Whether you’re buying a condominium, town home, or single family — there are several options for financing. In the video above, Arlington VA real estate agent Keri Shull breaks down the 3 different types of home loans.
You’ll need to decide whether you want to use a government-insured home loan (such as FHA or VA), or a conventional “regular” type of loan. The differences between these 3 mortgages are covered below.
VA Loans
The U.S. Department of Veterans Affairs (VA) offers a loan program to military service members and their families. Similar to the FHA program, these types of mortgages are guaranteed by the federal government. This means the VA will reimburse the lender for any losses that may result from borrower default. The major key of this program is that borrowers can receive 100% financing for the purchase of a home. That means no down payment!
FHA Loans
The Federal Housing Administration (FHA) mortgage insurance program is managed by the Department of Housing and Urban Development (HUD), which is a department of the federal government. FHA loans are available to all types of borrowers, not just first-time buyers. The government insures the lender against losses that might result from borrower default. Advantage: This program allows you to make a down payment as low as 3.5% of the purchase price. Disadvantage: You’ll have to pay for mortgage insurance, which will add a few hundred dollars to your monthly payments.
Conventional Loans
Conventional mortgages are ideal for borrowers with good or excellent credit. They follow fairly conservative guidelines, so be prepared to show up at closing with a decent amount of money. What’s good: Conventional mortgages generally pose fewer hurdles than Federal Housing Administration or Veterans Affairs mortgages, which may take longer to process.
Contact us to find out which one of the 3 different types of home loans is best for you!
The Keri Shull Team can meet any of your real estate needs. If it’s your first time buying, you’re an experienced property investor, planning to sell, or even looking to rent — contact us today.
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