Mortgage Programs
At Bond Street Mortgage, we strive to lead the U.S. mortgage industry with exceptional service and responsible lending. Our culture is built on continuous learning, collaboration, and innovation, guided by values of transparency, ongoing improvement, clear communication, and the highest standards of excellence.
Conventional Loans
A conventional loan is a type of mortgage that is not insured or guaranteed by a government agency, such as the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA). Instead, these loans are backed by private lenders and typically adhere to the guidelines set by Fannie Mae and Freddie Mac, which are government-sponsored enterprises (GSEs) that purchase and securitize mortgages.
Here are some key features of conventional loans
- Down Payment: Conventional loans often require a higher down payment than government-backed loans. While it's possible to put as little as 3% down with certain conventional loans, a 20% down payment is often required to avoid private mortgage insurance (PMI).
- Private Mortgage Insurance (PMI): If you put down less than 20% of the home's purchase price, most conventional loans will require you to pay for PMI, which protects the lender in case you default on the loan.
FHA Loans
An FHA loan is a mortgage that is insured by the Federal Housing Administration (FHA), a government agency created in 1934 to improve housing standards and increase homeownership. FHA loans are designed to help individuals who may not qualify for a conventional mortgage due to lower credit scores or smaller down payments.
Here are the key features of an FHA loan
- Low Down Payment: FHA loans typically require a lower down payment than conventional loans. The minimum down payment is as low as 3.5% of the purchase price, making homeownership more accessible for those with limited savings.
- Credit Score Requirements: FHA loans are more flexible with credit score requirements. Borrowers can qualify for an FHA loan with a credit score as low as 580 with a 3.5% down payment. Some lenders may allow a lower credit score, but a higher down payment (typically 10%) is required.
VA Loans
A VA loan is a mortgage loan program available to active-duty military members, veterans, and some eligible family members, guaranteed by the U.S. Department of Veterans Affairs (VA). The primary purpose of the VA loan program is to help eligible individuals buy, build, or refinance a home with favorable terms, often with no down payment or private mortgage insurance (PMI) required.
Here are the key features of a VA loan
- No Down Payment: One of the biggest advantages of a VA loan is that qualified borrowers can purchase a home with no down payment, which is rare in the mortgage industry.
- No Private Mortgage Insurance (PMI): Unlike conventional and FHA loans, VA loans do not require private mortgage insurance, even if the borrower puts no money down. This can save borrowers a significant amount of money over the life of the loan.
Investor Mortgage Loans
Investor mortgage loans are designed specifically for individuals or entities purchasing real estate properties for investment purposes rather than as a primary residence. These loans enable borrowers to buy properties they plan to rent out, flip, or hold as part of a broader real estate portfolio to generate income or appreciate in value over time. Because investment properties are generally considered higher-risk than primary residences, investor mortgage loans typically have different requirements compared to standard residential loans.
Here are the key features of investor mortgage loan
- Higher Down Payment Requirements: Investors are usually required to make larger down payments compared to standard homebuyers. While primary residences might require as little as 3-5% down, investor loans often require 20-30% or more, depending on the lender and the borrower’s financial profile.
- Higher Interest Rates: Interest rates for investor mortgage loans are typically higher than those for owner-occupied properties. Lenders charge a premium due to the perceived risk that an investor might default if the property doesn’t generate the expected rental income or the housing market declines.
Jumbo Loans
A jumbo loan is a type of mortgage that exceeds the conforming loan limits set by the Federal Housing Finance Agency (FHFA), which means it cannot be purchased or guaranteed by government-sponsored entities like Fannie Mae and Freddie Mac. Jumbo loans are typically used to finance luxury homes or properties in high-cost areas, where home prices exceed the conforming loan limits.
Here are the key features of a jumbo loan
- Loan Limits: The conforming loan limit for 2024 is $726,200 in most parts of the United States. In high-cost areas (such as certain parts of California, New York, or Washington, D.C.), the limit can be higher, up to $1,089,300. Any loan amount above these limits is considered a jumbo loan. These loans change annually so be sure to check in with us on any updates!
- Higher Credit Requirements: ◦ Since jumbo loans are not backed by Fannie Mae or Freddie Mac, lenders typically require higher credit scores from borrowers to mitigate the risk. A minimum credit score of 700 is usually required, although some lenders may require higher.
Bank Statement Loans
Bank statement loans are a type of mortgage designed for self-employed individuals, freelancers, and business owners who may not have traditional income documentation, such as W-2s or tax returns, to verify their income. Instead of using conventional income verification methods, lenders base approval on the borrower’s bank statements to assess their cash flow and ability to repay the loan.
Here are the key features of bank statement loans
- Income Verification through Bank Statements: Instead of requiring tax returns or pay stubs, lenders ask borrowers to provide 12 to 24 months of personal or business bank statements to verify their income. Lenders review the cash flow, deposits, and average balances to determine whether the borrower can afford the mortgage payments.
- Target Audience: Bank statement loans are ideal for self-employed individuals, business owners, independent contractors, or gig workers whose income may be inconsistent or difficult to document using traditional methods.
