Whether you’re a first-time buyer, or an American looking to refinance their current loan, there are a range of different mortgages available. You will need to identify what you’re looking for, know your credit score, and budget yourself before getting started.
A conventional loan is a mortgage loan that is not backed by any government organization. It is backed by banks and lenders. They can be broken down into conforming and non-conforming loans.
Conventional loans can range from down payments as low as 3% all the way up to 20%. The interest rates themselves will be lower with a higher credit score. Most lenders will approve you for a loan if you have a credit score from 620 and above. The lengths they run can range from 15-30 years. Non-conforming loans are for those who don’t have high enough credit scores, often through a subprime mortgage loan.
A federal housing administration loan is popular with many first-time buyers. They are designed for low-to-moderate income borrows, that require a lower minimum down payment and credit score. The loan is insured against the FHA, and borrowers can borrow up to 96.5% of the value of a home.
This type of loan is accessible for veterans who have served their country within the army, air force, navy and marines, amongst others. Veterans will be able to access lower interest rated loans, and avoid having to pay a down payment on purchasing a new home. They are also able to cash out up to 100% of the equity value of their home, in order to use the money for home improvements, or paying off debts.
You can use a veteran home loan calculator from VA loan specialists Hero Loan to work out how much you’re eligible for. Looking at loan values, length of agreement and interest rates with an experienced and passionate team.
Jumbo loans allow home buyers to access more luxury properties, up to one million dollars plus. You will need to prove you’re capable of paying off the high loan, with proof of assets and accepting a higher interest rate.
The interest rates are affected by how much you pay towards the down payment, as a higher amount will lead to lower percentages. This is important for jumbo loans as the rates are higher than other loans.
A USDA loan stands for the United States Department of Agriculture loan. They are set for homes out in rural areas, away from cities. They are low-interest mortgages, that require zero down payments, designed for lower income families who don’t have a high credit score.
The loan has to be used within rural and suburban locations. Monthly payments on these loans are typically restricted to around 30% or less of your current monthly income. USDA loans aren’t provided by the government, they are instead offered through banks and lenders, but are backed by the USDA.