Here are the five main loan programs you should know about in Tennessee.

Today I want to talk about some loan products that you may not be very familiar with. There are five in total, and a few of them might be available to you:

1. Conventional loans. This is the most well-known loan type. With this type of loan, you are usually borrowing 80% of the purchase price and bringing 20% as the down payment. However, the numbers can vary; we’ve seen buyers borrowing at much as 90%. If you borrow 80% or less, banks generally don’t require you to get PMI (private mortgage insurance). 

2. FHA loans. This is a government-backed loan, and the standard down payment is around 3.5% of the sales price. That means you can get a loan for 96.5% of the sales price. This is the most popular loan type for first-time homebuyers and those buying in rural areas. 

3. VA loans. This loan is special because they have many different products depending on your disability and how long you were in military service. With this loan, you can borrow up to 100% of the sales price, so you won’t need a down payment. They have some great programs, but I’ll let a loan officer get into that more with you if you’re interested.

“No matter which loan type you choose, you still have closing costs to consider.”

4. THDA loans. This is a 100% borrowing program for first-time homebuyers here in Tennessee with low or moderate incomes.

5. USDA loans / Rural development loans. You can borrow up to 100% for this loan type as well. These loans are given to those buying out in the country where they’re trying to build infrastructure, so they’re willing to let you borrow more.

These are the loan types we see most frequently. Remember that no matter which loan type you choose, you still have closing costs to consider (unless the seller agrees to pay those for you). Closing costs are typically 2% to 3% of the sales price. For example, if your home costs $300,000, at 3% you’ll pay $9,000 in closing costs. You should also think about city taxes versus county taxes and how that works with your insurance. 

If you have more questions about any of this, I’d love to go into more detail with you or get you in touch with one of our loan partners to walk you through the programs, what you qualify for, and which programs are available in your area. Just call or email me to begin the conversation.