Common Loan Types

When buyers are looking for a home, there are so many options to choose from.

Let’s look at a few of the most commonly used loan types for residential mortgages.

VA Loans

The Department of Veterans Affairs (VA) offers special home buyer benefits to

qualified Active Duty, Retired Military and other veteran members. The VA home

loan provides 100% financing and flexible qualifying standards, which has helped

many veterans get into their homes.

VA Loan features:

Up to 100% financing available, No monthly private mortgage insurance, Seller

concessions up to 4% of the reasonable value of the property, Credit scores, many

lenders accept FICO in the 500’s, Must be a veteran, retiree, active duty or reserve

member to be eligible, Manufactured homes allowed.

Conventional Loans

One of the most common types of home loans is a conventional mortgage. These

loans stand apart from most other common types of home financing because they

are not underwritten based on government guidelines, such as an FHA, VA, and

USDA Rural Development Loans. Conventional loans, instead, are most often

underwritten to either Fannie Mae or Freddie Mac guidelines. Conventional home

loans that are above 80% loan-to-value or LTV will require what is known as private

mortgage insurance or PMI. This insurance is added into your monthly payment and

is used to protect the lender in case a borrower goes into default. To avoid PMI, a

20% down payment would be required. This is a great option for those who are able

to put 20% or more down towards the purchase.

Conventional Loan features:

Up to 97% financing for Purchase loans, Cash-out refi available, Manufactured home

financing available

FHA Loans

The Federal Housing Administration (FHA) offers low down payment options for

financing a primary residence. The flexible guidelines and lower credit requirements

helps many homebuyers become new homeowners every year. The FHA home loan

is a great option for first-time homebuyers and for those who may not have a big

down payment.

FHA Loan features:

Up to 96.5% financing available, Credit scores FICO’s in the low 600’s, Manufactured

home financing,

Gift funds for down payment allowed, Mortgage insurance premiums (MI).

USDA Loans

A USDA Rural Development Home Loan is a mortgage loan that is insured by the

USDA. Backed by the US Department of Agriculture, these no money down, fixed

interest rate loans are helping many homebuyers realize their dreams of home

ownership. USDA loans are available to qualified individuals who are purchasing or

refinancing their home loan in an area that is not considered a major metropolitan

area by the USDA.

USDA Loan features:

100% financing available, Lenient on less than perfect credit, Property must be

located in a USDA designated area, Income restrictions apply, Closing costs may be

eligible to roll into loan.

Manufactured Homes

Manufactured Loan Financing is limited to only a select few lenders. Manufactured

homes are very common these days and there are a lot of smaller communities that

have a lot of communities of manufactured homes. Finance your manufactured

home on a VA, FHA or conventional loan types.

Manufactured Loan features:

Financing available using FHA, VA and Conventional loan financing, Financing can be

up to 100% using VA financing, Purchase or rate & term refinance transactions only.