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Types of Mortgages

Various Names and Details

To help you better understand the different types of mortgage loan programs, we have outlined them below. The top two loans we see are conventional and FHA. However, we highly suggest talking to a mortgage banker so they can assist you with the process. They can also help you determine which program best suits your situation, along with the benefits of a mortgage pre-approval.

Conventional Mortgages

  • A conventional mortgage can be any loan that is not federally insured or guaranteed by the government, even though many conventional mortgage guidelines come from government-sponsored entities Fannie Mae and Freddie Mac
  • Conventional mortgages come in many different packages: Fixed- and adjustable-rate, balloon mortgages, etc.
  • Conventional mortgages currently require at least 5% as a down payment.
  • Private Mortgage Insurance (PMI) is a requirement with less than a 20% down payment.
  • Escrow for taxes and insurance is required if you have less than 20% down payment.
  • Sellers can pay closing costs of up to 6% (3% on 5% down and 2% for investors).
  • Less-than-perfect credit may be cause for a higher interest rate, depending on your Credit Score.

You can use our mortgage loan calculator to help determine your monthly payment. But keep in mind property taxes do vary from city to city, so be sure to adjust for your area using the Millage Rates page.

FHA Loans

  • A Federally Insured Loan Program provides mortgages for owner-occupied homes with as little as a 3.5% down payment
  • Fixed-Rate and Adjustable-Rate Mortgages
  • Up-front Mortgage Insurance Premium (MIP) can be financed into your loan
  • Low Monthly MIP included in payment
  • Escrow for taxes and insurance is required
  • Seller-paid closing cost of up to 6% of the sales price is allowed
  • No pre-payment penalty
  • Less-than-perfect credit is acceptable
  • Easier to qualify for than a conventional loan

VA Loans

  • Zero-down-payment loans for eligible veterans and their spouses.
  • Guaranteed by the Department of Veterans Affairs
  • 15 and 30-year Fixed-Rate Mortgage
  • VA funding fee can be financed
  • No monthly PMI is required.
  • Escrow for taxes and insurance is required.
  • Seller-paid closing cost up to 100% is allowed
  • No pre-payment penalty.
  • Less-than-perfect credit is acceptable
  • No income limits
  • Available to widows of eligible vets

FHA Rehabilitation Loans

  • Allows the buyer of an owner-occupied property to finance certain repairs, improvements, and even appliances into the mortgage

USDA Loan

Unites States Department of Agriculture’s Office of Rural Development provides Zero Down Payment Loans for owner-occupied homes in qualifying areas.

  • 30-year Fixed-Rate Mortgage
  • USDA Guarantee Fee can be financed
  • No monthly PMI is required
  • Escrow for taxes and insurance is required.
  • Seller-paid closing cost of up to 6% of the sales price is allowed
  • No pre-payment penalty
  • Less-than-perfect credit is acceptable
  • Income limits apply 
  • There is .5% monthly fee for the life of the loan   

In this market you need a real estate agent by your side at all times. Do you have one or are your going it alone?

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