FHA, Conventional, VHA, Rural Development… With so many options, it’s natural for you to wonder which type of mortgage loan is best for you. If you know the basic characteristics of the main types of loans, it’ll be easier to make a decision. Each one has its advantages—it just depends on how, or whether, it fits your particular situation.
FHA (Federal Housing Administration) loan
This loan could be ideal for buying your principal residence, because it allows you to finance up to 96.5% of the sale price. (The maximum amount you’ll be eligible for will depend on the municipality the property is located in.) This loan will help minimize your down payment at closing.
Conventional loans give you flexibility, because you can use them to buy a principal residence, a second home, or an investment property. There are two kinds of conventional loans: Conforming and Non-Conforming.
If you’re considering buying or refinancing your principal residence, a second home, or an investment property, the Conforming option is ideal. You can finance up to $453,100 in single-unit properties and even more for those from two to four units. To be eligible for this type of loan, you must meet investors’ requirements.
The Non-Conforming mortgage loan gives you amounts over $453,100, but you must meet the requirements set by the mortgage bank.
If you’re a veteran, a member of the National Guard, or the widow or widower of a veteran, this could be your mortgage loan solution. This loan is guaranteed by the Veterans Administration (VA), and it enables you to finance up to 100% of the property’s value when buying or refinancing. You must meet certain eligibility and qualification requirements established by the VA.
Rural Development mortgage
If the property you want to buy is in a suburban area (near a city) or rural area (in the country), this type of loan may be ideal for you. It represents big savings, since it requires no down payment if the appraisal value is equal to or greater than the sale price. This loan is guaranteed by the United States Department of Agriculture (USDA). If you already have a property originally financed by this agency, you also have the option of refinancing it.
This information is just a guide for beginning the selection process. Depending on your specific situation, a mortgage expert can give you options. Popular Mortgage will like to help you purchase the property that you’ll make your home.