Loan Programs and Mortgages for Different Property Types

Many people think of an existing single-family home when they think about homeownership or buying residential real estate. Purchases of this type of property are common, after all. But there are other residential real estate purchases that might be perfect for your lifestyle and/or financial situation. 

One of the biggest differences between purchasing a single-family home and a different type of property comes down to the financing. Existing, habitable homes are generally financed with a conventional mortgage, jumbo loan, VA loan, or FHA loan (depending on the sales price).

Thankfully, there are other mortgages for different property types. Let’s break down some of the most common property types and what those mortgage loans might look like. 

Manufactured Housing

Manufactured (or prefabricated) housing can be a creative, cost-effective alternative to a single-family home. That’s because they’re generally smaller and manufactured in sections, which keeps costs down. 

Despite the fact that nearly 20 million Americans live in manufactured homes, you don’t often hear about financing for this type of property. Preferred Rate has you covered, though.

We have a variety of loan programs to help all types of buyers. We can finance manufactured homes that are more than 10 years old as long as they have a minimum of 400 square feet and are at least 12 feet in length—single-wides included.

Condos

There is often slightly less competition for a condo than there is for a single-family house, which can make these homes more attractive to people who are looking to buy a home without a massive bidding war.

Condos can be ideal for young professionals and families just starting their homeownership journey, as well as empty-nesters who are ready to downsize. Regardless of your age, there are many benefits to owning a condo that are worth exploring. 

Financing condos has been tricky in years past if the condo or development didn’t fit within the conventional guidelines laid out by Fannie Mae and Freddie Mac. Condos that don’t adhere to these guidelines are known as non-warrantable condos, which require non-QM (qualified mortgage) financing. 

New rules for FHA loans can allow you to buy a condo within an unapproved complex, something known as spot approval. FHA loans typically offer lower down payments, credit score requirements, and interest rates—three more reasons to consider this type of property!

Fixer-Uppers

Are you a fan of HGTV? Who isn’t? But you don’t have to be the Property Brothers to invest in a fixer-upper. Everyday people do it all the time—and they do it with renovation loans. 

Whether the home you want to purchase needs a little updating or a complete overhaul, there’s a renovation loan for that. Renovation loans can finance the cost of the work through your mortgage, and they can be used whether you’re renovating your current home or buying a new property. 

The best part about renovation loans is that they don’t require any money out of pocket. Instead, this type of financing can increase the value of the property by funding the costs associated with repairs, products, and labor. 

Construction

Having trouble finding the home or neighborhood you want? You can build or custom-design a new single-family home, including a manufactured home purchased from a dealer. This is done through a construction loan.

Preferred Rate offers one-time (6-, 9-, and 12-month terms) and two-time close construction loan options. On a one-time close, you are one and done. If you select the two-time close option, that means you’ll have one loan that funds the construction phase, and then, as your house nears completion, you’ll get a second loan that pays off the construction loan and becomes your permanent financing.

For both one- and two-time closes, you pay only interest on your construction loan during the building process, which can be paid in monthly payments or rolled into your loan.

Once construction is complete, the permanent financing is a traditional loan where your monthly payments will go toward principal and interest, just like any other mortgage.

A great feature of Preferred Rate’s construction loans is that you have a term up to 12 months (6 months longer than most mortgage lenders). You can also forward-lock your permanent financing right at the beginning or at any time during the process. That way you won’t have to worry about where interest rates will be when your home reaches completion.

Investment Properties

Maybe you’re not looking for a home to occupy, but one that can make you money. Welcome to the world of real estate investing. Real estate can be an excellent investment vehicle, as long as you understand the risks and stay within your budget. 

That’s where our financing programs can help. Preferred Rate offers its Visionary Investment program for those who want to make a long-term investment in a home but need a little flexibility with the financing requirements.

The Visionary Investment program funds loans up to $3 million. It can accept FICO credit scores as low as 640; offer options for debt-service coverage ratio (DSCR); and can even allow foreclosures, bankruptcies, and late payments in some cases. There is even an option to qualify with bank statements, and non-warrantable condos are also allowed!

Solutions for Everyone

Just as there is a mortgage available for every property type, there’s also a home loan program out there for every nontraditional borrower. 

Are you ready to get started? Preferred Rate is: Our trusted Mortgage Advisors can walk you through every type of property and their corresponding financing options. Reach out to us today to find a solution that’s a fit for you.