Navigating the world of mortgage loans can be complex, but choosing the right one is crucial for your home-buying journey. Here’s a breakdown of the most common types of mortgage loans to help you understand which might be the best fit for you.
VA Loan (Department of Veteran Affairs)
Who Qualifies: Veterans, personnel with honorable discharge, reservists, National Guard, and Gold Star surviving spouses.
Down Payment: None required.
Upfront Mortgage Insurance: None.
Monthly Mortgage Insurance: None.
Minimum Credit Score: 580.
USDA Loan (Department of Agriculture)
Who Qualifies: Individuals buying a home in a USDA-designated rural area.
Down Payment: None required.
Upfront Mortgage Insurance: 2% of the loan amount (can be rolled into the loan).
Monthly Mortgage Insurance: Required.
Minimum Credit Score: 640.
FHA Loan (Federal Housing Administration)
Who Qualifies: Anyone meeting the minimum credit and income levels.
Down Payment: At least 3.5% of the purchase price.
Upfront Mortgage Insurance: 1.75% of the loan amount.
Monthly Mortgage Insurance: Required.
Minimum Credit Score: 580-640.
203K Loan (Federal Housing Administration)
Who Qualifies: Those planning to purchase a fixer-upper or needing to renovate their home, meeting credit and income requirements.
Down Payment: At least 3.5% of the purchase price.
Upfront Mortgage Insurance: 1.75% of the loan amount.
Monthly Mortgage Insurance: Required.
Minimum Credit Score: 580-640.
First Time Home Buyers Assistance Program
Who Qualifies: First-time home buyers (haven’t owned in the last three years).
Down Payment: Varies from 3% to 20% of the purchase price (often 3% with a Conventional 97 program).
Upfront Mortgage Insurance: None.
Monthly Mortgage Insurance: Required.
Minimum Credit Score: 620.
Conventional Loan
Who Qualifies: Individuals meeting lenders’ credit, income, and debt level requirements.
Down Payment: Varies from 3% to 20% (typically ranges from 5% to 20%).
Upfront Mortgage Insurance: Varies based on amount down.
Monthly Mortgage Insurance: Required.
Minimum Credit Score: 620.
Conclusion
Choosing the right mortgage loan depends on your financial situation, credit score, and home-buying goals. Understanding the different types of loans and their requirements can help you make an informed decision. Whether you’re a veteran, a first-time homebuyer, or looking to renovate, there’s a loan program tailored to your needs. I am happy to conncect you with a local lender that can help you explore your options, so together, we can find the best fit for your dream home.
*Loan programs are subject to change*
About the Author
Nicole Strom
Nicole is a mom, grandma, a retired military spouse of over 25 years, as well as a full time Real Estate Professional serving her clients in and around Colorado Springs.
You need a REALTOR® with vast experience and knowledge of our specific market. You need a REALTOR® that genuinely cares about you and puts your needs first. You need a REALTOR® you can trust. Nicole is that REALTOR®.
