Home & Real Estate

5 Types of Home Loans

Did you know that US existing home sales rose to 6.48 million?

You’ve always dreamed of owning a home. So, you began talking to mortgage brokers to find the dream home that you can call your own. But, as you begin your research, you learn more about mortgages and begin to feel overwhelmed with all the different types of home loans.

So, which loan should you choose? And what does it mean to pre-approve for a home loan?

Begin exploring the world of home loans with this guide that teaches you about the different types of loans you have to choose from.

1. FHA Loans

There are many different types of home loans available on the market today, but one of the most popular is the FHA loan. FHA loans are backed by the Federal Housing Administration and are designed to help first-time homebuyers or borrowers with limited credit history. These loans typically offer lower down payment requirements and more flexible credit and income guidelines than conventional loans.

2. Conventional Loans

A conventional loan is a mortgage that is not backed by a government entity. It can be either a fixed-rate loan or an adjustable-rate loan (ARM) and can be either a conforming loan or a non-conforming loan.

Private lenders include banks, credit unions, and mortgage companies.

3. Jumbo Loans

A Jumbo loan is a type of home loan that is generally used to finance the purchase of high-end real estate or luxury homes. Jumbo loans typically carry higher interest rates than conventional home loans and often require a higher down payment and stricter underwriting standards. Some lenders may also require that the borrower have private mortgage insurance (PMI) to protect the lender in case of Default.

4. Standard Home Loans

These are generally fixed-rate, which stay the same until the loan is paid up. Standard home loans can be used to purchase a home, refinance an existing home loan, or for other purposes, such as home improvement or debt consolidation.

The home loan process can be summarized in a few simple steps. After finding the right home, the buyer submits a loan application to a lender. The lender then reviews the application and makes a decision on whether or not to approve the loan.

5. USDA Loans

A USDA loan is a home loan backed by the US Department of Agriculture. These loans are available to rural and suburban homebuyers and are often used to help low and moderate-income families purchase homes. USDA loans are one of the few types of mortgages that offer 100% financing, meaning you can buy a home with no down payment.

They are also very flexible when it comes to credit score requirements, and you can often qualify with a lower credit score than you would for other types of loans.

Find The Best Interest Rates In Types Of Home Loans

There are many types of home loans available to suit different needs. Some home loans are specifically for first-home buyers, others for investment purposes.

It is important to compare home loans to find the best deal for your personal circumstances. Speak to a mortgage broker to find out more about the different types available.

Interested in learning more about home and real estate? Then be sure to explore our blog for all the answers to your questions.