A conventional loan refers to a type of mortgage that is not insured or guaranteed by any government agency. Instead, it is offered and funded by private financial institutions such as banks, credit unions, and mortgage companies. These loans are often chosen by borrowers with good credit and the ability to make a down payment, and they come with varying terms, interest rates, and down payment requirements based on the lender's criteria and market conditions.
An FHA (Federal Housing Administration) loan is a government-backed mortgage option that aims to make homeownership more accessible, especially for first-time homebuyers and those with lower credit scores. FHA loans offer lower down payment requirements and more flexible qualification standards compared to conventional loans. The FHA insures the loan, which allows approved lenders to offer more favorable terms to borrowers.
A jumbo loan is a type of mortgage that exceeds the loan limits set by government-sponsored enterprises (GSEs). Because these loans are larger than the standard conforming loan limits, they are considered riskier for lenders. As a result, jumbo loans typically come with stricter credit requirements, higher down payment demands, and slightly higher interest rates. They are commonly used for purchasing higher-priced properties in expensive housing markets.
Seller financing, is a method in which the seller of a property acts as the lender and provides financing to the buyer. Instead of the buyer obtaining a traditional mortgage from a bank, the seller extends credit to the buyer, allowing them to make payments directly to the seller over an agreed-upon period. This option can be beneficial for buyers who might not qualify for traditional financing or for sellers who want to attract a wider range of potential buyers. Terms and conditions of seller financing are negotiated between the buyer and the seller and can vary widely.
A USDA (United States Department of Agriculture) loan is a mortgage program designed to help individuals and families in rural and suburban areas purchase homes. This type of loan offers favorable terms, such as low or no down payment requirements and competitive interest rates. To qualify for a USDA loan, the property's location must meet USDA eligibility criteria, and borrowers must also meet income requirements.
A VA (Veterans Affairs) loan is a mortgage program available to eligible veterans, active-duty service members, and certain members of the National Guard and Reserves, as well as some surviving spouses. These loans are designed to honor the service of military personnel by making homeownership more affordable.