Buying a home is a major decision that will impact your life years into the future. As a new homebuyer, it’s important for you to be informed and aware of your financial options. There are many different types of mortgage loans for buying a house, each of which has their own unique features and qualification requirements.
In this article, we’ll discuss the various loan options for buying a home and how to choose the right one.
Important Considerations for Choosing a Home Loan
When comparing home loans, you’ll want to look for the option that fits best with your situation and meets your needs. Here are some important factors to consider:
- Loan terms and requirements
- Where you’re planning on buying a home
- Whether it’s a primary residence or investment property
- Your personal finances and credit history
- How long you plan on living in the home
- Special circumstances like being a first-time buyer or a military Veteran
5 Common Types of Mortgage Loans for Buying a House
Now that you have a better idea of what to look for, let’s talk about the different mortgage loans out there. While there are many different types of home loans, the ones most commonly used for buying a house today are conventional, VA, FHA, USDA, and ARM loans.
1. Conventional Loans
Conventional loans are popular because of their attractive interest rates, flexible terms, and lower costs. However, requirements are stricter for these loans, so they’re usually reserved for buyers with good credit history and steady income.
2. VA Loans
VA loans are reserved for active members and Veterans of U.S. military forces as well as qualifying spouses. These loans are a great option for qualifying individuals because they usually do not require a down payment and there is a limit on closing costs. While all military members are welcome to apply, only the VA can determine your eligibility.
3. FHA Loans
FHA loans are loans that are insured by the Federal Housing Administration. They are popular among first-time homebuyers because of their relaxed qualifications and down payment requirements. If you think you will have trouble qualifying for a conventional loan, an FHA loan could be a good option for you.
4. USDA Loans
If you’re thinking about buying a home in a rural area, you may be eligible for a USDA loan. These loans are a great choice for borrowers with low to moderate income. A USDA loan may help you avoid having to pay a down payment and be able to obtain 100% financing.
5. ARM Loans
ARM loans are a good choice for borrowers who don’t plan on owning their home for a long period of time. If there’s a strong probability that you’ll move and sell your home within a few years, this could be a good option for you. With these loans, the interest rate is fixed for a set period and then adjusts periodically.
Find the Right Option for your Home Buying Needs
Start comparing loans for buying a house today. Call Mortgage Solutions Financial to find the perfect loan for your home buying needs.