The 4 Main Loan Types

  • Conventional
    • Can be used to buy primary residences, secondary residences and investment property.
    • For lower risk buyers with better credit, assets and work history.
    • Typically 5%, 10% and 20% down payments, with Mortgage Insurance required on anything less than 20% down.
    • Sellers Assists of up to 3% (5% down) or 6% (10% down or more), or the maximum of closing costs, whichever is lower, is allowed on these loans.
    • Ask the Lender for Conventional Renovation loan options, if needed.
    • Loans over $548,000 as of 2021 are called Jumbo loans and have a different set of requirements.
  • FHA
    • The Buyer must live in the home.
    • For higher risk buyers, the Federal Housing Administration is insuring the Lenders in case of default in order to promote home ownership.
    • Only 3.5% down is required.
    • Sellers Assist of up to 6%, or the maximum of closing costs, whichever is lower, is available on this loan.
    • FHA203(k) Renovation Loan available
  • VA
    • Available as a reward to our military service members.
    • Rather than FHA insuring these loans, the Veterans Administration is insuring these loans with a one time, up-front Mortgage Insurance Premium that is financed with the loan.
    • 0% down and no monthly Mortgage Insurance.
    • Seller Assist of 4% or more, or the maximum of closing costs, whichever is lower, is available on this loan.
  • PHFA (only in Pennsylvania)
    • This is Pennsylvania’s version of the FHA loan.
    • These loans are insured by the PA Housing & Financed Administration.
    • 3% down and up to 6% Seller Assist, or the maximum of closing costs, whichever is lower, is available on this loan.
    • The rate is usually a percentage point higher than the FHA loan but has no monthly mortgage insurance. Usually is cheaper for the Borrower on a monthly basis.

My formula for the “perfect” Sellers Assist (where 6% is allowed by the Lender/Loan Product)

Take the Estimated Cash Needed to Purchase and subtract $1800  = Your Perfect Seller Assist 

Confirm this amount is 6% or less than the Purchase Price.