There are several types of home loans available to borrowers, including:
- Conventional loans: These are the most common type of home loan and are not insured or guaranteed by the government. They can be conforming or non-conforming, depending on whether they meet certain guidelines established by Fannie Mae and Freddie Mac.
- FHA loans: These are loans that are insured by the Federal Housing Administration (FHA), which makes them more accessible to borrowers with lower credit scores or smaller down payments. FHA loans require mortgage insurance premiums, which increase the total cost of the loan.
- VA loans: These are loans that are guaranteed by the U.S. Department of Veterans Affairs and are available to active-duty military members, veterans, and some surviving spouses. VA loans typically offer lower interest rates and require no down payment, but they have specific eligibility requirements.
- USDA loans: These are loans that are guaranteed by the U.S. Department of Agriculture and are available to borrowers in rural and suburban areas who meet certain income requirements. USDA loans offer low interest rates and require no down payment.
- Jumbo loans: These are loans that exceed the conforming loan limit established by Fannie Mae and Freddie Mac. They are typically used for high-value properties and require larger down payments and higher credit scores.
- Fixed-rate loans: These are loans with a fixed interest rate and monthly payment for the life of the loan, usually 15 or 30 years.
- Adjustable-rate loans: These are loans with an interest rate that changes periodically based on market conditions. They typically offer lower initial interest rates but can become more expensive over time.
It’s important to carefully consider the pros and cons of each type of home loan and choose the one that best meets your financial needs and goals.