There's a lot of options out there! Whether you’re purchasing as a first-time home-buyer or a seasoned investor; or refinancing for rate-reduction or debt-consolidation, with due diligence and the right guide, you can find a mortgage loan to suit your needs.
Below are the primary loan types. Loans from any of these umbrellas can come in a number of flavors, including fixed interest rate or adjustable interest rate, and with various terms, from 5 years for some adjustable-rate loans up to 40 years for some. Traditionally, the terms on mortgages are either 15 or 30 years, with most borrowers opting for the latter. Here's a few more details...
Conforming loans These mortgage loan products are offered by Fannie Mae and Freddie Mac, the former quasi-governmental institutions that are now in conservatorship to the federal government. The vast majority of all mortgages written today are purchased by these big investors. Their products have been called the “plain vanilla” offering by the industry. They offer little flexibility in their underwriting guidelines; in fact, any loan product that meets their underwriting requirements is said to be “conforming.”
FHA loans Offered by a division of the U.S. Department of Housing and Urban Development, FHA loans have long been a tool to increase homeownership. These loans are provided by the same banks and mortgage companies that provide conventional loans, in which the Federal Housing Administration insures against default. These loans are designed for low-to moderate-income borrowers. The qualifying guidelines are typically more lax than the conventional guidelines. One key feature of FHA loans is their lower down payment requirement.
VA loans Veterans of our armed forces may qualify for a mortgage loan guaranteed by the Department of Veterans Affairs. These VA loans are not really offered by the government, but the VA offers lenders who provide financing to these borrowers a guarantee should the borrower get into trouble.
Jumbo loans When borrowers want to buy more home than most lenders want to lend against, they opt for a jumbo. Different investors have their own kinds of product for this market. Investors who offer jumbo loans give borrowers access to higher loan limits, but they also have tougher underwriting requirements and can cost more than conventional loans.
USDA loans USDA mortgages stand alone as one of the only zero-down programs available to borrowers who have not served in the military. Restrictions include: property location, income, etc..