Conventional Loans

A conventional loan is a mortgage loan that is not backed or secured by any government entity. This type of loan is often held through various private lenders such as mortgage companies, banks, and credit unions. A conventional loan is excellent for someone planning to put 10-20% as a down payment. You may be able to put down less than 10%, but your premium on your private mortgage may be higher. This loan could have higher interest rates. A downfall to this type of loan is that the underwriting is stricter than others, and the lenders might have add-on fees, increasing your cost.

FHA Loans

An FHA loan is a government-backed mortgage by the Federal Housing Administration. This means that the FHA organization protects your lender if there is a default on your loan. This loan is for first-time homeowners who may not have a lot of money for a down payment or even a perfect credit score. The down payment could be as low as 3.5%, and the closing costs could be rolled into your loan.

VA Loans

The VA Loan is a government-backed loan from the United States Department of Veterans Affairs. This loan is only available to Veterans, Service Members, and select military spouses. This loan has a $0 down mortgage option available, and since the government banks back, it does not require a Private Mortgage Insurance.

Bridge Loans

A bridge loan is a short-term loan from 6-9 months to get you past a time gap. If you are in the process of buying a new home and selling your current home at the same time, this may be for you. If you have already purchased your new home without a contingent clause, you may find yourself paying for two mortgages if you cannot sell your old home. The bridge loan will look at the current equity you have in the home you are selling. Once your home sells, the money will be used to pay back the bridge loan. These types of loans will often have higher interest rates. Ensure that you do your research on this loan and only take it if needed.

Construction Loans for New Home Construction On Your Land

Construction loans are for if you are going to build the home yourself or hire a general contractor or a custom home builder to construct your home on your land. You need to consider a few options on the type of loan you take out. Make sure that you talk to your lender to choose the best option for you. Here is some brief information on construction-to-permanent and stand-alone loans.

Construction-to-Permanent Loans (Single-Closing)

A construction-to-permanent loan (single-closing) is the loan you will take out to pay for the construction of the build. This is typically a short-term line of credit and will be converted over to a long-term loan. The credit usually comes out in draws during certain progressions finished in the construction phases.

Stand-Alone Construction Loans (Two-Closing Loan)

You will be issued two separate loans in a stand-alone construction loan (two-closing). The first one is for the construction, and the second one is a mortgage loan that can/should be used to pay off the construction loan you first received. Since this loan is a 2-part loan mortgage, you will have to pay two different fees.

When looking for any type of loan, make sure that you are getting the best deal around. Makes sure that you contact multiple lenders and get the best possible rate that is currently on the market. You are going to want to make your home perfect, so why not have the perfect loan package! Make sure to check out our page on our recommended lenders.