The first practical step in buying a home is deciding on how you are going to buy the home.  Are you planning on buying with cash, or will you finance the purchase?  There are pros and cons for both, and it's always best to contact a local professional.

Cash

  • No approvals required by a third party (the bank)
  • No appraisals needed
  • Quick closings
  • Can buy a home in any condition

Financed

  • Takes less money to buy
  • Tax incentives
  • You can buy a more expensive home with the same amount of money

As long as interest rates stay low, then it will be in most people's best interest to finance a property.  There are several different types of loans commonly available for residential properties.  Interestingly, a residential property is defined as a property with 4 or fewer units.  This means that you can buy an income property, such as a duplex or triplex, with one of the following owner occupant loans provided you live in the home for at least one year.

FHA Loan

An FHA loan is one of the most common loan types.

  • 3.5% down
  • Max LOAN AMOUNT (not purchase price) is $271,050
  • Easier to qualify
  • Higher debt to income ratios
  • MIP never falls off, even after you hit 80% equity

VA Loan

VA loans are available for anyone that has served in the nation's military.  They are one of the best types of loans you can get if used correctly.

  • 0% down
  • No monthly mortgage insurance
  • Loan amounts up to $417,000 (although our preferred lenders can go higher)
  • Higher debt to income ratios
  • Great interest rates

Conventional Loan

Most second time buyers or buyers that have a decent amount of equity use conventional loans.  The interest rates can change depending on your credit score.

  • Minimum 5% down
  • No mortgage insurance with 20% down
  • Loan amounts up to $417,000

Native American Loan (184b)

Native American loans are another great loan.  To qualify, you must be able to present your CDIB card and be a listed member of your tribe

  • 2.25% down
  • No monthly mortgage insurance
  • Easy to qualify
  • Slightly higher rates, but without monthly mortgage insurance the monthly payments are typically better

USDA

USDA loans, or Rural Development loans (RD) are based on location.  The house itself has to qualify and the borrower has to qualify. 

  • Geographic limitations
  • 0% down
  • Income limitations
  • Rural areas only

You can do all the research in the world online before you start the process, but the most important step is to work with knowledgeable professional.  Cornerstone Home Lending is one of our top preferred lenders.