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MORTGAGE 101 con't Types of Mortgages Conventional Conventional Loans, though not so conventional anymore, is the basic type of loan. Base parameters will be a certain FICO is needed, at least 5% down, two months savings equal to your PITI estimate and front and back end ratios of 28/36, respectively. What does all of that mean? It means that no more that 28% (give or take a smidget) should be attributed to your mortgage payment (PITI) and your PITI plus your monthly bills cannot amount to more than 36%. Too much more than ratios of 28/36 puts you in the range of high risk for affordability and will thereby decrease your chances of getting a loan for a mortgage. There are circumstances in which those ratios can be increased, but that will not be a part of this briefing. FHA Another smart person said, “well, what about those people out there that will not fit perfectly into the box of requirements set by a conventional? There has to be another way that they can realize a piece of the American Dream too”. Boom! FHA loans were created. FHA loans are not specifically FICO score driven and provides a way of forgiveness s to those that may have slip in credit ratings for reason beyond their control and reason within their control. The ratios are slightly expanded and allow for non-squeaky clean credit and low debt. The ratios are 29/41 with similar requirements of Conventional loans. VA These types of loans are geared to assisting veterans with home ownership. Ratios hover around 0/41. Yes, the front end ratio is 0% along with no money down. <<Back At 1st Choice Realty, "1st Choice is Your Choice" and we want to ensure you are fully equipped to buy your home with ease. Do you feel you are ready to buy a home? Contact us today for a quick evaluation.