MORTAGE TYPE
Loan Types
Federal Housing Administration (FHA)
FHA stands for the Federal Housing Administration. It is a government agency in the United States that is part of the Department of Housing and Urban Development (HUD). The FHA’s primary role is to insure loans made by approved lenders to borrowers with low to moderate incomes or credit challenges, making it easier for them to qualify for home loans.
Conventional Loan
A conventional loan refers to a type of mortgage loan that is not backed by a government agency such as the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA). These loans are typically offered by private lenders such as banks, credit unions, or mortgage companies. Conventional loans type is one of the most commonly used loan products.
Jumbo Loan
A jumbo loan is a type of mortgage loan that exceeds the limits set by government-sponsored mortgage companies like Fannie Mae and Freddie Mac. These limits vary depending on the location and are determined by factors such as the median home prices in the area. Jumbo loans are typically used for financing higher-priced properties, such as luxury homes or properties in expensive real estate markets.
Veterans (VA) Loan
A VA loan is a mortgage loan that is guaranteed by the United States Department of Veterans Affairs (VA). It is designed to offer flexible financing options to eligible veterans, current service members, and some surviving spouses. VA loans often have more favorable terms and lower interest rates compared to conventional loans. They can be used to purchase a home, refinance an existing mortgage, or make home improvements.
Adjustable Rate Mortgage
An adjustable rate mortgage (ARM) is a type of mortgage loan where the interest rateuates periodically, typically in response to changes in a specific financial index. Unlike a fixed-rate mortgage, where the interest rate remains the same for the entire term of the loan, an ARM usually has a fixed interest rate for an initial period (usually 5, 7, or 10 years) and then adjusts annually based on market conditions. The adjustments are typically subject to caps and limits to protect the borrower from drastic rate increases.
