When considering buying a home and making a move an important part of the move is connecting with lender and getting pre-approved. So, what is the best type of loan for you? Loans are not one size fits all.   The best loan for you is the one that fits your personal financial need. The following is a brief snapshot of the different loan types.

Conventional Mortgages

1. Conventional mortgages are the most common type of mortgage.
2. Down payment requirements start at 3% to down.
3. Down payments at 20% down or more do not require private mortgage insurance (PMI)
4. Minimum credit score of at least 620 to qualify.
5. The overall borrowing cost after fees and interest tends to be lower than other loan types.
6. Appraisal guidelines are typically more forgiving on repair items.
7. Interest rate options of Fixed-Rate or Adjustable-Rate are offered on Conventional Mortgages

Government-Backed Loans

The Government Backed Loans are simply loan programs insured by government agencies and offered by lenders that offer an option to the buyers with less down payment requirements. three types of loans: FHA, VA and USDA loans.  The government insures these loans reducing the risk for the lender.   You may qualify for a government-backed loan if you can’t get a conventional loan. Buyers who don’t qualify for conventional loans or have limited cash savings may benefit from FHA, USDA, or VA loan

FHA Loans

1. Down payment of 3.5%, you may pay more down.
2. Credit score as low as 580, mor forgiving for buyers with credit issues from such life events as

Divorce, bankruptcy and medical expenses.

1. Are insured by the Federal Housing Administration for the lender.
2. Appraisal guidelines will require the home and property to be in good repair.

USDA Loans

1. Allow you to buy a home with no money down
2. USDA loans have lower mortgage insurance requirements than FHA loans.
3. You must meet income requirements and have relatively good credit.
4. Home must be in a suburban or rural area to qualify for a USDA loan.
5. Are insured by the United States Department of Agriculture.
6. Appraisal guidelines will require the home to be in good repair.

VA Loans

1. Allow you to buy a home with $0 down.
2. Lower interest rates than most other types
3. Are insured by the Department of Veterans Affairs loans for the lender.
4. Appraisal guidelines are not as restrictive as FHA or USDA loan types.
5. You must meet service requirements in the Armed Forces or National Guard to qualify for a VA loan. 

First step is to schedule a  Buyers Consultation with the Realtor that you would to guide you through the home buying process.  We will listen to your needs, answer your questions, and define a checklist for your new home.  This will be extremely helpful when meeting with a mortgage lender.  IF you do not have a lender, we have a list of professionals for you to select from.  

Our goal is to help you define the best home option for you and surround you with trusted professionals for a seamless experience as you make your move to your new home! We welcome the opportunity to be your Realtors for all your real estate needs!

Roxanne Johnson

Broker, ABR, CRS, GRI