Types of Loans

There are a lot of different loan products available today, they are ever changing and evolving. We are sure you have heard of a few types of products like FHA, Conventional, and Insured Conventional loan. Yet, you may not understand what is different about each of these products. Let us clear the waters and go over a few of the basics.

FHA

An FHA loan is a government backed loan product that was intended to be used for first time home buyers, or people with less than perfect credit this allows you to do a little more with a little less. These loans are backed by the full faith and credit of the US government. A few things to understand:

  • Down payment as low as 3.5%
  • Credit scores as low as 620
  • Monthly Mortgage Insurance for the life of the loan.

Conventional

A Conventional loan is what used to be known as the standard mortgages. These loan require a high down payment and stronger credit history and scores. Most, if not all, of these loans are backed by Fannie Mae or Freddie Mac. A few things to understand:

  • Down payments of 20% minimum
  • Minimum credit scores of 620
  • No Monthly Mortgage Insurance

Insured Conventional

A Insured Conventional loan is a great product for people with a higher credit score but just do not have 20% down payment available to them. In fact the vast majority of Conventional loans that people say they have are really a Insured Conventional loan product. These loans are backed by Fannie Mae and Freddie Mac. A few key things to understand:

  • Down payments as low as 5%
  • Minimum credit scores of a 620
  • No Monthly Mortgage Insurance available, or highly reduced

VA

Veterans Administration loans, better known as VA loans are available for our service men and women. Either active or retired. These loans normally take a bit longer to complete. A few key facts about VA loans:

  • 100% financing is available
  • No minimum credit score
  • No Monthly Mortgage Insurance Premium.

USDA

The Department of Agriculture offers the USDA loan program, some times called Rural Housing. These loans are not available in many metro areas of the country. It is always smart to check and see if the area you are looking is available for USDA loan. Check Here. A few key facts about USDA loans:

  • 100% financing is available
  • 600 minimum credit score
  • Monthly Mortgage Insurance Premiums

Each of these types of loan product have great benefits and can be explained far better by a qualified loan officer. We suggest you talk to Tom to find out details about and see what you may qualify for.

Dan Moriarty
Dan Moriarty
500 US Highway 31 S Greenwood IN 46142