Quote:
Originally Posted by PoorMansCamaro
You never want a balloon or an ARM. It's also good to have 20% down, but that can be a pretty large sum of money. 10% is ok. 30year fixed mortgage is your standard mortgage that I would aim for.
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I am in real estate lending and I can tell you its not what it was 2-3 years ago. Back then ANYONE could have a loan, with next to no money down.
These days its a different story. You credit score needs to be at LEAST a 640; 620 in some cases of FHA or VA lending but don't be surprised if the 620 score getting a loan becomes a thing of the past too.
Your interest rate will depend largely on your credit score, the type of loan you get, and the amount of loan you get. There are new rules in place just in the last few months that prevent lenders from making money on jacking you with a bogus interest rate so you do not have that worry anymore. Legally it cannot be done. Its all based soley on YOU now.
The least amount of money down loan you can get these days is either a VA loan if you are or were military; or a USDA loan if you are buying in a rural area. These two loans will do 100% financing.
Your next least money down option is an FHA loan. You will need 3.5% of the purchase price to put down, and if you do not have this money, it can be gifted to you from a family member.
Conventional financing requires a minimum of 5% down and you cannot have it gifted; it must come from your own SEASONED funds.
DTI - or debt to income ratio - is a big factor as well. Based on debt you currently have and the new home payment you are looking to obtain, Freddie Mac and Fannie Mae will cap you at 45% or 50% depending on the loan specifics and if you have strong compensating factors such as money in the bank, a strong employment history (meaning you don't job jump, or work on a 1099 basis, or have mostly commission based or OT based pay.) You can go over these two DTI ratios, but other factors play a strong part in being able to.
Bear in mind I am talking to you about traditional and established bank mortgage lending; not "get a mortgage here quick" type fly by night lender. Also keep in mind that the gov't is working on ridding us of these types of lenders (ie brokers / correspondant lenders) unless they are above board and backed by a traditional bank, so soon you won't have to worry about this.
There are a dozen more things to consider, but this is the main part of what to look at to see if a mortgage is feasible for you.