The choice overload will always keep you on the fence when you’re planning to buy a new home in Dallas. With several options available, it can be truly overwhelming for a homebuyer to decide between different mortgage options and single out the one that offers the best value, is more accessible, and fulfills your long-term homeownership goals.
In this article, we will have a quick look at six different types of mortgage loans you can consider for your upcoming home purchase. The best part? These options are also recommended by the top Dallas Mortgage firms.
1. Conventional Loans
As its name suggests, conventional loans provide a no-nonsense approach to acquiring a home loan in Dallas. The process is pretty simple and accessible for anyone looking to buy a new home in Dallas.
The only catch is these loans are not supported by the Federal Government and require higher minimum credit score requirements. Because of these specific prerequisites, Conventional Loans are harder to qualify for than other government-backed mortgage options.
Besides the 620 minimum credit score requirements, you must also have at least 3% of the downpayment handy. You must also be ready to pay PMI in case you put in less than a 20% down payment.
2. FHA Loans
FHA Loans are next on our list. As its name suggests, FHA loans are backed by the Federal Housing Authority. These loans are mainly designed to cater to the needs of borrowers with credit blemishes and insufficient funds to pay a down payment.
You can even qualify for these loans with a credit score of 580 with a 3% down payment. You may also need to pay FHA mortgage insurance if you put less than 10% down initially.
The only downside?
These loans come with lower loan limits than most conventional loan options.
3. VA Loans
The US Department of Veteran Affairs has introduced a dedicated mortgage category for military servicemembers and their families. These loans do not require a down payment or a specific credit score. But this doesn’t mean VA loans come free of cost for the borrowers. Get ready to pay a hefty VA funding fee when you apply for these loans. You may also need to hire VA-approved appraisers to get your property inspected.
4. Fixed Rate Mortgage
Your interest rate stays the same throughout the loan tenure when you apply for a Fixed Rate Mortgage.
Borrowers can apply for a 15-year or 30-year mortgage, depending upon their needs. The only downside of acquiring Fixed Rate Mortgage is that you’re bound to pay more interest in the case of long-term loans. Also, the interest rate for these loans is comparatively higher than for adjustable-rate mortgage options.
5. USDA Loans
Low and moderate-income buyers looking to invest in their own property in designated rural areas can also apply for USDA Loans. There are no downpayment or mortgage insurance requirements. You must, however, need to pay an annual guarantee fee after getting approved for this type of loan.
6. Jumbo Mortgages
Looking to buy your dream home too good to be covered by the regular mortgage options? Jumbo mortgage can be your answer. These loans can be used for a wide range of property types. Just ensure you keep a huge chunk of money aside as a downpayment in order to qualify for Jumbo loans.