Residential Magazine

Take a Few More Bites of the Apple

Having more available loan programs creates the right fit for your borrowers

By Ryan Kelley

Everyone offering a mortgage right now could be expanding their business with a new product or loan program. Yes, everyone. There’s a mortgage for almost every borrower out there — originators just have to work hard enough to find it and educate themselves on how to sell it.

Each loan program is different. They will appeal to different borrowers at different times. Lenders may suggest that first-time homeowners consider Federal Housing Administration (FHA) options due to the lower downpayment requirements. Mortgage providers in rural areas may gravitate toward U.S. Department of Agriculture (USDA) loans, a terrific program with no downpayment requirement. And loans from the U.S. Department of Veterans Affairs (VA) are a great way to honor our heroes. 

Just because you offer one type of loan to one subsection of borrower, however, doesn’t mean that you need to stop there. Growth comes from opportunity and offering additional loan programs gives you more opportunity to create explosive growth. Each program has unique attributes and different requirements that must be addressed before you are allowed to offer them.

VA choice

When you put the work into becoming eligible to offer VA loans, you can offer a new product to thousands of borrowers that you previously had no shot with. VA loans require you to be delegated with the federal agency.

VA loans also require borrowers to be active-duty military or an honorably discharged veteran with at least 90 days of consecutive active service in wartime, or 181 consecutive days during peacetime. Borrowers also can qualify with more than six years in the National Guard or Selected Reserve. 

Borrowers will fill out a certificate of eligibility and many lenders that offer these mortgages are happy to help the borrowers fill them out. Veterans will need their discharge or separation papers, also known as a DD 214 Form, and all active-duty service members will have to provide a signed statement of service, which should have their full name, date of birth, Social Security number, the date they started duty, any lost time and the name of the command providing the information. 

Many mortgage companies don’t offer VA loans because it’s a difficult process to become delegated with the VA. These companies will end up steering their borrowers into conventional or FHA loan programs that they do offer, even if it’s not the best fit for the borrower. Even some banks and mortgage companies that offer VA loans will point their VA-eligible borrowers to other products in their portfolio because they are unable to close VA loans as quickly as other types of financing. 

This is a bad look, especially when the VA loan program is one of the best benefits of military service. Being able to offer these loans to veterans, active service members and their families is not only a great way to add to your bottom line, it’s also a great service to provide to people who risk their lives for our country.

USDA option

USDA loans are another underused mortgage product and they apply to many more properties than you may think. More than 90% of the U.S. is actually eligible for USDA loans, including many suburbs and outlying areas of cities. This program could be huge for lenders and originators, but many seem to ignore it, instead focusing on loans that are easier to advertise or close.

A no-downpayment loan should be easy to sell, right? General guidelines for a USDA loan require a borrower to meet some criteria: U.S. citizenship or permanent-residency status; the ability to prove creditworthiness, typically with a credit score of at least 640; a stable and dependable income; a willingness to repay the mortgage, which is generally demonstrated by 12 months of no late payments or collections; an adjusted household income that is equal to or less than 115% of the area median income; and that the property serves as the borrower’s primary residence and is located in a qualified rural area. But what is a rural area?

The USDA map on the federal agency’s website shows the eligible areas that are considered for USDA loans. One can see by looking at the map that most of the country is covered. Even if these areas are mostly outside of major cities, people live there and they’re hungry for quality home loans.

By offering USDA loans, you are catering to a part of the country that may not have been serviced traditionally, and the only loans available to them may come directly from local banks. This is another revenue stream that can be added to your bottom line in good times and bad.

Getting first-time homeowners and younger borrowers on board and used to working with you is a must in the mortgage industry.

FHA offering

Let’s not forget about FHA loans, which can push you to the next level. FHA is a strong program for first-time homebuyers and people without a large downpayment or lower credit. Originators who offer FHA loans also could have a better way to reach historically underserved minority areas. 

Since it requires a downpayment of only 3.5%, the FHA loan is a bridge for new homeowners who are ready to buy but may not have the ability to save up for a conventional loan downpayment of 20%. Offering this product to your borrowers is a no-brainer, particularly if you want to build repeat business.

Getting first-time homeowners and younger borrowers on board and used to working with you is a must in the mortgage industry. Being able to bring back repeat customers who are refinancing, moving to larger homes, or buying second homes or vacation homes, is a great way to turn an initial investment into a substantial profit.

That’s why finding the right loan for every borrower is so important. Lenders and originators can’t rely on one or two products to succeed. They need to be flexible so they can fulfill the borrower’s needs. Even if the borrower wants to get a conventional loan, if there is a better fit for them with another program, you should put yourself in position to offer it.

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Don’t miss out on lending opportunities because you don’t want to put in the time. Find your niche and build a loan menu that fits your area and expertise, but also one that allows for growth and expansion. Originators who pin all of their business to one program are dinosaurs and are destined to disappear.


  • Ryan Kelley

    Ryan Kelley is the founder of The Home Loan Expert LLC. In less than a decade, Kelley has gone from selling mortgages door to door to his neighbors to running one of the fastest-growing mortgage banks in America. Kelley rose to prominence with hard work and dedication, along with pioneering new techniques to get mortgages closed faster than anyone else in the business. With the addition of Hero.Loan, the rapidly expanding Veterans Affairs loan product, his company is growing every day.

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