How Loans Help Texans Achieve Homeownership
Texas home buyer loans
First-time buyers with 20% down payments can secure conventional loans, enjoying potential benefits such as low interest rates and exemption from private mortgage insurance (PMI).
Discover how putting down 20% can position you as a strong buyer, especially in competitive housing markets like Houston. Despite the challenge of saving this amount, various mortgage loan options exist for those with little or no down payment.
When considering homeownership, it's essential to be aware of closing costs, typically falling between 2% and 5% of your mortgage loan amount.
However, it's crucial not to overlook the impact of the down payment.
Factoring in the down payment can elevate the total cash requirement to approximately 7%-9% of the purchase price. Understanding these financial aspects is vital for a well-informed home buying process
Common Closing Costs for Buyers
- Down payment, 3-20%, (typical is only 7-8% down of purchase price)
- Loan origination, .5-1% (of the loan amount)
- Points/Discount fees, (pay to receive a lower interest rate, Typically .25-1% of the loan amount)
- Home inspection, $350-$450
- Appraisal, $400-$850
- Credit report $65-135
- Private mortgage insurance premium, Varies, .55-2.5% of loan amount (based on credit)
- Insurance escrow for homeowner’s insurance, $3000-$4000 a year in Texas (Varies on location and size and age of roof)
- Property tax escrow, if being paid as part of the mortgage. (4 months) Use Property Tax Calculator
- Deed recording $25-$70
- Title insurance policy premiums Varies (based our loan amount, set by State)
- Land survey $400-$1500
- Notary fees $65-$125
- Prorations for your share of costs, such as utility bills and property taxes
Types of Financing:
Explore different financing options, including:
- Conventional Loans: requiring a 5% down payment and a 620 minimum credit score, with the possibility of stopping mortgage insurance after reaching a 78% loan-to-value.
- FHA Loans: backed by the Federal Housing Administration, featuring a 3.5% down payment and a minimum credit score of 580, with ongoing mortgage insurance until refinancing, moving, or loan payoff.
- VA Loans: exclusive to veterans, with no down payment required and varying credit score requirements, offering ongoing mortgage insurance relief after closing.
- USDA Loans: designed for low-to-moderate-income buyers in rural areas, requiring zero down payment and often having a credit score requirement of 640.
Additional Financing Options: Explore special home loans for public servants and low-income buyers, as well as down payment and closing cost assistance programs for first-time buyers. Understand the variety of loan types available, including amortized loans and Adjustable-Rate Mortgages (ARMs).
Impact of Mortgage Applications on Credit Scores: Learn about the potential credit score impact when applying for a new mortgage. Understand the nuances, including a likely decrease of around 15 points and the importance of pulling from all three credit bureaus.
As you embark on your homebuying journey, consider the various financing options and programs available to tailor your approach to your unique needs. Factor in property taxes and homeowners' insurance when estimating your budget.
If you have military service history, check your eligibility for VA loans, and explore Non-QM Loan products for additional options. Contact us to learn more about your personalized financing solutions.
Current Mortgage Rates or apply now to get approved and get your personal interest Rate
FHA loan – Backed by the Federal Housing Administration.
3.5% down and a minimum credit score of 580.
Mortgage insurance is required until you refinance, move, or pay off your loan.
FHA loans are insured by the Federal Housing Administration.
These loans require a small down payment and are obtained through approved lenders. By providing insurance to the lender, the FHA attracts lenders to loans they would not otherwise be interested in making. In order to qualify for FHA insurance, buyers must meet some conditions. The FHA requires that the borrower pay a mortgage insurance premium in monthly installments as a part of the regular loan payment. The FHA requires a property appraisal before it will commit to ensuring any loan. The maximum loan amount is set by the appraised value or the sale price, whichever is lower, and the buyer must pay the difference in cash. No secondary financing of any kind is allowed. Most FHA loans are made for thirty-year periods, and the interest rates are set by the market conditions.
VA loans - are available only to veterans.
No down payment is required.
The minimum credit score varies by lender but is often 620.
No ongoing mortgage insurance after closing.
VA Loans are arguably the best mortgages available, so check your eligibility if you have a military service history.
VA loans are loans that are guaranteed by the U.S. Department of Veteran Affairs.
These loans are often available with no down payment. The guarantee is free to the Veteran.
The Veteran must receive a Certificate of Eligibility from the VA before applying for the loan. The VA must appraise the property. A veteran applying for a VA loan must sign a document stating that he or she will occupy the property. As with FHA loans, most loans have thirty-year terms, and the interest rates are set by the market conditions.
The maximum loan amounts for FHA and VA change periodically to accommodate real estate values over time.
USDA loan – For those on low–to–moderate incomes buying in designated rural areas. Zero down payment is required. Credit score requirements vary by lender but are often 640.
Low mortgage insurance rates Texas State Affordable Housing Corporation loans – Special home loans for public servants and low–income buyers. It's important to remember that a down payment isn't the only upfront cost when buying a house.
Additionally, closing costs often amount to 2–5% of the loan amount.
First-time buyers can make their upfront costs more affordable with help from the down payment and closing cost assistance programs.
There are many types of loans available. Some of the more popular types include:
Amortized loan -Borrowers make regular equal payments of principal and interest until they repay the loan in full. The term can be anything from 10 to 30 years, but the most common terms are 15 years and 30 years. This loan is often referred to as a fixed-rate loan.
Adjustable-Rate Mortgage (ARM) - This loan is paid like an amortized loan, but the interest rate changes or is adjusted periodically. The rate is usually tied to some readily available index, and changes from period to period are usually limited or “capped.” This loan can often give the buyer the lowest available monthly payment at the start of the term. However, the rate will fluctuate, and so will the payments. The maximum allowable adjustment over the life of the loan is also usually capped.
Remember that your mortgage payments will also include property taxes and homeowners' insurance. Factor these homeownership costs in when estimating your home buying budget.
We also offer Non-QM Loan products? Contact us to learn more
