First Time Home Buyers Episode 3: FHA and USDA Loans

– Hi, it's Amy Clarkson with the Clarkson Premier Team at Magnolia Realty and I'm here today with Rachel Crider from Guild Mortgage and I've got a couple questions for you Rachel We are helping first-time home buyers and we have There's a couple of loan options for first-time home buyers and I wanted to ask you about a couple of them

– [Rachel] Okay – [Amy] So I want to start with USDA Tell me something about why USDA would be good for a first-time homebuyer – [Rachel] USDA is a great program It is no money down and it's very low MI There's government assistance where it can help you pay for your closing costs as well

– [Amy] Tell me a little bit about what does MI mean? – [Rachel] MI is mortgage insurance so it's stuff that the lender adds to the mortgage to protect them in case you go into default – [Amy] Okay, so is that like a monthly cost? – [Rachel] Yes, it's a monthly cost – [Amy] Okay One thing about USDA is that it would be lower on that – [Rachel] Yes, it's very low

– [Amy] So the monthly payment would be less on that type of loan – [Rachel] Yes, correct – [Amy] Awesome Anything else about USDA that a first-time home buyer might need to know? – [Rachel] There's a few minimum requirements but we can go over those once they come in as far as loan credit score and income and stuff but that's something that we would discuss – [Amy] Does it cost anything to talk with you about those? – [Rachel] No, it's absolutely free

– [Amy] Okay, and how long does it take to kind of talk through a program? – [Rachel] I give 30 minutes and if you want real detail, it may take an hour It just depends on how detailed you want to get about it – [Amy] So USDA would be great The main thing about USDA is that it's no money down – [Rachel] Right

– [Amy] Low MI – [Rachel] Yes – [Amy] And can get some government assistance – [Rachel] Assistance to help with closing costs – [Amy] Closing costs perhaps

– [Rachel] So you can be almost zero out of your pocket – [Amy] Depending on the situation – [Rachel] Depending on the situation – [Amy] Awesome Then, there's another one, FHA loan

Tell me why an FHA loan would be good for a first-time home buyer What are the benefits? – [Rachel] Some of the benefits with FHA it's a low down-payment It's only 35% down The credit score you can go as low as 580 so that's a pretty big deal

Also, with FHA you can also get the government assistance as well, depending on credit score etc and we'd go in more detail once you came in and talked with me – [Amy] I think you were also telling me something about debt-to-income ratio – [Rachel] Yes, on FHA when you put the minimum amount down of 35%, your debt-to-income ratios can be higher so that's a pro

So when you're a little tight and they go over the threshold of USDA or conventional then FHA is definitely a good route to go – [Amy] Okay, awesome And it also has mortgage insurance? – [Rachel] Yes, it also has mortgage insurance It is a set rate just like USDA It is a little higher than USDA but it's still a really good rate

– [Amy] Okay – [Rachel] That's also a monthly premium as well – [Amy] So either one of those loans if we had a first-time home buyer that needed help, you could go through each of those and figure out which one would be the best for them once you have a conversation with them – [Rachel] Oh, yeah I'd sit down and we'd go over all their information and we'd talk back and forth on their kind of what they're trying to do and their situation and then we come up with the best plan for them

– [Amy] Awesome And those are just two of the options – [Rachel] Correct – [Amy] That we're talking about today that a first-time home buyer can take advantage of when getting a loan for a home – [Rachel] Yes, ma'am – [Amy] So all we have to do is give you a call and get help that way? – [Rachel] Yes, I'm always available

– [Amy] Awesome, thanks so much – [Rachel] Thank you