You’re A Seasonally Employed? Here’s A Guide To Get A Texas Mortgage

Getting A Texas Mortgage When You Have A Seasonal Income

If you are a professional who works part of the year or is seasonally employed, you might have a tough time qualifying for a mortgage. The job can be available depending on the season, such as snow removal, landscaping, or a side hassle. It is a type of employment known as sporadic.

While the nature of your profession might not disqualify you from getting a mortgage, it could make the process somewhat tricky.

The Required Documentation

You must prove to the mortgage lender you have a reliable income even though you have seasonal employment. For VA and FHA loans, you should provide the necessary paperwork that shows you worked for the same employer for at least two years or have been in the same profession for the same period. Moreover, your employer will provide the documents that prove you still be hired in the upcoming season.

However, if you have worked for less than two years, your incomes might not qualify you for the mortgage. Similarly, you might not be eligible even if you have been working for two years, and your employer cannot prove that you will be hired in the season that follows.

What Next If You Cannot Prove This?

If you cannot give evidence that shows you have a reliable income for a period not less than two years, you will not qualify for the mortgage. However, you can re-apply once these changes, and you have the necessary documentation to back it. But if your situation is wanting, you can consider other options even when you opt to wait and reapply.

Provide all your income sources. If you receive Social Security Benefits, have a second or third job, receive unemployment benefits, or some interest income, consider using them to bolster your chances of qualifying for the mortgage.

For instance, you can apply for the mortgage with a close friend, spouse, or family member. You may increase the chances of being eligible for the loan if you add another person, especially one with a good credit score. Keep in mind that lenders will consider both parties’ incomes and credit scores when qualifying the borrower. For better chances of qualifying, consider splitting the homeownership costs and seeking another person’s assistance through the process, which is some of the top benefits of co-owning a home with someone.

Proper documentation can make the difference between being eligible for a mortgage and buying that dream home. But before starting the application process, you should ensure that you sort the W2 forms and have proof of compensation, both covering the last two years. Furthermore, you need your employer to verify you will be hired the next season.

Choose The Texas Mortgage Pros

If you are confident you qualify, begin the process as soon as possible. Texas Mortgage Pros are here to help make things simple for you to have a fast approval. If you are uncertain of your eligibility, get in touch with us today to discover other viable options that you can consider.

All You Need To Know About Texas VA Loans Part II

Helpful Ideas To Understand VA Loans In Texas

Part 2

What Are The Benefits Of VA Loans?

By applying for a VA loan, you can enjoy the following benefits.

1. No Down Payment

No down payment is required when buying a home with a VA loan. It is one of the loans where you don’t need a down payment. In 2018, 50% of homes purchased using a VA loan didn’t require a down payment.

2. No Limits On Borrowing

With a VA loan, there is no limit on the amount you can borrow. However, there is a limit on the amount of liability for the VA. In 2019, the VA can guarantee a maximum amount of 25% (up to a maximum of $121,087) for a home loan. It matches a maximum loan of $484, 350. If you apply for more than that, the extra amount will not be guaranteed by the VA.

3. No Private Mortgage Insurance

With a VA loan, you are not eligible to pay for a Private Mortgage Insurance because the loans are backed by the government. Note that, with a regular mortgage loan, PMI can vary from 0.5% to about 2.25% of the total loan amount. Therefore, if you took a loan amount of $200,000 and the PMI rate was 1%, you would be forced to pay an extra $166 every month for your mortgage payment.

4. No Minimum Credit Score Requirement

With a VA loan, there is no requirement for minimum credit scores. However, loan lenders give loans to people with a credit score of 620 and more. Having a lower credit score will definitely worry the lenders when it comes to giving you a loan.

5. Assistance For Possible Foreclosure

If you qualify for a VA loan, you will get assistance if you are on the verge of getting a foreclosure. The loan technicians will negotiate with the loan lenders on your behalf if you are having issues with meeting your mortgage payments.

6. No Prepayment Penalties

If you have the money to pay off the loan early, you will not be charged for it.

7. No Limit On The Times You Can Borrow

You don’t necessarily have to be a first-time homebuyer to get a VA loan. If you pay off the loan every time, you can apply for it as often as possible.

8. Bankruptcy & Foreclosure Are A Non-Issue

Have you ever filed for bankruptcy? Have you ever gone through a foreclosure? They are non-issues when it comes to VA loans. You can still qualify in both cases but after 2 years from the date of foreclosure or filing for bankruptcy.

That’s what you need to know about VA loans and how you can benefit when buying a home.

You can use any of the interactive features on our website or call us anytime to speak to a diligent mortgage professional directly. We hope to work with you soon! Click here to go to the first article in this series.

All You Need To Know About Texas VA Loans Part I

Helpful Ideas To Understand VA Loans In Texas

Part 1

Are you finally ready to buy your first home? Are you a veteran or active military personnel looking to buy a home? Well, there are challenges involved in buying a home. However, there are a few mortgage options available for veterans referred to as the VA loan. Here’s what you need to know about the VA loan, how it works, and whether you are eligible for it.

What Is A VA Loan?

It is a loan offered by private lenders and guaranteed by the U.S Dept of Veterans Affairs. The VA loan is available to active duty service people, veterans, and their families when they want to buy a new home. It was introduced in the GI Bill in 1944 but has become very popular in the last few decades.

In the early part of 2019, at least 8% of house purchases were backed by a VA loan. It is a very attractive option when buying a new home. Even better, it’s easy to qualify and there is no down payment required for it.

How Does A VA Loan Work?

VA loans are part of the government (non-conventional) loans available in the market today. They don’t work like regular mortgage loans issued by banks or financial lenders. These loans are guaranteed by the government. It means that the government will repay part of the loan to the bank if you default your payments or in the event of foreclosure. In this type of loan, banks have less risk. As such, a lot of people can qualify for it. By 2018, the VA had guaranteed 610,513 loans for purchasing and refinancing homes.

What Are The Requirements To Qualify For A VA Loan?

To qualify for this loan, you must be current or former military personnel and looking to buy a home. You must also meet the following VA service requirements.

  • You must be an active duty service member. You must have been honorably discharged after serving for consecutively 181 days during peacetimes or 90 days during a war.
  • You must have served for more than 6 years in the Selected Reserve or the National Guard.
  • You must be the spouse of a serviceperson who died in the line of duty.

For the application process, you need a certificate of eligibility (COE) to show the loan lenders that you are eligible for a VA loan. The COE should be applied on the VA website, the lender, or through the mail.

You can use any of the interactive features on our website or call us anytime to speak to a diligent mortgage professional directly. We hope to work with you soon! Click here to go to the second article in this series.

 

First-Time Homebuyer In Houston? These Loans Are Available For You

10 Houston First-Time Homebuyer Loans & Programs

As a first-time homebuyer, you must be navigating one of the toughest real estate markets in the economy. It’s very hard to find the right house to buy since most people are buying any available houses to flip for profit. On the other end, builders are now focused on high-end homes because of the escalating costs so they can boost their own profits.

The Benefits Of Loan Programs For First-Time Homebuyers

Are you thinking about buying your first home? Well, there are first-time homebuyer programs, loans, and grants available to you. These are financial assistance programs given to qualified buyers, especially if they meet the set income restrictions and have high credit scores. Here are some of the ways you can benefit from these programs.

1. Grants

You might be eligible for a grant to cover costs related to buying a home such as down payment or closing costs.

2. Assistance With Closing Fees

You can get a loan that puts a cap on the total amount you can be charged for closing fees.

3. Deferred Payments

With these loans, you will not be charged interest or be forced to repay the loan until you sell the home or pay off the mortgage.

4. Savings On Interest

Some loan lenders will pay the interest or subsidize it. You can also get help with qualifying for a loan with reduced interest rates.

5. Loan Forgiveness

If you stay in the home for a predetermined period, a portion of your loan will be forgiven.

6. Assistance With Down Payment

With this program, you will put down a small down payment and the lender covers the rest. Also, in some cases, you will not pay the down payment at all.

10 First-Time Homebuyer Loans & Programs

1. FHA Loan Program

It is a loan for buying a home guaranteed by the Federal Housing Administration. It is the best loan program if you have low credit scores and a little amount of money as a down payment.

2. USDA Loan Program

It is a loan program guaranteed 100% by the U.S Dept of Agriculture. It is applicable to low-income loan borrowers in rural areas.

3. VA Loan Program

It is a loan program guaranteed by the U.S Dept of Veteran Affairs. Here, any military personnel will not pay any down payment. It’s also applicable to veterans and their families.

4. Good Neighbor Next Door Buyer Aid Program

It is a program offered by HUD (the U.S Dept of Housing and Urban Development). It is a housing program for people in law enforcement, emergency medical technicians, firefighters, and teachers.

5. Freddie Mac Or Fannie Mae Loans

They are conventional loans that are backed by Freddie Mac or Fannie Mae. They require a 3% down payment. It’s the best loan for people with strong credit.

6. HomePath Ready Buyer Program

Here, you will get 3% assistance with closing costs if you are a first-time homebuyer. To qualify you must complete an educational course and also buy a foreclosed Freddie Mac or Fannie Mae property.

7. Energy Efficient Mortgage Program

It is backed by VA or FHA loan programs. Here, buyers can combine the total cost of energy-efficient upgrades and apply for loan upfront.

8. FHA Section 203 (k) Loans

Here, you can borrow the money needed to pay for any home improvement projects. You will roll the costs into an FHA loan with the primary mortgage.

9. Local First-Time Home Buyer Programs & Grants

Various cities and states offer first-time buyer grants and programs for a down payment on a new home or assistance with closing costs.

10. Native American Direct Loan

It is a program backed by the VA that offers loans to Native American Veterans. They can buy, build, or renovate homes on their federal trust land.

Before making a decision, let one of the experts at The Texas Mortgage Pros help you find out exactly what loan is best for you.  Feel free to contact us or call us today!

The Suitable Home Loans For Texas First Time Homebuyers

Financing Basics For First Time Homebuyers In Texas Part 3

 

Fixed Vs Floating Rate Mortgages

Another consideration to make is whether to go for a fixed-rate or floating-rate (variable rate) mortgage. For fixed-rate mortgages, rates don’t change throughout the loan period. The benefit of getting this loan is that you know the monthly costs of the loan for the whole period beforehand. Whenever the prevailing interest rates are low, you’re guaranteed a good rate for a considerable duration.

first time home buyer banner for planoFloating-rate mortgages, like interest-only mortgages or adjustable-rate mortgages (ARM), are meant to assist first-time homebuyers or people who speculate an income rise along with the loan duration. Floating-rate loans normally enable one to get lower introductory rates in the initial years of the loan, enabling you to qualify for more money compared to opting for a more costly fixed-rate loan. This option can, undoubtedly, pose a risk if your income doesn’t grow at the same rate as the increase in interest rate. Another disadvantage is that the market interest rates may fluctuate: Whenever they rise drastically, the terms of your loan will shoot up with them.

How ARMs Work

The commonest types of ARMs are usually of one, five, or seven-year periods. The opening interest rate is usually fixed for a particular period of time and is then reset with time, often every month. Whenever an ARM changes, it adapts to the prevailing market rate, which is often done by adding a predetermined percentage (spread) to the usual U.S Treasury rate. Though an upper limit is imposed on the increase, and ARM adjustment may be more costly than the usual fixed-rate mortgage loan to compensate the financier for giving a lower rate in the introductory period.

Interest-only loans are a kind of ARM in which one only pays the mortgage interest and not principal in the introductory period until the loan returns to a fixed and principal-paying loan. These types of loans can be beneficial for first-time borrowers since paying interest only reduces the monthly cost of borrowing significantly and will help you qualify for a bigger loan. However, since you don’t pay the principal during the initial period, the amount due on the loan remains unchanged until you commence repaying the principal.

The Texas Mortgage Pros

The Texas Mortgage Pros team consists of mortgage professionals all over Texas. We are committed to providing our clients with the highest quality service for your mortgage needs. Combined with the lowest rate and multiple loan programs available in your area – Spring, San Antonio, Tomball, The Woodlands, Dallas, Austin, and Houston, Texas. Our outstanding mortgage professionals with years of experience will work with you one-on-one to ensure that you get the home loan that is tailored specifically to meet your situation and expectation. Whether you are purchasing your dream home, first home, refinancing an existing loan, or consolidating debt, our highly experienced team of loan officers can help you find the right loan program at the lowest rate possible.

Before making a decision, let one of the experts at The Texas Mortgage Pros help you find out exactly what loan is best for you.  Feel free to contact us or call us today! Click here to go to the first article in this series.

The Suitable Home Loans For Texas First Time Homebuyers

Financing Basics For First Time Homebuyers In Texas Part 2

 

Equity & Income Requirements

The financier determines the pricing of home mortgage loans in two distinct ways, with both relying on the creditworthiness of the borrower. On top of checking your FICO score from the major credit bureaus, financiers will compute the loan-to-value ratio (LTV) as well as the debt-service coverage ratio (DSCR) to determine the amount they will offer you, and the interest rate.

LTV refers to the actual or implied amount of equity available in the security being borrowed against. For home purchases, the LTV is arrived at by dividing the amount of loan by the home’s purchase price. Financiers assume that the more the amount you are paying in the form of the down payment, the less the possibility of defaulting on the loan. The higher the LTV, the bigger the risk of default, and the lenders will, therefore, charge more.

The debt service coverage ratio signifies your ability to service the mortgage. Financiers divide your net monthly income by the costs of the mortgage to determine the probability of defaulting on the mortgage. Most financiers require a DSCR greater than one. The higher the ratio, the higher the probability that you will cover the borrowing costs, which means less risk to the lender. The higher the DSCR, the higher the probability of the lender negotiating the loan rate since, even at a lower rate, the lender gets a better risk-adjusted return.

As such, you should submit any kind of qualifying income when negotiating with a mortgage financier. Often, an additional part-time job or other income-generating ventures can be the difference between qualifying and failing to qualify for a loan or achieving the best possible rate.

Private Mortgage Insurance

LTV also determines whether you will need to buy private mortgage insurance (PMI). The PMI protects the financier from default by transferring some of the loan risks to a mortgage insurer. Most financiers require PMI for loans bearing an LTV higher than 80%, implying any loan where equity ownership in the home is less than 20%. The amount to be insured, as well as the mortgage plan, will determine the mortgage insurance cost and collection plan.

The majority of mortgage insurance premiums are collected monthly alongside tax and property insurance securities. Once LTV equals or is less than 78%, PMI should be eliminated automatically. You can cancel PMI as soon as the home appreciates sufficiently in value to grant you 20% equity, and a set duration has elapsed, say two years. Some financiers, such as the FHA, will evaluate the mortgage insurance as a total sum and capitalize it into the amount of loan.

There are tactics to evade PMI payment. One should not borrow more than 80% of the property value when buying a home; another way is using home equity financing or another mortgage to make up more than 20%. The commonest program is known as an 80-10-10 mortgage. The 80 represents the LTV of the first mortgage, the first 10 represents the LTV of the second mortgage, while the third 10 stands for your equity in the homeownership.

Though the second mortgage’s rate will be higher than that of the first, on a combined basis, it should not exceed the rate of a 90% LTV loan. An 80-10-10 mortgage may be less costly than paying for PMI and also enables you to hasten the payment of the second mortgage and do away with that part of the debt fast for you to pay off your home early.

Before making a decision, let one of the experts at The Texas Mortgage Pros help you find out exactly what loan is best for you.  Feel free to contact us or call us today! Click here to go to the next article in this series.

The Suitable Home Loans For Texas First Time Homebuyers

Financing Basics For First Time Homebuyers In Texas Part 1

 

The numerous financing options at the disposal of First Time Homebuyers often seems overwhelming. However, researching on the various property financing basics can save you a great deal of time and money. Understanding the market of the property location and whether it provides incentives to financiers could mean a whole lot of advantages for you. Consider your finances to be sure that you are getting the most suitable mortgage.

Standard loans are uninsured mortgages or those that are not guaranteed by the federal government. They are basically fixed-rate mortgages. Their sterner requirements of making a larger down payment, having a higher credit score, lower-income to debt ratios, and often the need for private mortgage insurance render them the toughest to qualify for. However, standard mortgages are often less costly expensive than guaranteed mortgages.

Corpus Christi texas classic home bought with assistance paymentsStandard loans are classified as either confirming or non-conforming loans. The conforming loans are those that adhere to rules such as loan limits, which are set by the government-sponsored enterprises Freddie Mac or Fannie Mae since they or other financiers often buy and package such loans and sell them in the form of securities in the secondary market. The loan limit for a conventional mortgage in 2020 is $510,400 overall. Although it can go up in the case of well-known high-cost areas.

A loan in amounts higher than this is known as a jumbo loan and usually comes with a higher interest rate. The high rates are attributed to the high risk associated with these loans, since they involve huge sums of money, and this makes them less likable in the secondary market. Non-conforming loans are usually issued by portfolio lenders who determine their lending terms.

FHA Loans

The Federal Housing Administration (FHA), a portion of the U.S Department of Housing and Urban Development, provides several mortgage programs. An FHA loan requires a lower down payment and is easier to qualify for, unlike a conventional loan. FHA loans are great for First Time Homebuyers since they come with lower upfront costs and less severe credit requirements. As such, First Time Homebuyers can make down payments as low as 3.5%. FHA loans cannot go be. FHA loans cannot go beyond the statutory limits stated above.

Most importantly, all FHA borrowers ought to pay a mortgage insurance premium (MIP), which is included in their mortgage payments.

VA Loans

The U.S Department of Veterans Affairs (VA) assures VA loans. The body doesn’t offer loans itself, but rather guarantees mortgages offered by qualified financiers. Such guarantees enable veterans and service people to acquire home loans with friendly terms, normally without a down payment. Mostly, it is easier to qualify for VA loans than conventional loans. Financiers usually limit the maximum VA loan to the conventional mortgage loan limits. Before signing up for a loan, seek eligibility from the VA. If you are granted, the VA issues an eligibility certificate that you can use when applying for the loan.

On top of these types of federal loans and programs, state and local governments and agencies support assistance programs to grow investment or homeownership in specific locations.

Before making a decision, let one of the experts at The Texas Mortgage Pros help you find out exactly what loan is best for you.  Feel free to contact us or call us today! Click here to go to the next article in this series.

Which Loan Is Best For Texas First Time Home Buyers?

 Home Loan Options For First Time Home Buyer In Texas

For first-time homebuyers, the myriad of financing options out there can seem overwhelming. However, taking the time to do some research on the basics of property financing could save you a substantial amount of money and time. Learning the market like where to locate the property and if it provides incentives to lenders might result in added financial perks for you. So, you need to double-check your finances to make sure that you are receiving the mortgage that best suits your requirements and who can qualify for an FHA loan.

Mortgages that are neither insured nor guaranteed by the federal government are known as conventional loans. Typically, they are fixed-rate mortgages. While they have stricter requirements for a larger down payment, lower-income to debt ratios, the potential to require private mortgage insurance, and higher credit scores make them the hardest to qualify for. Usually, conventional loans are less expensive compared to guaranteed mortgages. Know more what are the different types of home loans that would suit you.

By definition, conventional loans are either non-conforming loans or conforming loans. Typically, conforming loans adhere to the guidelines like loan limits put in place by the government-sponsored enterprises (GSEs) Freddie Mac or Fannie Mae since different lenders usually purchase, package, and sell these loans as securities in the secondary market. As of last year, a conventional mortgage’s loan limit is $484,350 overall, although it could be more for certain designated high-cost areas.

Mostly, a loan made above this particular amount is known as a jumbo loan and often carries a relatively higher interest rate. However, these loans have more risk (because they involve more money), which makes them less appealing to the secondary market. When it comes to non-conforming loans, a portfolio lender, or the lending firm underwriting the loan set their guidelines.

FHA Loans

The Federal Housing Administration (FHA offers different mortgage loan programs. Typically, an FHA loan has relatively lower down payment requirements and is much easier to qualify for compared to a conventional loan. In general, FHA loans are better for first-time homebuyers since, apart from less stringent credit requirements and lower upfront loan costs, and you can make a low-down-payment of 3.5%. Usually, FHA loans cannot exceed the specific statutory limits named above. You should also know who can qualify for an FHA loan and know the guidelines.

VA Loans

VA Loans are typically guaranteed by the U.S. Department of Veterans Affairs (VA). Although the VA doesn’t make the loan itself, it guarantees mortgages made by professional lenders. With these guarantees, service people and veterans can acquire home loans that have favorable terms, often without a down payment. Mostly, VA loans are much easier to qualify for compared to conventional loans. In general, lenders use the conventional mortgage loan to limit the maximum VA loan. Ensure to ask for eligibility from the VA before applying for a loan.

Fixed Vs. Floating Rate Mortgages

Obtaining a floating-rate (or variable rate) mortgage is another important consideration. The rate doesn’t change for the entire loan period in a fixed-rate mortgage. The obvious advantage of obtaining a fixed-rate loan is that you know what exactly the monthly costs will be for the entire period of the loan. If prevailing interest rates are considerably low, you’ve got a decent rate for a substantial time. On the other hand, a floating-rate mortgage, like an adjustable-rate mortgage (ARM) or an interest-only mortgage is specifically made to help first-time homebuyers or those individuals who expect their incomes to increase significantly over the loan period.

The Bottom Line

For those who are seeking a home mortgage for their first time, it might seem challenging to sort through every financial option. You should take your time and determine how much house you can actually afford and then fund accordingly. For those who can afford to come up with a substantial amount or have sufficient income to make a low LTV, then you will have more bargaining power with the lenders, as well as the most financing options. In case you push for the largest loan, you might be issued private mortgage insurance and a relatively higher risk-adjusted rate.

Consider the pros of acquiring a more jumbo loan with the risk. Typically, interest rates float during the specified interest-only period and will usually adjust in reaction to market interest rates changes. Furthermore, weigh the risk that your disposable income won’t increase combined with the possible rise in borrowing costs. If you’re from Texas FHA loan programs are available in several banks you just need to have the best deals.

A reliable mortgage banker or mortgage broker should help in steering you through all the various options and programs, but nothing will be comparable to understanding your priorities for a mortgage loan.

Before making a decision, let one of the experts at The Texas Mortgage Pros help you find out exactly what loan is best for you.  Contact us today Or Call Us @ (877) 647-6030 

 

What Type Of Texas Mortgage Perfect For Your Needs?

The Different Types Of Home Loan In Texas

Many home buyers are more interested in looking at homes than checking in with their banks which loan is best for first time home buyers? While touring homes is certainly more fun than checking into the different types of loans out there, you will not be able to get home if you do not find a mortgage that works best for you. Getting a mortgage isn’t that easy these days; however, being sucked into one that’s wrong for you and your situation is. It’s best to be careful in this area as home loans will affect your financial situation for as long as you choose to live in your home.

Most homeowners are looking for a loan that will allow them to pay the least each month. This isn’t always a good strategy for those who are looking to eventually have their home paid off and have better financial situations. You should check with more professionals than just the guy doing mortgages at the bank. Those who have private financial advisers often end up in better predicaments. It’s important to be knowledgeable about the different types of loans before you talk to a real estate agent, banker, or financial adviser. Here are the different types of home loans you can choose from:

Fixed-Rate Loan

This is the type of loan most homeowners get. It is sometimes referred to as a conventional loan as it is an extremely common choice of homeowners. If you are not certain that you will be spending a great deal of your life in the home you are about to purchase, this may not be the best loan for you. Most financial advisers tell people who are going to stay in their homes for a long amount of time to get this loan.

A fixed-rate loan is often attractive as it offers the homeowner predictability. Some do not wish to have the uneasiness of knowing that the amount they pay for their home each month could go up. If this is so, you should consider getting a loan with a fixed rate. A fixed-rate loan is one that has a fixed interest rate, payment, and term. The time it takes for you to pay off your home will be determined and permanently established before you sign off on the mortgage. Most fixed-rate loans last between 15 to 30 years. For people who are older and wish to own their home, a 15-year loan may be the best option for them. It largely depends on the financial situation and you can inquire at any bank what do you need to qualify for a home loan. Those who go with a 15-year loan will be paying more each month. The payments will be for the same amount each month until it is paid off.

FHA Loan

You may like this option if you do not have a lot of money for a down payment. A fixed-rate loan usually requires the homeowner to put a 20% down payment on a home before the mortgage begins its regular process. This type of loan allows you to pay only 3.5% of the down payment upfront. You will be paying off the home for longer as a result of this.

How is the down payment reduced? The FHA is the Federal Housing Administration. They created this type of loan to help people who cannot afford a large down payment to get adequate housing. It is government-backed. This is not an excellent option if you would like to have a more expensive home. The cap of the home value is set at $417,000. Ask first who can qualify for an FHA loan to the nearest bank near you.

USDA Loan & VA Loan

The USDA home loan is for those looking to purchase a property in a rural area. It was created because many rural areas have impoverished people who cannot afford homes. The down payment is gone as it is 100% backed by the government. This is also an excellent idea if you need subsidizes on your mortgage.

You must have served 180 days in the military to be eligible for a VA loan; however, you only need to have served 90 days if you were involved in combat. This option allows veterans to get homes without having to pay a down payment or insurance for the property.

Which Is Best For You?

Again, speak with your financial adviser before making a decision. The type of mortgage you get will be one that you have to live with for a long time. If you’re from Texas FHA guidelines are a must to read before doing your step first. is best to make a well thought out decision that’ll keep you housed until you decide to move somewhere else.

Before making a decision, let one of the experts at The Texas Mortgage Pros help you find out exactly what loan is best for you.  Feel free to contact us or call us today!

A Guide When Applying For A Texas Mortgage This Year 2020

Minimum Texas Mortgage Requirements For 2020

If you want to purchase a home this year and wondering how to qualify for a mortgage, you can find the right loan program by learning the minimum borrowing guidelines. In 2020, mortgage options will be available at relatively higher loan amounts that indicate the increasing home prices across the U.S.

By going through the guidelines for the most popular loan types, you should know the amount of mortgage that you can qualify for.

Conventional Loan Requirements

Undoubtedly, conventional loans are the most common mortgage option, but no government agency guarantees them. Compared to the borrowing requirements for government-insured loans, Freddie Mac and Fannie Mae set conventional loan standards, which are stricter.

If you want a mortgage for a more expensive home, it’s much easier to qualify this year since loan limits are increasing up to $510,400 for a majority of the country in 2020. For conventional lending, below are the latest minimum mortgage loan requirements.

A Conventional Loan’s Current Minimum Requirements

  • Down payment. For conventional loans, the minimum down payment is usually 3% and can come as a gift from a family member or simply your money.
  • Mortgage insurance. The lender needs security with private mortgage insurance (PMI) for conventional loans that have less than 20% down in case you default. Each year, you’ll pay anywhere between 0.15% and 1.95% of your loan amount; however, the premium can even exceed 2.5%, especially if you have a small down payment and a low credit score. Typically, you pay the premium as part of your monthly payment, but you can also pay in a lump sum upfront during closing.
  • Employment. Since lenders need proof of your steady income, they’ll review your income and employment history from the past two years. Those with variable incomes and self-employed borrowers alike will need to present extra paperwork to verify income.
  • Credit score. For a conventional mortgage, the minimum score is 620. Most likely, you’ll receive a more favorable interest rate offers with higher credit scores.
  • Income. There are no income limits with many conventional loans. Freddie Mac’s Home Possible loans and Fannie Mae’s Home Ready, however, demand that borrower’s incomes should fall within that area’s income limits.
  • Occupancy. Generally speaking, conventional financing can be useful in purchasing a primary residence, an investment property that you can rent out, or a second home (also called a vacation home).
  • Debt-to-income ratio. The measure of your overall debt divided by your specific gross income is your debt-to-income ratio (DTI). A DTI of 45% or less is much preferable to most conventional lenders but might extend it to 50% with considerably higher credit scores, along with additional cash reserves. Mostly, borrowers with DTI ratios exceeding 45% might be needed to have a minimum credit score of 740 by private mortgage insurers.

FHA Loan Requirements

One of the most accessible home loans to obtain is a mortgage-backed by the FHA or the Federal Housing Administration. Since the FHA insures the mortgage, there are more favorable terms and rates available with FHA-approved lenders, particularly to first-time homebuyers.

Borrowers trying to qualify for a mortgage for high-priced homes will have some relief in 2020. In most parts of the country, there has been an increase in the FHA loan limits to $331,760 in 2020. Affluent areas might receive even more FHA bang for the buck since the maximum loan amounts can stretch up to $765,600.

An FHA Loan’s Current Minimum Requirements

  • Down payment. Whether it’s from your funds or as a gift, FHA demands a 3.5% minimum down payment. With a credit score ranging from 500 to 579, the down payment goes up to 10%.
  • Mortgage insurance. There are two kinds of mortgage insurance when it comes to FHA loans. The upfront mortgage insurance premium (UFMIP) can be rolled into your particular loan and is often 1.75% of the loan balance due. As part of your monthly payment, you’ll also incur an annual mortgage insurance premium (MIP), and those costs vary between 0.45% and 1.05% of the loan amount. Regardless of credit score, FHA mortgage insurance premiums are similar.
  • Employment. Typically, FHA loan requirements focus on the consistency of employment and earnings for the last two years. Job hoppers must explain gaps or changes in employment.
  • Credit score. With a 10% down payment, you can have a low credit score of 500. Homebuyers will require a minimum score of 580 if they make a 3.5% down payment.
  • Income. FHA loans have no income limits. In most parts of the country, the maximum FHA loan is, however, capped at $331,760 as opposed to $510,400 for conventional loans.
  • Occupancy. Whether it’s a single-family or multi-unit property, the property must be your primary residence for a minimum of one year after buying it.
  • DTI ratio. FHA loans have a front-end DTI ratio of 31%, while the back-end ratio is often 43%. Only housing-related costs matter with the front-end ratio, such as your insurance, property taxes, and monthly mortgage payment. Meanwhile, the back-end ratio considers credit card payments, car loans, mortgage payments, and other recurring debt payments. With proof of extra cash reserves or strong credit scores, higher DTI ratios might be approved.

VA Loan Requirements

Generally speaking, the U.S. Department of Veterans Affairs makes it much easier to qualify for a mortgage loan, especially for active-duty military personnel, eligible spouses, veterans, and reservists. There are no longer loan limits with VA mortgages in 2020. That implies that VA borrowers may be in a position to purchase homes with VA financing instead of a jumbo loan, or perhaps financing for loans that surpass conventional loan limits.

A VA Loan’s Current Minimum Requirements

  • Certificate of eligibility. If you want to qualify for a VA loan, a VA loan certificate of eligibility (COE) will be necessary since it proves you satisfy the military service requirements demanded by a VA loan. Most lenders can acquire a COE online; however, veterans and military personnel can apply for one online.
  • Mortgage insurance. No PMI is needed since the VA guarantees loans given to eligible borrowers.
  • Down payment. For a VA loan, no down payment is needed. Lenders might, however, demand a down payment, especially if the loan surpasses standard loan limits. The source of your down payments can be your funds or simply a gift from an employer, a close friend, a relative, charity, or government agency.
  • Funding fee. Many VA loans have this fee to defray the program cost to taxpayers. Generally, the amount varies depending on the down payment amount, the VA loan benefit usage, and the type of service. If military borrowers have service-related disabilities, they might be eligible for a waiver. VA funding fees jump to 0.15% for those borrowers who come up with 10% or less of the buying price. That sums up to an additional $1,500 in funding fee costs per $100,000 borrowed.
  • Employment. Proof of two years of employment is necessary, and the only exceptions are recently discharged veterans.
  • Credit score. Although there’s no credit score requirement with a VA home loan, VA-approved lenders need a 620 score.
  • DTI ratio. 41% is the preferred DTI ratio. VA-approved lenders might approve higher DTIs, especially if the borrower has additional money leftover after-tax deductions, or has residual income, and there’s a subtraction of monthly maintenance costs. Generally, the amount required varies depending on your family size and location.
  • Occupancy. Primary residences are fundamental to VA loans.

USDA Loan Requirements

Typically, the U.S. Department of Agriculture (USDA) provides a mortgage program made to allow low- to moderate-income families to purchase homes in rural areas. Apart from restrictions on the home location, USDA mortgage loan requirements include income limits.

A USDA Loan’s Current Minimum Requirements

  • Down payment. For eligible USDA buyers and properties, no down payment is needed.
  • Home location. The location of the home should be within one of the USDA’s assigned rural areas if you want to be eligible for a USDA loan.
  • Mortgage insurance. Mortgage insurance isn’t a requirement with USDA loans.
  • Guarantee fee. A 1% upfront fee is often charged, as well as an annual fee of approximately 0.35% of the loan amount. Like the mortgage insurance fee charged on an FHA loan, the annual fee is rolled into the monthly mortgage payment, and the upfront fee financed.
  • Income. For USDA loans, it’s usual to have proof of income history and two years of job. Considering all household member’s income is required, irrespective if or not they apply for the loan. Income limits are also a thing with USDA loans, which vary by family size, county, and city. Using USDA’s map tool, find out your area’s income limit.
  • Credit score. A minimum credit score of 640 is needed with USDA mortgage loans for automatic approval, as long as income and employment requirements are met. Homebuyers with lower credit, however, might still be approved in case a temporary hardship impacted their scores, or if the new housing payment is less compared to the amount the borrower is paying.
  • DTI ratio. For USDA loans, 29% is the maximum front-end ratio, and the maximum back-end ratio is 41%. With higher DTI ratios, borrowers might still qualify with a stable income history, large cash reserves, and a credit score ranging around 680 or higher.
  • Occupancy. Only primary residences matter with USDA loans.

Before making a decision, let one of the experts at The Texas Mortgage Pros help you find out exactly what loan is best for you. Feel free to contact us or call us today!