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Mortgage Loan Types
Explanation:
There are four main types of mortgages: conventional loans, FHA loans, VA loans, and RHS loans.
Conventional loans may be either Conforming or Jumbo. Conforming loans have terms and conditions that follow the guidelines set forth by Fannie Mae and Freddie Mac and the loan amount is below the conforming limits of $417,000 ($625,500 for Alaska, Hawaii, Guam, and the Virgin Islands). On the other hand, a Jumbo mortgage is a loan with a loan amount above the conforming limits. Jumbo Mortgages typically have higher interest rates than conforming loans.
An FHA loan is insured by the FHA (Federal Housing Administration). It allows for a low down payment and helps make it easier for lower income Americans to get a mortgage.
VA loans are guaranteed by the U.S. Department of Veterans Affairs, which allows veterans (and their surviving spouses who are not remarried) and service persons to obtain home loans up to $203,000 easier and with better terms, usually a lower APR and no down payment.
Rural Housing Service (RHS) loans are guaranteed by the U.S. Department of Agriculture, which allows rural residents to obtain a mortgage with minimal closing costs and without the need for a down payment.