Understanding the difference between FHA, USDA, MHDC and conventional loans can help you avoid unnecessary time and expense when you try to qualify for a mortgage. FHA, or the Federal Housing Administration, insures or “backs” loans within certain parameters and through certain lenders. A conventional mortgage is not backed by any federal agency, and you can obtain one from just about any lender, such as a mortgage company or a bank. At this current moment in time the minimum credit score you MUST have to obtain ANY loan is 620.
Qualifications: The FHA uses a credit score of 620 to determine whether you can qualify automatically for a loan. In addition, you can qualify for FHA loans one year after Chapter 13 bankruptcy, two years after Chapter 7 and three years after a foreclosure. With a conventional mortgage, you may have to wait two to four years or more after these events to qualify.
Down Payments: FHA loans require a lower down payment, typically between 3.5 percent and 4 percent of the purchase price. Conventional loans require higher down payments, which can range anywhere between 10 percent and 30 percent of the purchase price. The conventional down payment percentage may also vary based on the type of property, such as whether you are buying a single-family home or a condo. The FHA will allow you to accept a “gift” of money as a down payment, but conventional mortgage lenders usually will not.
USDA Guaranteed Home Loan
This is the most popular and widely used option. It allows prospective home buyers to purchase in a rural designated area and has a higher income limitation than the USDA Direct loan. It allows for buyers to have a qualifying income of up to 115% of the area median household income. Income is the key difference.
USDA Direct Loan
Not as common as the Guaranteed USDA Rural Home Loan. The main reason is that they carry very strict income limitations for qualifying applicants. You must have a very low income (80% of the area median household income) in order to qualify. Applicants also must be without adequate housing and be able to afford the housing payment (including taxes and insurance) which can be up to 26% of the applicant’s monthly income. As of May 6, 2014 USDA is now available for NIXA, MO, which it has not been in the past. This is a huge bonus for clients wanting to buy a home in the Nixa, MO community.
MHDC/Missouri Housing Development Commission, the state housing finance agency, offers first-time home buyers the opportunity to own a home.
Available for those who:
Have not owned or had principal interest in a home in the past three years, have qualifying credit (minimum 620 credit score required),meet income and purchase price limits, household income limits are based on the total gross annual household income for all residents age 18 or older who will live in the home. Income includes wages, overtime, bonuses, commissions, child support, alimony and earnings from a second job, business and investments. Loans made in the program may be subject to recapture tax provisions under federal law. The homebuyer must occupy the home with 60 days of loan closing. Borrowers should contact one of our certified lenders throughout the state. A list of them can be found at www.mhdc.com.
With homes in Springfield MO, Ozark MO, Nixa MO and surrounding southwest Missouri areas, Murney Associates produces more real estate sales in Springfield and Southwest Missouri than any other real estate firm. Murney Associates is the largest independent real estate company in Springfield Missouri and is ranked in the Top 100 in the nation by Real Estate Magazine. We are locally owned yet nationally recognized for our award-winning real estate performance.
We have the largest number of realtors in Springfield MO than any other real estate firm. And with commercial real estate in Springfield MO and surrounding areas, Murney Commercial Realtors can also help you find your next business location.
We can facilitate a stress-free move for you and your family to any of the homes in Springfield and its surroundings areas. Murney wants to exceed your expectations, because our clients always come first!
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