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We understand that figuring out which loan is right for you can be hard, confusing, and even frustrating. That is why we created a simple yet detailed overview of all of the loan programs we offer. You will learn how they work, how to qualify, and the pros and cons of each loan. Below you will find FHA loans, USDA Loans, ARM Loans, Conventional Loans, CRA Loans, and TSAHC Loans. Read all about how loans work, what kind of loans there are, and find out which one is right for you. 

Loan Programs Explained

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FHA Loans

FHA Loans

FHA Loans Explained

FHA Loan Overview

     Federal Housing Administration (FHA) loans are a type of government-backed mortgage designed to make homeownership more accessible, especially for first-time homebuyers and those with lower credit scores. These loans offer 15- and 30-year fixed interest rate options and have more lenient qualifications than conventional loans.

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How FHA Loans Work

 FHA loans are ideal for buyers who may not qualify for a conventional loan. These loans require mortgage insurance to protect the lender in case of default. Borrowers are required to pay both upfront and annual mortgage insurance premiums (MIP).

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FHA Mortgage Insurance Requirements

  • -**Upfront Mortgage Insurance Premium (UFMIP): 1.75% of the loan amount. This can be paid at closing or rolled into the loan.

  • -**Annual Mortgage Insurance Premium (MIP):** Ranges from 0.45% to 1.05% based on the loan term, amount, and loan-to-value ration. This is paid monthly.


    **Example:** For a $150,000 FHA loan:

  • -UFMIP = $2,625

  • -Annual MIP = $675 to $1,575 ($56.25 to $131.25 per month)
     

FHA MIP Cancellation Rules

  • -If the borrower puts down 10% or more, MIP may be canceled after 11 years.

  • -If the down payment is less than 10%, MIP lasts for the life of the loan.
     

  FHA Loan Qualifications

  • -Credit score: 580+ with 3.5% down; 500-579 with 10% down

  • -Verifiable Income and steady employment

  • -Property must be the borrower's primary residence

  • -Maximum front-end DTI: 31%; back-end DTI: 43% (some lenders accept up to 57%)

  • -Bankruptcy: Must be 2 years discharged; Foreclosure: 3 years removed.

     

FHA Loan Benefits

  • -Low down payment requirements

  • -Easier credit qualification

  • -Competitive interest rates

  • -Allows for co-borrowers and gift funds

     

FHA Loan Drawbacks

  • -Mandatory mortgage insurance

  • -Cannot be used for investment properties

  • -Limits on loan amounts based on county

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USDA Loans

USDA Loans Explained

USDA Loan Overview

     USDA loans are zero-down-payment mortgages available to eligible rural and suburban homebuyers. Backed by the U.S. Department of Agriculture, they are designed to promote homeownership in qualifying areas.

 

How USDA Loans Work

     USDA home loans are a great option for low- to moderate-income buyers who meet property and income eligibility requirements. The program includes upfront guarantee fee and a low monthly mortgage insurance fee. 

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 USDA Loan Fees

  • - **Upfront Guarantee Fee:** 1% of the loan amount (can be rolled into the loan)

  • - **Annual Mortgage Insurance Fee:** 0.35% of the loan amount (paid monthly)​​​​​​​​​​​​​​

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USDA Loan Eligibility

  • - Minimum credit score: Typically 640 (some lenders accept lower)

  • - Meet income limits by county and household size (check USDA eligibility tool)

  • - Property must be in a USDA-eligible rural area

  • - Must be used as a primary residence
     

 USDA Loan Pros

  • - No down payment required

  • - Lower monthly mortgage insurance than FHA

  • - Competitive interest rates

  • - Closing costs can be rolled into the loan
     

 USDA Loan Cons

  • - Geographic and income restrictions

  • - Not available for investment properties

  •  -Must meet USDA eligibility guidelines



​Helpful Link:
Check USDA Income Limits by County - https://eligibility.sc.egov.usda.gov/eligibility/incomeEligibilityAction.do?pageAction=state

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USDA Loans

ARM Loans

ARM Loans Explained

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ARM Loan Overview
 Adjustable-Rate Mortgages (ARMs) offer an initial period of low fixed interest rates followed by periodic adjustments basked on market rates. Common ARM terms include 5/1, 7/1, and 10/1. 

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How ARM Loans Work

  • - Fixed interest for initial period (5, 7 or 10 years)

  • - After the fixed period, the rate adjusts annually or semi-annually

  • - Adjustment caps limit how much the rate can change at each interval and over the life of the loan

 

ARM Loan Qualification

  • - Minimum down payment: 3.5%-5%

  • - Credit score: Typically 580-620 or higher

  • - DTI ratio: Up to 50%

  • - Maximum LTV: 95%



ARM Loan Benefits

  • - Lower initial interest rates

  • - Great for short-term homeowners or investors

  • - Increased affordability during initial fixed term

     

ARM Loan Disadvantages

  • - Risk of rising payments after fixed term

  • - Budget uncertainty due to rate fluctuations

  • - Complex terms, including rate caps and indexes

ARM Loans
Conventional Loans

Conventional Loans

Conventional Loans Explained

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Conventional Loan Overview
Conventional loans are mortgages not backed by a government agency and are typically offered by private lenders. They are the most popular type of home loan in the U.S.
 

How Conventional Loans Work

     These loans may be conforming (meeting Fannie Mae/Freddie Mac guidelines) or non-conforming (e.g., jumbo loans). Borrowers typically need higher credit scores and a larger down payment than with government-backed loans.
 

Conventional Loan Requirements 

  •  - Credit score: Minimum 620; 680+ for best rates

  • - DTI ratio: Generally 43%, up to 50% in some cases

  • - Down payment: 3%-5% minimum

  • - PMI required if less than 20% down

  • - 2024 conforming loan limit: $806,500(standard); $1,209,750 (high-cost areas)

     

Private Mortgage Insurance (PMI)

  • - Required with <20% down

  • - Can be canceled once 20% equity is reached
     

Conventional Loan Benefits

  • - Wide variety of lenders and loan products

  • - Eligible for investment and second homes

  • - Cancellable PMI

  • - Flexible loan terms (10, 15, 20, 30 years)

Conventional Loan Drawbacks

  • - Higher credit and income standards

  • - May require larger down payment

  • - Less flexibility for borrowers with past financial hardship

CRA Loans

CRA Loans Explained

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CRA Overview

     CRA loans are special mortgage programs offered by financial institutions to support low- to moderate-income borrowers and neighborhoods. These loans often feature no down payment and no PMI.
 

CRA Loan Requirements​

  • Minimum credit score: 640

  • - Property location must qualify (low-to-moderate income census tracts or minority zones)

  • - Income cap of $159,600 in higher-income areas

  • - DTI ratio: Up to 43% (640 score), or 45% (680 score)
     

CRA Loan Pros

  • - No private mortgage insurance

  • - 100% financing 

  • - No down payment required

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CRA Loan Cons

  • - Limited lender availability

  • - Stricter documentation and underwriting

  • - May not be widely advertised or known

CRA Loan
TSAHC Loan

TSAHC Loans

TSAHC Loans Explained

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TSAHC Loan Overview

     TSAHC is a Texas nonprofit providing affordable housing assistance through mortgage loans and down payment grants. It offers special programs for first-time buyers, low-to-moderate-income households, and Texas heroes.

 

Programs Offered

  • - Homes for Texas Heroes: Educators, police, fire, EMS, military, health faculty

  • - Home Sweet Texas: Open to low-to-moderate-income buyers

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Down Payment Assistance (DPA)

  •  - Grant: No repayment required

  • - Deferred forgivable second lien: Repaid only if the home is sold or refinanced within 3 years

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TSAHC Loan Qualifications

  • - Minimum credit score: 620

  • - Must meet program income limits

  • - Must complete the eligibility quiz at tsahc.org
     

TSAHC Pros

  • - Helps cover down payment and closing costs

  • - No need to repay grant assistance 

  • - Flexible use for first-time and repeat buyers

     

TSAHC Cons

  • - Texas-only program

  • - Forgivable loan may become repayable if home is sold too soon

This information was pulled from the following websites with help from the Texas Mortgage Pros, created for educational purposes only. www.quickenloans.com www.investopedia.com www.bankrate.com www.tsahc.org Kendall Homes does not assume any responsibility for any errors or omissions in the information contained. Information is meant for educational purposes only and should be verified by the reader for accuracy as the content above is subject to change without notice or could be considered incorrect. Each person has a different financial situation which uniquely applies to them, information is based on general standards to our best knowledge. Last Updated 8/06/2025. 

Floor plan & Elevation renderings are the artist's interpretation of the floor plan and may contain options or features which are not standard in all communities. Stated square footages are approximate and should not be used as representation of the home’s actual size. Plans, features, and prices are subject to change without notice. 100% financing available through USDA, has eligibility requirements and certain neighborhoods may not be located within a USDA area. Sale prices and interest rates are subject to change without notice. USDA estimated Monthly P&I is based on USDA $0-Down Program with a 6.25% fixed 30 year interest rate. FHA loans require 3.5% down payment, estimated payments are based on 4.875% fixed 30 year interest rate. Other fees such as taxes, insurance, and HOA fees may not be included in the monthly payment posted and will result in a higher monthly payment. All monthly payments are estimates, rates are subject to change without notice. Virtual Tours may not be an exact representation of the home. By submitting any contact form, you agree to receive text messages at the provided number from Kendall Homes. Message frequency varies, and standard message and data rates may apply. You have the right to OPT-OUT receiving messages at any time. To OPT-OUT, reply "STOP" to any text message you receive from us. Reply HELP for assistance.

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