It would be great when we could all pay cash for a home. Unfortunately most are not in the position to do this and must obtain a loan to purchase our home.
There are so many types of loans that it can be very confusing as to which type of loan to use. Some loans require you to have some sort of down payment. There are others that don’t have down payments. There is the conventional loan, loans for rural areas, for public servants like teachers, police officers and fire fighters. There are loans for veterans and their families and also rehab loans.
Here is some information on the more common used loans:
This type of loan comes has multiple terms to choose from, between 15 and 30 years. You have a consistent mortgage payment for budget planning purposes. You must have a down payment and depending on the lender you are working with it can be up to 20% of the purchase price.
A VA loan is a loan guaranteed by the Department of Veterans Affairs. If you are a veteran, member of the military, or a surviving spouse of a veteran, you can apply for this type of loan. There are some stipulations the VA puts on a veteran or their surviving spouse to be able to qualify for this loan. You should speak with a VA approved mortgage servicer/lender about your specific situation.
An FHA loan is great for a first time home buyer but you DON’T have to be a first time home buyer to qualify for this type loan. Many times the down payment is less than the 20% required for a conventional loan and the qualification and credit requirements are not as stringent. The FHA loan is an insured loan that is backed by the US Federal Housing Administration mortgage insurance organization. Only FHA-approved lenders can provide this type of loan to you.
This loan is for rural areas of the US. You can find out if your rural home purchase qualifies for a USDA loan by contacting the local USDA office within your state. With the USDA Rural Development Single Family Housing Guaranteed Loan Program there is no down payment but you need to buy a home that is in a USDA eligible area.
There are many more types of loan programs. You can find out what type of loan would be best for you and your family by contacting your favorite loan officer, or you go to our resource page where we have several of them listed for your convenience.