Financing Options

There are many loan options available to home buyers, starting with as little as 3 percent down. Listed below are some of the loan options available in today’s market.

Conventional Fixed Rate Mortgages (FRM)
A popular loan type, conventional fixed rate loans, feature a constant interest rate for the life of the loan. Generally speaking, monthly payments remain constant. Traditionally, borrowers are expected to provide a 20 percent down payment, though this is not necessarily required. You can go Conventional with as little as 5 percent down and can even do 10 percent and not pay PMI.

FHA Mortgage Loans
FHA loans are private loans insured by the federal government. These loans are popular with borrowers who don’t have enough funds to pay a traditional 20 percent down payment because they only require 3 percent down to qualify. Those who choose these loans are required to pay mortgage insurance, which slightly increases their monthly payments.

Lenders who wish to offer these loans must be approved by the Department of Housing and Urban Development (HUD).

VA Mortgage Loans
Like a FHA loan, VA loans are private loans insured by the federal government. VA loans are only available to qualified military veterans and their families. These loans are only available to these individuals for their own primary residences and cannot exceed a $417,000 loan limit.

Adjustable Rate Mortgages (ARM)
Adjustable rate mortgages are loans where the interest rate is recalculated on a yearly basis depending on market values. As interest rates are adjusted, so is the borrower’s monthly payment. While interest rates on ARM loans are generally lower than fixed rate loans they can eventually become higher. Various types of ARM loans include Hybrid ARMs such as 10/1 year, 7/1 year, 5/1 year and 3/1 year programs.

Jumbo Loans
A jumbo loan, or non-conforming loan, usually means any home loan for amounts higher than $417,000. Jumbo loans feature similar loan programs to fixed rate and adjustable rate programs. There are even FHA jumbo loans. The main difference between jumbo loans and conforming loans is the interest rate. Because jumbo loans are riskier for lenders, they usually have higher interest rates.

Construction Loans
Construction loans are used to finance the construction of a new structure. Whether you’re interested in building a brand new home for you and your family or you’re looking to construct a commercial property, construction loans may be the best solution. Each loan is as unique as the property you’re looking to construct.