Finding the right mortgage to finance your home can be as equally important as finding the home itself. Thanks to the availability of a variety of different financing options, homebuyers can be selective when choosing which mortgage best suits their needs. Basically, there are three main types of financing options available to homebuyers: the conventional loan, the FHA (F-H-A) loan, and the VA (V-A) loan. A conventional loan is one that is not insured by the Federal Housing Administration or guaranteed by the Veterans Administration. Conventional loans typically have a higher interest rate because banks set the guidelines, not the government. However, they permit you to borrow a greater sum of money. FHA loans, on the other hand, are insured by the Federal Housing Administration, and tend to limit the amount you can borrow to purchase a home. The advantage to them, if you qualify, is that they require very low down payments. For this reason, this type of loan is mainly meant to help first-time owners and low- to middle-class buyers. As a result, FHA loans are not available for people interested in buying property as an investment instead of as a primary dwelling. The last type of loan available is the VA loan. Guaranteed by the Veterans Administration, these loans were created to help military veterans purchase homes by offering lower interest rates and in most cases, requiring no down payment. Generally, the qualifying guidelines for financing a home through any of these types of loans are dependent on your income, employment, assets and liabilities, and credit history. You can apply for these loans with a mortgage broker, a credit union, professional or trade associations, financial services, state and regional housing agencies, a private home financing company, or even the seller.
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