The process of applying for a mortgage loan can be complicated, and one of the first steps for a homebuyer is to decide which type of loan works best in their situation. Here is a brief guide to the top 5 types of mortgage loans available to homebuyers.
5 Types of Mortgage Loans
Traditional FHA Loan
The Federal Housing Administration (FHA) insures loans so that lenders can offer first-time homebuyers better deals. FHA loans can be approved even with a credit score as low as 500, but you’ll be required to make a downpayment of at least 10 percent.
Fannie Mae Home Ready Loan
The Fannie Mae Home Ready loan program allows for down payments of as little as 3 percent — and isn’t limited to first-time buyers. Upfront cost can be lower as well as Home Ready doesn’t have the insurance premium that FHA requires.
Freddie Mac Home Possible Loan
Freddie Mac Home Possible loans offer flexible terms to low/moderate income buyers from underserved communities. Borrowers can use monetary gifts towards the down payment — approximately 3 to 5 percent of the home’s purchase price.
Veteran Loan (VA)
Veterans or active duty military personnel can qualify for a VA loan through the Department of Veteran Affairs. VA loans require no money down, no monthly private mortgage insurance (PMI), and have rates as low as 3.25 percent for a 30-year fixed loan.
Conventional 30-Year Fixed Loan
A conventional 30-year fixed loan is a common option for buyers planning to live in their homes for at least five years. Interest rates and monthly payments will stay the same, regardless of inflation or rate changes, but a move within the first three years will result in overpayment.
Stonebridge Mortgage Group can help you with your real estate loans and other mortgage solutions, both residential and commercial. We serve the greater Portland area and are located in Gresham, Oregon.