Types of Loan Options To Purchase a Home

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Types of Loan Options To Purchase a Home

You can leverage many loan options to purchase a home. There are several types of loans that you can use that can help you purchase a home. Your loan type will depend on your needs and financial situation.

FHA Loans

FHA loans are a great option for first time home buyers or those with credit problems. FHA loans are government insured and generally require a down payment of 3.5 percent of the purchase price. The closing costs can vary, but depending on the incentives of the sale, some of these costs may be covered by the seller or home builder.  

Conventional Loans

A conventional loan is a mortgage that a government agency does not back. Conventional loans tend to have higher interest rates than FHA and VA mortgages, but they do have their own advantages.

Conventional loans offer you more flexibility regarding the type of home you can buy. They also allow you to pay off your mortgage over periods as long as possible if you choose to do so, which can help save money each month.

However, unlike FHA and VA loans, conventional loans generally require higher down payments and stricter credit requirements.

USDA Loans

Another loan option to purchase a new home you should consider is the USDA loan. These are federal government-backed loans available to low-income rural residents who wish to purchase a home in a rural area. They require less than a three percent down payment and have low interest rates, so they’re great for first time homebuyers.

VA Loans

Eligible veterans should consider using a VA loan to purchase a home. Veterans do not have to be first-time homebuyers to qualify for a VA loan. They may use their benefit again and again in the future, but they must occupy the new home as their primary residence. This government guarantee will pay your mortgage if you must stop making payments for certain reasons.

If you can’t find the home of your dreams, or you keep losing a house to a better offer, you might want to consider building new construction. Even though you don’t own any real estate yet, you can still make payments on the new construction loan while it’s being built. That way when your new home is complete, all that’s left to do is close on it and move in!

Fund Your Dream Home

Many types of loans and financing programs are available from different lenders across the country. The best way to find out what type of loan works best for your needs is by getting in touch with your mortgage lender or real estate professional at an early stage of the home buying process. They can help guide you through all the steps involved in owning the home of your dreams.