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  • The Gold to Sold Group

MOST COMMON TYPES OF LOANS



Let’s talk LOANS, shall we? Disclosure: Realtors are not lending experts, so our first job will always be to connect our buyers with a qualified, trusted, and responsive loan originator (LO). The LO will review and discuss with the buyer all the various financing options available, and will handle the funding logistics of the transaction. But, many people just want to know what differentiates the most common loan types on the market today.

Conventional Loan: Ideal for borrowers with strong credit, a stable income and employment history, and a down payment of at least 3% (more is preferable). These loans are not insured by the government and so the requirements to qualify for one will be a bit stricter. Within the world of conventional loans, there are a couple of sub-types. A "conforming" conventional loan simply means the loan amount falls within maximum limits set by Fannie Mae or Freddie Mac. However, many of our clients require “jumbo loans.” This type of loan is an example of a conventional mortgage that exceeds conforming loan limits, and thus is considered "non-conforming."

Government-Insured Loans: The U.S. government isn’t a mortgage lender, but it does play a role in helping Americans become homeowners. Various government agencies, including the Federal Housing Administration (FHA loans), U.S. Department of Veterans Affairs (VA loans), and the U.S. Department of Agriculture (USDA loans) insure borrower loans. These types of loans are ideal for buyers who may not have stellar credit, or who don’t have a sizable down payment saved up. In fact, a major benefit of these types of loans is the low (to no!) down payment required to be eligible.

BOTTOM LINE

Only a qualified lender who knows YOUR complete financial picture (ie., your income, employment history, debt, credit score, savings, etc) can properly guide you to the best financing options that are available, and help you meet your unique goals.

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