Different Types of Mortgages Explained
Building a new home, buying a new home, renovating, repairing, restoring – these generally require financing. The type of financing you can receive depends on numerous factors. Rest assured, there is a mortgage out there for every situation and person.
As home loan experts, our job is to help you find the perfect mortgage for your situation. One of the best steps you can take in getting your ideal mortgage is to understand your options. To help with this, we’re going to cover some of the more common mortgages and their requirements.
These are mortgages insured by the Federal Housing Administration and are common for those with not-so-perfect credit and low income. The application process for an FHA mortgage is flexible, as it was created to increase the number of people entering the housing market
This mortgage is given to those who live in specific areas designated by the United States Department of Agriculture. These types of mortgages typically have very low interest with zero down payment. The most prominent factor for this mortgage isn’t your credit or income; rather it’s where your home is located.
Construction mortgages are one of the more difficult and uncommon mortgages and are specifically for buyers or builders. This mortgage involves land purchasing, along with a significant down payments and very high credit requirements.
These are mortgages obtained through the United States Department of Veterans Affairs (VA). Typically given to members of the national guard, reserves, military, and spouses of those who died during active duty. After six months of active duty, this mortgage is provided with 100% financing.
A Jumbo mortgage is one that’s based on the price of a home. If a home exceeds $424,100, it falls in this mortgage bracket. Typically, borrowers get a jumbo mortgage to pay for a luxury home. This mortgage requires excellent credit (above 700) and a high down payment. Interest rates can reach $1 million in these homes, but they’re tax deductible.
This mortgage is the most common. Based off the other types of mortgages, this would be considered the “average” of the bunch. Conventional mortgages are for new homebuyers and existing homeowners. The credit requirement isn’t high (about 660 or above), and the down payment is a little higher than most other mortgages. The most significant benefit of this mortgage is the two different rate options: fixed and adjustable.
The type of mortgage you’ll need depends on a variety of factors. Finding the one that’s perfect for your situation can sometimes seem a little overwhelming. Let one of our home loan experts do the heavy lifting. We’ll make sure you get the right financing for your situation, without breaking the bank.
To find out what type of mortgage you qualify for, contact one of our experts today!