Sound Mortgage, Inc offers several loan programs. Most loan programs contain different features that can be confusing for even experienced homeowners. The most common loan programs include:

Conforming | FHA | VA | USDA Rural | Reverse | Jumbo | Second Mortgages | Equity Lines

Conforming Loans

Conforming Loans are those that meet Fannie Mae and or Freddie Mac underwriting requirements. In other words, income, credit, and property requirements must meet nationally standardized guidelines. Conforming loans are subject to loan amount limits that are set by Fannie Mae (FNMA) and Freddie Mac (FHLMC). These limits vary based on the region in which the subject property is located as well as the number of legal units contained in the subject property.

	48 States	Hawaii & Alaska
1 unit property	$417,000	$625,500
2 unit properties	$533,850	$800,775
3 unit properties	$645,300	$967,950
4 unit properties	$801,950	$1,202,925

Under the FNMA and FHLMC Charter Acts, the loan limits are 50% higher for first mortgages in Alaska, Hawaii, Guam, and the U.S. Virgin Islands.

Programs and Features:

• Fixed Rate Loans, Temporary Buy-Downs and ARMS
• Available for 1 to 4 unit dwellings, eligible condos and PUD's
• Can be used for investment properties and second homes
• Mortgage insurance is required when the loan to value ratio exceeds 80%
• Non-occupant co-borrowers are not allowed
• Seller may contribute a maximum of 3% if the loan to value ratio is above 90% and 6% if it is 90% or below 
• Loans may be used for purchase, rate and term refinance, and cash out refinance

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Federal Housing Administration (FHA)

The Federal Housing Administration is a division of the U.S. Department of Housing and Urban Development, commonly referred to as HUD. FHA loans were created to provide affordable mortgages to the average homebuyer. The federal government insures FHA loans, or guarantees participating lending institutions against loss from default on qualifying loans.

Programs and Features:

• Fixed Rate Loans, Temporary Buy-Downs and ARMS
• Available for detached 1 to 4 unit dwellings, eligible condos and PUD's
• Available for owner-occupied homes only, no investment properties or second homes
• Properties must meet HUD guidelines and be inspected by HUD-approved appraisers
• Subject to loan limits set by HUD (see HUD web site for loan limits)
• Mortgage insurance of up to 0.55% due annually and paid monthly
• One time up front mortgage insurance fee of 2.25%, which may be financed
• Non-occupant co-borrowers allowed
• No reserve requirements at closing
• 100% of down payment and closing costs may be a “gift”
• Fully assumable by a qualified borrower
• Seller may contribute a maximum of 3% of the lower of the sales price or the appraised value
• The maximum loan amount is 96.5% of the lower of the sales price or the appraised value for both purchases and rate and term refinances and 85% for cash out refinances

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Veterans Administration (VA)

Veterans Administration loans were created to help veterans finance the purchase of their homes with favorable loan terms. For the purpose of the VA program, “veteran” includes active duty service personnel and certain categories of spouses. Like FHA loans, the federal government insures VA loans, or guarantees VA approved lending institutions against loss from default on qualifying loans.

Programs and Features:

• Fixed Rate Loans and Temporary Buy-downs
• Available for detached 1-unit dwellings, eligible condos and PUD's
• Available for owner-occupied homes only, no investment properties or second homes
• Properties must meet VA guidelines and be inspected by VA-approved appraisers
• Subject to loan limit set by VA, currently $417,000 in most counties (see VA web site for loan limits)
• One time up front VA funding fee of 1.5% to 3.3% is typically charged, which may be financed if the total loan amount does not exceed $417,000 
• No reserve requirements at closing
• No down payment required
• Out-of-pocket expenses may be gifted, typically from relatives
• Only eligible veterans and their spouses occupying the subject property may be co-borrowers or co-signers
• Seller may contribute a maximum of 4% of the lower of the sales price or the appraised value
• Loans may be used for purchase, rate and term refinance, and cash out refinance

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US Department of Agriculture (USDA) Rural

The USDA Guaranteed Rural Housing Program is administered by the Department of Agriculture and is designed to help preserve our rural communities. USDA loans were created to provide affordable mortgages to moderate income families looking to purchase single family homes. The federal government guarantees participating lending institutions against loss from default on qualifying loans.

Programs and Features:

• 30 Year Fixed Rate Loans, Temporary Buy-Downs
• Available for single family dwellings, eligible condos and PUD's
• Available for owner-occupied homes only, no investment properties or second homes
• Properties must be located in a Rural Development eligible area (see USDA web site for eligibility map)
• Subject to income limits set by USDA (see USDA web site for income eligibility)
• Borrowers must not currently own adequate housing
• No monthly mortgage insurance
• One time up front guarantee fee of 3.5%, which may be financed
• No reserve requirements at closing
• Closing costs can be financed or may also be a “gift”
• No maximum seller contributions, if greater than 6% a comment from appraiser is required
• Up to the lesser of 10% or $10,000 can be financed for non-structural repairs or improvements
• The maximum loan amount is 103.5% of the of the appraised value 
•  Available for purchase or rate and term refinance of an existing USDA Rural loan

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Reverse Mortgages

A Reverse Mortgage is a low interest Federal Housing Administration (FHA) loan for senior homeowners that uses a home's equity as collateral. Reverse Mortgages were created to allow seniors to tap available home equity to provide cash in the form of a lump sum, line of credit, or monthly payment. The federal government insures Reverse Mortgages and no repayment is required as long as you live in your home.

Programs and Features:

• All homeowners must be age 62 or older to qualify
• No income or credit qualifications
• Available for owner-occupied homes only, no investment properties or second homes
• The amount of money that you receive is dependent on your age and the value of your home
• Receive cash in a lump sum, line of credit, tenure payments (monthly payment for a specific length of time), term payments (monthly payments for as long as any borrower resides in the home), or a combination thereof
• Repayment is only made at a maturity event: death, property sale, or relocation
• A reverse mortgage cannot be outlived; as long as at least one homeowner lives in the home (keeping taxes and insurance current) the loan does not need to be repaid
• Reverse Mortgages are non-recourse, this means that you, your heirs, or your estate can never owe more that the home's appraised value at the time of repayment
• HUD/AARP counseling is required
• Available for properties owned outright, refinance of existing mortgage, or home purchase

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Jumbo

Jumbo loans are those that exceed the loan amounts allowed by FNMA and FHLMC.

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Second Mortgages or Home Equity Closed-End Loans

A close-ended loan is one where a set amount of money is borrowed and repaid within a specific period of time. There are a multitude of second mortgage products available and lender guidelines vary widely. Generally, loan amounts, interest rates and fees are tied closely to equity in the property and credit scores. Whether to do a first or second mortgage or whether to take a line of credit or closed-end loan depends largely on the purpose of the loan.

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Home Equity Lines of Credit

A home equity line of credit loan is a line of credit that is secured against real estate. The amount of the credit line is dependent upon the amount of equity in the subject property and the lender's guidelines. Each lender has its own specific guidelines and limitations. Lines of credit are typically designed for borrowers who intend to pay back the borrowed funds within a short period of time. Equity lines of credit are processed and underwritten similar to traditional mortgages; however, lender guidelines vary widely.

Home equity lines differ from traditional mortgages that provide funds up front, then require repayments of principal and interest each month. With a home equity line, a borrower may draw against any available credit on the line while continuing to make monthly payments during the "draw period." The draw period usually lasts 10 to 15 years. At the end of that time, the borrower has a set number of years to repay the remaining balance in full without further draws. The "repayment period" is typically 10 to 15 years.

Interest on home equity lines accrues similar to interest on credit cards and payments are based on payment factors.

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