The most common types of mortgages are conventional loans, jumbo loans, FHA loans, VA loans, and USDA loans.
All of these loans are typically available through private lenders such as banks, credit unions, and online institutions. The main difference between these mortgage programs is who insures the loan.
Conventional Loans
If you're a first-time home buyer, chances are you'll use a conventional mortgage loan. This option typically works well for those with earned income and good credit who have also saved some money up - three percent of the total price is usually required as an initial down payment. For smaller deposits, PMI may be necessary to bridge any gaps in funding; 82% of very first homeowners go this route!
FHA Loans
For first-time home buyers who may not qualify for a conventional loan, FHA mortgages offer an attractive financing alternative. With as little as 3.5% down and credit scores of 500 or higher accepted in some cases, it's no wonder that 10 percent of all such purchases are funded by these government insured loans – especially among those looking to take advantage of "house hacking" with multi unit homes!
Jumbo Loans
Jumbo loans are mortgages that exceed the conforming price limits for the county you’re buying or refinancing in. Unlike conforming conventional loans, jumbo mortgages aren’t purchased, guaranteed, or securitized by Fannie Mae or Freddie Mac.
VA Loans
Created in 1944 as part of the G.I. Bill, VA loans provide an invaluable service to current and former members of our military - a no-down payment home loan with relaxed closing costs for qualified veterans! With great benefits like these that are available exclusively to those who have selflessly served our country, it's easy to understand why VA loans remain so desirable today.
USDA Loans
The USDA loan program provides a unique opportunity for aspiring homeowners in rural and low-density areas - giving them access to 100% financing options, subsidized interest rates and the chance at owning their dream home. To be eligible you must meet certain modest requirements.
Portfolio Loans
If you're looking for a larger loan that falls outside standard criteria, portfolio loans may be the answer. As government regulations don't set approval rules in this case, lenders decide individually how to evaluate potential borrowers – requiring they have above-average credit and income levels. Jumbo mortgages are an example of such loan products designed to finance more substantial purchases than traditional services can offer.
To learn more about types of mortgages, click below!
