Types of Loans

Conventional:

  • Max loan: $600,300 in Salt Lake, Summit and Tooele counties; $417,000 in all other counties
  • Maximum LTV (loan to value): 97%
  • Minimum down payment on a purchase: 3%
  • Fixed rate terms available: 30, 25, 20, 15 and 10 years
  • ARMs (adjustable rate mortgage) available: 3, 5, 7, and 10 year fixed on 30-year amortization
  • Mortgage insurance is required on loans above 80% LTV. Mortgage insurance can be dropped once the loan is less than 80% of the home’s value. The amount of mortgage insurance changes depending on how much you owe on your home. Call us and we can help you calculate it.
  • You can get cash out up to 80% LTV on a refinance loan
  • Can be used to buy or refinance an investment/rental property

Conventional loans are the most common type of loan. If your credit score is above 680 and you have at least a 3% down payment for a purchase, or 3% equity on a refinance, a conventional loan is likely to be good fit for you.

If you need a loan over $417,000 ($600,300 in Salt Lake, Summit and Tooele county), you will want to apply for a jumbo loan.

FHA:

  • Down payment can be a gift
  • Max loan: $271,050 to $729,750; determined by county (see table below)
  • Max LTV (loan-to-value): 97.5%
  • Minimum down payment on a purchase: 3.5% (down payment can be a gift)
  • Fixed rate terms available: 30, 25, 20, 15 and 10 years
  • ARMs (adjustable rate mortgage) available: 3 and 5 year fixed terms on 30-year amortization
  • Mortgage insurance: There are two types of mortgage insurance on an FHA loan:
    1. UFMIP (upfront mortgage insurance premium) of 1.75% of the loan amount.
    2. Monthly MIP is required for the entire life of the loan on FHA mortgages originated after June 3, 2013.
  • Cash out up to 85% LTV
  • Can be used to refinance a rental/investment property that has an existing FHA mortgage

FHA loans are insured by the Federal Housing Administration, which is part of the U.S. Department of Housing and Urban Development, or HUD.

FHA loans are a good fit if you have credit scores under 680 or don’t have your own money saved up for a down payment. FHA guidelines allow the minimum 3.5% down payment to be a gift from a relative, employer, close friend, charitable organization, or government entity. There are some lenders who have no minimum credit score requirements on FHA loans and some will even do an FHA loan if you have no credit scores or credit history. FHA loans also permit someone who will not be an occupant of the home to be a co-borrower/co-signer on the mortgage to help someone qualify for the mortgage who wouldn’t qualify on their own.

UFMIP (upfront mortgage insurance premium): An UFMIP of 1.75% of the base loan amount is required on all FHA loans. The 1.75% premium is added to the base loan amount. On a $250,000 base loan, the UFMIP would be $4,375. Added to the base loan, the final loan amount is $254,375.

Monthly MIP (mortgage insurance premium): The monthly amount is 1.3% on loans up to 95% LTV. The premium increases to 1.35% annually on loan amounts over 95% LTV. Using the final loan amount of $254,375 from the example above, the monthly premium is calculated by taking $254,375 times by 1.3% (.013). This gives us the annual premium of $3,434.06. Dividing this annual premium of $3,434.06 by twelve gives us the monthly premium of $286.17. This is the amount of monthly PMI one will pay for the life of the loan.

FHA max loans by county:

  • $729,750: Salt Lake, Summit, and Tooele counties
  • $431,250: Wasatch
  • $397,500: Davis, Morgan, Weber
  • $383,750: Kane
  • $372,500: Washington
  • $323,750: Utah, Juab
  • $302,450: Daggett
  • $269,700: Rich
  • $271,050: Beaver, Box Elder, Cache, Carbon, Duchesne, Emery, Garfield, Grand, Iron, Millard, Piute, San Juan, Sanpete, Sevier, Uintah, Wayne
Jumbo

  • Loan sizes: $417,000 to $10,000,000+ ($630,300+ in Salt Lake, Summit, and Tooele)
  • No mortgage insurance
  • fixed and adjustable rates options
  • 10% minimum down payment/equity

Jumbo loans are mortgages that exceed the $417,000 conforming loan limit in Utah, or a loan in excess of $600,300 in Salt Lake, Summit, and Tooele counties.  There is no mortgage insurance on jumbo loans.  Jumbo loan rates are excellent right now and the 20 lenders we work with offer the widest variety of jumbo loan options and the absolute lowest rates you can get.  Call the 801-APPROVE Team and we can help you find the prefect jumbo mortgage to buy or refinance your dream home.

VA:

  • No down payment required
  • Max LTV (loan-to-value): 100%
  • No mortgage insurance on VA loans
  • good for purchase or refinance of primary residence
  • $650,000 max loan size in Salt Lake, Summit, and Tooele counties, $417,000 in all other counties
  • Fixed rate terms available: 30, 25, 20, 15 and 10 years
  • ARMs (adjustable rate mortgage) available: 3 and 5 year fixed terms on 30-year amortization

VA loans are available to help veterans purchase or refinance a home.  VA loans are backed by the government and offer some very beneficial features over other loans, such as no down payment requirement and no mortgage insurance.  To qualify a service member needs to meet just one of the following requirements:

  • served 181 days on active duty during peacetime
  • served 90 days on active duty during war time
  • served 6 years in the reserves or national guard
  • is the spouse of a service member who died while in military service
USDA

  • No down payment required
  • Max LTV (loan-to-value): 100%
  • No maximum loan size
  • Lower interest rates than most other loans
  • Available to those who live in “rural” areas
  • 2% upfront mortgage insurance fee, and annual premium of 0.4%

USDA loans are designed to help those who live in rural areas. They are loans backed by the United States Department of Agriculture.  To determine if your home, or the area you’re considering buying in falls in a “rural” area please call the 801-APPROVE Team and we can tell you.

Construction:

If you’re looking to build your dream home, the 801-APPROVE Team can help you secure the financing you need to finance those dreams; from money to buy the lot, to the loan needed to build the house, to the permanent mortgage once the home is completed—we’ve got you covered.  There are a number of financing options available depending on your needs.  It’s best to call us and tell us what your needs are and we can give you the options available to you.

Fixed Rate

Fixed-rate loans are the most common type of loan.  These loans have a fixed principal and interest payment that remains the same for the entire life of the loan.  They ensure that there are no surprises or large payment increases down the road due to rising interest rates and changing financial markets.  Fixed-rate loans are the safest and best loan option for most people, as the terms of loan are fixed and will never change.  If you want regular payments with no surprises and you plan to stay in your home for a long time, a fixed-rate loan is what you want.

Adjustable Rate

ARMs (adjustable rate mortgages) have a fixed interest rate only for an initial period, after which the rate will adjust based on market conditions. ARMs usually offer a lower initial rate than you can get with a fixed-rate mortgage. There are a variety of ARMs available with different options for how long your rate will stay fixed before it starts adjusting. The number of years the rate is fixed on an ARM range from one year up to 10.

Typically the shorter the fixed period is, the lower the initial rate will be. In other words, you’ll get a lower initial rate on a 3-year ARM than you will on a 10-year ARM. An adjustable rate mortgage is typically best for people looking to increase their short-term cash flow or who plan to move or refinance within a few years (before the rate begins to adjust). It may also be ideal for buyers who need a larger loan than they can qualify for with a fixed-rate mortgage, due to the higher interest rates on fixed-rate loans.

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Calculate Your Payment
 
Use the calculator to estimate your total monthly payment, including property taxes, homeowner’s insurance, and PMI/MIP (private mortgage insurance). The calculator is preset to a conventional loan with a 5% down payment.  There are several types of loans available. Read about them on the “Types of Loans” page on the “MORTGAGE 101” dropdown menu. You can buy a home with no money down on some loan programs. Call us at 801-277-7683 and we’ll be happy to help you select the right loan to fit your needs and answer all of your questions.

Use the factors below to estimate other purchase scenarios:

Conventional purchase, 30-year loans: (760+ FICO scores)

  • 3% down payment requires PMI of 1.10%
  • 5% down payment requires PMI of .59%
  • 10% down payment requires PMI of .44%
  • 15% down payment requires PMI of .28%
  • 20% or greater down payments don’t require any PMI

FHA purchase, 30-year loans: (all FICO scores)

  • 3.5% down payment requires PMI of 1.35%
  • 5% or greater down payments require PMI of 1.3%
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Do You Have Questions About Which Type of Loan Is Best For Your Situation?

Give us a call now at 801-277-7683
We would be happy to answer your questions.