First things first, if you think you are ready to buy a house, you need to get prequalified. Getting prequalified may tell you more than just what you can afford, but also what type of loan you qualify for. Of course, understanding what each loan is will help you before you make that first step.
A conventional loan is offered by most financial institutions and is not backed by the government.
If your down payment is less than 20% you will be required to pay Private Mortgage Insurance (PMI). If your down payment is at least 20% (or more) then you are not required to pay PMI.
Conventional loans usually can offer more money than other loans.
You get more choices in loan structure (terms, etc.)
Your credit score must be at least 620. Though higher credit scores will get you better interest rates.
These loans are insured by the government as a part of the Federal Housing Administration.
You can only get an FHA loan from an FHA approved lender. You can borrow up to 96.5% of the homes worth, meaning you can put as little as 3.5% as a down payment.
You must have a minimum of 580 credit score, or put at least 10% down if your score does not meet.
You must purchase mortgage insurance as a part of your loan.
These loans are offered to those that have served in the military.
These loans (usually) do not require a down payment, or PMI.
The idea is that this loan will stay with the bank that originated it. These loans usually have a little higher interest rate, and shorter terms. It is up to the lender to determine what rate you will get, or if you even qualify to keep your loan in house. If you are a landlord and own a certain amount of properties, you may be required to keep your home loans in house.
The journey to learn which mortgage loan would be the best for you can be a little overwhelming, but it doesn’t have to be! I can give you my expert opinion and recommend a trusted lender that will make your home buying experience the best it can be.