Understanding the Types of Loans Available Conventional Loan Programs Conventional loans are traditional home mortgages, not backed by any government program of insurance or guarantee. There are standard underwriting guidelines for conventional conforming loans up to $417,000. These loans are available as a fixed or variable (ARM) rate with a variety of repayment terms which can be tailored to your individual needs. Buyers will need cash reserves/savings to cover two months of payments and generally, there is not a penalty for prepayment. Fixed Rate Mortgage Fixed Rate Mortgages provide the security of a fixed principal and interest payment for the term of the loan. The term of a fixed rate mortgage can provide the flexibility needed to meet your specific goals. Common fixed-rate mortgage terms are 10, 15, 20 or 30 years. Adjustable Rate Mortgage An Adjustable Rate Mortgage (ARM) features a variable interest rate which may periodically adjust after a set term, generally one to ten years. For example, a 5/1 ARM will start with a competitively low interest rate for a five-year period which will be well below a standard fixed-rate loan. After five years the interest rate will reset based upon the loan's margin and the index (e.g. LIBOR, Treasury, etc.) with which it is tied. Your interest rate may go up or down, or may stay the same depending upon the prevailing index. ARMs can save on interest and lower your monthly payment. They are completely predictable with upper and lower end caps on how much the interest rates will increase, or decrease. These loans are especially attractive to home buyers who want extremely low monthly payments, or who plan to trade up in future years. Jumbo Mortgage If the anticipated amount of your mortgage loan exceeds $417,000, we offer a variety of mortgage options which will meet your needs. So-called non-conforming jumbo loans can be either fixed or adjustable rate mortgages. Underwriting guidelines may vary depending on program selected, down payment and actual loan amount. FHA/VA Loan Programs Paramount Mortgage is an FHA/VA approved lender. FHA (Federal Housing Administration) backed loans are ideal for first-time home buyers and those low- to moderate-income borrowers. Loans are insured by the FHA. Down payments may be as little as 3.5% and 100% of the down payment funds can be from a gift. There are also several other options for the source of funds needed for closing. The seller can contribute up to 6% towards closing costs, prepaid cost and points. No cash reserves are required for loan approval. FHA loans can be fixed or adjustable rate. The 2011 FHA loan limits for the St. Louis and Tampa Bay regions are: One-Family: $271,050 Two-Family: $347,000 Three-Family: $419,425 Four-Family: $521,250 2011 maximum loan amounts are effective:Oct. 1, 2011 - Dec. 31, 2011. (New loan limits will be announced later this year.) Check with your local Paramount Mortgage Office for the FHA loan limits in Florida, Washington, Idaho, California, Illinois, or other areas. Our mortgage banking experts can give you all of the specific details that apply to your situation. VA (Veterans Administration) loans are available to individuals who have served or are currently in the U.S. armed forces that meet eligibility requirements. VA mortgages may be provided with no down payment requirement, making them ideal for first-time borrowers. Loan amounts may be as much as $417,000 with full entitlement. Requirements are generally 2 years in the armed forces with veterans benefits. A Certificate of Eligibility is required. The seller can pay closing costs and prepaid items. There is a 100% financing option and there are no penalties for prepayment. State or Community-Specific Lending Programs Missouri's First Place Loans Missouri Housing Development Commission (MHDC) sponsors loan programs offering first-time home buyers in Missouri assistance in purchasing a home. The MHDC program provides competitive interest rates and a forgivable cash assistance loan for down payment/closing costs. Candidates must not have had any interest in a primary residence in the past three years. Gross annual household income limits must fall within the limits for the defined Metropolitan Statistical Area (MSA) in which the property is located. For the St. Louis region MSA, First Place Loans for homebuyers in non-targeted areas can qualify with a gross household income up to $69,500 (one or two person household) or $79,925 (three or more person household). Targeted areas are $83,400 and $97,300 respectively. Persons who have owned a home within the previous three years are not eligible unless buying in a specially designated area.