Loan Options

Conventional Loans

Conventional mortgages are by definition, those not insured or guaranteed by the federal government. They further breakdown into two primary categories, Conforming Loans and Jumbo Loans. Conforming loans, are loan products offered through Fannie Mae and Freddie Mac. These two federally chartered non-profit corporations created to promote home ownership annually establish conforming loan limits. Conforming loans offer the most flexibility and fewest restrictions to buyers with good credit scores and stable income.

Loan amounts exceeding the conforming loan limit in the prevailing geography are termed non-conforming and fall into the Jumbo Loan category.

Conventional Loan highlights

purchase offerings with as little as 3% down for first-time buyers.
flexible mortgage insurance options for loan amounts above 80% LTV
options for employed, self-employed, and retired borrowers.
lower interest rates for borrowers with good credit
available for purchase or refinance
may be used to purchase a primary residence or 2^nd home
investment property up to a 4 units
available in fixed or adjustable rate loans

The current conforming maximum loan amount in most states is $647,000 effective January 2022. States deemed "high cost" areas have higher conforming loan limits up to $970,800.

FHA Loans

Ideal for first-time buyers and those needing limited out of pocket cost to close. Backed by HUD (Housing and Urban Development) FHA loans offer more flexible qualifying criteria than conventional loans.

FHA Loan highlights

purchase with as low as 3.5% down payments
flexible income and credit requirements, some qualifying with credit scores as low 600
fixed- and adjustable-rate mortgage options, purchase or refinance
loans for 1-4 unit properties and condos may be available (must be owner occupied)
down payment funds can be a gift from a relative or employer
home sellers can contribute up to 6% of the closing costs
recent bankruptcy, short-sale or foreclosure may be accepted
available to borrowers who have previously used FHA programs

VA Loans

VA Loans are backed by the Department of Veterans Affairs and designed to provide affordable access to home ownership for qualified service members, veterans, and their spouses. VA loans offer flexible qualifications in terms of down payment, credit, and income.

VA Loan highlights

100% financing with full VA entitlement
no mortgage insurance (PMI) required
primary residence only
allows up to a 4 unit purchase if one unit is owner occupied.
fixed or adjustable-rate options, purchase or refinance
VA financing fees can be “rolled” into the loan amount in most cases.
variety of eligible property types, including townhomes and VA-approved condos
occupancy exceptions exist surrounding deployment.

USDA/Rural Loans

The United States Department of Agriculture (USDA) loan offerings are designed to support low to moderate income buyers access to home financing in designated rural and small towns around the country. Qualifying criteria is partially based on household income which cannot exceed 115% of the medial income for the area.

USDA Loan highlights

Options for up to 100% financing and up to 102% of the appraised value (covers guarantee fee)
Lower Credit Score qualifying criteria
Low closing costs with option to use gifted funds
Borrowers must qualify for the loan based on their ability to pay the mortgage payment, property taxes, homeowners insurance and the monthly guarantee fee.
Loan limits vary by geography
30 -year fixed rate mortgage loans

Jumbo Loans

Jumbo (or non-conforming) loans accommodate borrowers seeking loan amounts higher than conforming Fannie Mae/Freddie Mac Loan Limits. Jumbo loan offerings have responded to our changing markets now offering 5% down payment options, second home and investment property loans. Some of the newest Jumbo products allow for automated underwriting which can streamline the approval process. Fairway offers a large variety of Jumbo products at competitive rates.

Jumbo Loan highlights

in house underwriting offering solid pre-approvals and timely closings
only one appraisal required for most products up to $2M loan amount
options for employed, self-employed and retired borrowers.
primary residence, second home and investment property options
purchase, refinance, and cash out refinance available.
single family, townhome, condo and 2-4 units properties
available in fixed-rate and adjustable rate loans

Renovation Loans

Renovation Loans are designed to wrap repairs, renovations, or energy-efficient improvements into a conventional mortgage at the time of purchase or refinance. Various products allow for primary residence, second homes and investment properties to qualify with low down payment options.

With loan to value options up to 110% of the “as-completed” value, those willing to take on a project can now wrap improvement costs into their mortgage. Two options are available to the borrower. The Fannie Mae HomeStyle Renovation Loan and the FHA 203(k) Rehab Loan offered by HUD.

HomeStyle Renovation highlights

- up to 97% loan-to-value
- limited to 75% of the “as-completed” appraised value
- low 5% down options (3% options for first-time buyers)
- potentially lower rate than home equity line of credit (HELOC)
- must use licensed contractors
- work to be completed with 15months of loan close date
- upfront draws for up to 50% of materials costs

Retirement Loans

Retirement lending is one of the most misunderstood areas I work in. As a borrower you can take comfort there are options for home financing that extend beyond your years of receiving regular employment income. We are here to educate and advise on best options in addition to providing access to the best programs in the market. Retirement lending can be summarized into three categories outline below: Retirement Income Loans, Asset Based Loans and Home Equity Conversion Mortgages.

Retirement Income Loans

Loans qualified with retirement income sources such as Soc. Sec, pension, annuity/investment income, investment property income, note income, and other sources.

Retirement Income Loan highlights

most closely mirror traditional home mortgage loans
qualify buyers who no longer have regular employment income under unique underwriting guidelines
conforming and jumbo loan programs available catering to a wide class of buyers
preserve cash resources

Asset Based Loans

Asset based loans calculate a qualifying income based on investment and retirement account balances. Distributions may need be established.

Asset Based Loan highlights

qualify buyers who no longer have regular employment income
accommodate changing lifestyle needs in a home
maintain a home as an asset

Home Equity Conversion Mortgages (HECM)

A product created by HUD (yes, home of the FHA loan) and the least understood mortgage product, but in some cases-including clients with significant assets-the loan that can be the optimal choice. Also referred to as a reverse mortgage, they allow a borrower to obtain a mortgage with no required mortgage payment on the new loan-the borrower is still responsible to pay all taxes and insurance on the property. A Home Equity Conversion Mortgage may be used for either a home purchase, or a refinance. A very common practice is establishing an available line of credit as a reserve of funds to draw from if needed.

Home Equity Conversion Mortgage highlights

allows equity in the home to cover the mortgage payment eliminating a required mortgage payment (mortgage payments are optional, but not required).
borrower must pay all taxes, insurance, and maintenance on the home
home to be used as a primary residence (must live in the home a minimum of 6 months annually)
one of the borrowers on title must be age 62 at the time the loan closes
borrower(s) remains on title to the home and may sell at any time without penalty
non-recourse loan FHA guaranteed | at time of sale if the loan balance exceeds the home value, neither borrower nor their heirs are responsible for the deficit.
additional tax-free income that doesn’t impact Social Security or Medicare benefits
mandatory mortgage counseling by an independent HUD-approved agency prior to qualifying
loans can be closed within 30 days following pre-approval

Reverse Mortgage FAQ

Additional Details on Reverse Mortgages

Estate Planning Services

HUD advises against using any service that charges a fee (except required HECM counseling) or any service that requests a lender referral fee to obtain a retirement mortgage. HUD provides this information free of charge and can direct you to HUD-approved housing agencies that offer approved retirement mortgage counseling or additional services that are free or have a minimal cost.

There is typically a retirement mortgage (HECM) counseling fee that ranges from $125 – $150. If the borrower cannot afford this fee, some counseling agencies will waive the fee for qualified applicants. You can find a HUD-approved housing counseling agency near you by calling 1-800-569-4287 toll free.

Medical Professional Loans

Designed to offer affordable financing for those who have chosen to pursue a career in the medical profession, funds are available to medical students, residents, practicing physicians and other medical professionals. Qualifying in the face of student loan debt, physicians loan take into account future income and offer a path to home ownership.

Medical Professional Loan highlights

low down payment options with no mortgage insurance
no pre-payment penalties
caters to those with student loan debt
allows future income qualifying such as a resident being able to qualify with income from a signed contract for full time physician income prior to starting the new employment.