Getting the right type of mortgage loan begins with understanding the distinctions between various types of loans. You may have been stacking away cash for years in order to purchase your home or you may have a stable household income but you’re unable to make a down payment right now– regardless of your situation, there may be a mortgage loan that’s just right for you.
Conventional Loans
Conventional Loans require as low as 3% down and require Private Mortgage Insurance (PMI) unless you put 20% down on the home. Conventional Loans will usually require good credit scores, and typically, the higher the credit score, the lower the interest rate on the loan.
FHA Loans
Federal Housing Administration (FHA) loans usually require down payments as low as 3.5% and have low closing costs. There also tends to be more flexibility in terms of your credit score.
USDA Loans
The United States Department of Agriculture (USDA) loans offer $0 money down and have less strict eligibility requirements compared to other types of home loans. This option is ideal for first-time home buyers who do not have savings set aside for purchasing a home but who have stable income, good credit, and can afford monthly mortgage payments.
VA Loans
Veteran’s Administration (VA) loans are for Veterans who can provide a Certificate of Eligibility from the VA and do not require a down payment. Eligibility is limited to Veterans, and the VA guarantees a portion of the loan which makes it easier for loan approval.
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