When looking for a home loan, you will find that there are four basic types of loans to choose from: Conventional Mortgages, FHA Loans, VA loans and USDA or Rural Development (RD) Loans. These loans provide different benefits for home buyers and each option you qualify for should be carefully considered before making a final decision.
Conventional mortgages are not insured or guaranteed by the federal government, but they do adhere to guidelines set by the government-sponsored enterprises, Fannie Mae and Freddie Mac. These loans have a maximum limit at $417 thousand, and may have either a fixed or an adjustable rate. They also have multiple down payment options which can be discussed with your lender to find the best fit for your needs.
FHA Loans are government-insured loans that can only be provided through FHA-approved lenders. They require mortgage insurance for the life of the loan, but have the benefit of only requiring a minimum 3.5 percent down payment. They also require the house to meet certain conditions before approval can be granted.
USDA / RD Loans
In order to qualify for this loan type, the home must fall within a designated rural area and must meet other qualifications concerning aspects such as household income. USDA / RD loans also come with mortgage insurance, but the percentage is less than the rate that comes with an FHA loan.
VA loans are for veterans only and a proof of eligibility is required before you can be approved for this loan option. These loans offer low rates with no monthly mortgage insurance. Just like other government loans, the credit requirements are a little less restrictive for this loan type.
Navigating the home mortgage process can be perceived as difficult and many people may think they could never qualify for a loan. By educating yourself on the available loan options, you may find you’re closer to a home loan than you think.
Ready to get into a new home? See the real estate options currently available in Northwest Arkansas by visiting www.allnwahomes.com or by contacting a McNaughton Real Estate Agent.
*The information in this article was contributed by Kelli Franks, vice president secondary market at Priority Bank in Fayetteville. Kelli can be reached at 479.587.1122 ext. 226 or by email at email@example.com*