The conventional conforming loan is the traditional mortgage program. Conventional loans are conforming, meaning they follow the guidelines set forth by Fannie Mae and Freddie Mac. This loan requires mortgage insurance if the down payment is less than 20 percent. A conventional loan is a good option for those who have more money for down payments and better credit scores.
The Federal Housing Administration (FHA) mortgage insurance program is managed by the Department of Housing and Urban Development (HUD), which is a department of the federal government. FHA loans are available to all types of borrowers, not just first-time buyers. The government insures the lender against losses that might result from borrower default. Advantage: This program allows you to make a down payment as low as 3.5% of the purchase price. Disadvantage: You’ll have to pay for mortgage insurance, which will increase the size of your monthly payments.
The U.S. Department of Veterans Affairs (VA) offers a loan program to military service members and their families. Similar to the FHA program, these types of mortgages are guaranteed by the federal government. This means the VA will reimburse the lender for any losses that may resultfrom borrower default. The primary advantage of this program (and it’s a big one) is that borrowers can receive 100% financing for the purchase of a home. That means no down payment whatsoever.
The United States Department of Agriculture (USDA) offers a loan program for rural borrowers who meet certain income requirements. The program is managed by the Rural Housing Service (RHS), which is part of the Department of Agriculture. This type of mortgage loan is offered to “rural residents who have a steady, low or modest income, and yet are unable to obtain adequate housing through conventional financing.”
Reverse mortgage is an FHA insured loan. This loan allows those who are 62 years of age or older to use equity in their home for other purposes. Borrowers need at least 40-50% equity in their home to qualify.
Homeowners to finance the cost of repair work to improve/renovate/rehabilitate their primary residence into their mortgage. FHA program requires the property to be a primary residence of the borrower. A standard 203k loan program allows a loan amount that is 110% of the after improvement value determined by the appraisal.