5 types of mortgage loans
Deciding which mortgage LOAN is best will depend on YOU - there is no one correct choice.
Conventional Loans
Conventional loans can require as little as 3% down, making it a great option. While Conventional loans do require mortgage insurance if you are putting less than 20% down, you CAN cancel the mortgage insurance after your home equity reaches 20%. Credit Score: 620 or higher. A conventional loan can require as little as 3% down- and unlike FHA, you CAN cancel mortgage insurance after your home equity reaches 20%.
FHA loans help make homeownership possible for borrowers who don’t have a large down payment saved up and don’t have excellent credit. Borrowers need 3.5% down payment and a credit score of 580+ (these requirements change often.) Remember FHA loans require 2 mortgage insurance premiums: one is paid upfront, and the other is paid annually for the life of the loan if you put less than 10 percent down. This can increase the overall cost of your mortgage because the mortgage insurance premiums cannot be canceled on some loans.
USDA Loans
USDA loans help moderate- to low-income borrowers buy homes in rural areas. You must purchase a home in a USDA-eligible area and meet certain income limits to qualify. Some USDA loans do not require a down payment for eligible borrowers with low incomes.
Jumbo Mortgages
Jumbo mortgages are conventional loans that have non-conforming loan limits. This means the home prices exceed federal loan limits ($510,400 in 2020 Las Vegas, NV). In certain high-cost areas, the price ceiling is more. Jumbo loans are more common in higher-cost areas and generally require more in-depth documentation to qualify. A good credit score and a down payment of at least 10- 20% is needed.
VA Loans
Veteran Affairs loans are for members of the U.S. military (active duty and veterans). VA loans do not require a down payment or PMI! A funding fee is usually charged on VA loans but it can be rolled into most VA loans if needed.