Loan Programs

Loan Purposes

What is the purpose for this loan? Are you purchasing a new home, need to refinance or get a cash out refinance?

Purchase

The process of acquiring a property for the purpose of primary residence, second home or investment property.

Advantages:

  • All interest on the mortgage is tax deductible.*
  • Establishes credit history.
  • Secured investment.
  • May build equity.
  • May be used to borrow against.
Rate Term Refinance

The process of paying off one loan with the proceeds from a new loan, using the same property as security. Cash received by the borrower at closing may not exceed $2,000. Status varies depending upon State Law. The purpose is, as the name implies, to reduce the interest rate, payment, and/or overall term of the mortgage.

Advantages:

  • Reduction of the interest rate, payment, and/or overall term of the mortgage.
  • Limit of $2,000 cash (varies depending upon State Law).
Cash Out Refinance

Cash-out refinances are deemed to have a higher risk factor than either rate & term refinances or purchases due to the increase in loan amount relative to the value of the property.

Advantages:

  • A lump sum of money at closing for large purchases.
  • Easy to qualify if equity has been built.
  • Tax benefit is if loan is used to pay off other debt on which interest is not tax deductible.*
  • Interest rates are usually lower on cash out refinance loans than they are on home equity loans.

Loan Types

Traditional

Do you need a fixed rate mortgage which offers the predictability of a fixed monthly payment with a choice between a 15 to 30 year loan term?

Conventional Loans
Conventional loans are actually any type of creditor agreement that are not financed by the Veterans Administration (VA), or supported by the Federal Housing Administration (FHA). In general, all conventional loans are protected by the government sponsored entities such as Fannie Mae (FNMA) and Freddie Mac (FHLMC).

There are different types of conventional loans that have their own peculiarities. Conforming and nonconforming types of conventional loans are the most common kind of subdivision. Conforming loans have to meet the guidelines set by Fannie Mae and Freddie Mac. One key feature is that the loan amount can not exceed the maximum loan limit set by Fannie and Freddie.

Advantages:

  • The fact that the creditors can actually keep the loan in their own portfolios and in this way they provide themselves with more flexibility concerning the loans as it must not take any other direction when it comes to some other borrowers.
  • The creditors are free to add or on the contrary eliminate some of the fees on the loans.
  • In the case when a person who is willing to get a loan does not have all the possibilities to do that, the creditor has the opportunity to self-insure the loan at the same time increasing the interest rate so that to recompense for the risk he or she takes.
Jumbo Loans
A jumbo is a loan in which the amount borrowed is greater than loan limit set by Fannie Mae (FNMA) & Freddie Mac (FHLMC)

Advantages:

  • Able to finance a home that is over the maximum loan amount established by Fannie Mae and Freddie Mac.
  • Enables a borrower to purchase “more house”.
*Interest rates and products are subject to change without notice and may or may not be available at the time of commitment or lock-in. 

Government

Do you need a government secured loan? Are you in the armed forces, a veteran, reservist or the surviving spouse looking for a home mortgage?

FHA Loans

The Federal Housing Administration was created in 1934 as an effort to bolster homes sales during the Depression. By financially guaranteeing loans the FHA lifts much of the risk of non-payment and foreclosure from private lenders. It is important to remember that the FHA is not a lender; they just guarantee your loan.

Advantages:

  • Bankruptcy not an automatic disqualification.
  • Less stringent credit requirements.
  • Lower interest rates.
  • Down payment is less.
  • Lower mortgage points and other closing cost requirements.
  • Resale can be made quicker.
  • Is backed by the U.S. government.

Features:

  • Down payment required.
  • Higher MIP than on conventional loans.
  • Loan Limits are lower than conventional.
  • MIP required regardless of the Loan-to-Value (LTV).
VA Loans

A VA loan is a mortgage loan guaranteed by the Veterans Administration. It was created in 1944 and signed into law by President Franklin D. Roosevelt. A VA loan provides veterans and/or their surviving spouses with a federally guaranteed home with zero down payment. The program, also referred to as the GI Bill, has been highly successful and has helped millions of American veterans and their families acquire a home.

Advantages:

  • No down payment.
  • VA does not require private MIP.
  • Limit on the amount of origination fees and closing costs that the lender can charge.
  • Limit also placed on appraisal fees.

Features:

  • Borrower must have a Certificate of Eligibility (CoE) from the VA in order to avoid a longer processing time.
  • Borrowers are required to make a one-time funding fee based on loan amount and applicant’s service length.
  • Closing costs may be paid by the lender and/or the seller.
USDA Rural Loans

The USDA Rural Housing Service has various programs available to aid low- to moderate-income rural residents to purchase, construct, repair, or relocate a dwelling and related facilities. USDA Rural Housing Loan programs allow qualified homebuyers to get loans with minimal closing costs and no down payment.

Advantages:

  • No Down Payment requirement.
  • Property must be located in an eligible rural area (moved up from disadvantages).
  • Closing Cost can be added into the loan (if the property appraises high enough to include it at up to 102% of the appraised value).
  • Loan government guarantee fee and not monthly guarantee fee.
  • Low interest rates.
  • Applicants with a wide range of credit profiles.
  • Income eligible applicants who do not qualify for conventional financing.
  • Families & Individuals that have minimal funds for a down payment and closing costs.
    Includes First Time Homebuyers and Repeat Homebuyers.
  • Seller Concessions – 6% max.
  • No cash reserve requirement.
  • No Non-Allowables costs.
  • No First Time Homebuyer Requirement.
  • 30 Year Loan @ Competitive Fixed Rate.
  • No Limit on Gift Funds.

Features:

  • Property must be in very good condition and have a high insulation R-factor.
  • You can not make over 50% of 115% of the median county income to qualify.
  • Must be able to verify income limits.
*DAS Acquisition Company, LLC is not affiliated with or endorsed by any government entity or agency, including USDA, HUD or VA.

Speciality Loans

Do you have unique mortgage needs? USA Mortgage offers a wide variety of loan programs to accommodate your purpose and financial situation.

First Time Buyer

These programs assist the first-time homebuyers who do not have the resources to make a down payment on a home.

Advantages:

  • Lower down payment.
  • Easier to qualify.
  • May get lower rates.

Features:

  • May be subject to income and property value limitations.
  • Some programs which have government subsidies may have a recapture tax if the home is sold too early.
Renovation Loans

Renovation loans can provide tax deductible money* for a complete remodel or specific improvements. It is essentially a second mortgage or home equity loan, which is paid to you in one lump sum or in draws at the loan closing.

Advantages:

  • Interest may be tax deductible.*
  • Can consolidate and eliminate unnecessary or high interest debt into one loan.

Property Types

What is the usage of the property? Will it be used as your primary residence or a second home? Or is this property being used for investment purposes?

Primary Residence

A person’s primary residence is the dwelling where they live, typically a house or an apartment. A person can only have one primary residence at any given time, though they may share the residence with other people.
A primary residence is considered as a legal residence for the purpose of income tax and/or acquiring a mortgage.

Advantages:

  • All interest on the mortgage is tax deductible.*
  • Establishes credit history.
  • Secured investment.
  • May build equity.
  • Can be used to borrow against.
  • Gifts are allowed.
Second Home

A “second home” refers to private ownership of a residence other than one’s primary residence. Depending on their purpose, second homes are sometimes called vacation homes, or secondary residence. The property must be available for your exclusive use and enjoyment and must not be subject to any rental pools or long-term leases.

Advantages:

  • Buy the home now while employed and retire in it later.
  • May build wealth with additional equity.
  • Similar terms to primary residence loan.
Investment Property

A real estate property that is not occupied by the owner and has been purchased with the intention of earning a return on the investment, either through rent, the future resale of the property, or both. An investment property can be a long-term endeavor, such as a rental home, or an intended short-term investment in the case of rehabilitation (where a property is bought, remodeled or renovated, and sold at a profit).

Advantages:

  • Capital growth.
  • Rental income and yield.
  • Tax shelter.*
  • May build wealth.

Amortization

Amortization is a fancy word that basically describes the number of years it will take to repay the loan completely, with interest.

Fixed Rate

10, 15, 20, 25 and 30 Year Fixed

A fixed rate mortgage is a mortgage loan where the interest rate on the note remains the same through the term of the loan, as opposed to loans where the interest rate may adjust.

The payment amount is independent of the additional costs on a home sometimes handled in escrow, such as property taxes and property insurance.

Advantages:

  • Monthly payments are fixed over the life of the loan.
  • Interest rate does not change.
  • Protected if rates go up.
  • Can refinance if rates go down.
Adjustable Rate

3/1 ARM, 5/1 ARM, 7/1 ARM, 10/1 ARM, 1 Year ARM, 6 Month ARM, 1 Month ARM

An adjustable rate mortgage (ARM) is a mortgage loan where the interest rate on the note is periodically adjusted based on a variety of indexes. Among the most common indexes are the rates on 1-year constant-maturity Treasury (CMT) securities, and the London Interbank Offered Rate (LIBOR).

Consequently, payments made by the borrower may change over time with the changing interest rate (alternatively, the term of the loan may change). The borrower benefits if the interest rate falls and loses out if interest rates rise.

Advantages:

  • Lower initial monthly payment.
  • Lower payment over a shorter period of time.
  • Rates and payments may go down if rates improve.
  • May qualify for higher loan amounts.

Disclosure About Qualifying

Loan product availability is subject to loan amount and qualification of borrower. Not every applicant qualifies or is eligible for every loan program. Some products may not be available in all states. Loan approval and rate are dependent on borrower credit, collateral, and financial history. All loan programs, terms and rates are subject to change without notice.

* USA Mortgage is not a licensed CPA or Tax consultant and therefore, cannot determine if your mortgage interest will be eligible as a tax deduction per IRS code. You are advised to contact a tax professional. This in no way implies you are guaranteed a tax credit.

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