Choosing the mortgage that is going to be best for you seems like a daunting task. But it does not have to be. I can point you in the direction of some local lenders who can give you a thorough understanding of which mortgage type would be best for you. When I refer to mortgage type, some of you will be very confused. Not all mortgages are the same. Just like not all buyers are the same. Just like not all credit scores are the same. All of these things are very individualized. When you get pre-approved for your mortgage, the lender can help you decide which will be best for you. Your real estate agent will ask you which type loan you are using. It matters. Real estate agents, including me, are not lenders. Make sure you are using a GOOD, LOCAL lender.

In our area, most buyers use either a conventional mortgage, FHA mortgage, VA mortgage, or USDA mortgage. These all have different criteria. I will break it down as simply as I possibly can.

A conventional mortgage is usually handled through private lenders or investors through mortgage brokers and are very flexible on the amount of down payment. These usually require a higher credit score. It can be used for a primary residence or investment property.

FHA loans are guaranteed by the Federal Housing Administration and have more lenient qualification criteria. Borrowers are allowed a slightly lower credit score. And usually have to put down a minimum of 3 1/2% of your purchase price for your down payment. FHA does require PMI if you are putting down less than a 20% down payment. Talk to your lender about your PMI amounts.

A USDA loan is popular in our rural areas. Almost all of Elmore County and part of Autauga County meet USDA criteria. USDA loans are backed by the United States Department of Agriculture and are designed for low to moderate income buyers in designated rural areas. These loans require very strict income limitations, higher credit scores, and lower debt to income ratios. This loan does not require any down payment. Therefore, a buyer can get into this loan type with zero down payment, but you still do have closing cost, inspection, cost, appraisal fees. It’s not like you can buy a house without having any skin in the game.

Very popular in our area is a VA loan. These loans are secured by the Department of Veterans Affairs. Most members of our US Armed Forces active duty or veteran can qualify for this type of mortgage. There are some additional VA fees associated with these loans, but they typically do have the lowest interest rates. This loan must be used for a primary residence, not investment property or vacation homes. Most all of our local lenders are approved VA lenders. Please do not think that you must use Veterans United or USAA just because they are marketed to veterans. Please check their closing cost and fees up against a local lender. Chances are a local lender is going to give you a better deal than one of those nationally marketed companies.

For more in depth information, call a local mortgage broker.

Also good info at 6 Types Of Mortgages: Which Is Best For You? – Forbes Advisor