FHA loans allow home buyers to borrow up to a certain percentage of a home’s value, depending on their credit score.

According to FHA guidelines, buyers who have a credit score over 580 can borrow up to 96.5% of a home’s value with an FHA loan. Home buyers whose credit scores are between 500 – 579 can still qualify for an FHA loan with a 10% down payment.

While FHA loans are available with low down payment options and lower minimum credit score limits than other types of home loans, you'll also have to pay mortgage insurance.

Mortgage insurance is a type of insurance that protects against default on home loans.

On an FHA Loan, this will be paid in a couple of ways;

• First, with an upfront mortgage insurance premium (UFMIP), which is usually about 1.75% of your base loan amount.

• In addition to FHA UFMIP, you’ll also pay an annual mortgage insurance premium.

Annual MIP payments run approximately 0.45% – 1.05% of the base loan amount.

Based on FHA guidelines you must;

• Have at least a 580 FICO score, at least 500 if you are putting 10% down.

• Ideally stay under 43% debt-to-income, meaning that your monthly debts do not exceed 43% of your monthly income before taxes are accounted for.

• Have 3.5% of the home’s value for a down payment, 10% if your FICO is under 580. For example, if you wanted to buy a home for $200,000 your down payment would be $7,000 with a 3.5% down payment.

• Have consistent and documented work history.

• Make sure that the home you desire is within FHA loan limits. Click here for a tool to check loan limits in your area.

Veterans, service members, current or formerly activated national guard members, current or discharged members of the national guard who have not been activated, and surviving spouses.

One must also meet one of the following:

• Served 181 days of active service during peacetime.

• Served 90 consecutive days of active service during wartime.

• Served more than 6 years of service with the National Guard or Reserves or 90 days under Title 32 with at least 30 of those days being consecutive.

• Be the spouse of a service member who lost their life in the line of duty or as the result of a service-related disability. Generally you cannot have remarried, some exceptions apply. Click for more information on VA.gov.

Please note: wartime or peacetime definitions depend on when you served. For more information see the VA’s eligibility guidelines.

There are several types of VA loans:

• VA Home Purchase Loan, this is a standard mortgage for purchasing a home.

• VA Jumbo Loan, a purchase loan that exceeds conforming loan limits.

• VA Renovation Loan, a VA loan that funds a purchase of a home plus the cost to renovate the property.

• VA Cash-Out Refinance, a loan that converts the home’s equity into cash.

• VA Rate/Term Refinance, this allows eligible clients not already in a VA loan to refinance for the purpose of lowering their rate and/or changing the term of their mortgage.

• VA Interest Rate Reduction Refinance Loan (IRRRL), the function here is the same as a rate/term refinance, but it’s for people who already have existing VA loans. The purpose is to lower the monthly payment and/or interest rate. It requires less documentation and there’s a lower VA funding fee. This may also be referred to as a VA Streamline.

Some benefits include lower interest rates, more lenient borrowing requirements, no down payment due at closing, and no monthly mortgage insurance.

There are some additional benefits only available to disabled veterans such as;

• Exemption from funding fees. Typically the VA funding fee ranges from 1.25% - 3.30% of your loan amount. You must currently receive some form of disability benefits to avoid the funding fee.

• Property Tax Exemptions. This varies depending on your location. Contact your local VA office for more information.