Most consumers will be looking at one of the two rate options below:

• Fixed Rate Mortgage – A loan that has an interest rate that remains constant throughout the life of a loan.
• ARM (Adjustable Rate Mortgage) – A loan that has an interest rate that increases or decreases at specified times during the life of a loan. The change in the interest rate is tied to a financial index.

There are numerous types of loans available to the consumer (Contract for Deed, Conventional, DVA, FHA, USDA, Balloon Loans, Buy-Down Loans, Interest Only, New Construction, and Reverse Mortgages). Below is a brief explanation of some of the most commonly used loan programs used today:

Contract for Deed – Alternative financing agreement in which the seller finances the buyer rather than a lender whereby the purchaser acquires “equitable title” and the seller retains “legal title” until the contract is paid in full. Purchaser and sellers are free to determine:

• Initial Down Payment
• Interest Rate
• Monthly Payments
• Length of term

Conventional – These loans typically require a minimum of 5% down and are privately insured still must adhere to the mortgage guidelines set by Fannie Mae & Freddie Mac. Loans with at least 20% down are not insured and condition of the property is subject to the mortgage guidelines of the bank. These loans are available in 10, 15, 20, and 30 year terms. Conforming loan limits for all counties in Minnesota presently are:

• $417,000 Single Family Homes
• $533,850 Duplex
• $645,300 Tri-Plex
• $801,950 Quad

DVA (Department of Veteran Affairs) – For veterans, service members, and eligible surviving spouses, the VA guarantees a portion of the loan for the lender and eligibility is determined by the length of service and/or duty status and require a COE (Certificate of Eligibility) which can be reused. These loans typically require 0% down and are available in 15 and 30 year terms.

• Maximum loan amount is $417,000
• Seller Contributions are limited to 4%
• Can be 1-4 Units, condominiums are also eligible

FHA (Federal Housing Administration) – These mortgages are insured by the Federal Government and typically require a minimum of 3.5% down and are available in both 15 and 30 year terms. Loans include an upfront and monthly mortgage insurance premium for the life of the loan. FHA offers three options: The 203(b) loan, where the home must adhere to the mortgage guidelines. The 203(k) loan permits the home buyer to finance an additional $5,000 to $35,000 for home rehabilitation to bring the home up to the mortgage guidelines. Conforming loan limits for the greater Minnesota area presently are:

• $271,050 Single Family Homes
• $347,000 Duplex
• $419,425 Tri-Plex
• $521,250 Quad

USDA (US Dept of Agriculture – Rural Housing) – This is a mortgage guaranteed program by the Federal Government that provides home ownership opportunities to low and moderate income rural Americans. Loan limits that vary by County /Zip Code and typically require a low or no down payment.

• Single Family Homes Only
• Seller Contributions are allowed
• Rehab Loans available

Homestretch First-Time Home Buyer’s Program – This is a government sponsored home buyer assistance program that helps buyers with their down payment and/or closing costs of up to $5,000. This program is subject to the borrower meeting income limits and the completion of a training class on home ownership that is offered locally through AEOA (Arrowhead Economic Opportunity Agency) . This program can be used with a variety of the financing options listed above.