Where Can I Find Affordable Mortgages? 3 Great Options
A house is many people’s single most expensive purchase. However, you’ll hardly feel the pinch when you take out a mortgage you can afford.
Where can you find affordable mortgage options? Learn what constitutes affordable mortgages and where you can find them.
Affordable Mortgage Loans vs. Low-Cost Mortgages
An affordable mortgage loan is within your budget, whereas a low-cost one has a low interest rate.
The two aren’t necessarily interchangeable. A high-interest home loan can have a manageable, predictable monthly payment with little to no money down and zero costs at closing. On the other hand, a low-interest mortgage may involve a large down payment and high closing costs.
Nevertheless, some low-cost mortgage programs can be affordable for specific borrowers. Explore every option on the market to find the least expensive home loan you can afford and qualify for.
Types of Affordable Mortgages
The mortgage industry has created numerous loan programs for different needs and preferences. The home loans most affordable housing lenders offer aren’t mutually exclusive since a mortgage program can roll many of them into one.
Fixed-Rate Home Loans
These loans have an interest rate that remains the same throughout their lives. They can be affordable when rates are low. Low mortgage rates suggest that real estate markets are cool — supply outpaces demand — driving home prices down.
Adjustable-Rate Mortgages
These loans have an interest rate that is fixed for the first few years but scheduled to change periodically — usually once a year or once every six months. The rates of adjustable-rate mortgages are generally lower than those of fixed-rate home loans.
The interest attached to these loans can go up or down after the introductory period. Consider applying for them when you plan to sell before the fixed rate becomes subject to adjustment to avoid monthly payment fluctuations.
30-Year Home Loans
These mortgages take 30 years to mature. You have 360 months to repay one, rendering each installment small and manageable. A 30-year mortgage allows you to borrow a large amount and have affordable monthly payments.
The caveat is that it takes a while before you reduce your principal. Most of your initial payments go toward the interest, so this loan makes it challenging to build equity on your home through mortgage repayment.
Conventional 97 Loans
These first-time mortgages have a maximum loan-to-value ratio of 97%. You can borrow up to 97% of a property’s appraised value and put down only 3%, making it affordable if you have considerable savings.
Conventional 97 loans let you use cash grants and monetary gifts from friends and close relatives to cover your entire down payment. This way, you won’t have to touch funds from your bank account or acquire more debt in the form of a secondary mortgage.
No-Down-Payment Mortgages
These home loans permit 100% financing. This feature applies to mortgage programs backed by the United States Department of Agriculture (USDA) or the Department of Veteran Affairs (VA).
Private mortgage lenders extending credit for low- and moderate-income borrowers originate USDA and VA loans. They won’t require private mortgage insurance, so you won’t have to pay for a policy designed to protect your creditor against losses in case you default.
Where Can You Find Affordable Mortgage Options? Top 3 Affordable Housing Lenders
You can find affordable mortgage options from dozens of housing lenders, but these three are your best bets.
Assurance Financial
Assurance Financial is a multi-award-winning full-service residential mortgage provider. It has a license to offer fixed- and adjustable-rate home loans with terms of up to 30 years in most states. The company’s conventional 97 loans include HomeReady® by Fannie Mae and Home Possible® by Freddie Mac.
This banker originates USDA loans for homebuyers wanting to buy a rural home and VA loans for active service members, National Guard members, and veterans or their surviving spouses. Assurance Financial has more than 100 loan officers nationwide who are ready to help you determine the most affordable mortgage based on your credentials.
Guild Mortgage
Guild has more than 60 years of industry experience. This established mortgage lender offers 30-year fixed-rate mortgages for borrowers looking for a trade-off between monthly payment predictability and affordability. It also provides USDA and VA loans.
This lender finances manufactured homes, offers interest buydown options, facilitates hundreds of down payment assistance programs nationwide and extends zero-down mortgages — like its doctor home loan program. Guild also helps members of federally recognized tribes own a house even on nontribal land through the U.S. Department of Housing and Urban Development’s Section 184 Indian Home Loan Guarantee Program.
Rocket Mortgage
Rocket Mortgage is a digital-only company that originates higher loan volumes than any other mortgage retail lender in the U.S. It offers an impressive selection of 30-year fixed-rate conventional 97 loans — including HomeReady and Home Possible.
Some are more affordable than others, as they include a base credit worth thousands of dollars you can apply toward your upfront costs when you buy a house in a certain metropolitan area. If you qualify for one of this mortgage lender’s loan programs for low- and moderate-income earners, you can pay as low as 1% down.
Find a Mortgage Lender Where You Can Find the Most Affordable Options
Assurance Financial, Guild Mortgage and Rocket Mortgage are darlings of borrowers seeking affordable home loans. Get preapproved by these three to obtain reliable loan estimates, determine how much residential real estate you can afford and learn about your costs.
