Conventional Loans: Ideal for borrowers with strong credit, stable income and employment, and a down payment of at least 3%.
The most common conventional loans are Fannie Mae (FNMA) and Freddie Mac (FHLMC). They are not insured or guaranteed by the federal government, so mortgage insurance is not typically required unless you put less than 20% down. Overall, the borrowing costs tend to be lower even if the interest rates are slightly higher.
Jumbo Loans: Ideal for buyers purchasing high-end homes. Buyers typically have excellent credit, higher than average income, liquidity down payment of at least 20%. Subject to change.
These are conventional loans that exceed the loan limits of Fannie Mae and Freddie Mac. Borrowers can qualify for loans up to $3 million on their primary residence and $2 million on their second homes or investment properties. Interest rates are usually competitive with a conventional loan.
Government Loans: Ideal for those with low cash savings, not-so-great credit, or who don’t qualify for conventional loans.
- Federal Housing Administration (FHA) Loans: FHA Loans are managed by the Department of Housing and Urban Development (HUD) and are available to all types of borrowers, not just first-time home buyers. There are fixed and adjustable rate options, making them ideal for those who don’t have a large down payment or pristine credit. Down payments for FHA loans can be as low as 3.5% of the purchase price if your credit score is higher than 580.
- Veteran Affairs (VA) Loans: VA Loans are managed by the US Department of Veteran Affairs and are ideal for active duty military or veterans. Qualified borrowers can receive 100% financing for the purchase of a home. Interest rates are typically low and fixed, and a minimum credit score of 620 is required. Fees are usually capped or rolled into these loans too.
- US Department of Agriculture (USDA) Loans: USDA loans are available for homes in USDA-eligible areas for moderate to low-income rural borrowers that meet certain income requirements. Qualified borrowers may be eligible for no down payment and low, fixed rates.