A&O MORTGAGE BOUTIQUE
POWERERED BY BARRETT FINANCIAL GROUP
Loan Program Options
FHA Home Loans
What is an FHA Home Loan? An FHA loan is a mortgage insured by the Federal Housing Administration (FHA). Because the government insures these loans, lenders can offer more flexible qualification requirements, making homeownership accessible for those with limited savings or lower credit scores. 2026 Key Benefits: Low Down Payment: Purchase a home with as little as 3.5% down if your credit score is 580 or higher. Flexible Credit: Borrowers with credit scores as low as 500 may still qualify with a 10% down payment. Higher Loan Limits: For 2026, the standard FHA loan limit for single-family homes has increased to $541,288 in most counties. High-Cost Areas: In expensive markets, the 2026 loan limit can reach up to $1,249,125. Gift Funds Allowed: You can use 100% gift funds from family or grants for your down payment and closing costs. Forgiving Requirements: FHA loans are generally more lenient regarding past bankruptcies or foreclosures compared to conventional loans. Important Requirements: Mortgage Insurance (MIP): All FHA loans require both an upfront and an annual mortgage insurance premium. Primary Residence: The property must be your main home; FHA loans cannot be used for investment properties or second homes. Appraisal: The home must undergo a specific FHA appraisal to ensure it meets basic safety and structural standards.
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Conventional Home Loans
A conventional loan is a mortgage that is not insured or guaranteed by a government agency (like the FHA, VA, or USDA). Instead, these loans are offered by private lenders and typically follow the "conforming" guidelines set by Fannie Mae and Freddie Mac. They are the most popular choice for homebuyers with stable income and solid credit. 2026 Key Features & Benefits: Low Down Payment: Qualified first-time buyers can purchase a home with as little as 3% down. PMI Cancellation: If you put down less than 20%, you will pay Private Mortgage Insurance (PMI). Unlike FHA loans, this insurance can be removed once you reach 20% equity in your home. 2026 Conforming Loan Limits: For 2026, the baseline loan limit for a single-family home has increased to $832,750 in most areas. High-Cost Areas: In expensive housing markets, the 2026 conventional loan limit can go as high as $1,249,125. Flexible Property Types: Unlike government-backed loans, conventional loans can be used for primary residences, second homes, or investment properties. Property Condition: Conventional appraisals are often less strict regarding minor repairs compared to FHA or VA standards, giving you more flexibility with "fixer-upper" homes. 2026 Qualification Requirements: Credit Score: Most lenders require a minimum credit score of 620. Higher scores (740+) typically secure the most favorable interest rates. Debt-to-Income (DTI): Lenders generally look for a DTI ratio of 43% to 45%, though some may allow up to 50% with strong compensating factors like high cash reserves. Stable Income: You will typically need to provide two years of steady employment and income documentation.
VA Home Loans
A VA loan is a mortgage benefit available to Veterans, active-duty service members, and eligible surviving spouses. These loans are backed by the U.S. Department of Veterans Affairs, allowing lenders to provide highly competitive terms and often requiring no down payment. 2026 Key Features & Benefits: $0 Down Payment: Most qualified borrowers can purchase a home with no down payment. No Monthly Mortgage Insurance: Unlike FHA or conventional loans, VA loans do not require Private Mortgage Insurance (PMI), saving borrowers hundreds of dollars each month. Lower Interest Rates: VA loans typically offer some of the lowest average interest rates on the market. No Hard Loan Limits: For borrowers with full entitlement, the VA does not impose a maximum loan amount in 2026. Lenders determine the limit based on your credit and income. 2026 Conforming Limits: For those with partial entitlement, the baseline 2026 limit has increased to $832,750 in most areas, with higher limits up to $1,249,125 in high-cost regions. Limited Closing Costs: The VA limits the types of closing costs and fees that a Veteran can be charged. 2026 Qualification Requirements: Certificate of Eligibility (COE):You must have a valid COE to prove your service-based eligibility. Credit & Income: While the VA doesn't set a minimum credit score, most lenders in 2026 look for a score of at least 620. Residual Income: Lenders use a unique "residual income" test to ensure you have enough cash left over after all monthly bills to cover basic living expenses. VA Funding Fee: Most borrowers pay a one-time funding fee (which can be rolled into the loan). Veterans with service-connected disabilities are typically exempt from this fee.
Jumbo Home Loans
A Jumbo loan is a mortgage used to finance properties that are too expensive for a conventional conforming loan. Because these loans exceed the limits set by the FHFA, they cannot be purchased by Fannie Mae or Freddie Mac, meaning lenders take on more risk and often require stricter qualifications. 2026 Threshold: In most of the U.S., any mortgage amount above $832,750 is considered a Jumbo loan. High-Cost Areas: In expensive markets (like parts of CA, NY, or FL), the threshold can go as high as $1,249,125. Stricter Requirements: Expect to need a credit score of 700–720+, a down payment of at least 10–20%, and significant cash reserves.
USDA Loans
A USDA loan is a government-backed mortgage designed to help low-to-moderate-income families buy homes in eligible rural and suburban areas. These loans are popular because they offer 100% financing. No Down Payment: Borrowers can purchase a home with $0 down. 2026 Income Limits: Eligibility depends on household size. In most U.S. counties for 2026, the limit is $119,850 for a 1-4 person household and $158,250 for 5-8 people. Location Based: The home must be located in a USDA-eligible area (typically outside major cities). Credit Standard: Most lenders look for a credit score of 640 or higher for automated approval.
Non-QM Loans
Non-QM loans provide flexible financing for creditworthy borrowers who do not fit into the "traditional" box required by most lenders. They allow for alternative ways to prove income and ability to repay. Documentation: Instead of W-2s or tax returns, you can qualify using bank statements, 1099s, or asset depletion. Ideal for the Self-Employed: Perfect for business owners, freelancers, and gig workers with complex income structures. Investor Options (DSCR): Real estate investors can qualify based on the rental income of the property alone, rather than their personal income. Credit Flexibility: These loans are often available to those with a recent major credit event (like bankruptcy or foreclosure) without the long waiting periods required by standard loans.