When it comes to buying a home in Wisconsin, you have a variety of mortgage loan options, including state-sponsored WHEDA loans. In this article, we’ll help you compare WHEDA loans with your other mortgage options. As a WHEDA-approved lender, we can help you begin the application and pre-approval process for whichever mortgage loan you choose.

Understanding How WHEDA Loans Work

WHEDA loans are mortgage programs sponsored by the state through the Wisconsin Housing and Economic Development Authority. The goal is to provide affordable home financing, particularly for first-time and low to moderate-income homebuyers. There are two WHEDA loan programs:

  • WHEDA Advantage Conventional: For owner-occupied properties (single-family residence, condo, 2-4 units, or manufactured homes) in Wisconsin. 620 minimum credit score and no down payment required except for 2-4 unit properties (3% of purchase price and 6 months of payments in reserve).
  • WHEDA Advantage FHA: For owner-occupied properties (single-family residence, 2-units, or HUD-approved condos) in Wisconsin. 640 minimum credit score and 3.5% minimum down payment required.

Requirements for both WHEDA mortgage programs include:

  • All homebuyers, not just first-time buyers, are eligible.
  • Must be under total household compliance income limit
  • Can use both WHEDA Down Payment Assistant programs
  • Pre-purchase Home Buyer Education (HBE) is required for First Time Home Buyers (pre-purchase Landlord Education is required if purchasing a 2-4 unit).
  • Eligible borrowers can receive a reduced interest rate when buying a home in certain rural counties in Wisconsin.

 

Learn more in this blog article on “Everything You Need To Know About WHEDA Loans.”

Comparing WHEDA Loans with Other Mortgage Options

Now that you understand the basics of the WHEDA loan program, let’s look at how it compares with other mortgage options.

WHEDA Loan vs. Conventional Mortgages

Conventional mortgages are standard loans not backed by any government agency and are typically offered by private lenders or banks.

  • Credit Score Requirements: Usually require a higher credit score compared to WHEDA loans.
  • Down Payment Needs: Often require a minimum 5% down payment, which can be higher than some government-backed loans.
  • Interest Rates: Depending on the lender and the borrower’s credit score, rates can vary.

Compared to conventional loans, WHEDA advantages include:

  • Flexible Credit Score Requirements: WHEDA loans are more accessible to individuals with lower credit scores.
  • Lower Down Payment: They often offer lower down payment requirements, making homeownership more attainable for many first-time homebuyers.
  • Competitive Interest Rates: Designed to be affordable, they often have competitive interest rates.

WHEDA Loan vs. FHA Loan

FHA loans are backed by the Federal Housing Administration. These loans are designed for low-to-moderate-income borrowers.

  • Down Payment Requirements: Low down payment requirements, as low as 3.5%.
  • Credit Score Flexibility: Offers more leniency in credit score requirements compared to conventional loans.

Compared to FHA loans, WHEDA advantages include:

  • Comparable Accessibility: Like FHA loans, WHEDA loans are accessible to those with lower credit scores and offer similar down payment requirements.
  • State-Specific Benefits: WHEDA loans may offer additional state-specific benefits and assistance programs, such as down payment assistance, especially tailored for Wisconsin residents.

WHEDA Loan vs. VA Loans

Backed by the Department of Veterans Affairs, VA loans are exclusively for veterans and eligible military service members.

  • Down Payment Requirements: No down payment is required.
  • Eligibility: Limited to veterans, active-duty service members, and certain military spouses.

Compared to VA loans, WHEDA advantages include:

  • Broader Eligibility: WHEDA loans are available to a wider audience, including non-military first-time homebuyers and those who meet income criteria.
  • Competitive Terms: Though they may require a down payment, WHEDA loans still offer competitive terms, making them a viable option for those ineligible for VA loans.

WHEDA Loan vs. USDA Loans

USDA loans are aimed at promoting homeownership in rural areas, backed by the U.S. Department of Agriculture.

  • Geographic Eligibility: Restricted to homebuyers in designated rural areas.
  • Down Payment Requirements: Often no down payment required for eligible rural homebuyers.

Compared to USDA loans, WHEDA advantages include:

  • Wider Geographic Availability: WHEDA loans are not limited to rural areas, making them accessible to a broader range of locations within Wisconsin.
  • Support for Urban and Suburban Homebuyers: They provide an opportunity for those living in more urban or suburban areas, expanding the potential for homeownership beyond rural communities.
  • Broader Eligibility: WHEDA loans are available to a wider audience, including non-military first-time homebuyers and those who meet income criteria.
  • Competitive Terms: Though they may require a down payment, WHEDA loans still offer competitive terms, making them a viable option for those ineligible for VA loans.

Making Informed Decisions Before Buying a House

Choosing a mortgage loan is an important decision in the home buying process, but it’s not the only one. Here’s what else you need to consider before buying a house.

Personal Financial Situation

Are you financially prepared to take on the responsibilities of home ownership? This extends beyond your mortgage payment to recurring and occasional expenses such as property taxes, home insurance, routine maintenance, repairs, etc. Having a stable income and a healthy savings can help you meet the financial demands of homeownership without stress.

You should also check your credit score and take steps to improve it (if necessary) before applying for a mortgage.

Decision-Making Tips

Consulting with Mortgage Professionals

Talking to a local mortgage expert can help you understand your mortgage loan options. Contact any of our Wisconsin-based lenders to discuss your financial situation, homebuying goals, and get pre-approved to know how much you can borrow.

Take the First Step Towards Your New Home – Contact Us for WHEDA Loan Guidance

As you consider your mortgage loan options in Wisconsin, remember that we are here to assist you every step of the way. Whether you have questions about WHEDA loans or are ready to begin your application process, our mortgage lending team is eager to provide the support you need. We understand that navigating home financing can be complex, but with our expertise and personalized assistance, we’ll make it a smooth and transparent journey for you. Don’t hesitate to reach out; your dream home is closer than you think, and we’re here to help you make it a reality. Let’s start this exciting journey together – contact us today or visit your nearest branch location in Oshkosh, Waupun, or Fond Du Lac, Wisconsin to take the first step towards your new home!