Real Estate Money Basics – 10 Ideas for Financing a Home

Traditional mortgage financing generally requires that borrowers have good credit and documented income and can submit bank statements and other papers requested by lenders. Conforming loans that require 20 percent down are included in this category, and so are government-insured loans through the FHA, VA, and USDA that offer lower down-payment options for eligible borrowers. Veterans may qualify for a zero-down mortgage through the VA program, while those purchasing a home in a rural district may be eligible for financing through the USDA program. Moreover, the FHA program is available to buyers meeting certain income and credit guidelines and homes meeting specific condition requirements. Loans in the “non-traditional” arena tend to involve creating financing, and many are available to buyers with less than stellar credit and no money down. In “subject to the existing mortgage” arrangements, buyers basically take over the seller’s mortgage, whereas “seller financing” means the seller offers financing to buyers who do not qualify for a traditional mortgage but earn a good income. In “lease with an option to buy” arrangement, sellers allow buyers with poor credit and no down payment to rent, with a portion of the rent credited toward the down payment, which is used to purchase the home down the road. Another non-traditional arrangement involves a buyer using a loan from a hard money lender to buy a fixer upper, then obtaining a new appraisal after the renovations are done and refinancing with a long-term mortgage. | Read More