FIXED-RATE LOAN
A fixed-rate loan is a type of mortgage where the interest rate remains constant throughout the entire term of the loan. This means that the monthly mortgage payments, which include principal and interest, remain the same for the duration of the loan, making budgeting and financial planning easier for borrowers. Fixed-rate loans are popular among homeowners who prefer stability and predictability in their mortgage payments, as they are not subject to the fluctuations of the market interest rates. These loans are typically available in various term lengths, with 15-year and 30-year terms being the most common.
Can be as low as three percent (3%), but some borrowers choose to put down at least 20% to avoid PMI (Private Mortgage Insurance).
Down Payment: Initial cash payment made by a buyer, representing a percentage of the property's purchase price, reducing the amount financed.
DOWN PAYMENT INFO
Front-End Ratio: Up to 28%
Back-End Ratio: Up to 36%
Debt-to-Income Ratio (DTI): A key financial factor used by lenders to assess a borrower's financial health, calculated by dividing the total monthly debt payments by the gross monthly income.
Front-End Ratio: Calculates the percentage of a borrower's gross income that goes toward housing costs, including mortgage principal, interest, property taxes, and homeowners insurance.
Back-End Ratio: Encompasses all monthly debt obligations, including housing expenses (mortgage, property taxes, insurance) along with other recurring debts such as car loans, credit card payments, student loans, and any other financial commitments.
DEBT TO INCOME RATIO INFO
For most counties in California, the max loan limit for a single-family home was $647,200 for conventional loans. However, certain high-cost areas, such as San Francisco and Los Angeles, had higher limits, reaching up to $970,800.
Max Loan Limit: The maximum amount set by lenders or government entities that determines the highest loan amount available to borrowers when applying for a mortgage, usually based on factors like location and the type of mortgage program.
MAX LOAN LIMIT INFO
PMI required with less than a 20% downpayment. Once borrowers reach 78% of LTV (Loan to Value), once the amount financed is less than 78% of the assets value, PMI may be canceled.
PMI: Private Mortgage Insurance is specifically associated with conventional loans. When borrowers put down less than 20% of the home's purchase price, lenders typically require PMI. It's provided by private insurance companies and allows borrowers to secure a mortgage with a lower down payment. PMI premiums are added to the monthly mortgage payments until the borrower reaches sufficient equity, usually when they've paid down the loan to 80% of the home's original value.
MORTGAGE INSURANCE INFO
At least 620.
Credit Scores: Numeric representations, typically ranging from 300 to 850, used by lenders to assess an individual's creditworthiness based on their credit history, payment behavior, and financial reliability.
CREDIT SCORE INFO
Are gift funds allowed? - Yes, for downpayment and closing costs. Gift funds can cover 100% of these costs!
Are downpayment assistance programs available? Yes.
Gift Funds: Monetary gifts provided by family members, employers, charitable organizations, or other eligible sources to help borrowers cover the down payment, closing costs, or reserves required for a home purchase.
Downpayment Assistance: Financial aid or grants provided by government agencies, nonprofits, or employers to help homebuyers cover a portion or the entire down payment required when purchasing a home. These programs aim to make homeownership more accessible by offering financial support to eligible buyers.