General Mortgage Loan Info
The home prices in Delaware vary greatly depending on location and the desirability of any housing market. Identifying the cities where you want to live can help you to get a better sense of average home prices and what you can expect to spend on a home. Your closing costs will include your home inspection, origination costs, and appraisal. Retaining a lawyer and title insurance are costs that you can shop around for and thus reduce your costs. Your lender is also obligated to show you a Loan Estimate within three days of submitting your loan application. This estimate is where you can see the breakdown of your closing costs. In Delaware, it is typical to pay between 2-5% of your home’s value in your closing costs.
VA Loans in Delaware
A VA loan is made by private lenders but guaranteed by the Department of Veterans Affairs. It offers low interest rates and a 0% down payment. You can use this program to purchase or refinance your Delaware home. This loan program provides 100% financing. If you negotiate with the seller to pay the closing costs, a Delaware vet can purchase a home with as little as $1,000.
You need to have a minimum 580 credit score to apply. There is also no monthly mortgage insurance, unlike the FHA loan program. However, there is a funding fee that can be financed as part of the loan.
To be eligible, you need to have served at least 2 years on Active Duty or served 6 years in the Reserves or National Guard. If you are the spouse of a service member killed in the line of duty or a spouse of a service member who died due to a service-related disability, then you are also eligible for a VA loan. If you have 100% entitlement available, then there are no loan limits. Partial entitlement does have a maximum loan amount that they can borrow at 100% financing, but then you must put down 25% of the remaining amount above the loan limit.
FHA Loans in Delaware
Delaware FHA loans are available for those with less than perfect credit and a lower down payment. A homebuyer can qualify with a credit score as low as 500. The FHA loans are insured through the federal government, which lowers the risk for lenders and allows homebuyers to take advantage of low interest rates. It has flexible qualifying guidelines, including higher debt to income ratios.
With the lower down payment, however, you will have to pay MIP (mortgage insurance premiums) as part of your monthly mortgage payment. Your closing costs will also include an upfront premium (UFMIP), which can be paid at closing or rolled into the life of your loan.
USDA Loans in Delaware
The USDA offers a program that allows you to purchase a home without any down payment. You can also finance your closing costs. The mortgage insurance, referred to as the “guarantee fee,” is typically lower than MIP insurance through the FHA. All USDA loans come with a fixed interest rate that will not adjust or fluctuate throughout the life of your loan. Another benefit is that you do not have to be a first-time home buyer. A Delaware USDA Rural Housing loan allows the lender to lend up to the appraised value of the home. Many rural and suburban areas qualify for the USDA program.
However, to qualify, you must have a credit score of 620 or greater, meet the income limits, and the property must be in a rural area. You also have to use the property as your primary residence. There are no exact loan limits through the USDA program, since the amount you can borrow will be based primarily on your debt-to-income ratio. Your monthly housing expenses must meet a specific percentage of your gross monthly income. Typically, 29% ratio is the guideline. If you have a bankruptcy, it must have been discharged for 3 years or more.