Purchase Home Loans

If you are purchasing a home and need a mortgage loan, there are various steps that should be taken. Also, in order to get the best loan for your particular needs, you should consult several lending institutions and be aware of what they will request of you when documenting your application.

If you are a veteran of the U.S. armed forces, you may qualify for a Veterans home loan. No downpayment is required with this home loan and the guidelines for qualification can be a bit more lenient than for regular conventional loans. FHA and conventiional financing are also options. However, in recent years, underwriting of such loans has become much more stringent and it is harder to qualify today than ever before.

Still, a purchase home loan is possible if your credit score is decent (say, above 600). Most lenders require at least a 10% downpayment and specific qualification guidelines such as proof of employment for at least two years; bank statements showing a history of deposits for six months to a year; good to excellent credit history; and proof of ownership or rental history of your current housing situation. Each lender is different in regard to their required documentation and credit standards. That is why you should check with several prior to making applicatiion.

The best way to find the lender who will help you the most is to ask your Realtor or builder for recommendations. This by no means obligates you to use that particular lender. However, he or she can be a valuable source of information when it comes to what different lenders require of their borrowers. Some builders even offer their own financing on new homes. In this regard, underwriting guidelines may be a bit less sticky.

The Mortgage Lenders Association in your area is another source of information. You can find out which company is doing the most purchase home loans as well as other information regarding their guidelines, etc. Remember that most mortgage companies sell their loans to secondary sources – usually larger investment sources or lenders – and may be able to “shop” for the best deal for your situation. If you choose to apply at your local bank or another conventional institution, you will have to have excellent credit. There are stricter guidelines than if you go to a mortgage broker or a mortgage lender.

No matter what your credit, you should be able to find a lender willing to work with you. But you may have to come up with a much larger down payment in order to do so. This can be your own money or come in the form of a gift from a relative or friend. Still, it is worth the research and effort if you really want to buy a home.