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4 Types of Home Loans in Georgia


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Long-time readers of the site know that I'm a Georgia girlie through and through. Even though I've lived briefly in New York and Birmingham, I've spent the bulk of my 37 years in the Peach State, and now twelve years in Atlanta. In my time here, I've witnessed first-hand the dramatic growth of the area, and I understand why an estimated 300,000 people move to Georgia every year.

  1. First off, Georgia has a relatively low cost of living compared to other states, making it an attractive option for those looking for affordable housing. Even Atlanta, compared to other major metro areas can offer relatively “affordable” housing.
  2. Additionally, Georgia offers a variety of climates, from the mountains in the north to the coastal areas in the south, providing diverse options for outdoor activities and lifestyles.
  3. Georgia also has a strong job market, with several major industries such as film production, technology, and logistics, which can provide employment opportunities for residents.

Especially now that I work in real estate full-time as an agent (not just as an investor!), I'm well-acquainted with the types of home loans available in Georgia. Below is a quick “hit list” of the different types of mortgage loans available to most home buyers.

What are the types of home loans available in Georgia?

In Georgia, there are several types of home loans available. Some common options include conventional loans, FHA loans, VA loans, and USDA loans. These are available nationwide (with some restrictions), but readily available in Georgia as well. These are just a few examples, and there may be other specialized loan programs depending on your city and zip code.

It's crucial when shopping for a mortgage to build a relationship with a mortgage broker in your area who can alert you to loan products and grant programs you may qualify for.

4 types of home loans in Georgia

Conventional (Standard) Loan

Conventional loans are not insured or guaranteed by the government and typically require a higher credit score and down payment.

  • A conventional loan can either fall into the conforming loan or non-conforming loan category. (Depends on the size of the loan.)
  • You must have good credit (at least 620-640) and money saved for the down payment and closing costs to qualify for this loan.
  • Buyers do not need to occupy the home at closing (the government-backed loans require that you use them as a primary residence.)
  • Private mortgage insurance is a requirement if you cannot provide at least a 20% down payment at closing.

While good credit and high down payment are needed for a conventional loan, this loan is the most flexible of all of the ones listed here. Looking for a primer on construction loans? Click here.

FHA Loan

  • This loan is backed by the Federal Housing Authority (FHA) and helps first-time homebuyers or people with low credit scores.
  • You can qualify for an FHA loan with a credit score as low as 500-579, but you will need at least 10% down payment of the home’s purchase price, a debt-to-income ratio of less than 43%, as well as other requirements.
  • To qualify for the 3.5% down payment, you’ll need to have a credit score of no lower than 580.
  • There are also 203k mortgage loans to help you pay for renovations on a fixer-upper and more traditional options like a 15-year mortgage.

FHA 203k Rehabilitation Loan

I'm mentioning a type of FHA loan here (the 203k also known as a “rehab loan”) because it is what I used to purchase and renovate my first home way back in 2013 and I have a lot of experience with it. Essentially:

  • A 203k is a home loan product where you can borrow money for home renovations at the same time you borrow money for a mortgage, and it lumps the funds all together as one mortgage loan.
  • The down payment requirement is low at 3.5% but there is a lot of paperwork involved.
  • You have to hire a professional contractor to do the repairs/renovation.

VA Loan

  • This is a government-backed loan for military veterans.
  • The US Department of Veterans Affairs backs part of the loan for qualified military service members, veterans, and qualified spouses.
  • You don’t need a very high credit score to qualify.

USDA Rural Loan

 Types of Home Loans in Georgia: FAQs

Are there any restrictions on home loans in Georgia?

Yes, there are some restrictions on home loans in Georgia. One important restriction is the loan-to-value ratio (LTV), which is the percentage of the home's value that can be borrowed. In Georgia, the maximum LTV ratio is typically around 80%. Additionally, there may be restrictions on the borrower's credit score, income, and debt-to-income ratio. It's always a good idea to consult with a lender or mortgage professional to get specific information about the restrictions that may apply to your situation.

What is a conforming vs. non-conforming loan?

A conforming loan is a loan that falls underneath a certain limit and is backed by the government (Fannie Mae and Freddie Mac.) The Federal Housing Finance Agency that regulates the housing market puts a cap on conforming loan limits (for single-family homes it’s $484,350, and in high-cost areas, it’s $726,525).

A non-conforming loan is aptly named – because it doesn't conform to the limits set by the government. What that means is that any loan over these amounts wouldn’t be guaranteed by Fannie Mae or Freddie Mac and are considered much riskier.

Because of the high amounts these loans are sought after by homebuyers looking to purchase luxury homes or homes in highly competitive housing markets. Jumbo loans require high credit scores and large down payments because of the higher risk to lenders.

What's the difference between a fixed rate loan vs. adjustable rate mortgage (ARM)?

After choosing your mortgage type, you’ll also pick what type of interest rate program you want.

  • Fixed Rate Mortgage – Keeps your interest rate the same for the life of your loan (usually 15-30 years). Your rate will never change, even if housing interest rates go up or down. For example, at closing your rate is at 4% and will remain there for the life of your loan unless you refinance.
  • Adjustable Rate Mortgage (ARM)  – This means the interest rate will fluctuate based on market indicators after an initial period (typically anywhere from 3, 5, 7, or 10 years). Your interest rate may increase (or decrease depending on the market) the longer you hold on to your loan. So, if you’re planning on moving out around 5 years, an ARM could get you a much lower interest rate at the time of closing than that of a fixed rate loan.

The TL:DR

In conclusion, Georgia offers a variety of home loan options for potential buyers. From conventional loans to FHA loans and VA loans, there are choices to suit different financial situations and needs. Buyers need to research and compare the different types of home loans available in Georgia to find the best option for their circumstances. By understanding the restrictions and requirements associated with each type of loan, buyers can make informed decisions and secure the financing they need to purchase their dream home in Georgia.

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