There are many types of mortgage loans. Most loans are based on the type of property you are buying. Here are the four most common loans used for the purchase of a home (from single family to 4 flat).
• Conventional Loan: A Conventional Loan has many financing options with no limits on area. However, you must have a credit score of 620 or above. The loan to value can be as high as 95% of the purchase price, but above anything above 80% there will be PMI (private mortgage insurance added onto the loan requirements. Conventional Loans can have a 10 to 30 year term.
• FHA Loan: A FHA (Federal Housing Administration) Loan has option that will qualify you with much lower credit rating making it much easier to qualify for and can have as low as 3% down payment with a 15 to 30 year term. This loan is typically available to first time home buyers and can be used to purchase 1-4 unit properties.
• VA Loan: A VA (Veterans Affair) Loan has a 0% down with almost no guidelines for credit. However, this loan can only be used by qualified veterans.
• USDA Loan: A USDA (United States Department of Agriculture) Loan is for Rural Housing. This loan also has a 0% down payment. However, you must have good credit and is limited to only rural areas.
Which one fits you and your needs best? Make sure you talk to a knowledgeable mortgage person about what mortgage would be best for you.
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