Understanding the benefits and drawbacks of the different kinds of loans is key to making informed decisions when getting qualified for the home-buying process.

Conventional – Conventional loans are one of the most common loans. They are appealing to many buyers as there are many conventional loan options out there. 

• best for first time and repeat buyers
• down payment as little as 3% down for first time buyers
• the most common mortgage option, usually the best interest rates

FHA – FHA stands for the Federal Housing Association which is part of HUD. This is a government backed loan that has been helping buyers become homeowners since the 1930s.

• best for first time home buyers
• down payment as little as 3.5%
• ownership is more affordable with less down and easier credit requirements

VA – VA stands for Veteran Affairs. This is another government backed loan that helps veterans, service members, and their surviving spouses purchase homes.

• best for veterans
• down payment as little as 0%
• removes the need for down payment. Only available to veterans and their families.

Your lender will help you talk through each loan and make sure the one you choose is right for you.

USDA: USDA stands for the United States Department of Agriculture. This is also a government backed loan that you can use on rural new or existing homes meant to be used as primary residence. 

• cannot be income producing
• down payment as little as 0%
• this mortgage option was developed to promote the purchase of rural land

ARM: ARM stands for Adjustable Rate Mortgage. This mortgage usually allows a fixed rate for a specified period of time, then the rate changes to adjustable. 

• best for short term homeowners
• down payment as little as 10%
• rates start out lower than any other option, but fluctuate with the market

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