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Conventional
Conventional home loans boast great rates, lower costs, and homebuying flexibility. They are the loan option of choice for about 60% of all mortgage applicants. Conventional home loans are also known as conforming loans, since they conform to a set of standards set by Fannie Mae and Freddie Mac.
You can use a conventional home loan to buy a primary residence, second home, or rental property.
Conventional home loans are available in fixed rates, adjustable rates (ARMs), and offer many loan terms usually from 10 to 30 years.
Down payments as low as 3%.
No monthly mortgage insurance with a down payment of at least 20%.
Mortgage insurance is cancelable when home equity reaches 20%.
FHA
Whether you are a first-time homebuyer or a homeowner preparing to refinance or sell your house and buy a new one, it is well worth your time to find out whether or not you can benefit from an FHA home loan.
An FHA home loan typically has less strict requirements regarding debt-to-income ratios compared to a conventional mortgage.
An FHA home loan does require a monthly mortgage insurance premium (MIP) as part of your monthly mortgage payment.
FHA MIP is often lower than the equivalent private mortgage insurance (PMI) premium that you might have to pay on a conventional home loan with a low down payment.
Because the cost of living is not the same throughout the country, FHA home loan limits vary from one county to the next.
VA
Eligible veterans, reservists, and Active Duty personnel and their eligible spouses with suitable credit, sufficient income, and a valid Certificate of Eligibility (COE) can take advantage of 100% financing options with a VA Mortgage, guaranteed by the Department of Veterans Affairs.
No down payment required (unless required by the lender or the purchase price is more than the reasonable value of the property).
VA home loans do not require private mortgage insurance (PMI) or a monthly mortgage insurance premium (MIP).
Closing costs are comparable with other financing types (and may be lower).
Compared to other loan programs, VA home loan guidelines tend to be more flexible. This is made possible because of the VA home loan guaranty.
Most VA home loans are “assumable,” which means you can transfer your VA home loan to a future homebuyer if that person is also VA-eligible.
USDA
A USDA home loan is a zero down payment mortgage for eligible rural and suburban homebuyers. USDA loans are issued through the USDA loan program, also known as the USDA Rural Development Guaranteed Housing Loan Program, by the United States Department of Agriculture.
The home you are buying must be your primary residence. Rental properties, investment properties, and second home purchases are not eligible for the USDA home loan program.
To be eligible, the home must be located within a USDA-eligible area.
There are no stated mortgage limits for USDA home loans. Rather, the applicant’s income determines the maximum loan size.
USDA home loan borrowers will pay very low fees compared to what they would pay for other low down payment loans.
Jumbo
Jumbo home loans are home loans that exceed conforming loan limits. A jumbo home loan is one way to buy a high-priced or luxury home.
Jumbo home loans allow you to borrow an amount which exceeds the conforming loan limits set by Fannie Mae and Freddie Mac.
Jumbo home loan rates are very competitive with conforming home loan rates, and the interest on jumbo home loans may still be tax-deductible.
Jumbo home loans are available for primary residences, second or vacation homes and investment properties, and are also available in a variety of terms.
Credit score requirements are about the same for conforming home loans and jumbo home loans.
Reverse Mortgage
A reverse mortgage is a type of home equity loan that’s reserved for older homeowners and does not require monthly mortgage payments. No repayment of the mortgage (principal or interest), is required until the borrower dies, moves away permanently, or sells the home.
Reverse mortgage loans are specifically designed to help seniors, age 62 and older, tap home equity to help cover their retirement needs.
Your only obligations as a borrower with a reverse mortgage loan are to continue to pay taxes and insurance on the home, keep it in good condition, and comply with the other loan terms.
Reverse mortgage loan funds can be used for just about anything, such as paying for medical bills, paying other debts, supplementing your retirement portfolio, or for home repair and improvment.
Reverse mortgage loan funds can be disbursed to you thru a lump sum payment, a line of credit, monthly payments, or any combination of these.