Thinking about purchasing a home? Often times we don’t have 100,000+ just lying around to buy a home, so a great thing you can do to be able to afford a home is to invest in a loan. The loan you may qualify for, or the one that is best for you depends on a couple of factors, such as the location of the home, your income, and your credit. Below we have the common home loans and terms you need to know.
FHA LOAN
Stands for Federal Housing Administration. You get the loan from a FHA-approved lender and then FHA guarantees the loan. Designed for low/moderate income borrowers. Very popular for first time homebuyers. Requires lower down payments and easier to qualify for compared to other loans
VA LOAN
You can only qualify for this if you are a veteran or your spouse. It is provided by a private lender and guaranteed by the Department of Veteran’s Affairs. Alot of people that get this loan are able to get into a home with zero percent down.
CONVENTIONAL LOAN
Unlike FHA, this loan is guaranteed by a private lender instead of a government entity. They have fixed interest rates and are a little harder to qualify for. One of the things they look at to qualify buyers is your debt-to-income ratio (DTIs) being at or below 36-43%.
USDA LOAN
This loan is for low/moderate income buyers that get a home outside of city limits/rural areas. Often has low interest rates and has the option of zero down.
ADJUSTABLE-RATE LOAN
With this type of loan, the interest rate at the time of closing is fixed for a certain period of time and then after that, resets periodically. There is a limit on how much it can raise . This loan is smart for people that plan on paying off their loan in full within a certain amount of time.
