There are so many loan options available to you it can take time to go through all of them in an attempt to find the right one for you. There is no right loan option that works for everyone as each has their own pros and cons. It is really up to you to decide which is right for you and your situation.

FHA (Federal Housing Administration Insured Mortgage)

The FHA is part of the United States Department of Housing and Urban Development (HUD). FHA insured loans typically have much lower interest rates than other types of loans but much of this rate difference is negated by FHA loans requiring mortgage insurance for the life of the loan. Purchasers with lower credit scores will normally benefit from an FHA loan. The minimum down payment is 3.5%.

CONVENTIONAL MORTGAGE

Mortgages that are not obtained under a government insured or guaranteed program such as those operated by the FHA or VA but still meet the minimum standards of Freddie and Fannie Mae are known as conventional mortgages. Private mortgage insurance is required for these loans only if the down payment is less than 20% of the home’s value. This mortgage insurance can be done away with by reappraising your home after you have greater than 80% equity in the property. Purchasers with high credit scores and large down payments will normally benefit from a conventional loan. The minimum down payment is 3%.

VA (Veteran’s Affairs Guaranteed Mortgage)

If you are currently in the U.S. military or if you have ever served in the U.S. armed forces, you may be eligible to get a loan guaranteed by the VA. If you qualify, this special government benefit might be a good option for you as it may allow you to purchase a home with little or no down payment. There is no mortgage insurance on a VA loan. The minimum down payment is 0%.

DOWN PAYMENT ASSISTED LOANS

Loans that offer grants or second mortgages for down payment assistance may be available in your area. These loans are normally either FHA or Conventional Loans but with an additional program on top of them to assist home buyers with the down payment. A reputable and knowledgeable lender will be familiar with these options. 

PORTFOLIO LOANS

The majority of all home mortgages are sold on what is known as the secondary market. There are some loans and properties that cannot qualify to be sold on this market. Loans on these properties must be made by lenders that will own the loan for as long as the mortgage exists. These products are fairly specialized and mostly offered by local banks.