Aside from bank loans, there are several other ways to finance your dream home—and choosing the right one can save you serious time, money, and energy. Today, we’ll go over four of them to help you make the right decision.
FHA loans
Federal Housing Authority (FHA) loans are government-backed mortgages specifically designed for low to moderate income borrowers. Aside from requiring lower minimum credit scores, they also require down payments as little as 3.5%, making them more accessible to more people.
The only downside to choosing this option is that it requires you to pay for mortgage insurance premium, which ultimately increases the total cost of your loan. In addition, buying property with an FHA loan means you can only use said property as a primary residence. You’re not allowed to rent it out to earn income as a landlord.
VA loans
The Veterans Administration loans or VA loan is a type of mortgage loan guaranteed by the Department of Veteran Affairs.
The pros of financing your dream home with a VA loan are:
- No down payment
- No private mortgage insurance
- Competitive interest rates
The only catch is that you can only avail a VA loan if you’re a current or former member of the US military or, in some cases, a spouse of one. In addition, VA loans require a funding fee that brings the total cost of the loan up—unless you’re exempt because of a service-related disability.
USDA loans
If you’re okay with owning a property in rural and suburban areas, then the USDA loans backed by the United States Department of Agriculture may be a good option for you. Designed to encourage development in less densely populated areas, USDA loans require no down payment and offer low interest rates.
However, it also comes with several downsides aside from the geographic restrictions, including:
- Income limits to ensure accessibility for lower-income borrowers
- Residency requirements that may pose a challenge for non-resident immigrants
Non-traditional loans
Non-traditional home loans consist of options like peer-to-peer loans, private lender loans, and any other government-backed loans other than the three we’ve talked about so far. They’re designed for borrowers with limited credit history or non-traditional employment, making them perfect for immigrants.
Their cons, however, typically include:
- Higher interest rates
- Higher fees
- Less protection for borrowers due to fewer and less strict regulatory safeguards
But not all non-traditional loans are created equal. Some offer more favorable terms than others.
Choosing the right financing option
With all these financing options at your disposal, which one should you choose? Well, it all depends on your specific needs and situation.
The good news is you don’t have to make such a big decision on your own. Since Asenso Home Loans offers all the financing options we’ve talked about so far (and more), we’re able to not only help match you with the right one, but also assist you in securing the most favorable terms and rates possible based on your requirements and financial situation.
Whether you’re a traditional borrower or someone who needs a little more flexibility, owning your dream home or investment property in the US or the Philippines is easier with Asenso Home Loans.
Start your property ownership journey today
Apply for an Asenso home loan online now at asenso.io/homeloans. Just answer some questions and we’ll match you with a dedicated loan officer who will help you find the perfect convenient and bias-free financing option for you based on your specific needs and preferences.
