Types of Mortgages

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The most common loan options available for purchasing a home are Conventional, FHA and VA. A brief description of each is below.

Conventional Loan

A conventional loan is a mortgage that is not guaranteed or insured by any government agency. It is the most common type of mortgage.

  • 3% or 20% down payment
  • Typically requires a credit score of at least 620
  • Mortgage insurance is only required for loans with less than a 20% down payment
  • Loan Limit is $453,100
  • Gifts are allowed
  • Interest rates are usually higher than FHA and VA mortgages, but the payment may still be lower if the loan doesn’t require mortgage insurance

FHA Loan

An FHA loan is a mortgage that is insured by the Federal Housing Administration

  • Generally easier to qualify for than conventional loans
  • 3.5% down payment
  • Typically requires a credit score of at least 580
  • In most cases, mortgage insurance is required and remains for the life of the loan
  • Loan limit is $294,515
  • Gifts Are Allowed

VA Loan

A VA Loan is a 0% down payment mortgage available for military veterans and active military personnel. VA loans are issued by private lenders and are guaranteed by the U.S. Department of Veterans Affairs (VA).

  • Generally easier to qualify for than conventional and FHA loans.
  • 0% down payment
  • Typically requires a credit score of at least 580
  • Mortgage insurance is not required
  • Gifts are allowed
  • A VA funding fee of 0 to 3.3% (this fee may be financed) of the loan amount is paid to the VA

Fixed vs. Adjustable Rate Mortgages

Fixed-rate mortgages have the same interest rate for the life of the loan. Because of this, your monthly payment remains the same

Adjustable-rate mortgage (ARMs) have interest rates that will change over the life of the loan. Since the rate will change, your payment will change, making this option riskier than a fixed rate mortgage