Financing Options

The following is a partial list of programs offered with a brief description of the key elements of each. For a complete list of the programs that we offer, please contact us at .
These materials are not from HUD or FHA and were not approved by HUD or a government agency.
A Home Equity Line of Credit (HELOC) is a revolving credit line secured by the equity in your home. It operates similarly to a credit card, giving you access to a flexible credit limit based on the value of your home and the amount of equity you’ve accumulated.


Key Features:

  1. Credit Limit: Your credit limit is determined by the difference between your home’s current market value and the outstanding balance on your mortgage. Typically, lenders offer a credit limit that is a percentage of your home’s appraised value.
  2. Draw Period: HELOCs come with a draw period, usually 5 to 10 years, during which you can borrow funds up to your credit limit. During this time, you may only be required to make interest payments on the amount you’ve borrowed.
  3. Repayment Period: After the draw period ends, the HELOC enters the repayment period, which can last 10 to 20 years. During this time, you’ll need to pay back both the principal and interest on any outstanding balance.
  4. Interest Rates: HELOCs generally have variable interest rates, which means the rate can fluctuate based on market conditions. Some lenders offer fixed-rate options for portions of the balance if you prefer stability.
  5. Flexibility: You can withdraw funds up to your credit limit, making it a versatile option for various financial needs, such as home improvements, debt consolidation, or emergencies.
  6. Fees and Costs: While HELOCs often have lower interest rates compared to other forms of credit, they may come with fees, such as annual fees, application fees, or closing costs. It’s important to review the terms and conditions carefully.
  7. Tax Deductibility: In some cases, interest paid on a HELOC may be tax-deductible, especially if the funds are used for home improvements. However, tax laws change, so it’s wise to consult a tax professional.
What Is a HELOC?

A conventional mortgage loan is a home loan not insured or guaranteed by the government. Private lenders like banks, credit unions, and mortgage companies offer conventional mortgages, which are typically used to finance the purchase of a home or refinance an existing mortgage.

Key Features:

  1. Types of Conventional Loans:
    • Fixed-Rate Mortgages: These loans have a fixed interest rate for the entire term, providing predictable monthly payments. Common terms are 15, 20, or 30 years.
    • Adjustable-Rate Mortgages (ARMs): These loans have an interest rate that can change periodically based on market conditions. Initial rates are often lower than fixed-rate mortgages, but payments fluctuate after the introductory period.
  2. Down Payment: Conventional loans typically require a down payment of at least 5% to 20% of the home’s purchase price. A higher down payment can help you secure a better interest rate and avoid private mortgage insurance (PMI).
  3. Private Mortgage Insurance (PMI): If your down payment is less than 20%, you may be required to pay PMI, which protects the lender if you default on the loan. PMI costs can be added to your monthly mortgage payment or paid upfront.
  4. Interest Rates: Conventional mortgage rates are determined based on market conditions, your credit score, and the amount of your down payment. Fixed rates provide stability, while ARMs offer the potential for lower initial rates but come with the risk of rate increases.
  5. Loan Limits: Conventional loans have maximum loan limits that vary based on the property’s location. The Federal Housing Finance Agency (FHFA) sets these limits, which are subject to change annually.
  6. Eligibility Requirements: To qualify for a conventional mortgage, you’ll need to meet specific credit score, income, and debt-to-income ratio requirements set by the lender. Higher credit scores and a lower debt-to-income ratio can improve your chances of approval and help secure better loan terms.
  7. Flexibility: Conventional loans offer a range of term options, allowing you to choose a loan term that best fits your financial situation and goals. They can be used for primary residences, second homes, and investment properties.
  8. Fees and Costs: Conventional mortgages may have various fees, including application fees, appraisal fees, and closing costs. It’s important to review all associated costs before committing to the loan.
Top Tips for Understanding a Conventional Mortgage

An FHA mortgage loan is a type of home loan insured by the Federal Housing Administration (FHA). This government-backed insurance reduces the risk for lenders, making it easier for them to offer loans to borrowers with lower credit scores or smaller down payments. FHA loans are popular among first-time homebuyers and those with less-than-perfect credit.

Key Features:

  1. Down Payment: FHA loans typically require a lower down payment than conventional loans. The minimum down payment is 3.5% of the home’s purchase price, which makes homeownership more accessible for those who may not have a large amount of savings.
  2. Credit Score Requirements: FHA loans have more lenient credit score requirements than conventional mortgages. Generally, a credit score of 580 or higher qualifies you for the 3.5% down payment option. Borrowers between 500 and 579 scores may still be eligible but must make a larger down payment (10%).
  3. Mortgage Insurance Premiums (MIP): FHA loans require two types of mortgage insurance premiums:
    • Upfront Mortgage Insurance Premium (UFMIP): This is a one-time fee paid at closing, typically 1.75% of the loan amount. It can be rolled into the loan or paid in cash at closing.
    • Annual Mortgage Insurance Premium (MIP): This premium is paid monthly as part of the mortgage payment. The cost varies based on the loan term, amount, and loan-to-value ratio.
  4. Loan Limits: FHA loans have maximum loan limits that vary by county and are based on the area’s median home prices. The Department of Housing and Urban Development (HUD) sets these limits annually.
  5. Eligibility Requirements: To qualify for an FHA loan, you must meet certain income, credit, and debt-to-income ratio criteria. The FHA insures the loan, but the lender sets its specific requirements within the FHA guidelines.
  6. Property Requirements: FHA loans have specific property standards to ensure the home meets basic safety, security, and livability criteria. A home appraisal is required to assess the property’s condition and value.
  7. Flexibility: FHA loans can be used for various properties, including single-family homes, multi-family homes (up to four units), and some approved condos. They are also available for both first-time and repeat homebuyers.
What Is an FHA Loan and How to Qualify

A VA mortgage loan is a home loan backed by the U.S. Department of Veterans Affairs (VA). It is designed to help eligible veterans, active-duty service members, and specific National Guard and Reserves members purchase, refinance, or improve their homes. VA loans offer several benefits, including competitive terms and no down payment requirements.

Key Features:

  1. No Down Payment: One of the most significant advantages of a VA loan is that it typically requires no down payment. This makes it an attractive option for those needing more substantial savings for a down payment.
  2. Competitive Interest Rates: VA loans generally offer lower interest rates than conventional loans. Because the VA guarantees a portion of the loan, lenders can offer more favorable terms to borrowers.
  3. No Private Mortgage Insurance (PMI): Unlike many other low- or no-down-payment loans, VA loans do not require private mortgage insurance (PMI), which saves borrowers money on their monthly payments.
  4. Funding Fee: While VA loans do not require PMI, they do require a funding fee, which helps offset the cost of the VA loan program. The fee varies based on factors like the type of service, down payment amount (if any), and whether it’s a first-time or subsequent use of the benefit. The fee can be financed into the loan amount.
  5. Eligibility Requirements: To qualify for a VA loan, you must meet specific service requirements, including a minimum length of service or duty. Eligibility is generally extended to:
    • Veterans who served on active duty.
    • Active-duty service members.
    • National Guard and Reserve members.
    • Certain surviving spouses of deceased veterans.
  6. Loan Limits: VA loans have a maximum guarantee amount, which varies by county and is based on the area’s median home prices. However, there is no formal cap on the amount you can borrow with a VA loan, though lenders may impose their limits.
  7. Property Requirements: The property must meet specific standards to ensure it is safe, sound, and sanitary. A VA appraisal is required to verify the property’s value and condition.
  8. Flexible Credit Requirements: VA loans typically have more lenient credit requirements than conventional loans, making them accessible to borrowers with less-than-perfect credit histories.
  9. Assumable Loans: VA loans are assumable, meaning that a qualified person can take over the loan from the original borrower, which can be a selling point if you decide to move.

A Debt Service Coverage Ratio (DSCR) loan is a type of loan where the borrower’s ability to repay the loan is assessed based on their debt service coverage ratio. This ratio measures the borrower’s income relative to their debt obligations and is commonly used in commercial real estate and investment property financing.

Key Features:

  1. DSCR Calculation: The DSCR is calculated by dividing the property’s net operating income (NOI) by the total debt service (i.e., principal and interest payments) on the loan.
  2. For example, if a property generates $120,000 in annual NOI and has $100,000 in annual debt service, the DSCR would be 1.2 ($120,000 ÷ $100,000).
  3. Minimum DSCR Requirements: Lenders typically require a minimum DSCR to qualify for the loan. A DSCR of 1.0 means the property’s income covers the debt service. Lenders usually prefer a DSCR greater than 1.0 (e.g., 1.2 or higher), indicating that the property generates more revenue than is needed to service the debt, providing a buffer for financial stability.
  4. Use in Commercial Real Estate: DSCR loans are frequently used for commercial real estate investments, such as office buildings, apartment complexes, and retail properties. Investors use the DSCR to assess whether the property will generate enough income to cover the loan payments.
  5. Use in Investment Properties: Lenders may use DSCR to evaluate rental income compared to the loan payment for residential investment properties. This is particularly relevant for investors who own multiple properties and rely on rental income for repayment.
  6. Loan Terms and Conditions: The specific DSCR requirements and terms can vary by lender and loan type. Lenders assess the DSCR alongside other factors, such as credit history, property, and market conditions.
  7. Risk Assessment: A higher DSCR indicates a lower risk for lenders, as it shows the property generates sufficient income to cover the loan payments and provide a cushion for unforeseen expenses or vacancies.
  8. Income Documentation: Accurate and detailed income documentation is required to determine the DSCR. This may include financial statements, tax returns, and rent rolls for commercial or investment properties.

A refinance loan is a financial strategy that involves replacing an existing loan with a new one, typically to achieve better terms or to access additional funds. Refinancing can be applied to various types of loans, including mortgages, auto, and student loans. The primary goal is to improve the borrower’s financial situation through better rates, lower payments, or changes in loan terms.

Key Features:

  1. Types of Refinance Loans:
    • Mortgage Refinance: This involves replacing an existing mortgage with a new one. Common reasons include obtaining a lower interest rate, changing the loan term, or switching between fixed and adjustable rates.
    • Cash-out refinance allows borrowers to take out a new loan larger than the existing one and receive the difference in cash. This money can be used for home improvements, debt consolidation, or other major expenses.
    • Rate-and-Term Refinance: This type of refinance focuses on adjusting the interest rate and/or the loan term without changing the loan amount. It is often used to lower monthly payments or shorten the loan term.
    • Streamline Refinance: A simplified refinance process available for certain loans, such as FHA and VA loans, that requires less paperwork and may have fewer qualifying requirements.
  2. Interest Rates: One of the main reasons to refinance is to secure a lower interest rate. A reduced rate can lower monthly payments and reduce the total interest paid over the life of the loan.
  3. Loan Term: Refinancing allows borrowers to adjust the length of their loan. Extending the term can lower monthly payments but may increase the total interest paid, while shortening the term can save on interest but may increase monthly payments.
  4. Closing Costs: Refinancing typically involves closing costs, including application fees, appraisal fees, title insurance, and other charges. It’s essential to weigh these costs against the potential savings from refinancing.
  5. Eligibility: Borrowers usually need to meet specific credit score, income, and debt-to-income ratio requirements to qualify for a refinance loan. Lenders will also evaluate the property’s value (for mortgage refinances) or the current loan balance (for other refinances).
  6. Break-Even Point: Before deciding to refinance, it’s helpful to calculate the break-even point, which is the time it takes for the savings from the new loan to offset the refinancing costs. This helps determine whether refinancing is financially beneficial in the long run.

A construction loan is a short-term, interim loan used to finance the construction of a new building or major renovations to an existing property. Unlike traditional mortgages, which are typically used for purchasing an existing home, construction loans are specifically designed to cover the costs associated with building or significantly renovating a property.

Key Features:

  1. Types of Construction Loans:
    • Construction-to-Permanent Loan: This loan starts as a construction loan and converts into a permanent mortgage once the construction is completed. This eliminates the need for a second closing and simplifies the process.
    • Stand-Alone Construction Loan: This short-term loan is used exclusively for the construction phase. Once the construction is completed, the borrower must secure a separate permanent mortgage to repay the construction loan.
    • Renovation Loans: Specifically designed for major renovations or improvements to existing homes. Examples include the FHA 203(k) and Fannie Mae HomeStyle Renovation loans.
  2. Loan Disbursement: Construction loans typically disburse funds in stages, or “draws,” based on the construction progress. Each draw is made after an inspection verifies that a particular phase of construction is completed. This ensures that funds are used appropriately and the project is on track.
  3. Interest Rates: Construction loans usually have higher interest rates than traditional mortgages, reflecting the higher risk of financing construction. The interest rate may be fixed or variable, depending on the lender and the type of loan.
  4. Down Payment: Lenders generally require a substantial down payment for construction loans, ranging from 10% to 20% of the projected construction costs. The exact amount can vary based on the borrower’s creditworthiness and the project’s scope.
  5. Loan Term: Construction loans are short-term loans, typically lasting from 6 to 12 months. The loan term covers the construction period. After construction is completed, the borrower must either pay off the loan with a permanent mortgage or with other financing.
  6. Qualification Requirements: To qualify for a construction loan, borrowers must provide detailed plans, cost estimates, and a construction schedule. Lenders assess the borrower’s creditworthiness, income, and the feasibility of the construction project.
  7. Property Appraisal: An appraisal is conducted to determine the property’s expected value upon construction completion. This helps the lender assess the risk and ensure the project is financially viable.

A Non-Qualified Mortgage (Non-QM) loan is a type of mortgage that does not meet the standards set by the Consumer Financial Protection Bureau (CFPB) for Qualified Mortgages (QM). Non-QM loans are designed to provide more flexibility regarding underwriting criteria and loan features, catering to borrowers who may not fit the traditional QM mold.

Key Features:

  1. Underwriting Flexibility: Non-QM loans offer greater underwriting flexibility than Qualified Mortgages. They are often used for borrowers with unique financial situations, such as self-employed individuals, those with non-traditional income sources, or borrowers with recent credit issues.
  2. Income Documentation: Non-QM loans may allow for alternative methods of income verification. This includes using bank statements, profit and loss statements, or other documentation to prove income instead of traditional W-2s or tax returns.
  3. Credit Score Requirements: Non-QM loans can be more accommodating to borrowers with lower credit scores or recent credit issues. While specific credit score requirements vary by lender and loan type, non-QM loans generally offer more leniency than conventional loans.
  4. Loan Terms and Features: Non-QM loans can include a variety of loan structures and terms that may not conform to QM standards. This includes interest-only payments, adjustable rates, or loans with balloon payments. These features can provide flexibility but also come with specific risks.
  5. Property Types: Non-QM loans can be used for various properties, including primary residences, second homes, and investment properties. The types of properties eligible may depend on the lender’s criteria and the specific loan product.
  6. Debt-to-Income Ratio (DTI): Non-QM loans may accept higher debt-to-income ratios than Qualified Mortgages. This allows borrowers with higher levels of existing debt relative to their income to qualify for a loan.
  7. Prepayment Penalties: Some Non-QM loans may have prepayment penalties and fees if the borrower pays off the loan early. This feature is less common in QM loans but can be present in some non-QM products.
  8. Risk and Costs: Due to the increased flexibility and higher risk associated with non-QM loans, they may have higher interest rates and fees. Borrowers should review the loan terms and costs carefully to understand the overall financial impact.

A jumbo loan, a mortgage type that surpasses the conforming loan limits set by government-sponsored entities like Fannie Mae and Freddie Mac, is a unique financial tool. These loans, not eligible for purchase or guarantee by these entities, are considered non-conforming and come with distinct terms and conditions compared to conventional loans.Flexibility is a key feature of jumbo loans. Some lenders offer a range of loan structures, such as fixed or adjustable rates, and various loan terms. This empowers borrowers to select a loan that aligns with their financial situation and goals.

Key Features:

  1. Loan Limits: Jumbo loans exceed the conforming loan limits, which vary by county and are adjusted annually. As of 2024, the conforming loan limit for most areas is $726,200, but this limit can be higher in high-cost areas. Any loan amount above this threshold is considered a jumbo loan.
  2. Interest Rates: Jumbo loans often have slightly higher interest rates than conforming loans due to the increased risk for lenders. However, rates vary widely based on the borrower’s credit profile, loan amount, and market conditions.
  3. Down Payment: Jumbo loans typically require a larger down payment than conforming loans. While conforming loans might require a down payment as low as 3% to 5%, jumbo loans often require a minimum down payment of 10% to 20% of the purchase price. The exact requirement can vary by lender.
  4. Credit Requirements: To qualify for a jumbo loan, borrowers generally need a higher credit score and a solid financial profile. Lenders look for credit scores of 700 or higher and substantial income and assets to offset the higher risk associated with jumbo loans.
  5. Income and Asset Verification: Due to the higher loan amounts and increased risk, lenders require comprehensive documentation of income, assets, and financial stability. This rigorous process, which often includes providing detailed tax returns, bank statements, and proof of assets, ensures a secure and transparent loan process. Debt-to-Income Ratio (DTI): Jumbo loans often have stricter debt-to-income ratio requirements. Lenders typically prefer a DTI ratio of 40% to 45% or lower, which can vary depending on the lender and the borrower’s overall financial profile.
  6. Property Types: Jumbo loans can finance a variety of property types, including primary residences, second homes, and investment properties. The terms and conditions may vary based on the property type and intended use.

A commercial loan is a type of financing designed for businesses and commercial properties rather than personal use. These loans are used to fund various business activities, including purchasing equipment, expanding operations, or acquiring real estate for commercial purposes. They can also be utilized for other business needs, such as working capital or refinancing existing debt.

Key Features:

  1. Interest Rates: Commercial loans generally have higher interest rates than residential mortgages due to the increased risk associated with business ventures. Rates can be fixed or variable, depending on the lender and the loan terms.
  2. Down Payment: Many commercial loans require a down payment, ranging from 10% to 30% of the loan amount. The exact down payment requirement depends on the type of loan, the lender’s policies, and the borrower’s financial profile.
  3. Loan Terms: Commercial loan terms vary widely based on the type of loan and its purpose. Terms can range from a few years to 20 years or more for term loans. Commercial mortgages typically have terms of 5 to 20 years, with amortization periods extending beyond the loan term.
  4. Collateral: Commercial loans are often secured by collateral, such as the business’s assets, real estate, or equipment. This provides security for the lender and may impact the loan amount and terms.
  5. Qualification Requirements: To qualify for a commercial loan, businesses must demonstrate robust financial health, including good credit history, stable cash flow, and solid business plans. Lenders often require detailed financial statements, tax returns, and business projections.
  6. Repayment Structure: Commercial loan repayments can be structured in various ways, including monthly, quarterly, or balloon payments (a large payment due at the end of the loan term). The repayment schedule depends on the loan type and agreement with the lender.
  7. Risk Factors: Commercial loans carry risk factors such as business performance, market conditions, and property values. Lenders assess these risks through thorough underwriting and due diligence.