Types Of Home Loans

Fha loans backed by the fha these types of home loans help make homeownership possible for borrowers who don t have a large down payment saved up and don t have pristine credit.

Types of home loans. Conventional fixed rate mortgage. An fha loan otherwise known as a federal housing administration loan allows home buyers to borrow up to 96 5 of the value of the property. The most common type of conventional loan a fixed rate loan prescribes a single interest rate and monthly payment for the life of the loan which is typically 15 or 30 years.

The basic types of loans 1. Personal loans and credit cards come with high interest rates but do not require collateral. Don t worry you ll move into your new home in no time.

Fha loans use two types of mortgage premiums ufmip upfront mortgage insurance premium and annual mip. This type of loan also requires you to pay private mortgage insurance pmi if your down payment is less than 20 of the home s value. They have the lowest credit score requirements of any mortgage type.

Conventional fixed rate loans are a safe bet because of their consistency the monthly payments won t change over the life of your loan. The differences between these two mortgage types are covered below. Fha home loans are one of the most popular types of mortgage loans used by first time homebuyers.

Fha loans are guaranteed by the federal housing administration. A conventional home loan is one that is not insured or guaranteed by the federal government in any way. Home equity loans have low interest rates but the borrower s home serves as collateral.

Conventional loans aren t backed by the government so lenders can charge a higher interest rate or require a higher down payment typically at least 5 compared to unconventional loans. The upfront mortgage premiums are paid once the home closes and the loan is issued. This distinguishes it from the three government backed mortgage types explained below fha va and usda.