HOME BUYING 101
MORTGAGE LOAN TYPES
Understanding the different types of mortgage loans is crucial when preparing to buy a home. Each loan type offers unique benefits tailored to different buyer profiles, financial situations, and property types. Here's a comprehensive overview to help you navigate your options.
Conventional Loan
A conventional loan is not backed by the government and typically requires a higher credit score.
- Not backed by the government and typically requires a higher credit score.
- Can be conforming (meets Fannie Mae and Freddie Mac guidelines) or non-conforming (jumbo loans).
FHA Loan FHA
Federal Housing Administration Loan - Government-backed loans popular for first-time homebuyers.
- Government-backed, popular for first-time homebuyers.
- Allows lower down payments and credit scores.
VA Loan VA
Veterans Affairs Loan - Available to military veterans and active service members.
- Available to military veterans and active service members.
- No down payment or mortgage insurance required.
USDA Loan USDA
U.S. Department of Agriculture Loan - For rural homebuyers.
- For rural homebuyers.
- No down payment is required, and offers low-interest rates for eligible properties and buyers.
Jumbo Loan Jumbo
A non-conforming loan for expensive homes that exceed conforming loan limits.
- A non-conforming loan for expensive homes that exceed conforming loan limits.
- Typically requires a higher down payment and credit score.
Fixed-Rate Mortgage FRM
A mortgage where the interest rate remains the same throughout the loan term.
- Interest rate remains the same throughout the loan term.
- Common terms are 15, 20, or 30 years.
Adjustable-Rate Mortgage ARM
A mortgage where the interest rate can change periodically based on market conditions.
- Interest rate can change periodically based on market conditions.
- Usually starts with a fixed rate for a set period (e.g., 5/1 ARM).
Interest-Only Mortgage
A mortgage where you only pay interest for a specific period, with principal payments deferred.
- Initially, you only pay interest for a specific period, with principal payments deferred.
Balloon Mortgage
A mortgage with lower payments initially but requires a large lump sum payment at the end of the term.
- Lower payments initially but requires a large lump sum payment at the end of the term.
Reverse Mortgage
Available to homeowners aged 62 and older, allows borrowing against home equity.
- Available to homeowners aged 62 and older.
- Allows homeowners to borrow against their home's equity without monthly payments.
Ready to Explore Your Options?
Our team can connect you with trusted lending partners who specialize in finding the right mortgage solution for your unique situation.