TYPES OF MORTGAGE LOANS
There is no one-size-fits-all when it comes to home financing. That’s why we offer many types of mortgage loans and programs to fit the diverse needs of today’s borrowers. Whether you’re a first-time homebuyer, a property investor, a foreign national, a self-employed borrower, or even a borrower with bad credit, we have options for you and will match you with the mortgage loan program that makes the most sense for you.
Below are the different mortgage loan options offered. However, there is no substitute for a quick conversation so we can learn more about your specific situation and guide you in the right direction.
A conventional loan is a mortgage that is not backed or secured by a government entity. It is available through and guaranteed by either a private lender or one of the two government-sponsored enterprises, Fannie Mae and Freddie Mac.
Some of the benefits of conventional loans include:
- Loan amounts up to $647,200 (2022) in California
- Fixed or adjustable rates
- Down payments as low as 3% for primary residences
- Primary, second, and investment property options
A conventional mortgage is best for borrowers with a minimum of a 620 FICO score, stable employment and income, and a debt-to-income ratio of less than 50%.
Down payment requirements can vary based on your situation and the type of loan or property you’re buying and can range from 3% to 20% or more. If you put down less than 20% on a conventional loan, you’ll be required to pay for private mortgage insurance (PMI).
Most conventional mortgages are referred to as “conforming loans,” which means they meet the requirements to be sold to Fannie Mae or Freddie Mac. For a conforming conventional loan, your loan must fall within the loan limits set by Fannie Mae and Freddie Mac. The loan limit changes annually and is greater for high-cost areas (which applies to some areas in California).
An FHA loan is insured by the Federal Housing Authority. It is a federally backed mortgage designed for low- to moderate-income borrowers.
An FHA loan allows a lower credit score than a conventional mortgage, and the minimum down payment depends on your credit score. If you have a FICO score that’s 580 or higher, the minimum down payment is 3.5%.
Mortgage insurance must be paid on an FHA mortgage, either upfront at closing or rolled into the loan, plus monthly as part of your regular mortgage payments. FHA-approved banks and lenders issue FHA loans.
The FHA has a maximum loan amount that it will insure, known as the FHA lending limit. In 2022, that limit is $420,860 for single-family homes in Tulare, Kings, and Fresno counties. However, in high-cost areas of California, the FHA loan limit extends to $970,800.
FHA Loan Benefits:
- A minimum of 3.5% down payment
- Flexible credit qualifying guidelines
- A minimum of a 580 FICO score required
- Can be paired with a down payment assistance program
If you are a veteran, an active military member, or a spouse of a deceased veteran, you may be entitled to a VA loan home loan benefit. VA loans are designed to help those who have served our country achieve homeownership.
A VA loan is backed by the U.S. Department of Veterans Affairs. It’s a loan program that helps U.S. veterans, active-duty service members, and widowed military spouses buy a home, build a new house, make home improvements, or refinance their current mortgage.
When applying for a VA loan, you’ll need to provide a Certificate of Eligibility (COE) to qualify for VA financing. You can obtain a COE through the VA website or by mail, or our team can request it as part of the loan process.
The 2022 VA loan limit for Tulare, Kings, and Fresno counties is $548,250 for a single-family property. For more expensive housing markets and high-cost areas in California, VA loan limits can reach up to $970,800 for 2022.
There is no monthly mortgage insurance with VA loans. However, there is a one-time upfront VA funding fee applied to purchase and refinance transactions.
VA Loan Benefits:
- Competitive interest rates
- No down payment requirement—up to 100% financing
- Ability to finance closing costs
- Higher allowable debt-to-income ratio than other loan types
- Sellers can pay up to 6% of closing costs and other concessions
- Leniency with past bankruptcy or foreclosure
A jumbo loan is a home loan that exceeds the limit set by the Federal Housing Finance Agency (FHFA). Unlike conventional loans, jumbo loans are not secured by the government-sponsored enterprises Fannie Mae or Freddie Mac. Fannie and Freddie set conforming loan limits for mortgages. However, jumbo loans exceed this limit and are referred to as non-conforming loans or non-QM loans.
Our jumbo financing solutions were created for borrowers who are looking to maximize their buying power but with flexibility in how they do it, whether this means having a higher DTI or needing an alternate way to document their income.
Our jumbo products include Jumbo 1st and 2nd—APM’s specialty product, and 11 delegated jumbo solutions with several delegated up to $3 million. We also have jumbo loans for ITIN foreign national borrowers up to $6 million with fixed, ARM, and interest-only loan options and flexible qualifying guidelines.
At APM, we have our own in-house Jumbo Lending Team, and we are the leading experts in jumbo loan products.
Jumbo Loan Benefits:
- Loan amounts up to $3,000,000
- Fixed rates, adjustable rates, and interest-only options
- Primary, second, and investment property options
- Jumbo 1st and 2nd loan combos
- Credit and income qualifying flexibility
Some homebuyers want an existing home that’s move-in-ready; others want to build their dream home from the ground up. Our team works with you and your builder directly to provide the financing needed to build through our in-house construction lending program.
We offer a two-time close construction loan. This means you’ll have one loan to pay for the construction, and then as construction nears completion, you’ll get a second loan that will pay off the construction loan and become your permanent financing.
Our construction loan comes with up to 90% financing, post-construction rate locks, and timelines that exceed typical building parameters. We expertly guide you through the construction loan process, which includes managing builder approval, draw requests, and everything else that takes place between breaking ground and moving in.
The payments on the construction loan are interest only, and you can choose to make monthly payments or build them into your loan. Your permanent financing is a traditional loan, where you make principal and interest payments monthly just like any other mortgage.
Repairs or remodeling projects can deplete your savings, so that’s why we provide the perfect solution with our suite of renovation mortgage products. Available in FHA and conventional mortgage loan options, these loans allow a client to purchase a less-than-perfect property that needs remodeling. They also help homeowners who need to make repairs or updates that can enhance their home’s value, or investors looking to rehabilitate properties for maximum rental income.
NON-CONFORMING LOANS AND SPECIALTY MORTGAGE PRODUCTS
Non-conforming loans and specialty products are designed to meet the needs of nontraditional borrowers. Below are some mortgage loan options that fit unique homebuying situations.
Bridge Loans by APM
A bridge loan is the perfect solution for someone buying and selling a home at the same time. Our bridge loans allow buyers to make a noncontingent offer on a new home without a sales contingency to sell their current property. This ensures that you won’t miss out on getting your dream home due to a sales clause. Borrowers also don’t have to liquidate their assets, retirement savings, or investments to access money for a down payment.
We offer single- and double-wide manufactured home financing options up to 95% LTV on a primary or second home.
We offer solutions for all types of investors, including borrowers who have a vision for transforming a home into a long-term investment but need flexibility with their financing. This includes flexible income and credit qualifying and jumbo financing solutions.
Condominiums offer many benefits for buyers, especially first-time homebuyers. Condos often are more affordable, require less maintenance, and come with community amenities that single-family homes can’t compete with. There’s also the possibility for owners to turn their unit into an investment if they decide to rent it out down the road.
Our team has access to programs that offer flexibility for various condo purchase scenarios, including foreign nationals, gift fund purchases, unlimited DTI with ample reserves, non-warrantable condos, delayed financing, and non-owner occupied purchases.
DOWN PAYMENT ASSISTANCE PROGRAMS
For many people, saving enough money for a down payment is the biggest challenge getting in their way of being able to buy a home of their own. At APM, we have access to local, state, and national down payment assistance programs, also referred to as DPA programs or grants, to help those who qualify achieve the American dream of homeownership and all the benefits that come with it.
The latest housing authority to announce a new DPA program to homebuyers in California is the California Housing Finance Agency (CalHFA), with a program called the Forgivable Equity Builder Loan. This program allows first-time homebuyers to get up to 10% down payment assistance on the purchase of their first home, and it is a 100% forgivable loan if you live in the property for at least five years.