If only shopping for a mortgage was as much fun as shopping for shoes — or a smartphone or a big-screen TV. Hunting down bargains and saving a few bucks is worth an afternoon or two, right? But the time and effort it takes to decode jargon understand the difference in loan may not give off the same vibe.
Still, let’s try to make this as pain free as possible, here’s a short list of the most common loan types .
FHA Home Loans
Flexible guidelines, more forgiving on credit than conventional, low interest rate, low down payment requirements. There may be property type limitations. Mortgage insurance required, and is not automatically cancelled. It can only be used with a primary residence.
- Minimum Credit Score: 580*
- Minimum Down Payment Requirement: 3.5% of purchase price
- *500-579 credit score with 10% down
Conventional Home Loans
Low rates for borrowers with good credit, no limits on property use or type. Flexible down payments allow for lower PMI costs, and No PMI if down payment is 20% or more.
- Minimum Credit Score: 620
- Minimum Down Payment Requirement: 5% of purchase price*
- *3% down payment options available OAC
VA Home Loans
No down payment required. Flexible credit guidelines and often lower interest rates. No PMI. Must be active or retired military. Can be used to purchase a primary residence.
- Minimum Credit Score: 640
- Minimum Down Payment Requirement: 0%
USDA Home Loans
No down payment required. No PMI necessary. Flexibility with credit requirements. There may be income and area limitations. Can be used to purchase a primary residence.
- Minimum Credit Score: 640
- Minimum Down Payment Requirement: 0%
It’s okay to not know which loan is right for you, that’s what I’m here for.