A Quick and Easy Loan Option GuideJul 9 2012
If you're just starting your home loan process and aren't really sure where to start, here is a quick overview of the most common home loan options you'll run into during your process. Start here to see which ones seem the best fit for you then contact one of our home loan experts to discuss your options further and get the best mortgage for you!
Conventional loans are generally $417,000 or less for a single-family home, although this limit can be higher in pricier regions of the country. There tend to be less "hurdles" to jump when applying for a conventional loan, compared to other loan types. A good credit score plus a 5-20% down payment is needed for you to qualify for a conventional loan.
Who Are Conventional Loans Good For?
Borrowers with excellent credit who can afford a down payment of 5% or more.
If you want to borrow more than what is allowed with a conventional loan (usually $417,000) then you'll need a Jumbo loan. Due to the higher loan amount, Jumbo loans carry slightly higher interest rates than conventional loans, and of course, a larger monthly payment.
Who Are Jumbo Loans Good For?
For borrowers who live in an area with higher home prices, or who have a high salary but not enough money saved to bring the loan down to conventional levels.
FHA loans help borrowers who aren't able to qualify for a conventional loan, to still own a home. This is due to the FHA (Federal Housing Administration) providing government backing for these loans, in the event that the borrower defaults. FHA loans require only 3.5% down payment, while also allowing you to qualify with a less-than-perfect credit score.
Who Are FHA Loans Good For?
Borrowers who have less-than-perfect credit, moderate debt-to-income rations and/or don't have a lot of money for a down payment.
Active-duty service members, veterans and their families can purchase a home with little to no money down with a VA loan. In addition, VA loans have fewer restrictions than conventional loans, allowing a higher debt-to-income ratio and more leniency with your credit history.
Who Are VA Loans Good For?
Active-duty service members and veterans who can't qualify for a conventional loan.