Home Loans: Oregon

The higher your credit score, the better your chance of qualifying and getting good terms for your desired loan amount. The average Oregonian has a credit score of 732, 18 points above the US average and enough to qualify for most mortgages.

In reality, many people have lower scores than that, but this doesn’t mean they cannot get a mortgage. Conventional mortgages in the Beaver State usually require a score of 620 or above. Jumbo loans (with a loan amount exceeding standard requirements) require a higher score, usually above 700. Government-backed loans are easier to qualify for, typically requiring a score above 500.

A key parameter lenders use to assess your financial health is your debt-to-income (DTI) ratio. Conventional loans require low DTI, with the percentage depending on the lender. On the other hand, people with higher debt levels may need to look into a government home loan program.

Many homebuyers think they have to save up for a down payment of at least 20% to buy a home. However, the payment required is often much lower, and some programs and lenders let you get a loan amount equal to or exceeding 100% of the purchase price.

But at the same time, if you have more savings, you can get a bigger loan amount, better rates, and overall better terms. However, the state of Oregon has a way to help. An Individual Developer Account (IDA) provides consumer education and contribution matching.

There are two types of mortgage insurance: private mortgage insurance (PMI) and mortgage insurance premium (MIP). If your down payment on a home loan is less than 20% of the purchase price, you will have to pay PMI. The bigger the down payment, the cheaper the insurance. FHA home loans require paying for an upfront mortgage insurance premium, while USDA loans have an annual guarantee fee instead.

If you’re a first-time buyer, your mortgage will typically be more affordable than a second home or an investment property mortgage. Buying a home that will be your first and primary residence is generally considered a lower-risk investment for lenders.

If you’re eligible for a government home loan, you may save money on your mortgage. The requirements are usually more lenient, and annual percentage rates are lower. Here are some loan programs available to Oregonians:

• FHA Loans: FHA-backed mortgages allow lower down payments and lower credit scores.

• FHA 203(k) or Rehab Loans: Oregon Rehab loans let you purchase (or refinance) and renovate a property with a single mortgage.

• USDA Loans: USDA loans focus on helping low-income households in rural areas. A USDA mortgage loan has a very low annual percentage rate, which may be as low as 1%. It’s a fixed-rate mortgage with terms that may exceed 30 years.

• OHCS Flex Lending Programs paired with DPA: A home loan program offering fixed-term, first-time buyer mortgage loans with down payment assistance. Borrowers can combine them with a second mortgage, which is either a silent forgivable second lien or an amortizing repayable second lien.

VA loans are available to veterans, active-duty members, and military spouses. VA home loans have lower interest rates, flexible credit requirements, and capped closing fees but don’t require PMI or a down payment.