Loan Types

Different Types of Loans

Just as homes come in different styles and price ranges, so do the ways you can finance them. It is important to understand the differences between the types of mortgage loans available so you can feel confident about the one you choose.

Conventional

These are also known as Fannie Mae, Freddie Mac, or conforming loans. This loan type can be used for a primary residence, vacation home, or investment property. Conventional loans offer a minimum of a 3% down payment on a primary residence purchase, a 10% down payment on a vacation home purchase, or a 15% down payment on an investment home purchase.

FHA

This loan type is great for someone with less than perfect credit, a higher debt to income ratio, or trying to come to closing with the least amount of money out of pocket. In most cases, this program is for a primary residence only. FHA loans offer a minimum of a 3.5% down payment and in most cases will allow more seller paid closing costs than a conventional loan.

VA

This loan type is only available to US Veterans, or surviving spouses, who have eligibility through the VA. Having eligibility does not guarantee that you will qualify for the loan, but it allows you to apply for this type of financing. This program is for primary residence only. VA loans can be done with no down payment.

Reverse Mortgages

This is for primary residence only and also has a minimum age of 62. Reverse mortgages can be done for purchase or refinance transactions. They do require a larger down payment on a purchase or more equity on a refinance when compared to a conventional loan. However, there are no monthly payments required as long as the property remains your primary residence. You are still obligated to pay the property tax and insurance on the home.

USDA

This loan type is for primary residence only and has geographic and income restrictions. USDA loans can be done with no down payment.

Construction/Perm

This loan type is used when you are building a home or doing extensive renovations of an existing home. This program allows for primary residence & vacation homes only and has a minimum down payment of 20%. Construction/Perm is also available on FHA/VA with additional conditions that would apply.

Foreign National

This loan type is for borrowers who are not US Citizens and can be done for primary residence and vacation homes and requires a minimum of a 30% down payment.

Stated Income/No Doc

This loan type was not available for quite some time, but there are some options that are now available. Due to the higher risk associated with not being able to verify income and/or employment, expect to pay a premium on interest rates and costs. You can expect to have approximately a 25% down payment requirement.