hires.jpg 819w, https://www.housingwire.com/wp-content/uploads/2024/01/alannamccargo_gnma_hires.jpg?resize=120,150 120w, https://www.housingwire.com/wp-content/uploads/2024/01/alannamccargo_gnma_hires.jpg?resize=240,300 240w, https://www.housingwire.com/wp-content/uploads/2024/01/alannamccargo_gnma_hires.jpg?resize=768,960 768w, https://www.housingwire.com/wp-content/uploads/2024/01/alannamccargo_gnma_hires.jpg?resize=600,750 600w” sizes=”(max-width: 819px) 100vw, 819px”>

Alanna McCargo

In an interview with RMD late in 2023, Ginnie Mae President Alanna McCargo spoke about some of the challenges in securing additional appropriations considering the narrow political majorities in both houses of Congress.

“We’ve been on a journey to right-size Ginnie Mae since I started, and then the acquisition of this portfolio and with the role we’re playing right now in the reverse industry, [that has] only accelerated our need to have more focus, more resources and more people to do the business that we have to do,” McCargo said.

While there has been some support shown for fully funding Ginnie Mae in Congress, operating off of a continuing resolution has stifled any potential growth in appropriations, she explained.

“Unfortunately, the [continuing resolution] that we’re currently operating under keeps us flat, so it really does slow down our ability to do the hiring and planning that we want and need to do,” McCargo said.

External to the budget issues, Ginnie Mae has taken steps to improve reverse industry liquidity by reducing the minimum size required to create HMBS pools to assist smaller issuers and changing certain pool eligibility requirements to ease some strain.

Source: housingwire.com

Apache is functioning normally

January 7, 2024 by Brett Tams

Many people mistakenly believe they can’t afford to buy a home because they don’t really know what their options are. Fortunately, home loans are not one-size-fits-all. There are various mortgages available to suit your budget and preferences.

So, before you start visiting open houses, take some time to familiarize yourself with the different home loans that are available. Going into the home buying process informed could help you save a lot of money on your down payment, interest, and fees.

The 8 Types of Mortgage Loans Available

Understanding the different types of mortgage loans will help you choose the option that’s best suited for you. Let’s look at a brief overview of the eight types of mortgages available in 2024.

1. Conventional Loans

A conventional loan is a mortgage that’s not issued by the federal government. There are two different types of conventional mortgages you can choose from: conforming and non-conforming loans.

A conforming loan falls within the guidelines laid out by Fannie Mae and Freddie Mac. You’ll take out a conforming loan through a private lender like a bank, credit union, or mortgage company. Since the government doesn’t guarantee the loan, conventional mortgages typically come with more stringent lending requirements.

According to the CFPB, the maximum loan amount for a conventional loan is $484,350. However, it may be as high as $726,525 in counties with a high cost of living. You’ll have to take out private mortgage insurance (PMI) if you don’t have a 20% down payment.

Conventional loans are fixed-rate mortgages, which means your monthly mortgage payment remains the same throughout the entire life of the mortgage loan. The terms typically range from 10 to 30 years:

30-year fixed-rate mortgage
20-year fixed-rate mortgage
15-year fixed-rate mortgage
10-year fixed rate mortgage

Pros:

It can be used to purchase a primary home or an investment property
Tends to cost less than other types of loans
You can cancel your private mortgage insurance (PMI) once you reach 20% equity in your home

Cons:

Must have a minimum FICO score of 620 or higher
Harder to qualify for than government-backed loans
You’ll need to have a low debt-to-income ratio to qualify

2. Conventional 97 Mortgage

A conventional 97 mortgage is similar to a conventional loan in that it’s widely available to various borrowers. The main difference is that with this type of home loan, you only have to pay a 3% down payment.

The program is available for first-time and repeat home buyers. However, it must be your primary place of residence, and the maximum loan amount is $510,400.

Pros:

Widely available to most borrowers
Only requires a 3% down payment
Available for first-time and repeat homebuyers

Cons:

Cannot be used to purchase investment properties
The maximum loan amount is $510,400
Requires a minimum FICO score of 660 or higher

3. FHA Loans

FHA loans are backed by the Federal Housing Administration and are a popular option for first-time home buyers. To qualify, you need to have a 3.5% down payment and a minimum credit score of 580.

If you have a credit score of 500 or higher, you can qualify for an FHA loan with a 10% down payment. These flexible requirements make FHA loans a suitable option for borrowers with bad credit.

To qualify for an FHA home loan, you must have a debt-to-income ratio of 43% or less. These loans can’t be used to purchase investment properties, and your home must meet the FHA’s lending limits.

These limits vary by state, so you’ll need to check the FHA’s website to see what the guidelines are for your area.

Pros:

Loans come with low down payment options
A viable option for borrowers with bad credit
Available for first-time and repeat homeowners

Cons:

Loans can’t be taken out for investment properties
If your credit score is below 580, a 10% down payment is required
You must have a debt-to-income ratio below 43%
Mandatory mortgage insurance premiums

4. FHA 203(k) Rehab Loans

An FHA 203(k) rehab loan is sometimes referred to as a renovation loan. It allows home buyers to finance the purchase of their home and any necessary renovations with a single loan.

Many people purchase older homes to fix them up. Instead of taking out a mortgage and then applying for a home renovation loan, you can accomplish both within a single mortgage.

A rehab loan is similar to an FHA loan in that you’ll need a 3.5% down payment. However, the credit requirements are stricter, and you’ll need a minimum credit score of 640 to qualify.

Pros:

Allows you to buy a home and finance the remodel within one mortgage
Requires a minimum 3.5% down payment
Easier to qualify since the FHA backs your loan

Cons:

Credit requirements are more stringent than typical FHA loans
You must hire approved contractors and cannot DIY the renovations
The closing process takes longer than other types of mortgages

5. VA Loans

The Department of Veteran Affairs guarantees VA loans. These loans are designed to make it easier for veterans and service members to qualify for affordable mortgages.

One of the biggest advantages of taking out a VA loan is that it doesn’t require a down payment or mortgage insurance premium (MIP). And there are no listed credit requirements, though the lender can set their own minimum credit requirements. VA loans typically come with a lower interest rate than FHA and conventional loans.

To qualify for a VA loan, you must either be active duty military, a veteran or honorably discharged. You’ll need to apply for your mortgage through an approved VA lender.

Pros:

No down payment required
No PMI required
Flexible credit requirements

Cons:

Must be a veteran to qualify
Some sellers will not want to deal with a VA loan

6. USDA Loans

A USDA loan is a type of mortgage that’s available for rural and suburban home buyers. It’s a viable option for borrowers with lower credit scores that are having a hard time qualifying for a traditional mortgage.

USDA loans are backed by the U.S. Department of Agriculture, and they help low-income borrowers find housing in rural areas. USDA loans do not require a down payment, but you will need a minimum credit score of 640 to qualify.

You will need to meet the USDA’s eligibility requirements to qualify for the loan. But according to the department’s property eligibility map, over 95% of the U.S. is eligible.

Pros:

No down payment required
A practical option for low-income borrowers
Available to first-time and repeat home buyers

Cons:

A minimum credit score of 640 is required
Housing is limited to rural and suburban areas

7. Jumbo Loans

A jumbo loan is a mortgage that exceeds the financing guidelines laid out by the Federal Housing Finance Agency. These loans are unable to be purchased or guaranteed by Fannie Mae or Freddie Mac.

A jumbo mortgage is financing for luxury homes in competitive real estate markets, and the limits vary by state. In 2024, the FHFA raised the limits for a one-unit property to $766,550, increasing from $726,200 in 2023. In certain high-cost areas, the limits for jumbo loans vary, reaching up to $1,149,825. These jumbo loans are for mortgages that exceed the set limits in their respective counties.

If you’re hoping to buy a home that costs more than $1 million, you’ll need to take out a super jumbo loan. These loans provide up to $3 million to purchase your home. Both jumbo and super jumbo mortgages can be difficult to qualify for and require excellent credit.

Pros:

These loans make it possible to purchase large homes in expensive areas
Typically comes with flexible loan terms

Cons:

Jumbo loans and super jumbo loans come with higher interest rates
You’ll need a good credit history to qualify

8. Adjustable Rate Mortgages (ARMs)

Unlike a fixed-rate mortgage, where the interest rate is set for the life of the loan, an adjustable-rate mortgage (ARM) comes with interest rates that fluctuate. Your interest rate depends on the current market conditions.

When you first take out an ARM, you will typically start with a fixed rate for a set period of time. Once that introductory period is up, your interest rate will adjust on a monthly or annual basis.

An ARM can be a suitable option for some borrowers because your interest rate will likely be low for the first couple of years you own the home. But you need to be comfortable with a certain level of risk.

And if you choose to go this route, you should look for an ARM that caps the amount of interest you pay. That way, you won’t find yourself unable to afford your monthly payments when the interest rates reset.

4 Types of ARMs

There are 4 different types of adjustable-rate mortgages typically offered:

One Year ARM – The one-year adjustable-rate mortgage interest rate changes every year on the anniversary of the loan.
10/1 ARM – The 10/1 ARM has an initial fixed interest rate for the first ten years of the mortgage. After 10 years is up, the rate then adjusts each year for the remainder of the mortgage.
5/5 and 5/1 ARMs – ARMs that have an initial fixed rate for the first five years of the mortgage. After 5 years is up, for the 5/5 ARM, the interest rate changes every 5 years. For the 5/1 ARM, the interest changes every year.
3/3 and 3/1 ARMs – Similar to the 5/5 and 5/1 ARMs, except the initial fixed-rate changes after 3 years. For the 3/3 ARM, the interest rate changes every 3 years and for the 3/1 ARM, it changes every year.

Pros:

Interest rates will likely be low in the beginning.
If you pay the loan off quickly, you could pay a lot less money in interest.

Cons:

Your monthly mortgage payments will fluctuate.
Many borrowers have gotten into financial trouble after taking out an ARM.

Choosing the Right Home Loan

When it comes to choosing a home loan, you need to consider a few key factors. First, you’ll want to think about the type of loan that is best suited to your needs.

Fixed-rate mortgages offer stability and predictability, while adjustable-rate mortgages (ARMs) can be a viable option for those who expect their income to increase significantly over time. You’ll also want to consider your budget and how much you can afford to borrow, as well as the size of your down payment and the length of the loan term.

It’s also crucial to shop around and compare offers from multiple mortgage lenders. While it’s tempting to go with the first lender you find, it pays to do your homework and see what other options are available.

This can help you get a better rate and more favorable terms on your loan. It’s a good idea to get quotes from at least three different lenders, and to consider both traditional banks and online lenders.

Tips for Getting the Best Rates and Terms

One of the most effective strategies is to improve your credit score. Lenders look closely at credit scores when deciding whether to approve a loan. Those with higher scores are typically offered better terms. You can improve your credit score by paying your bills on time, reducing your debt, and correcting any errors on your credit report.

Another tip is to make a larger down payment, which can help you secure a lower interest rate and reduce the size of your monthly payments. Finally, consider working with a mortgage broker, who can help you shop around and find the best deal.

Bottom Line

As you can see, there are many home loans for you to choose from. The type of mortgage that’s best for you will depend on your current income and financial situation.

If you’re not sure where to start, consider working with a qualified loan officer. They can assess your situation and recommend the option that will be best for you.

Source: crediful.com

Apache is functioning normally

January 7, 2024 by Brett Tams

Why use an FHA loan?

FHA loans have been making homeownership more accessible for decades. Tailored to borrowers with lower credit, the FHA makes it possible to buy a house with a credit score of just 580 and only 3.5% down.

But home buyers aren’t the only ones who can benefit. For current homeowners, an FHA refinance may let you access low rates and home equity, even without great credit.

Not sure whether you’ll qualify for a mortgage? Check out the FHA program. You might be surprised.

Verify your FHA loan eligibility. Start here

In this article (Skip to…)

>Related: How to buy a house with $0 down: First-time home buyer

What is an FHA loan?

An FHA loan is a mortgage insured by the Federal Housing Administration (FHA).

FHA insurance protects mortgage lenders, allowing them to offer loans with low interest rates, easier credit requirements, and low down payments (starting at just 3.5%).

Thanks to their flexibility and low rates, FHA loans are especially popular with first-time home buyers, home shoppers with low or moderate incomes, and/or lower-credit home buyers.

But FHA financing isn’t limited to a certain type of buyer — anyone can apply.

Verify your FHA loan eligibility. Start here

How does an FHA loan work?

The first thing to know about FHA mortgages is that the Federal Housing Administration doesn’t actually lend you the money. You get an FHA mortgage loan from an FHA-approved bank or lender, just like you would any other type of home mortgage loan.

The FHA’s role is to insure these mortgages, offering lenders protection in case borrowers can’t pay their loans back. In turn, this lets mortgage lenders offer FHA loans with lower interest rates and looser standards for qualifying.

The one catch — if you want to call it that — is that you pay for the FHA insurance that protects your mortgage lender. This is called “mortgage insurance premium” or MIP for the life of the loan or until the FHA home loan is refinanced into another type of mortgage. We go over this in detail below.

Types of FHA loans

FHA loans offer various options to meet different home buying needs. These government-backed loans are designed to make homeownership more accessible, especially for those with less-than-perfect credit scores or limited savings.

Each type of FHA loan is tailored to different financial situations and home buying needs. Here’s what you can expect.

Compare FHA loan quotes from multiple lenders. Start here

FHA mortgage loan

An FHA mortgage is ideal for first-time home buyers, requiring a minimum credit score of 580 for a 3.5% down payment. Those with credit scores between 500 and 579 can still qualify for a 10% down payment. These loans are popular due to their lenient credit score requirements and low-down payment options.

FHA rate-and-term refinance

An FHA refinance loan is suited for borrowers looking to improve their loan terms or lower interest rates, especially if their credit scores have improved since obtaining their original mortgage. It offers a way to adjust loan terms to better fit current financial situations.

FHA Streamline Refinance

For current FHA loan holders, the FHA Streamline Refinance provides an efficient way to refinance with minimal documentation and underwriting. It often results in lower interest rates and can potentially reduce mortgage insurance premiums. This option is advantageous for those who want to refinance without a complicated process.

FHA cash-out refinance

An FHA cash-out refinance allows homeowners to tap into their home equity, converting it into cash. It requires a minimum credit score of 620, and borrowers must leave at least 15% equity in their home after the refinance. It’s suitable for those needing extra funds for expenses or investments.

FHA Home Equity Conversion Mortgage (HECM)

HECM is a reverse mortgage for homeowners aged 62 and older, allowing the conversion of home equity into cash. It provides financial flexibility for seniors by enabling access to their home equity without selling the home.

FHA 203(k) loan

The FHA 203(k) loan is designed for home purchases requiring renovations. It combines the cost of the home and renovation expenses into one loan. Borrowers must meet specific credit score requirements and ensure that renovations are completed within six months.

FHA Energy Efficient Mortgage

This loan type allows borrowers to include energy-efficient upgrades in their FHA loan. It’s aimed at reducing utility costs and increasing the home’s environmental friendliness, thereby potentially increasing its value.

Section 245(a) loan

The Section 245(a) program is for borrowers expecting an increase in their income. It offers a graduated payment schedule that starts low and increases over time, aligning with anticipated income growth. This loan is particularly beneficial for young professionals expecting career advancement.

Check your FHA loan eligibility. Start here

FHA loan requirements

Homeownership can be a liberating experience, especially for first-time buyers. With their flexible guidelines and government backing, FHA home loans provide a welcoming path.

Understanding FHA loan requirements can make the process much easier, opening the door to a future in your ideal home.

Check your FHA loan eligibility. Start here

To be eligible for an FHA loan, applicants must adhere to specific guidelines:

The property must undergo a home appraisal by an FHA-approved appraiser.
The property must serve as the applicant’s primary residence; investment properties and second homes are not eligible.
Occupancy of the property is required within two months following the closing.
A mandatory inspection is conducted to ensure the property meets FHA’s basic standards.

There are a few more specific conditions to qualify, such as a down payment amount, mortgage insurance, credit score, loan limits, and income requirements.

FHA loan down payment requirements

FHA loans require a minimum down payment, which varies based on credit score. For credit scores of 580 and above, a minimum down payment of 3.5% is required. Borrowers with credit scores between 500 and 579 must make a 10% down payment.

FHA mortgage insurance premiums

FHA mortgage insurance premium (MIP) is what makes the FHA program possible. Without the MIP, FHA-approved lenders would have little reason to make FHA-insured loans.

There are two kinds of MIP required for an FHA loan. One is paid as a lump sum when you close the loan, and the other is an annual premium, which becomes less expensive each year as you pay off the loan balance:

Upfront Mortgage Insurance Premium (UFMIP) = 1.75% of the loan amount for current FHA loans and refinances
Annual Mortgage Insurance Premium (MIP) = 0.85% of the loan amount for most FHA loans and refinances

MIP is split into monthly payments that are included in your mortgage payment. You’ll have to pay FHA insurance for the life of the loan or if you refinance into another type of mortgage loan.

The good news is that, as a homeowner or home buyer, your FHA loan’s MIP rates have dropped. Today’s FHA MIP costs are now as much as 50 basis points (0.50%) lower per year than they were in previous years.

Also, you have ways to reduce what you’ll owe in FHA MIP.

Depending on your down payment and loan term, you can reduce the length of your mortgage insurance to 11 years instead of the entire loan.

Loan term	Original down payment	MIP duration
20, 25, 30 years	Less than 10%	Life of loan
20, 25, 30 years	More than 10%	11 years
15 years or less	Less than 10%	Life of loan
15 years or less	More than 10%	11 years

Or, you could refinance out of FHA MIP at a later date.

With FHA interest rates as competitive as they are today, refinancing could reduce your monthly mortgage payments and cancel your mortgage insurance premium if you have enough equity in the home.

Check your FHA loan rates. Start here

FHA loan credit score minimums

The minimum credit score requirement for an FHA loan is 500. However, a score of 580 or higher allows for a lower down payment. Credit scores directly impact loan terms and down payment amounts.

Debt-to-income ratio

FHA loans consider the borrower’s debt-to-income (DTI) ratio, a measure of monthly debt payments against monthly income. The FHA prefers a DTI ratio of no more than 43%, though exceptions can be made for higher ratios with compensating factors.

Income and employment requirements

There is no specific income threshold for FHA loans, but borrowers must demonstrate steady employment history. Verification includes pay stubs, W-2s, tax returns, and bank statements.

FHA loan limits

Loan limits for FHA loans vary by county. However, starting January 1, 2024, the new FHA loan limit will be $498,257 for a single-family home in most parts of the country. Limits increase for 2-, 3-, and 4-unit properties.

FHA loan rates

Interest rates for FHA loans are competitive and can vary based on factors such as prevailing market rates, borrower’s credit score, income, loan amount, down payment, and DTI ratio. Government backing often enables lenders to offer lower rates compared to conventional mortgages.

Compare your FHA loan rates from multiple lenders. Start here

Today’s rates for a 30-year, fixed-rate FHA loan start at % (% APR), according to The Mortgage Reports’ daily rate survey.

Thanks to their government backing, FHA loan rates are competitive even for lower-credit borrowers. But interest rates can vary a lot from one lender to the next, so be sure to shop around for your best offer.

FHA loan benefits

Check your FHA loan eligibility. Start here

1. Lower down payment: Just 3.5 %

For today’s home buyers, there are only a few mortgage options that allow for down payments of 5% or less. The FHA loan is one of them.

With an FHA mortgage, you can make a down payment as small as 3.5% of the home’s purchase price. This helps home buyers who don’t have a lot of money saved up for a down payment along with home buyers who would rather save money for moving costs, emergency funds, or other needs.

2. FHA allows 100% gift funds for the down payment and closing costs

The FHA is generous with respect to using gifts for a down payment. Very few loan programs will allow your entire down payment for a home to come from a gift. The FHA will.

Via the FHA, your entire 3.5% down payment can be a gift from parents or another family member, an employer, an approved charitable group, or a government homebuyer program.

If you’re using a down payment gift, though, you’ll need to follow the process for gifting and receiving funds.

3. FHA loans allow higher debt-to-income ratios

FHA loans also allow higher debt-to-income ratios.

Your debt-to-income ratio, or DTI, is calculated by comparing two things: your debt payments and your before-tax income.

For instance, if you earn $5,000 a month and your debt payment total is $2,000, your DTI is 40%.

Officially, FHA maximum DTIs are as follows.

31% of gross income for housing costs
43% of gross income for housing costs plus other monthly obligations like credit cards, student loans, auto loans, etc.

However, a 43% DTI is actually on the low end for most FHA borrowers. And FHA will allow DTI ratios as high as 50%. Although to get approved at such a high ratio, you’ll likely need one or more compensating factors — for instance, a great credit score, significant cash savings, or a down payment exceeding the minimum.

In any case, FHA is more lenient in this area than other mortgage loan options.

Most conventional mortgage programs — those offered by Fannie Mae and Freddie Mac — only allow debt-to-income ratios between 36% and 43%.

With down payments of less than 25%, for example, Fannie Mae lets you go to 43% DTI for FICOs of 700 or higher. But most people don’t get conventional loans with debt ratios that high.

4. FHA loans accept lower credit scores

Officially, the minimum credit scores required for FHA mortgage loans are:

580 or higher with a 3.5% down payment
500-579 with a 10% down payment

High credit scores are great if you have them. But past credit history mistakes take a while to repair.

FHA loans can help you get into a home without waiting a year or more for your good credit to reach the “excellent” level. Other loan programs are not so forgiving when it comes to your credit rating.

Fannie Mae and Freddie Mac (the agencies that set rules for conventional loans) say they accept FICOs as low as 620. But in reality, some lenders impose higher minimum credit scores.

5. FHA even permits applicants with no credit scores

What if an applicant has never had a credit account? Their credit report is, essentially, blank.

FHA borrowers with no credit scores may also qualify for a mortgage. In fact, the U.S. Department of Housing and Urban Development (HUD) prohibits FHA lenders from denying an application based solely on a borrower’s lack of credit history.

The FHA allows borrowers to build non-traditional credit as an alternative to a standard credit history. This can be a huge advantage to someone who’s never had credit scores due to a lack of borrowing or credit card usage in the past.

Borrowers can use payment histories on items such as utility bills, cell phone bills, car insurance bills, and apartment rent to build non-traditional credit.

“Not all lenders who are FHA approved offer these types of loans, so check with your loan officer individually,” cautions Meyer.

6. FHA loans can be up to $ in most of the U.S.

Most mortgage programs limit their loan sizes, and many of these limits are tied to local housing prices.

FHA mortgage limits are set by county or MSA (Metropolitan Statistical Area), and range from $ to $ for single-family homes in most parts of the country.

Limits are higher in Alaska, Hawaii, the U.S. Virgin Islands, and Guam, and also for duplexes, triplexes, and four-plexes.

7. FHA also allows extended loan sizes

As another FHA benefit, FHA loan limits can be extended where home prices are more expensive. This lets buyers finance their home using FHA even though home prices have skyrocketed in certain high-cost areas.

In Orange County, California, for example, or New York City, the FHA will insure up to $ for a mortgage on a single-family home.

For 2-unit, 3-unit and 4-unit homes, FHA loan limits are even higher — ranging up to $.

If your area’s FHA’s loan limits are too low for the property you’re buying, you’ll likely need a conventional or jumbo loan.

8. If you have an FHA loan, you can lower your rate with an FHA Streamline Refinance

Another advantage for FHA-backed homeowners is access to the FHA Streamline Refinance.

The FHA Streamline Refinance is an exclusive FHA program that offers homeowners one of the simplest, quickest, and most affordable paths to refinancing.

An FHA Streamline Refinance requires no credit score checks, no income verifications, and home appraisals are waived completely.

In addition, via the FHA Streamline Refinance, homeowners with a mortgage pre-dating June 2009 get access to reduced FHA mortgage insurance rates.

Verify your FHA loan eligibility. Start here

FHA loan disadvantages

What is the downside to an FHA loan? Among the numerous benefits of FHA loans, there are certain disadvantages that potential borrowers should be aware of. These drawbacks can impact the overall cost and flexibility of the loan.

Here are the downsides that you should know about FHA home loans.

FHA loan mortgage insurance premiums

One of the primary drawbacks of FHA loans is the mandatory mortgage insurance premiums. These include an upfront premium at closing, generally 1.75% of the loan amount, and ongoing monthly payments. This additional cost can make FHA loans more expensive over the long term

Loan limits

One notable limitation of FHA loans is the lower loan limits compared to conventional loans, which can be restrictive for higher-income buyers. The FHA mortgage limit for a one-unit property ranges from $ to $ for single-family homes in most parts of the country, which may not be sufficient in areas with higher property values.

Strict property requirements

FHA loans come with stringent property requirements. The purchased home must be the borrower’s primary residence and must meet specific safety and condition standards. This requirement can limit the types of properties that qualify for an FHA loan.

FHA loan alternatives

Alternative loans, like USDA and VA loans, offer distinct advantages, such as no down payment requirements, but come with specific eligibility criteria. Understanding these alternatives ensures you make a well-informed decision about the type of mortgage that’s right for you.

Conventional 97

The Conventional 97 program comes with a down payment requirement of just 3%. It stands out due to the absence of income limits and mandatory home buyer education, making it accessible to a broader range of homebuyers.

Check your conventional loan eligibility. Start here

HomeReady Mortgage by Fannie Mae

The HomeReady mortgage program is designed for low- to moderate-income families, allowing a home purchase with only a 3% down payment. Furthermore, this program permits the entire downpayment and closing costs to be covered by gifts or grants, offering significant financial flexibility.

Freddie Mac Home Possible

The Home Possible loan is notable for its reduced mortgage insurance costs compared to other similar programs. With a 3% down payment requirement and lower ongoing costs, Home Possible is an attractive alternative for those looking to save on mortgage insurance.

USDA loans

USDA loans, backed by the U.S. Department of Agriculture, are an attractive alternative, especially for moderate-income buyers in rural areas. They don’t require a down payment, which is a significant advantage. However, eligibility for USDA loans is restricted based on income and geographical limits, and not every property qualifies for this type of financing.

VA loans

VA loans are another viable alternative, particularly for U.S. military service members, veterans, and certain surviving spouses. Like USDA loans, VA loans also require no down payment. However, eligibility for VA loans is exclusive to the military community, limiting their accessibility to the general public.

FAQ: FHA loans

Can I choose between a fixed rate and an adjustable-rate FHA loan?

Yes, FHA loans offer both fixed-rate and adjustable-rate (ARM) options. A fixed-rate FHA loan provides a consistent interest rate and monthly payment for the life of the loan, ideal for those who prefer stability. An adjustable-rate FHA loan, on the other hand, has an interest rate that can change over time, typically offering lower initial rates.

Do FHA loans have lower interest rates?

FHA loans often have lower interest rates compared to many conventional loan options. This is largely due to the government backing of FHA loans, which reduces the risk for lenders. As a result, lenders are generally able to offer more competitive mortgage rates to borrowers. However, the actual interest rate you’ll receive on an FHA loan can vary based on several factors, including your credit score, loan amount, and the current market conditions. It’s always a good idea to compare rates from multiple lenders to ensure you’re getting the best deal possible for your situation.

Are FHA loans assumable?

Yes. A little-known FHA benefit is that the agency will allow a home buyer to assume the existing FHA mortgage on a home being purchased. The buyer must still qualify for the mortgage with its existing terms but, in a rising mortgage rate environment, it can be attractive to assume a home seller’s loan. Five years from now, for example, a buyer of an FHA-insured home could inherit a seller’s sub-3 percent mortgage rate. This can make it easier to sell the home in the future.

Can you buy a rental property with an FHA loan?

While you can’t buy a true rental property with an FHA loan, you can buy a multi-unit property — a duplex, triplex, or fourplex — live in one of the units, and rent out the others. The rent from the other units can partially, or even fully, offset your mortgage payment.

Are closing costs higher for FHA loans?

Closing costs are about the same for FHA and conventional loans with a couple of exceptions. First, the appraiser’s fee for an FHA loan tends to be about $50 higher. Also, if you choose to pay your upfront MIP in cash (instead of including this 1.75% fee in your loan amount), this one-time fee will be added to your closing costs. Additionally, the fee can be rolled into your loan amount.

What credit score do I need for an FHA loan?

Most borrowers will need a minimum credit score of 580 to get an FHA loan. However, home buyers who can put at least 10% down are eligible to qualify with a 500 score. Yet, each lender may have their own credit score minimums, separate to those established by the Federal Housing Administration.

What is the loan-to-value ratio requirement for FHA loans?

The loan-to-value (LTV) ratio for FHA loans typically cannot exceed 96.5%, meaning you can borrow up to 96.5% of your home’s value. This high LTV ratio is part of what makes FHA loans accessible, especially for first-time homebuyers who might not have substantial savings for a down payment.

How does PMI work with FHA loans?

For FHA loans, the equivalent of private mortgage insurance (PMI) is the mortgage insurance premium (MIP). MIP is required for all FHA loans, regardless of the down payment or loan-to-value ratio. This insurance protects lenders from losses in case of borrower defaults and is included in both upfront and ongoing mortgage costs.

What happens if I default on an FHA loan?

If you default on an FHA loan, the lender can initiate foreclosure proceedings. The FHA loan program, backed by the Federal Housing Administration, is designed to minimize the risk of defaults by offering more lenient qualification criteria. However, consistent failure to make mortgage payments may lead to foreclosure, impacting your credit score and homeownership status.

Today’s FHA loan rates

Now is an opportune time to consider an FHA loan, with current mortgage rates being historically competitive.

FHA loan interest rates are typically among the most competitive. To capitalize on these favorable rates, start by comparing offers from FHA-approved lenders.

Finding the most affordable loan could be just a few clicks away. Begin your journey towards homeownership today by exploring your options and discovering the best rates available for your financial situation.

Time to make a move? Let us find the right mortgage for you

Source: themortgagereports.com

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