Here is a simple guide on loan types, and we hope it helps you understand your options a little more.
Conventional Loans When you think of conventional loans, look at them as the closest thing to a standard mortgage. There are no particular requirements, and almost all lenders offer them. You will need to put 3% down and have a 620 credit score. This is the most popular option for home buying and refinancing.
FHA Loans These loans aid those with lower credit scores still make home buying a possibility. The requirement is a credit score starting at 580 and 3.5% down on the house. Current homeowners can also look into FHA refinance options. These loans are accessed through private mortgage lenders.
Home Construction Loans For some buyers who are not looking to compete with many offers on a property, this may be a good fit. Some perks come with building a home, but also buyers may find the process more difficult than getting a loan for an already built home. Speak with your lender about everything you should expect. Renovation and Rehabilitation Loans FHA 203k loans allow you to finance the house itself and the needed repairs. The home must meet safety and livability standards for the loan to be approved. So yes, if there is too much work needed, your search will have to continue. This loan is possibly a good option for someone on a tighter budget, and you may find less competition.
USDA Loans This loan option works with the U.S. Department of Agriculture and its Rural Development Guaranteed Housing Loan program. It assists low-to-average income residents in less populated or developed areas. Offers include no down payment, reduced mortgage insurance, and below-market mortgage rates.
VA Loans Supported by the U.S Department of Veteran Affairs, this loan option is for active-duty military personnel and veterans purchasing a home. There is no down payment or mortgage insurance requirement. Buyers may also find relaxed rules about qualifying and additional perks.