If you are in the market for a home loan, there are plenty to choose from. The one that is best depends on the purpose of the loan, your financial situation, your credit history, and other factors. Sorting through your options can take a little time, but it is worth it to find the one that is right for you. Here is a list of different mortgage products that might be available for you to consider.
- Conventional conforming loan. Conventional loans are backed by private lenders instead of the federal government. Conforming conventional loans meet the guidelines established by Fannie Mae and Freddie Mac, and typically require a credit score of at least 620—higher is better—to qualify. If your down payment is less than 20% of the purchase price of the home you are buying, you will be required to obtain mortgage insurance.
- Jumbo loan. A jumbo loan is a type of conventional loan. But unlike a conforming loan, it exceeds the loan limits established by the Federal Housing Finance Agency (FHFA). Jumbo loans typically require better credit and a larger down payment than conventional loans.
- FHA loan. FHA loans are designed for first-time home buyers and those who may need credit flexibility. Insured by the Federal Housing Administration, FHA loans typically have less stringent application requirements than conventional loans and require down payments of as little as 3.5%.
- VA loan. The VA loan program provides loans to help active-duty military personnel, veterans, eligible surviving spouses and those who have served in the Reserves or National Guard buy or refinance their homes. VA loans do not typically require a down payment and offer lower credit score requirements than conventional loans. Plus, VA loans limit the amount of closing costs you are allowed to pay and do not require mortgage insurance.
- USDA loan. USDA loans are guaranteed by the U.S. Department of Agriculture and are meant for people with low to moderate income who want to buy a home in a non-urban area. To qualify for a USDA loan, the property must be in a qualified “rural area” and you must also meet certain income requirements, which vary by state.
- One-time close construction loan. If you are building a new house, this type of loan covers your financing needs while your home is being built and after construction is complete. This means you don’t have to secure separate loans for the construction and post-construction phases.
- Renovation loan. If the home you want to buy needs a little TLC, a renovation loan can provide the funds you need to turn your fixer-upper into the home of your dreams.
- Down payment assistance loan. While down payment assistance programs are known for helping first-time homebuyers, they can also work for move-up buyers and homeowners looking to refinance. Assistance can come in the form of a grant, a forgivable mortgage, or a fully amortizing subordinate lien. These programs vary significantly from state to state.
- Reverse mortgage. If the youngest borrower is at least 62 years old, and the home is a primary residence with significant equity, a reverse mortgage may be right for you. This loan allows homeowners to access a portion of their home equity as cash, among other benefits.
If you’re interested in learning more about the right product for you, reach out to one of our Licensed Mortgage Professionals to discuss your options.