There are many types of financing programs. Click on the tabs below to learn about each.
Since the mortgage meltdown, this is the most common loan that is not a “government loan” such as FHA, VA or USDA. By Conventional, it means that the loan is not backed by the government. By “Conforming” it means that it is within Freddie Mac or Fannie Mae guidelines and is below their maximum loan amounts which are set on a county-by-county basis. A common misconception is that a Conventional Conforming loan requires a high downpayment, however there are options available to qualified borrowers to purchase or refinance a home with as little as 3% down / equity
An FHA loan is a loan which is insured by the Federal Housing Administration. This is a good product for anyone looking to buy who has low credit (between 640-680) or could be an option for someone who has re-established credit after a foreclosure, short sale or bankruptcy. FHA collects an Upfront Mortgage Insurance Premium (UFMIP) which is typically wrapped into the loan amount, as well as an annual fee which is collected on a monthly basis.
A USDA Rural Housing Program loan is designed for borrowers who are looking to buy a home in what is deemed a rural area as defined by USDA. Borrowers may be surprised to learn that many properties that wouldn’t typically be described as rural are eligible for this program. This is an attractive program since borrowers are eligible to purchase their home with 0% down. To be eligible the borrower’s household income must not exceed the area’s median income as defined by USDA
A VA-Guaranteed Home Loan is available for eligible veterans, service personnel, reservists or National Guard members. It is possible to buy a home with 0% down. Like FHA, VA loans typically will have an upfront Funding Fee which can be included in the loan amount, but VA has the advantage of having no monthly program fees.
A Conventional loan that exceeds Fannie Mae / Freddie Mac loan limits is said to be a Jumbo loan or if it otherwise does not meet the agency guidelines it is a “Non-Conforming” loan. These loans will typically have a higher interest rate than a Conventional Conforming loan since private investors ultimately will be backing these loans up.