Types of Loans Offered for Colorado Springs Real Estate

Colorado Springs, Colorado has a huge military population. With the Air Force Academy, FT. Carson Army Base, Peterson Air Base, Shriever Air Base, and numerous satellite tracking stations and facilities, Colorado Springs offers the perfect housing loan opportunities for using VA benefits. Here are a few of the loan types available.

VA:
The term VA refers to The Veterans Administration. VA does not actually make the loans, they insure the loan to the lender. The lender, in turn, must abide by VA underwriting and loan requirements. The VA lending limit changes frequently, but currently is at $359,650.

You have VA eligibility if you served in the military, and do not have a current VA loan. This loan was designed for Veterans to buy a home with a minimum of cash down  The allowable debt-to-income ratio is higher than for conventional financing (10-20% down), meaning you can qualify for more home. There is a funding fee of 2 to 3% which is usually added on to the base loan. Only fixed rate VA mortgages are available, and all VA loans are assumable, but only if the VA buyer qualifies.

FHA:
This is the best choice if you must conserve as much cash as possible, and do not have VA eligibility.  You can put as little as 3% down. There is a 2% Mortgage insurance premium added to your loan amount, and .5% per month added to your payments for the privilege of getting this loan. You can get a fixed rate mortgage or an adjustable rate. The adjustable rate FHA is superior to conventional ARMS (Adjustable Rate Mortgage) in that they can only increase 1% per year, and 5% over the life of the loan. FHA guidelines also allow a higher debt-to-income ratio than conventional loans. The current FHA limit is $206,798.

Both VA and FHA appraisals have more requirements than conventional appraisals, and are much more critical of the condition of the home, due to your small down payment and lack of equity in the property.

Conventional Loans:
There are more types of conventional loans than there are lenders. Generally, if you put less than 20% down, you will have private mortgage insurance premiums to pay until you reach 80% loan to value. If you have the best of credit, you can get a 95% conventional loan. The qualifying ratios are less generous than VA or FHA, and the appraisal guidelines more generous. Some new loan products offer a FIRST loan, combined with a SECOND loan, both which close at the same time, designed to eliminate PMI (Private Mortgage Insurance). Talk to your lender and see if this program is right for you.

A good lender will take the time to determine which loan product best fits your needs, and work closely with your agent throughout the process.

Other special loans: CHFA
Colorado Housing and Finance Administration periodically issues Bond money to help first-time home buyers, for purchases within selected, targeted areas. Usually there is a below market interest rate, and the down payment and closing costs can also be subsidized. There are strict requirements for eligibility regarding income limits and price ranges. Be sure you qualify before trying for CHFA money. It goes fast, and you should have a contract in hand when the money comes out in order to have a chance at it. Additionally, CHFA requires it's home buyers to take a special class before funding. The class needs to be completed before application for the funds. These classes fill up frequently, so plan ahead. The Emerson Team recommends that if you are considering this type of loan program, sign up for the class at the time you meet your lender for a pre-qualification, prior to going out to look at houses.

There are many other specialized loan programs available, including zero down programs, programs for the self-employed, and programs such as Neighborhood Gold where the seller makes a contribution to the buyer's downpayment and/or closing costs. Special loans for the handicapped are also available which subsidize down payments. There are even special programs for Civil Service workers, police, and firefighters!  These programs change their parameters frequently. The Emerson Team recommends that you consult with one of our Preferred Lenders for the latest program availability and requirements.

The Emerson Team will gladly refer a list to you of reputable lenders which we do a lot of business with. We are picky, and our list changes depending on the level of service that we receive. A good lender today can be bought out, merged, change names, change personnel and become a poor lender tomorrow. Feel free to call us for an updated, preferred lender list.