If you’re in the market for a new home in Indiana, chances are you’re also searching for the right home loan that suits your needs. There isn’t a one-size-fits-all model – each loan comes with its pros and cons, and each is designed for different purposes.
So, let’s take a look at some of the most common mortgage loans in Indiana, and see who can benefit from them.
VA loans are an attractive option if you meet the eligibility requirements. They’re designed for eligible US veterans, servicemembers, or surviving spouses.
They’re issued by banks and lenders but are guaranteed by the government. That means that the bank takes on a lesser risk when lending out the money, so you’ll find the application process easier and the rates and fees generally more favorable.
For a VA loan, you don’t need a down payment, you don’t need to cover the Private Mortgage Insurance, and there’s no prepayment penalty. However, you should be aware that there’s a limit on the loan amount that the VA will guarantee.
USDA loans are aimed at rural areas for low to moderate income families who may not be able to afford a down payment. They come with low-interest rates and require no down payment. Additionally, you cannot get just any home with a USDA loan, it needs to be in an eligible rural area.
Similarly to VA and USDA loans, Conventional loans are backed by the government and offer low down payment to make homeownership more accessible.
With a Conventional loan, you’ll get lower interest rates and lower down payment, but you’ll need to meet the more stringent requirements. Generally, a credit score of at least 620 is required and total housing payment should not exceed 40% of your gross income.
If you have your sights set on a high-end home in Indiana and you are financing over $510,400, you should consider getting a Jumbo home loan.
The government does not back these loans, so you’ll face higher interest rates, and you’ll need to make a larger down payment. Also keep in mind that not everyone can get approved for a jumbo loan. You need a good or excellent credit score, a low debt-to-income ratio, and ample evidence of financial health.
If you’d prefer to build rather than buy your own home, your best option might be a Single Close Construction loan.
When building a home, you’d typically need two loans – one short-term loan for the construction, and one long-term financing loan. Instead of applying for these loans separately and getting unfavorable rates and fees, Single Close Construction loan combines the two with a single close loan.
That brings many benefits, as you’ll need to qualify for the loan just once, you’ll generally get fixed interest rates, you’ll get a single closing cost; all this results in less spending.
As you see, different loans are designed for various purposes. Before buying or constructing a home in Indiana, consider carefully what your needs and circumstances are, and choose the home mortgage loan that suits you. GO Mortgage is happy to take these steps with you and answer any questions you may have. Contact us today to speak with an Indiana home loan advisor.