Mortgage Loans Secured By Ginnie Mae
Ginnie Mae secures a variety of mortgage loans that have the direct backing of the federal government. Let’s run through them.
FHA Loans
Most loans backed by Ginnie Mae are those underwritten to the requirements of the Federal Housing Administration (FHA). FHA loans are aimed at borrowers with less-than-perfect credit or shorter credit histories. Although you can get an FHA loan with a 10% down payment if your median FICO® Score is 500 or better, most lenders, including Rocket Mortgage, require a median score of 580 with a down payment of 3.5% or more.
It’s also important to note that you may qualify for increased flexibility around your debt-to-income ratio (DTI) if you have a score of 620 or better. Higher credit scores can also mean lower rates if everything else is held equal.
One thing borrowers should know about FHA loans is that if you make the minimum down payment, you will pay monthly mortgage insurance payments for the life of the loan along with an upfront mortgage insurance premium.
VA Loans
GNMA also secures VA loans made through the home loan program from the Department of Veterans Affairs (VA). This program is intended for qualifying service members, veterans and qualifying surviving spouses.
In addition to having no required down payment, the other key selling points of this loan option include highly competitive rates and the ability to qualify with a slightly higher DTI than you could on most other loans. Additionally, you can take out 100% of your equity and convert it to cash with a minimum 620 FICO® Score.
Instead of mortgage insurance, there’s a VA funding fee that’s a percentage of the loan amount. How much you pay depends on factors like your down payment, service status and whether you’ve used a VA loan in the past.
USDA Loans
Ginnie Mae also backs loans made by the U.S. Development of Agriculture (USDA) through its Rural Housing Service (RHS) program. Intended to provide an affordable mortgage option for borrowers interested in purchasing a home in a rural area, USDA loans have several advantages.
One of the program’s main benefits is that there’s no required down payment. Another is that guarantee, or funding, fees on USDA loans are cheaper than the monthly and upfront mortgage insurance payments for FHA loans.
To qualify for this loan option, you have to purchase a home in a qualifying rural area. Plus, you and everyone in your household can’t make more than 115% of the area’s median household income.
At this time, Rocket Mortgage doesn’t offer USDA loans.
Mortgages For Native Americans
HUD’s office of Native American Programs offers low down payment options on low-interest home loans through its Section 184 Loan Program. The minimum down payment is 2.25% if your loan is over $50,000 and 1.25% if under $50,000. The interest rates are also based on the market rather than your credit score.
These loans are manually underwritten, so there may be some flexibility around credit depending on your situation. The loan features a 1% guarantee fee that can be paid upfront or built into the loan rather than a mortgage insurance requirement.
At this time, Rocket Mortgage does not originate Section 184 mortgages.
