Your Home Sold Guaranteed Realty — The Nathan Clark Team

Learn About 4 Different Types of House Loans

Curious about the different types of house loans available to home buyers? If you’re buying your dream home, your first step should be evaluating your mortgage options. But if this is your first time buying a home, you may not know what types of mortgages you can potentially qualify for.

In this post, our award-winning real estate team at Your Home Sold Guaranteed Realty – The Nathan Clark Team will cover four types of house loans. We’ll break down the most common types of loans, as well as a few lesser-known options.

Conventional Loans

Conventional loans are the most popular type of mortgage. Conventional loans refer to essentially any home loan that isn’t backed by the government. These are loans that are available from private lenders, like banks or credit unions. 

The exact terms of these loans vary from lender to lender, so it’s worth speaking to several before deciding on the right fit.

U.S. Government-Backed Loans

The second most common type of house loans are ones that are backed by the U.S. government. There are three options for these loans.

Federal Housing Administration (FHA) Loans

FHA home loans are intended to help lower-income home buyers break into the housing market. They have less strict qualifications compared to conventional loans and allow home buyers to make lower down payments.

However, because the loan requirements are lower, they’re seen as a higher risk for the lender. For this reason, home buyers who take out an FHA loan can expect to pay higher interest rates. 

It also means it will be necessary to purchase private mortgage insurance to ease the lender’s risk, which can contribute to a higher monthly payment. FHA loans are available from any lender that has been approved by the FHA.

United States Department of Agriculture (USDA) Loans

The USDA offers home loans as part of its Rural Development Guaranteed Housing Loan Program. As the name suggests, these loans apply to home buyers seeking their dream home in a rural area. There are three USDA loan programs: loan guarantees, direct loans, and loans specifically designated for home improvement.

The USDA’s loan guarantees are available at any participating lender and allow the home buyer to get a home loan with low interest rates as well as a low down payment. The direct loan program comes directly from the USDA itself rather than a third-party lender. Of course, the exact loan terms will depend on the specific area in which the home is being purchased.

Veterans Affairs (VA) Loans

Lastly, veterans and current service members are eligible for home loans through the VA. These loans are offered through private lenders and provide home buyers with lower interest rates, little to no down payment, and even lower closing costs.

The VA offers several different types of loan programs, including one for home purchase, two for refinancing, one for renovations, and a dedicated program for Native American veterans. It’s important to note that not every home is eligible for a VA home loan. A VA-approved appraiser will need to evaluate the property to make sure it meets the right criteria.

Jumbo Loans

A less common type of home loan is a jumbo loan. These are intended for expensive luxury properties, and their exact terms are determined by the lender. Jumbo loans are harder to qualify for because the home buyer is borrowing a significant amount from the lender.

For this reason, buyers will need to have a great credit score, a good debt-to-income ratio, and show they have stable employment and cash reserves. 

Interest-Only Mortgage

Another uncommon home loan is an interest-only mortgage. With this type of loan, the home buyer only pays interest on their home for a set amount of time. After that initial period ends, they must pay interest and principal.

This loan option is a good idea for home buyers who plan to refinance later down the line or just need a bit more time to save up before they start making their full monthly payments.

Work With Our Team to Buy Your Dream Home

If you’re looking to buy a home in New England, our team at Your Home Sold Guaranteed Realty – The Nathan Clark Team is the best choice to help you. We’ve been connecting people to their dream homes for years, and we know we can do the same for you.

We have a network of lenders that we can recommend to help you find the right types of house loans for your situation. On top of that, we offer several buyer’s guarantees like our Buyer Protection Plan and Buyer Cancellation Guarantee. These guarantees help make the home-buying experience as stress-free and risk-free as possible.

To learn more about the different types of house loans or what it’s like working with our realtors, give us a call at 401-288-3557 or fill out the form below.

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Nathan Clark $ 39 Cedar Swamp Rd, Smithfield RI 02917 401-288-3557

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401-288-3557