Loan choices for every buyer

McClatchy-Tribune Information Services

With the summer home-buying season underway, house hunters are looking for loan options that will help them make the move to home ownership. Whether they are first-time buyers or looking to move up or downsize, loan programs are available to fit all types of needs.

And there’s more good news: Buyers no longer need to save up for a 20 percent down payment. There are also loan programs for borrowers with less-than-stellar credit scores and large student-loan debts.

Navy Federal Credit Union recently introduced a loan program that offers 100 percent financing with no private mortgage insurance. The program loans up to $1 million in purchase money to qualified borrowers.

"The loan default rate on this product is lower than national averages, since savvy home shoppers tend to select this loan as a way of keeping their cash in the bank rather than tying it up for years in a single property," said Bill Pearson, spokesman for Navy Federal Credit Union.

If you’re looking for a loan with a low down payment, consider a Federal Housing Administration or VA loan. These offer high income ratios and generous flexible credit-score guidelines with down payments of as little as 3.5 percent. Note that FHA loans have a $612,950 limit in San Diego County.

For those with student debt, Fannie Mae has made it easier to get a home loan. Borrowers participating in the federal reduced-payment plan are able to report their actual monthly payments toward their debt-to-income ratios. Until recently, lenders needed calculate 1 percent of the student loan balance as the monthly payment on the student loan, greatly increasing the debt ratio, which made it difficult to find a lender.

Specialty loans are also available. Low- to moderate-income borrowers have a number of loan options available, from rural-living mortgages and loans for the self-employed to down-payment assistance programs with a 5 percent grant for closing costs or down payments.

"Buying a home can be a complex, intimidating process. There are a large number of discouraged customers who were impacted by the 2008 crisis with good credit history that want to get back into market," said Doug Smith of Caliber Home Loans. "These are people who had an event that disqualifies them for an agency product: VA, FHA and conventional conforming and jumbo financing.

"Good quality, non-agency eligible borrowers who demonstrate the ability to repay are a newly emerging market. Recently, products have been introduced into the market allowing lenders to continue the highest standards of underwriting and risk management to work with these customers in a responsible way. It is with this in mind, Caliber Home Loans developed a number of portfolio products designed to play a complementary role to traditional financing."

In other words, if you want to buy a home, chances are there’s a mortgage out there designed to help you make it happen. Do your homework before finding a qualified lender.

Before you fall in love with a home, look at your credit score and your finances. Gather several years of tax documents and three to six months of the most recent bank statements and paystubs. Know what your needs or challenges are and tell your lender about them. What they don’t know can hurt you, so ‘fess up and take control of the loan process.

"The most important thing is that you work with a financial institution you trust, who works as your financial advisor," Pearson said.

With the right financial partner on your side, you can march into a sales office armed with a pre-approval in your hand.

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RESOURCES

Navy Federal Credit Union, http://nfcu.me/1ef0eY4

Federal Housing Administration, http://bit.ly/2iALAaq

VA loan, http://bit.ly/Mg6CXZ

Fannie Mae, http://bit.ly/2uHcdgn

Rural-living mortgages, http://bit.ly/2jLpQXy