Mortgage types

Conventional Loans – private sector loans that are not a government guaranteed or sponsored program.  They are generally provided by banks and other lending institutions such as credit unions.  Loans can vary in terms up to 30 years at fixed or variable rates.

Fixed rate mortgages – a mortgage with a fixed rate and generally 15 or 30 years but could be for other lengths.

Adjustable rate mortgages (ARM) – ARM are loans with adjustable rates applied during the course of the loan.  Variable rates for ARMs could be like 5/1 or 7/1 which means if you have a 5/1 ARM, the interest rate is fixed for the first five years and then the rate adjusts once each year beginning in year 6. The rate is tied to an interest index to effect the interest adjustment at the later date.

Jumbo loans – are loans exceeding $417,000 (FHA limit) and structured for loans amounts above this threshold.

Government Loans – loans that are originated by private financial lenders and guaranteed to an extent by federal or state governments.

FHA – the government loan program that approves amounts up to $417,000.  A 3.5% down-payment is required based on lower of purchase amount or appraised value.   Non-occupying buyers are allowed.  The down payment and closing costs can be gifted by a family member – great for first time home buyers.  Program allows up to 4 unit properties.

203k Streamline program – used in conjunction with the regular FHA program above to provide funds in addition to renovate the home up t0 $35,000 in repairs.  No structural repairs.  Can be used for a refinance.  No minimum repairs.  2 contractor draws allowed.

203k Full program – Structural repairs allowed.  FHA consultant required (usually the lenders loan officer).  5 draws for contractors.  Up to 6 months PITI can be included if property not occupied.  LTV can be up to 110% of the improved value.

VA – This is the loan program available for qualified veterans.  It is a 100% loan and doesn’t have any monthly mortgage insurance.  The VA funding fee may be financed into the mortgage.

US Department of Agriculture (USDA) – Program funds a 100% loan on rural properties.  Property  and income limitations.  30 year fixed rates the loan guarantee fee may be financed (2%-3% available).

Home Path – A special government loan for FNMA foreclosures.  Loans up 97% LTV (loan-to-value) with a 3% down payment.  The 3% down can be a gift, grant, or loan from a non-profit.  No appraisals, property inspections, or mortgage insurance required.  Investors up to 85% LTV.  2% seller contributions allowed.

Local programs – Sometimes local municipalities will have housing programs for low income or teacher and fire department employees.