Learn The Difference
Conventional loans, also known as conforming loans offer great rates, lower costs and more home buying flexibility. Down payment requirement can be as little as 3% of the purchase price, depending on lender. First time home buyers are able to use this type of loan.
The Federal Housing Administration (FHA) loan is very popular for first time home buyers. The Federal Housing Administration sets guidelines. This type of loan has more lenient credit guidelines than a conventional loan and is insured by the government. The government does not lend money directly, but rather protects the lender with an “insurance policy”. The lender is covered against financial loss if borrower defaults on the loan. This program allows home ownership to become a reality for many that otherwise may not have had the opportunity. Down payment requirement is as little as 3.5%. You do not have to be a first time home buyer to utilize this loan.
The VA loan is an invaluable option for eligible veterans and active duty service members. There is no down payment required, credit guidelines are more lenient and some lenders offer reduced costs. The Veterans Administration sets loan guidelines and backs these loans, incentivizing lenders to offer VA loans. The lender is covered against financial loss if borrower defaults, much like an FHA loan.
The United States Department of Agriculture (USDA) loan is a zero down payment style loan that offers a buyer the option to finance a house in a “rural” area. USDA loan eligibility can be easily checked here- https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAction=sfp
The streamline 203K Rehab loan may be the right solution for those who already qualify for an FHA loan, find the right house and discover it needs repairs before lender will approve loan. This is also an option for buyers who wish to make cosmetic repairs such as bathroom or kitchen remodeling and roll those costs in the loan. Costs for all repairs and price of home must meet total appraised value.