What Type of Mortgage Should I Get?
It’s a question that every potential homebuyer asks themselves: Which type of mortgage loan should I choose?
With such a variety of loan options available, we’d like to take a few minutes to detail four of the most common types provided by Minute Mortgage so you can make the best and most informed decision when applying for your home mortgage.
Let’s start with Conventional Loans
Conventional loans are those backed by government-sponsored entities, Fannie Mae and Freddie Mac. Generally, conventional lenders require you to pay private mortgage insurance — or PMI — when you put down less than 20 percent of the home’s purchase price.
Conventional loans can be used for:
- Primary, secondary and investment properties
- One to four family units
- First-time homebuyers are also eligible for conventional financing
Next are FHA Loans
A Federal Housing Administration — or FHA— loan is one that is underwritten by an FHA-approved lender but is insured by HUD, Housing and Urban Development, a government agency.
FHA loans are usually the best option for first-time homebuyers who may have a lower down payment than conventional requires, who may have low credit scores or who may have had some adverse credit events such as collections or late payments.
With FHA loans, the requirements for all three of those factors are more lenient compared to conventional loans.
There are also Jumbo Loans and VA Loans.
Jumbo loans are used when you are purchasing a higher-priced home. Whether or not you need a jumbo loan is determined by how much financing you will require rather than by the property’s purchase price. Jumbo borrowers must have good to excellent credit, typically have a lower debt-to-income requirement as well as a substantial down payment.If you’ve served in the United States military, a Department of Veterans Affairs or VA loan can be an excellent alternative to a conventional loan.
VA loans offer up to 100% financing on the value of a home for service members, veterans and eligible surviving spouses. These loans are underwritten and approved by private lenders, but the VA sets the qualifying standards, dictates the terms of the mortgages offered and guarantees a portion of the loan.
Minute Mortgage’s knowledgeable Loan Officers can help you with a deeper dive into each of these types of loans and help you get the best product for your needs.
No matter what you might require, we’re here for you: Minute Mortgage can help before, during and after your loan application, homebuying or refinancing process.