Confused About Home Loans?


Getting a loan for your new home can be very confusing. Here is some basic information about four of the most popular home loans available: FHA, VA, USDA and Conventional. Please keep in mind: I am not a Mortgage Advisor. For more specific and exact numbers please contact Stonegate Mortgage

FHA Loansare insured by the Federal Housing Administration. This insurance allows lenders to offer benefits to the borrower like lower down payments (3.5% minimum), lower closing costs, lower credit score minimum (530 lowest/620 preferred), and lower qualification requirements (poor or damaged credit). Although with these advantages come a few disadvantages. For example, FHA loans require mortgage insurance. An FHA loan may not be available on all property types. They also have a maximum loan amount of $271,050.

VA Loansare guaranteed by the U.S. Department of Veterans Affairs. This type of loan allows lenders to provide certain benefits to eligible: Members of the Service, Veterans, and surviving spouses. These benefits include; no down payment, no private mortgage insurance, and limits on the amount of closing costs charged to the borrower. VA loans require a minimum of a 620 credit score and have a lump sum funding fee, which varies per loan. The maximum loan amount is $417,000. Property must be in the US or its territories.

USDA Guaranteed Loansare also guaranteed by the U.S. Government. The benefits include 100% financing of the appraised amount of the home and 0% down payment. USDA loans do have a guarantee fee that is financed into the loan amount. No, you do not need to be a farmer to qualify, but the property must be in an eligible area and the loan is subject to income qualifications.

Conventional Loansare loans not guaranteed or insured by the U.S. Government. There are more options available with this type of loan. The borrower may choose the length of the loan, whether the rate is fixed or adjustable, no mortgage insurance (20% down payment), and the ability to borrow a larger amount. The disadvantages include a minimum credit score or 680 and a higher down payment (generally 5%).

**The numbers and percentages may vary per lender and per year**