That’s right! Just like there are different varieties of houses (ranch, Cape Cod, colonial) there are different styles of mortgages. And just like one person may prefer a Craftsman home over a Tudor revival one, one mortgage type may work better for them than another. We’ll break down each type of mortgage below.
It can be overwhelming reviewing all of these categories, but don’t worry. If you’re considering applying for a mortgage, talk to us at AMKO for additional help. Thanks to our combined 45+ years of experience in the mortgage industry, we can evaluate your individual needs and find the best mortgage that works for you.
Conventional Mortgage
This is the most common type of mortgage. They typically come in 15-to-30-year fixed terms. Many may believe that you need 20% of the home’s price as a down payment for conventional mortgages, but that’s considered old-school thinking and not necessarily the case! You really only need 5% down, and for first time homebuyers, it can be as little as 3%. Work with a broker to determine the best option for you.
Adjustable-Rate Mortgage
The opposite of a conventional, fixed-rate mortgage, an adjustable rate one typically has a lower rate locked in for the first year (or five or ten, depending on the length) before adjusting annually. These are a good fit for buyers looking to get into a starter home before moving into their “forever” home.
Government-backed Mortgage
While funded by the government, these mortgages usually have specific requirements buyers have to meet before applying and being approved. It’s strongly recommended that you check with AMKO to see if you qualify. There are a few common types of government-backed mortgages:
- FHA loans: backed by the Federal Housing administration, borrowers can put down as little as 3.5% and can have credit scores as low as 500.
- VA loans: backed by the Department of Veteran Affairs, borrowers need to meet service requirements either in the Armed Forces or National Guard to quality for this mortgage.
- USDA loans: backed by the United States Department of Agriculture. While there are no down payments required on many properties and some home improvement loans are available, there are limits on property location and value.
Jumbo Mortgage
If you’re looking at houses above $647,200, have a high credit score and a low debt-to-income ratio, this is a great mortgage for you. Jumbo mortgages are usually best for buyers of expensive homes and are typically more difficult to qualify for.
Interest-Only Mortgage
It’s exactly like it sounds: buyers only make payments on the interest. However, you don’t make any payments on the principal when you’re paying just the interest. The borrowers will need to be disciplined enough to make periodic principal payments and will have to show lenders substantial assets.
Other Mortgage Options
While the above options are most common, there are plenty of other mortgage varieties. An experienced, licensed mortgage broker can walk you through all the options and identify the best one to suit you.
As mortgage brokers, we do all the comparing and searching for you! We’re not tied to any particular bank or lender, so we can find you the best rate and mortgage for your financial situation and lifestyle.
