Only 38% of Americans own their homes outright, free of a mortgage.
And unless you have a load of cash lying around, you’ll need one of the mortgage options out there when buying a house.
Before you start researching area neighborhoods, you might want to look into the options available for financing your home purchase. Once you figure out the type of mortgage money that will work best for you, you’ll know what you can afford to spend on your new home.
When it comes to buying a home, you want to get one of the best mortgages. Stick with us to learn more about the different types of mortgages available to finance your purchase.
Conventional Loan
Conventional loans are best for people with a good credit score and the ability to pay at least a 3% down payment. If you have a steady stream of income and minimal debt, you can get a conventional loan to finance anything from your primary residence, a vacation home, or investment property.
They’re not backed by the government so there are less stringent rules about what type of property you can buy. Most conventional loans are conforming loans meaning they meet the limits governed by Fannie Mae and Freddie Mac. This year that means the loan is less than $647,200 or $970,800 for high-cost areas.
A 30-year fixed-rate mortgage is the most common type of conventional loan.
Government-Insured Loan
Which government agencies make it possible for people with less than stellar credit and less money for a downpayment to buy homes? The Federal Housing Administration backs FHA loans. The U.S. Department of Agriculture backs USDA loans. The U.S. Department of Veterans Affairs backs VA loans.
These loans are a good option for those who don’t qualify for a conventional loan but they sometimes have higher overall costs. They also must be used to purchase a primary residence.
Jumbo Mortgage Loan
These loans are larger than conventional conforming loans meaning more than $647,200 in 2022. These are for high-end borrowers with excellent credit scores (700 or higher), a lot of money in savings, and minimal debt.
Looking for a home in San Francisco, New York City, or Hawaii? These are the areas where jumbo loans are more common.
Do you need a mortgage broker? Schedule a consultation with the nation’s most reputable mortgage specialists today. Learn more about the home mortgages that might work for you and get some home buying tips.
Types of Mortgages: Now You Know
Now that you know the types of mortgages out there, your next step is to find a mortgage lender to help you find the best option for you. Shop around, ask for recommendations, and find the best terms for your budget. Get your financial records together so you’re ready to go into the process.
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