Conventional – Conventional mortgages are not insured or guaranteed by the government. Fixed rates and adjustable rates are available on a conventional mortgage. With 20% down payment, you will not have monthly mortgage insurance and there are no up-front mortgage insurance fees like there are on government loans. However, with less than 20%, you will incur monthly mortgage insurance premiums.

FHA – FHA loans are insured through the Federal Housing Administration. This means if you default on the loan, the lender is paid by FHA. The biggest advantage of this type of loan is the low down payment requirement. FHA only requires 3.5% down payment, where conventional usually requires at least 5% equity into the property. FHA is also a little more lenient with some of their requirements, including credit score. The main drawback to an FHA loan, however, is the monthly mortgage insurance cost and an up-front mortgage insurance cost. These fees are to help offset the cost of default claims.

USDA – This type of mortgage loan is reserved for people who live in certain parts of the country and is overseen by the United States Department of Agriculture. The main benefit of this loan is the zero down payment option. Borrowers are able to purchase a primary residence with zero down payment and a favorable rate. USDA does not charge mortgage insurance; however, they do charge a small monthly fee as well as an up-front funding fee (which can be rolled into the loan). USDA loans do have an income limit, but unlike many loans, there are certain expenses we are able to deduct from your income to help you qualify. Also the property must be in an eligible area for the USDA Loan Program.

VA – VA loans are reserved for military service members and their families and are managed by the Department of Veteran Affairs. It can be used to finance 100 percent of a home purchase, which eliminates the need for a down payment. While there is no mortgage insurance on a VA loan, VA does charge a guarantee fee that can paid at closing or rolled into the loan.

203K – An FHA 203k rehabilitation loan is a very well-liked loan used to fix up and repair homes. The 203K loan allows access to a government-backed loan program for needed funds. At closing, the seller receives their money and the rest is put into an escrow account for the buyer to use for rehabbing the property.