Choosing a lender to back your mortgage is just one step in the process. Once you begin examining lenders, you’ll find that each offers a number of programs. In all, there are 11 BBVA Compass mortgage programs that you might consider. Here’s a closer look at each.
Who Is BBVA Compass?
BBVA Compass operates 672 branches across the country. The majority of their branches lie in Texas, but they also feature large coverage in other states. Alabama, Arizona, California, Florida, Colorado, and New Mexico are a few of them. If you live in one of these places, you likely have a branch nearby.
In fact, BBVA Compass is 25th in the United States when it comes to deposit market share. They also hold the title of second largest bank in Alabama, fourth in Texas, and fifth in Arizona. So, there are no worries when it comes to their recognition and accessibility. The Small Business Administration (SBA) even recognizes them as a leading lender. In 2016, BBVA Compass ranked fifth in the nation for total number of SBA loans originated.
With all that in mind, there is no wonder why they hold so many accolades. This all helped them earn a spot on the “Best Banks in America 2015-2016” list featured in Money magazine. They earned the title of best regional bank in the South and West. Plus, they even took home the title of best mobile banking app.
One of the main reasons that customers favor BBVA Compass so much is for their innovation. In addition to their banking app, you’ll never find their site outdated. This makes banking online a breeze, even if you don’t have a branch in your town.
Types of Mortgages
Like most banks, BBVA Compass offers a variety of mortgage products. That’s because no single loan product can fit everyone’s needs. Instead, you’ll want to compare all 11 options BBVA Compass has to offer.
BBVA Compass offers professional loans for those in certain positions. These professional loans often give more financial flexibility. If you hold a job with high earning potential, you likely qualify.
BBVA Compass has specialty products for medical residents and practicing physicians. They also offer specialty products for oral surgeons, dentists, attorneys, and CPAs. If you fit one of these descriptions, you could take advantage of it.
Typically, if a specialty product is available for your profession, you’ll find the option to be quite competitive. Because of your job’s high-earning potential, these loans often come with many perks. From a lower interest rate to the ability to borrow more, you’ll often find such a product to be the best choice.
In the case of BBVA Compass, advantages include:
- A low down payment. Most loans require 20% but a specialty product could require a lot less.
- Higher loan-to-value ratios. Put less down and finance more without having to accept an extremely high interest rate.
- No private mortgage insurance. For most loans, you need PMI if you put less than 20% down. That’s not the case with these specialty loans, though.
- Don’t count your student loan debt. In some situations, they may not count your student loan debt against your income, which can help you afford a more expensive home.
- Multiple forms available. This product applies whether you are looking to purchase, refinance, construct, or take out a home equity loan.
You can learn more about their professional loans here.
A fixed-rate loan allows you to lock in an interest rate when you close. If you anticipate market rates will rise, a fixed-rate loan could be the right option. The exact interest rate you will pay depends on your borrower profile. The length of your loan term will also impact it. A longer loan term will result in a higher interest rate.
In general, fixed-rate mortgage products come in multiple term lengths. However, 15-year and 30-year products are the most popular. A shorter term will score you a lower interest rate, but your monthly repayment obligation will be higher in order to meet the payoff deadline for your home.
The biggest fear most people have when signing a fixed-rate loan is, what if interest rates go down? That could mean you end up overpaying on your loan’s principal balance. However, if market rates do end up decreasing, you can refinance your home at a new rate.
An adjustable-rate loan can help you take advantage of a low introductory rate. With time, your interest rate will begin fluctuating based on market averages. So, if you do not anticipate interest rates increase over the life of your loan, an adjustable rate mortgage (ARM) could be a good choice.
Similarly to a fixed-rate loan, an ARM will come in multiple term lengths. However, an adjustable rate loan does not have a variable interest rate right out of the gate. Rather, it usually has a period of fixed-rate interest.
A 5/1 ARM, for instance, has a five-year fixed rate term. After those five years, your interest rate will adjust every year. A 30-year 5/1 ARM will have five years of a fixed introductory interest rate followed by 25 years of a variable interest rate.
Generally, the introductory fixed rate you can get on an ARM is less than the fixed rate you can score on a completely fixed-rate mortgage. For that reason, many people get an ARM to save money with a plan to refinance when the fixed-rate period ends.
BBVA offers adjustable-rate conventional loans. These usually require 20% down and you cannot borrow more than $484,350. Learn more about this option here.
The Federal Housing Finance Agency (FHFA) sets limits for how much a lender can loan for a conforming loan. The fixed and adjustable-rate loans offered through BBVA are conforming loans, so the $484,350 limit applies. That means, regardless of your income or credit score, you cannot borrow more than that amount to purchase a house.
This can pose an issue for those wanting to purchase a luxury home or large lot, and/or move to a more expensive area of the country. If you fall into one of those scenarios, you will likely consider a jumbo loan. A jumbo loan is a loan that exceeds the FHFA’s conforming loan limit.
At BBVA Compass, jumbo loans are:
- Loans that exceed $484,350 and go up to $5 million.
- Available for purchasing, refinancing, and construction.
- Available for both primary and secondary/vacation homes.
- Either fixed or adjustable rate products.
You can learn more about this option here.
If you are looking at the homes available in your area and not seeing a house that fits your needs, you might consider construction. In this case, getting a “lot loan” allows you to finance a land purchase. This is great if you want to buy property to build on later.
The lot loans from BBVA Compass allow for:
- Lots as large as 10 acres in size.
- Loan amounts up to $1,000,000.
These generous limits allow you to buy anything from a sprawling waterfront lot to a small hobby farm and so much in between. You can learn more about this option here.
Construction Permanent Loans
If you’re ready to start the building process sooner, a construction-to-permanent loan might be better than a lot loan. A lot loan can work well if you are looking to buy land and build on it later down the road. When you’re ready to build, a construction-to-permanent loan is what you’ll need.
If you already have property (or a lot loan for a piece of property), you can apply for a construction-permanent loan. You can also apply for a construction permanent loan if you are ready to buy land and build a house at the same time.
A construction permanent loan will:
- Allow you to finance up to $5,000,000. The money can cover both the purchase of land and the construction of your home (or just home construction).
- Allow you to postpone mortgage payments for up to 12 months while your home is under construction.
- Secure a permanent interest rate on the loan prior to construction.
- Give you added flexibility when it comes to payment options.
Learn more about this mortgage product here.
Foreign National Loans
If you are a foreign national, this BBVA Compass mortgage product may be ideal for you. Many foreign physicians come to the United States with a work visa. This means they can deliver care in many different positions.
The most popular titles include patient care technician, medical assistant, and registered nurse. However, these positions do not necessarily qualify you for a professional loan. And, even if it does, you might find that the foreign national loan product is a better fit.
BBVA Compass offers this product in a variety of markets across the country. Both condominiums and single-family homes qualify for the program. You can get a loan up to $2,000,000, which is a generous limit. This loan could come in the form of a fixed-rate or adjustable-rate product.
In states other than Texas, you will have the option to cash-out and refinance down the road as well. Learn more about this product here.
The Federal Housing Administration, or FHA, offers a competitive loan product. There is no limit to how much you can earn in order to qualify. However, this loan program puts caps on how much you can borrow. In 2019, the loan limits range from $314,827 to $726,525.
If you feel like you can find a home within the given limit, this program could be a good fit. Your limit will depend on your income and location. The most appealing thing about the FHA mortgage program is that it offers a low 3.5% down payment option for borrowers with good credit. This government-backed program is also easier to qualify for than a conventional loan.
Loans from the USDA (United States Department of Agriculture) are rapidly growing in popularity. Like FHA loans, these government-backed loans are also easier to qualify for. That’s because banks know that the government will help cover any losses should a borrower default on their loan.
The USDA home loans actually have a better advantage than FHA loans. That is, they require no down payment whatsoever. That could save you thousands out of pocket. However, the USDA does have income caps. That means, if you earn more than a certain amount, you will not qualify. However, the USDA does not have a set cap on how much you can borrow.
You can find out if you qualify for the USDA program by using their eligibility tool.
Between loan limits and income limits, many physicians will pass up the FHA and USDA programs. Despite their low down payment requirements, the extra hoops you have to jump through may disqualify or deter you. However, you should not be so quick to pass up this government program.
A VA loan is available through the United States Department of Veterans Affairs. Only certain active duty and retired service members qualify, along with their spouses. However, if you do qualify for a VA home loan, you will enjoy some incredible benefits. This makes a VA home loan appealing, even next to a physician loan product.
- No down payment. Most borrowers will not have to front a down payment to purchase a home. This beats the FHA program and most specialty physician-only products.
- No private mortgage insurance. Just like a physician-only loan, the VA loan does not require PMI. That means no monthly mortgage insurance premium. This beats the FHA and USDA loans, which both require PMI.
- Limited closing costs. This program allows the seller to pay for up to 100% of the buyer’s closing costs. You can also receive up to 4% in concessions from the seller. That means you can enter your new home with thousands of dollars. That’s money you can invest in the property.
- Lower interest rates. On average, VA home loans have a lower interest rate than many other loan programs.
- No prepayment penalty. Pay off your VA loan early without any financial penalty for doing so.
- Second tier entitlement. If you have used your VA loan benefits in the past, you may still be able to go through the program again.
- Assumable mortgage. A VA loan can be set up as an assumable mortgage. That allows someone else to take over your mortgage payment. They’ll get to keep your monthly payment amount and interest rate.
You can learn more about this program here.
Home Ownership Made Easier (HOME)
The final program you might consider from BBVA Compass is the HOME program. In certain areas, you may have no problem getting a loan through this program even as a high-income earner. It all depends on where you are shopping.
- The maximum Loan-to-Value (LTV) ratio is 100%. That means you will not have to put anything down if you do not want to.
- BBVA Compass may pay your closing costs, up to $4,500. This could save you thousands of out-of-pocket.
- You do not have to have private mortgage insurance, even without a down payment.
- Borrowers can take Seller Contributions. That means the seller can contribute to help cover your closing costs.
- Borrowers can take Gift Funds. That means friends and relatives can give you money towards your down payment or closing costs.
- Borrowers can take Down Payment Assistance (DPA) if BBVA Compass approves the program.
- Income limits may apply. But if you are shopping in a low or moderate income census tract, they may not.
- You will receive homeownership education.
Learn more about this program here.
Choosing the Right Mortgage Product
Buying a home requires research at every stage of the process. However, if you put in the time, you can definitely walk away with a beautiful home that fits your needs.
As a physician, you have even more options than the average borrower. So, it’s worth getting in touch with a few different lenders. Ask them questions and work to understand your options.
Here at Curbside Real Estate, we are more than happy to help. Reach out to us today to get advice and get on the path to your dream home.