Know the difference between each mortgage loan type, this will determine which mortgage loan may best fit your situation; here are some notes about each type of loan program.
Conventional, FHA, or special programs. Mortgage loans are organized into categories based on the size of the loan and whether they are part of a government loan program.
Each loan program will affect the following:
How much will be needed for the down payment
The total cost of the mortgage loan, including interest and mortgage insurance
How much one may borrow, and the house price range the buyer qualifies for
Choosing the right loan type.
Each loan type is designed for different situations. Sometimes, only one loan type will fit your situation. If multiple options fit your situation, try out scenarios and ask lenders to provide several quotes so you can see which type offers the best deal overall.
Majority of loans
Typically cost less than FHA loans but can be harder to get
Note: “Conventional” just means that the loan is not part of a government program. Conventional loans generally cost less than FHA loans, but they can be more difficult to get.
Generally a lower down payment, as low as 3.5 percent
Available to those with lower credit scores
Have a maximum loan amount that varies by county
Note: Mortgage insurance is required for all FHA loans
For Veterans, servicemembers, or surviving spouses
Do not require monthly mortgage insurance premiums, but may require a funding fee
For low- to middle-income borrowers in rural areas
For low- to middle-income borrowers, first-time homebuyers, or public service employees
Note: VA, FHA and USDA Loans are subject to basic government regulation.
Generally, lenders must document and verify the borrower’s income, employment, assets, debts, and credit history to determine the borrower’s ability to repay the loan.
For more tips on mortgages and the mortgage process, contact me anytime!
Providing Solutions Because…Your Move Matters!
Michael L. Brownstead
First Sergeant, U.S. Army (Retired)
ABR, GRI, MRP, SRS, REALTOR
Keller Williams Realty
1002 Raintree Cir., Ste. 100, Allen, TX 75013