- Conventional Mortgage
- A home loan that isn't not insured by the federal government.
- Conforming: loan amount that falls within maximum limits set by Federal Housing Financial Agency.
- Non-Conforming: doesn't meet guidelines. Most common is a jumbo loan.
- Can be used for primary, secondary, or investment property.
- Overall borrowing cost lower than others.
- Can pay as little as 3% down on loans.
- Minimum FICO score has to be 620.
- Debt-to-income ratio has to be 45%:50%.
- Jumbo Mortgage
- Conventional types of mortgages that have non-conforming loan limits- home price exceeds federal loan limit.
- More common in higher-cost areas and usually require more in-depth documentation.
- Borrow more money to purchase home in a high-cost area.
- Competitive interest rates.
- FICO scored typically needs to be 700, though some may accept 660.
- Government-Insured Mortgage
- Though the U.S. Government aren't mortgage lenders, they do play a role in helping American's become homeowners.
- 3 Gov't agencies that back mortgages:
- FHA- For those who haven't saved up a large down payment, those that don't have the best credit, minimum 580 FICO. 2 mortgage insurance premiums required.
- USDA Loan- Moderate to low income borrowers in rural areas. USDA- eligible areas only. Some don't require a down payment.
- VA Loan- Flexible, low interest mortgage for U.S. military families. Funding fee as a percentage of loan amount is required.
- Helps finance home when you don't qualify for conventional loan.
- Credit requirements are more relaxed.
- No large down payment is needed.
- Open to repeat and first-time buyers.
- Many have mandatory mortgage insurance premiums that can't be cancelled.
- High overall borrowing costs.
- Fixed-Rate Mortgage
- Same interest rate for the life of the loan.
- Monthly principal and interest payment always the same.
- Generally pay more interest with longer-term loan.
- Takes longer to build equity.
- Rates are typically higher.
- Adjustable-Rate Mortgage
- Fluctuating rates that can increase and decrease depending on the market conditions.
- Many have a fixed rate for a few years before the loan changes to a variable interest rate for the remainder of the loan.
- Save substantial amount of money on interest payment.
- Monthly payments could become unaffordable leading to a loan default.
- Home values may fall in a few years making it harder to refinance or sell home.
5 Types of Mortgages
March 03, 2021 at 11:12am | 
There are a few types of mortgages, you may qualify for some. Here's more information about them!
check_circle
Send us a Message
You agree to receive automated promotional messages from Michael Hunter regarding real estate information and education.Click here for terms and privacy policy. Message frequency varies. To opt out of receiving messages from me, text STOP to cancel. Reply HELP for help. Message and data rates may apply.
