Below is a list of everything you need to get started for a mortgage loan. There may be items on the list that do not apply to you.

FHA Loans

FHA loan programs are particularly beneficial to those buyers with little or no cash. The rates on FHA loans are generally market rates, and while there are down payment requirements down payment assistance is available to pay the entire 3.5%.

Some of the other benefits of FHA financing:

• Only a 3.5 percent down payment is required.
• Closing costs can be financed.
• Lower monthly mortgage insurance premiums and, under certain conditions, automatic cancellation of the premium.
• More flexible underwriting criteria than conventional loans
• FHA limits the amount lenders can charge for some closing cost fees (e.g. the origination fee can be no more than 1% of mortgage).
• Loans are assumable to qualified buyers.

VA Loans

VA guaranteed loans are made by lenders and guaranteed by the U.S. Department of Veteran Affairs (VA) to eligible veterans for the purchase of a home. The guaranty means the lender is protected against loss if you fail to repay the loan. In most cases, no down payment is required on a VA guaranteed loan and the borrower usually receives a lower interest rate than is ordinarily available with other loans.

Other benefits of a VA loan include:

• Negotiable interest rate.
• Closing costs comparable – and sometimes lower - than other financing types.
• No private mortgage insurance requirement.
• Right to prepay loan without penalties
• Mortgage can be taken over (or “assumed”) by the buyer when a home is sold.
• Counseling and assistance available to veteran borrowers having financial difficulty or facing default on their loan.

A VA loan can be used to buy a home, build a home and even improve a home with energy-saving features such as solar or heating/cooling systems, water heaters, insulation, weather-stripping/ caulking, storm windows/doors or other energy efficient improvements approved by the lender and VA.

Veterans can apply for a VA loan with any mortgage lender that participates in the VA home loan program. A Certificate of Eligibility from the VA must be presented to the lender to qualify for the loan.

FHA 203K Loans

Most mortgage financing plans provide only permanent financing. That is, the lender will not usually close the loan and release the mortgage proceeds unless the condition and value of the property provide adequate loan security. When rehabilitation is involved, this means that a lender typically requires the improvements to be finished before a long-term mortgage is made. In the current market many of the numerous foreclosures sit on the market in disrepair due to vandals, theft and neglect. To lenders of traditional loans those properties are considered poor collateral that they’d prefer not to lend on. However, for FHA 203K loans the loan is based on after repair value and includes an escrow account to complete the repairs needed to bring the house to a condition that lenders prefer. That means that the current condition of the property is not as important as the condition of the property once the renovation is complete. This provides an outlet to purchase dilapidated properties, many of which have spent extended periods on the market due to the lack of availability to traditional financing, and solves the problem that most lenders face when dealing with property in disrepair. What this means to the home buyer is generally a significant discount to “as-is” value and, quite often, a fantastic deal on a house.

How Can FHA 203K Loans Be Used?

FHA 203K renovation loans are used in three different ways:

1. To purchase an existing home (and the land attached to that home) to renovate it.
2. To payoff existing debt on a current residence and renovate it
3. To purchase an existing home with the intent to move it to a new piece of land in a more preferred location.

The eligible improvements allowed on FHA 203K loans are numerous and extensive. About the only thing HUD frowns on are luxury improvements that are not going to be a permanent piece of the property. That means your plans for a hot tub with a 42′ inch plasma TV and a built in beverage cooler are not going to fly past the underwriter most likely. Here are just a few of the common and not so common things FHA 203K borrowers use the versatile loan for:

1. New freestanding appliances
2. Bathroom remodels
3. Master bedroom remodel
4. Upgrading HVAC
5. Adding energy efficient improvements
6. Wells and septic repair and upgrades
7. New siding
8. Interior painting
9. Exterior painting
10. Attic build-outs
11. Waterproofing the basement
12. Creating a media room
13. Adding a 2nd floor
14. Total renovations
15. Finishing the basement
16. Bedroom additions
17. Neck deck / patios
18. New hardwood flooring
19. New doors and windows
20. Upgrading plumbing and electrical
21. Opening up the floorplan
22. New granite countertops
23. Vaulting the ceilings
24. New fixtures for bathtubs, sinks and kitchens
25. Making a house handicap accessible
26. Getting a condo or house ready for a new college student
27. Solar panels
28. Low flow toilets and shower heads
29. Creating a new master bedroom area