Mortgage Loans

Mortgage Loans

Your buyer’s agent will familiarize you with the mortgage financing process. This will help you select the right mortgage lender and loan for your needs. Here’s a look at different mortgage types and their general requirements:



Conventional mortgages are not backed by the federal government. Down payments for conventional mortgages can be as low as 3% of the home’s purchase price, but mortgage insurance is required when the down payment is less than 20%. This may be waived once equity conditions are met. Typically, conventional mortgages offer very competitive interest rates, but can be harder to qualify for in terms of credit scores and income. 



Loans backed by the Federal Housing Administration are designed to make home ownership more attainable. These loans offer down payments as low as 3.5% and up to a 6% seller concession. FHA loans have lower credit score requirements and allow a higher debt-to-income ratio. FHA mortgage interest rates are often slightly lower than a similar conventional mortgage, but the total monthly payment is often slightly higher because of the mortgage insurance costs.

Mortgage insurance is required when the down payment is less than 20%. 



Loans backed by the Veterans’ Administration are designed as a benefit for military service members and veterans. VA mortgages allow 0% down and require a funding fee rather than mortgage insurance. They have forgiving credit score requirements and allow larger debt-to-income ratios.


Fixed-rate mortgages maintain the same interest rate throughout the life of the loan.


Adjustable-rate mortgages or ARMs have introductory interest rates that are below market. The initial rate expires after a set period of time, anywhere from 1 to 15 years. The interest rate is then reset to reflect current market rates. ARMs can be popular when interest rates are trending high, as the initial rate is significantly lower than market. However, the future rate could be higher than what the current market would provide on a fixed-rate mortgage. ARMs are best suited for home buyers who plan to sell within a few years or who have the financial ability to withstand the risk of higher mortgage payments.


Your buyer’s agent can walk you through important questions to ask potential lenders in terms of fees, down payment assistance, and a number of important considerations.