Loan Types

Click on the loan type below to learn more:

Conventional Loans
Conventional loans are mortgage loans offered by non-government sponsored lenders. These loan types include:

  • Fixed Rate Loans
  • Adjustable Rate Loans (ARMs)
  • Jumbo / Construction Loans
  • Reverse Mortgage
Conforming Loans
Conforming loans are conventional loans that meet bank-funding criteria set by Fannie Mae (FNMA) and Freddie Mac (FHLMC). Both of these stock-holding companies buy mortgage loans from lending institutions and secure them for resale to the investment community. Every year, form October to October, Fannie Mae and Freddie Mac establish limits on what constitutes a conforming loan in a mean home price.Buying back mortgage loans allow these agencies to provide a continuous flow of affordable funding to banks that reinvest their money back into more mortgage loans. Fannie Mae and Freddie Mac only buy loans that are conforming, to repackage into the secondary market – effectively decreasing the demand for non-conforming loans.

Conforming Loan Limits:

Number of Units Maximum original principal balance Alaska, Guam, Hawaii, and U.S. Virgin Islands only
1 $417,000 $625,500
2 $533,850 $800,775
3 $645,300 $967,950
4 $801,950 $1,202,925

NOTE: The conforming loan limit in Alaska, Hawaii, Guam and the Virgin Islands is 50% higher.

FHA Loan
FHA mortgage loans are issued by federally qualified lenders and insured by the U.S. Federal Housing Authority, a division of the U.S. Department of Housing and Urban Development.FHA loans are an attractive option, especially for first-time homeowners:

  • Generally easier to qualify for than conventional loans.
  • Lower down payment requirements.
  • Cannot exceed statutory loan limits.

Learn more about FHA loans. (Department of Housing and Urban Development)

VA Loan
Designed to offer long-term financing to American veterans, VA mortgage loans are issued by federally qualified lenders and are guaranteed by the U.S. Veterans Administration. The VA determines eligibility and issues a certificate to qualifying applicants to submit to their mortgage lender of choice. It is generally easier to qualify for a VA loan than conventional loans.Here’s how it works:

  • 100% financing without private mortgage insurance or 20% second mortgage.
  • A VA funding fee of 0 to 3.3% (this fee may be financed) of the loan amount is paid to the VA.
  • When purchasing a home, veterans may borrow up to 100% of the sales price or reasonable value of the home, whichever is less.
  • When refinancing a home, veterans may borrow up to 90% of reasonable value in order to refinance where state law allows.

Apply for a VA Loan with a VA Qualified Lender.

State and Local Housing Programs
Many state, county and local government programs offer financing for qualifying low-to-moderate income families wishing to purchase their first home. Loan assistance programs like Mortgage Credit Certificate (MCC) offer a partial tax credit for interest on the loan.These programs typically offer:

  • More relaxed qualifying guidelines
  • Lower upfront fees
  • Lower interest rate
  • Fixed rate
Jumbo Loans
Jumbo Loans exceed the maximum loan amounts established by Fannie Mae and Freddie Mac conventional loan limits. Rates on jumbo loans are typically higher than conforming loans. Jumbo Loans are typically used to buy more expensive homes and high-end custom construction homes.
Fixed Rate Mortgage
With a fixed rate mortgage, the interest rate does not change for the term of the loan, so the monthly payment is always the same. Typically, the shorter the loan period, the more attractive the interest rate will be.Payments on fixed-rate fully amortizing loans are calculated so that the loan is paid in full at the end of the term. In the early amortization period of the mortgage, a large percentage of the monthly payment pays the interest on the loan. As the mortgage is paid down, more of the monthly payment is applied toward the principal.A 30 year fixed rate mortgage is the most popular type of loan when borrowers are able to lock into a low rate.

Benefits:

  • Lower monthly payments than a 15 year fixed rate mortgage
  • Interest rate does not go up if interest rates go up
  • Payment does not go up, it stays the same for 30 years

Drawbacks:

  • Higher interest rate than a 15 year fixed rate mortgage
  • Interest rate stays the same even if interest rates go down

A 15 year fixed rate mortgage allows you to pay off your loan quicker and lock into an attractive lower interest rate.

Benefits:

  • Lower interest rate
  • Build equity faster
  • If interest rates go up, yours is fixed

Drawbacks:

  • Higher monthly payment stays the same if interest rates go down
  • Interest rate stays the same even if interest rates go down
Adjustable Rate Mortgage (ARM)
An ARM is a mortgage with an interest rate that may vary over the term of the loan — usually in response to changes in the prime rate or Treasury Bill rate. The purpose of the interest rate adjustment is primarily to bring the interest rate on the mortgage in line with market rates.Mortgage holders are protected by a ceiling, or maximum interest rate, which can be reset annually. ARMs typically begin with more attractive rates than fixed rate mortgages — compensating the borrower for the risk of future interest rate fluctuations.

Choosing an ARM is a good idea when:

  • Interest rates are going down
  • You intend to keep your home less than 5 years

ARMs have the following distinguishing features:

  • Index
  • Margin
  • Adjustment Frequency
  • Initial Interest Rate
  • Interest Rate Caps
  • Convertibility

Index

An adjustable rate mortgage’s interest rate increases and decreases based on publicly published indexes. ARMS are based on different indexes including:

  • United States Treasury Bills (T-bills)
  • The 11th District Cost of Funds Index (COFI)
  • London Interbank Offering Rate Index (LIBOR)
  • Certificate of Deposit Indexes (CODI)
  • 12-Month Treasury Average (MTA or MAT)
  • Cost of Savings Index (COSI)
  • Bank Prime Loan (Prime Rate)

Margin

Margin is a fixed percentage amount that is pointed added to the index – accounting for the profit the lender makes on the loan. Margins are fixed for the term of the loan.

interest rate = index + margin

Adjustment Frequency

Adjustment frequency reflects how often the interest rate changes – also known as the reset date. Most ARMs adjust yearly, but some ARMs adjust as often as once a month or as infrequently as every five years.

Initial Interest Rate

The initial interest rate is the interest rate paid until the first reset date. The initial interest rate determines your initial monthly payment, which the lender may use to qualify you for a loan. Often the initial interest rate is less than the sum of the current index plus margin so your interest rate and monthly payment will probably go up on the first reset date.

Interest Rate Caps

Interest rate caps put limits on interest rates and monthly payments.

Common caps:

Initial Adjustment Cap
An initial adjustment cap limits how much the interest rate can change at the first adjustment period.

Example:
If your ARM has a 1% initial adjustment cap, your interest rate may only increase or decrease by a maximum of 1% at the first adjustment period.

Periodic Adjustment Cap
A periodic adjustment cap limits how much your interest rate can change from one adjustment period to the next. Usually a six-month adjustable rate mortgage will have a one percent periodic adjustment cap while a one-year adjustable rate mortgage will have a two percent periodic adjustment cap.

Example:
If your loan has a 2% periodic adjustment cap, your interest rate may only increase or decrease by a maximum of 2% per adjustment period.

Lifetime Cap
A lifetime cap sets the maximum and minimum interest rate that you may be charged for the life of the loan. Most ARMs have caps of 5% or 6% above the initial interest rate.

Example:
If your loan has a 6% lifetime cap, your interest rate may only increase or decrease by a maximum of 6% for the life of the loan.

Initial adjustment caps, periodic adjustment caps, and lifetime caps make up an adjustable rate mortgage’s cap structure, and are usually represented as three numbers:

Example:
1/2/6 — Initial adjustment cap is 1 %/ periodic cap is 2% / lifetime cap is 6%.

Negatively Amortizing Loans

Because Negatively Amortizing Loans provide payments caps instead of interest rate caps, they limit the amount the monthly payment can increase. However, there is a risk interest rates could potentially escalate to a point where the monthly payment would not cover the interest being charged. If this scenario were to occur, the extra interest charges would be added to the principle of the loan, resulting in the borrower owing more than was initially borrowed. Borrowers are usually allowed to make payments over the loan amount to pay down the mortgage and guard against this scenario.

There are certain times when having a negatively amortizing mortgage could be beneficial. If a borrower were to lose a job or have an unexpected financial emergency a negative amortization option could ease cash flow situation. However, this should only be used as a short-term solution.

Option ARM loans

Option ARM loans allow the borrower to choose the amount to pay toward the mortgage each month. Make a minimum payment, interest-only payment, 30-year amortized payment or 15-year amortized payment. Pay the minimum amount to free up funds for other uses, or make larger payments for faster equity build up. Option Arms offer much more cash flow flexibility but must be used wisely by the borrower. Always consult a qualified loan officer to learn about all of the risks associated with these types of loans. He or she will also be able to offer valuable advice on properly managing your monthly payments.

Combined/Hybrid ARMs
A combination of fixed rate and adjustable rate loans:

Fixed-Period ARMs

Borrows often lock into 3 to 10 years of fixed rate payments before the initial interest rate change. At the end of the fixed period, the interest rate adjusts annually. Fixed-period ARMs are typically tied to the one-year Treasury securities index: 3/1, 5/1, 7/1 and 10/1.

ARMs with an initial fixed period beside of lifetime and adjustment caps usually have also first adjustment cap. It limits the interest rate you will pay the first time your rate is adjusted. First adjustment caps vary with type of loan program.

The advantage of these loans is that the interest rate is lower than for a 30-year fixed (the lender is not locked in for as long so their risk is lower and they can charge less) but you still get the advantage of a fixed rate for a period of time.

Balloon Loan

Balloon Loans offer a fixed rate for a specified time period, typically 5 or 7 years, and then adjust to the current market rate. After the adjustment the mortgage stays at the new fixed rate for the remainder of the loan period.

Graduated Payment ARMs

Graduated payment mortgages initially offer lower payments at the start of the loan that gradually increase at preset times. Lower initial payments allow borrowers to qualify for a larger loan amount. Loan amounts negatively amortize during the early years of the loan then pay off the principal at an accelerated rate through the later years.

GPM payment plans will vary by rate of payment increases and number of years over which payments will increase. The greater the rate of increase, or the longer the period of increase — the lower the initial mortgage payments.

Convertible ARMs

If an adjustable rate mortgage is convertible, the borrower may convert to a fixed rate mortgage, when interest rates begin to rise, without refinancing. The new rate is established at the current market rate for fixed-rate mortgages. The terms of convertibility vary among lenders. Typically it involves a nominal fee and minimal paperwork. The downside is that the conversion interest rate is often a little higher than the market rate at the time of conversion.

A fixed rate loan with a rate reduction option allows borrowers, under predetermined conditions, to adjust to the current market rate for a nominal fee. The discount points or interest rates are often slightly higher for convertible loans.

Buydown Mortgage

A temporary buydown initially offers a lower interest rate and lower monthly payments. In order to reduce monthly payments during the first years, borrowers make an initial lump sum payment or agree to a higher interest rate. Over the years, the interest rate gradually increases until it peaks at a fixed rate. Borrowers who chose this loan often expect a significant increase in their income.

Testimonials

“First Rate Financial was so amazing to work with! My husband and I just purchased our first home and they were there every step of the way! We worked with Chris Dixon and he made everything so easy. He told us everything we needed upfront and we were actually ready to close early if we wanted to because everything went so smooth. We so appreciate their help and expertise. We will definitely recommend them and use them in the future.”

– Morgan Villanueva

“I was referred to First Rate Financial by a buddy that had a phenomenal experience. Chris Dixon was my loan officer. He and my real estate agent Dan make a great team. They are extremely knowledgeable, responsive and set the right expectations for their clients. Not to mention provide the lowest rates without you having to shop lenders. Keep up the great work, I’m your customer for good!”

– Jay Cooper

“My wife and I purchased our first home with the help of Jason Turner. With it being our first time going through the home-buying process, Jason was extremely helpful getting all of our questions answered, even if some of our questions were basic and obvious. Jason answered texts, emails and calls on Fridays and Saturdays and made sure everything was moving forward swiftly throughout the entire process.

I highly recommend First Rate Financial, and specifically Jason. He was incredibly knowledgeable and my wife and I were very impressed with how everything went.

Thanks, Jason (and the rest of the First Rate Financial team)! I’ll recommend these guys to future home buyers”

– Eddie Moore

“Thank you so much to Jason Turner for helping us with our refinance. We never dreamed this process could be so easy and convenient. We could not have been taken care of better!! He was incredibly accommodating even with all of our silly questions! It was a breath of fresh air to have someone take the time to truly explain each detail! Thank you again Jason.. we will be sending all our family and friends your way!!!”

– Brittany Hitt

“Jenny with First rate financial was amazing! I was given her name through a friend after a terrible experience with a large bank. Jenny was friendly and knowledgeable . She had a competitive quote in 2 hours after my initial call. We closed without any hiccups in 3 weeks. Closing was completed at my house and done in 20 minutes. I would highly recommend this company without any reservations and will be a repeat customer the next time I need any finance assistance”

– Courtney Campbell

“Jenny Bray did an outstanding job with my refi! Saved me money with every opportunity and sent people to me to get everything signed and closed. No one likes driving across the metroplex to close on a loan and I got to do it in my office at work”

– Wesley Rogers

“Tawna was great to work with. She explained rhe whole process very nicely in detail and was available to answer any questions any time. She always responded to queries very quickly and always suggested the best options available keeping the interest of the client in mind. She was a great help through the whole process and we jighly recommend her.”

– Shailendra Parolkar

“I can’t say enough about Sarah Miller & how grateful we are to have worked with her on our home loan! Sarah was so quick to get us pre-approved, and was INCREDIBLY helpful in explaining the process for our home loan. She helped us get our interest rate to the lowest available, which saved us so much money, & worked hard on our behalf. She was quick, professional, and we are so confident in her services as well as pleased with the process! We will recommend Sarah Miller with First Rate Financial, LLC to all of our family & friends!”

– Alexandra Joplin

“First Rate Financial was excellent to work with. We received a recommendation from a friend after obtaining quotes from two other lenders. Chad Lemons and the team at First Rate Financial were able to get us a better interest rate and lower closing costs that either of the other two lenders – by a lot. At closing, the title company representative said that in all her years in the business, she’d never worked with a lender that was as good as Chad and First Rate Financial. Many thanks to Chad Lemons and the team at First Rate Financial.”

– Jeffrey Davis

“Hi Josh, First Rate was such a pleasure to work with during the refinance of my home mortgage. Josh, you were always pleasant each time there was a question about completing the process. There was no apparent stress involved in getting the paper work done. Thank you for being such a gentleman.

– Elizabeth Peveto

“My wife and I worked with First Rate Financial to secure a mortgage in June under a very compressed time schedule. We were leaving on vacation overseas and we had to complete our application and all the required supporting documentation in less than 10 days. They were extremely helpful in guiding us through this process and working with both the lender and the title company to make sure we had the correct information in a timely fashion. With their help, we were able to complete the application on time before our trip and by the time we returned the loan was already approved. We are very grateful for their professionalism and dedication and we will certainly refer our friends”

– Sanaa and Said Azim

“Couldn’t be more pleased with Chad & First Rate Financial!”

– Jere & David Medina

“Buying a home can be a daunting process, I am familiar with some of the complexities of the process – dealing with underwriters is no easy task. Add in multiple different deals, many, often conflicting, voices, and one can struggle to keep afloat. Patrick Pitts juggles all of these things with a finesse and talent that would put the Barnum Brothers to shame. While many people complain that it is impossible to contact their loan officer, Patrick will take a call at any time and talk down even the most petrified buyer. I have complete faith in Patrick, and I have no inhibitions about giving him my stamp of approval. While mortgage loan officers seem to be dime a dozen these days, Patrick is one in a million!””

– Michael Wellner

“Patrick Pitts from First Rate Financial made our mortgage refinancing seamless. It was simple, easy and hassle free! Patrick kept the communication open. He was available ANY given time to answer ANY questions that my wife and I had. He patiently went over the Good Faith Estimate line by line with my wife and I to ensure we completely understand what those numbers were. It was EXTREMELY pleasant working with Patrick. What my wife and I love the most about Patrick and First Rate Financial is that we CAN close our loan at our own comfort home and at a time that we chose for our convenience. How about that! I referred Patrick to one of my co-workers and he experienced and felt the same way about Patrick and a great company call FIRST RATE FINANCIAL. Once again we want to say THANK YOU Patrick and First Rate Financial for a remarkable experience!”

– Jill and Jay Luong

“I had a not-so-good experience with the company that financed my first house. Jason, at First Rate Financial, came highly recommended from a friend. He was able to get me pre-qualified in no time! He explained everything to me so that I clearly knew the process and had realistic expectations for each phase of the process. Finally, the day came when I found my house. I called Jason and he took the time to walk me through the next steps. When it came time to lock in my rate, Jason got me the most competitive rate at the best price. His work put me in the best possible position to purchase my new home.”

– Ty Scott

“Chad Lemons at First Rate Financial helped us refinance our house.  The experience was fantastic.  Every expectation was exceeded and everything he said would happen, did happen.  We got a great rate with no hassle, and the process was much faster than we thought possible.”

– Tom Ziglar

“Chad Lemons was a true blessing when he helped me refinance my mortgage. He was tireless, and even when it didn’t look like the loan would go through, he worked his miracles and not only got my loan approved in a timely manor but saved me several hundred dollars on my mortgage payment. I would highly recommend him to anyone. He is trustworthy, efficient and yes, even brilliant at tying up the loose ends to make a deal happen. In short, Chad Lemons is the man for the job!”

– Cindy Oates

“Building a new home presented several challenges, but Chad Lemons at First Rate Financial made the financing aspect of it a cinch. Circumstances caused our loan scenario and needs to change after the pre-qualification stage and after construction had commenced, which gave us great concern. He worked with us diligently until we found the solution that worked best for us. His work ethic, attention to detail, and customer service set him apart from the rest during a process that can be very stressful and confusing to home buyers that have limited experience with it. And when it came to our closing, he had our paperwork done almost a week early and his diligence made the process go as smoothly as possible. In fact, our builder sent us an email commenting on how rare it was for a broker to be so easy to work with and to be so organized with everything. I hope to be in my new home for a while, but when it’s time to move, Chad will be the first person I call!”

– Blaine Banta

“My husband and I were completely satisfied with the efficient service we received from Chad. We had been working with another financial institution attempting to refinance our home for 4 months. We found out about Chad, and we had our refinance funded at a lower rate, with proceeds in hand, within 6 weeks!! We would recommend Chad to our friends, family and associates. Thanks so much Chad!”

– Karen and Mike Maguire

CURRENT RATES 05/15/2017 at 6:30 PM CST

Product
Interest Rate
APR
Conforming and FHA Loans
30-Year Fixed
4.00%
4.067%
30-Year Fixed FHA
3.625%
4.357%
20-Year Fixed
3.875%
3.968%
15-Year Fixed
3.25%
3.367%
10-Year Fixed
3.125%
3.295%
7-Year ARM
3.625%
3.691%
5-Year ARM
3.375%
3.44%

*Based on loan amounts of $200,000+

*Subject to credit & income requirements

*restrictions apply

All conventional rates and APRs assume 80% financing on a $200,000 loan value with max loan of $417,000. Offers may terminate at any time without notice. Rate/APR calculated on a 365 day year with typical closing costs. Rates/APRs subject to change in closing costs and properties. All rates as of date posted on this website with 30 day lock period. Signed loan application required to lock rate. Rates may be higher for credit scores below 740 middle score. APR will change with loan amount and percentage of home being financed.