An FHA loan is a mortgage insured by the Federal Housing Administration, allowing borrowers with lower credit scores or smaller down payments to qualify for home loans. It's popular for first-time homebuyers and those with limited financial resources. FHA loans require a down payment of as little as 3.5% of the purchase price.
A conventional loan is a mortgage that is not insured or guaranteed by the government. It typically requires a higher credit score and a larger down payment compared to FHA loans. Conventional loans are offered by private lenders and follow guidelines set by Fannie Mae and Freddie Mac. They're often chosen by borrowers with good credit and stable finances.
A VA loan is a type of mortgage available to eligible veterans, active-duty service members, and some surviving spouses. It's guaranteed by the U.S. Department of Veterans Affairs, which allows qualified individuals to purchase a home with little or no down payment and often with more favorable terms than conventional loans. VA loans are designed to help veterans and their families achieve homeownership.
A USDA loan is a mortgage backed by the United States Department of Agriculture, aimed at helping individuals in rural areas buy homes. These loans offer attractive terms like low-interest rates and no down payment requirement. They're designed to promote rural development and homeownership in less populated regions.
A jumbo loan is a type of mortgage that exceeds the limits set by government-sponsored enterprises like Fannie Mae and Freddie Mac. These loans are typically used to finance higher-priced properties. Because of their size, jumbo loans often have stricter requirements and higher interest rates compared to conventional loans.
Portfolio loans are mortgages held by the lender rather than being sold to government-sponsored enterprises like Fannie Mae or Freddie Mac. These loans don't adhere to standard underwriting guidelines, so they're more flexible and can accommodate borrowers who might not qualify for traditional loans. Lenders often keep these loans in their "portfolio," managing them directly rather than selling them on the secondary market.
A mortgage refinance is when you replace your existing home loan with a new one, usually to get a lower interest rate, reduce your monthly payments, or change the loan term. It can also be done to cash out equity or switch from an adjustable-rate to a fixed-rate mortgage.
Down payment assistance mortgage loans help homebuyers by providing funds to cover a portion or all of the down payment required to purchase a home. These programs are often offered by state or local governments, non-profit organizations, or private lenders. They aim to make homeownership more accessible, especially for buyers who may struggle to save enough money for a down payment on their own, and many are forgivable after a certain amount of time in the home.
A land loan is a type of financing specifically for purchasing land. It's used for buying raw or undeveloped land for investment, recreational purposes, or future building. These loans typically have higher interest rates and shorter terms compared to mortgages for homes because land is considered riskier collateral.
Construction loans are short-term loans used to finance the building of a new property or renovating an existing one. They provide funds in stages as construction progresses, and once the project is completed, the loan is usually converted into a traditional mortgage. These loans often have higher interest rates and require a detailed plan, including blueprints and cost estimates, to qualify.