Conventional loans are not government-insured, so lenders typically require 20% downpayment, although I have seen conventional loans with large PMI (Mortgage Insurance that protects the lender) that will loan as low as 5%. Keep in mind that anything less than 20% down will required this insurance and increases the monthly mortgage payment considerably.
FHA loans are federally insured loans that allow qualified borrowers to borrow with a lower downpayment of 3.5%. This loan also includes monthly PMI.
Other common loans in Nome and Kotzebue are:
- HUD184 available to Alaska Natives, with a 2.25% downpayment.
- USDA/RD has zero downpayment, but there are some upfront guarantee fees and income restrictions
- VA loans are available for eligible veterans. Often veterans can purchase a home with zero down, and the loan terms are very favorable.
In addition to rules about who can borrow on the government insured loans, the lender will have requirements for the property you are trying to purchase. A fixer-upper may not work for your loan program.
These programs are available from most lenders, but beware of the ‘found on the internet’ lenders. If the lender is not familiar with the challenges of living and doing business in Alaska, you WILL have problems with closing. Feel free to give me a call to discuss qualifying for a loan or to find out if your lender has successfully been able to close properties here!