FHA
Loan Terms: 15 & 30-Year Loans
Loan Types: Purchase, Refinance
Interest Rate Types: Fixed, Adjustable
Property Type: Primary Residence
This is a HUD or government-insured loan that allows buyers to purchase a home for only 3.5% down. The FHA loan has maximum loan limits for each county which are significantly lower than conventional limits (search your county limits here). An FHA loan is excellent for someone who has less money to put down, and someone who has higher debt-to-income ratios, or someone whose credit is less than perfect.
Conventional
Loan Terms: 10, 15, 20, & 30-Year Loans
Loan Types: Fixed, Adjustable
Interest Rate Types: Purchase, Refinance
Property Type: Primary Residence, Second Home, & Investment Properties
The conventional conforming loan is the traditional mortgage program. It is called “conforming” because it fits within the standardized guidelines set by Fannie Mae and Freddie Mac. It can be used to finance all different types of residential properties. The loan requires mortgage insurance if the down payment is less than 20 percent. The monthly mortgage insurance required for this loan is cheaper than FHA mortgage insurance. A conventional loan caters to those who have more money to put down and great credit scores.
USDA
Loan Terms: 30-Year Loans
Loan Types: Purchase, Refinance
Interest Rate Types: Fixed
Property Type: Primary Residence
The Rural Housing Loan is a federal program offered through the United States Department of Agriculture (USDA). It is designed to help borrowers with low-to-moderate income obtain home financing in specified rural areas. The program has an upfront guarantee fee of 2.0% (which can be financed into the loan) and a low monthly mortgage insurance premium. This is a great loan for those seeking financing in a rural area. Income and property location restrictions apply- see below for more details.
VA
Loan Terms: 15 & 30-Year Loans
Loan Types: Purchase, Refinance
Interest Rate Types: Fixed, Adjustable
Property Type: Primary Residence
This is a Veterans Administration insured loan available to Veterans of the Armed Forces. It allows for 103% financing so a veteran can buy a home for no money down and finance the closing costs. The VA charges an up-front funding fee (which can be financed into the loan) that varies based on whether or not it is the borrower’s first time getting a VA mortgage. This program is a perfect option for a Veteran seeking the most affordable type of home financing.
Reverse Mortgages
Loan Terms: Fixed, Adjustable
Loan Types: Purchase, Refinance
Interest Rate Types:
Property Type: Primary Residence
This is an FHA insured loan. A reverse mortgage allows those who are at least 62 years of age, or older, to pay off a forward mortgage or use the equity in their home for other purposes. In general terms, a borrower needs at least 40 to 50% equity in their home to qualify. Those who qualify can get a lump sum of cash, a monthly income, a line-of-credit, or a combination of those things. Owners retain title to the property. No repayment is required as long as the borrower lives in the property. In the event of death, heirs are responsible to pay off the lower of the loan balance or sales price of the home.