Mortgage Loan Types Summary: Which Loan Type is Best For You?
Mortgage Loan Types & What They Mean
Wondering which loan type is best for you? To start, you need to understand that there are several mortgage loan options available. Here's a summary:
1️⃣ Conventional Loans
✅ Not backed by the government
✅ Requires good credit (typically 620+)
✅ Minimum down payment: 3% for first-time buyers
✅ Best for borrowers with stable income & strong credit
2️⃣ FHA Loans (Federal Housing Administration)
✅ Government-backed loan with lower credit score requirements (580+)
✅ Minimum down payment: 3.5%
✅ More flexible approval guidelines
✅ Requires mortgage insurance (MIP)
3️⃣ VA Loans (For Veterans & Active Military)
✅ Backed by the Department of Veterans Affairs
✅ No down payment required
✅ No private mortgage insurance (PMI)
✅ Competitive interest rates for eligible veterans
4️⃣ USDA Loans (For Rural & Suburban Homebuyers)
✅ Backed by the U.S. Department of Agriculture
✅ No down payment required
✅ Income and location restrictions apply
✅ Great for low-to-moderate income buyers in rural areas
5️⃣ Jumbo Loans
✅ For loan amounts above conventional loan limits ($806,500+ in most areas for 2025)
✅ Requires higher credit scores (700+) and larger down payments
✅ Used for luxury or high-priced homes
6️⃣ Fixed-Rate Mortgages
✅ Interest rate stays the same for the entire loan term
✅ Predictable monthly payments
✅ Available in 15, 20, or 30-year terms
7️⃣ Adjustable-Rate Mortgages (ARM)
✅ Interest rate starts lower but can adjust over time
✅ Good for short-term homeowners
✅ Rate adjustments depend on the market
8️⃣ Bridge Loans (Short-Term Financing)
✅ Temporary loan to “bridge” the gap between selling & buying a new home
✅ Allows you to purchase a new home before selling your current one
✅ Short repayment period (typically 6 months to 3 years)
9️⃣ Reverse Mortgages (For Homeowners 62+)
✅ Converts home equity into tax-free cash for seniors
✅ No monthly mortgage payments (loan is repaid when home is sold)
✅ Best for retirement income planning
🔟 Construction Loans
✅ Short-term loan to build a new home
✅ Converts into a permanent mortgage after completion
✅ Requires detailed construction plans & lender approval
1️⃣1️⃣ Non-QM Loans (Non-Qualified Mortgages)
✅ Designed for self-employed, investors, or unique income situations
✅ Uses alternative income verification (bank statements, assets, etc.)
✅ More flexible than traditional loans but higher interest rates may apply
1️⃣2️⃣ HELOC (Home Equity Line of Credit) & Home Equity Loans
✅ Borrow against your home’s equity
✅ HELOC = Revolving credit line (like a credit card)
✅ Home Equity Loan = Lump sum loan with fixed payments
1️⃣3️⃣ Interest-Only Loans
✅ Pay only the interest for a set period, then start paying principal
✅ Lower initial payments, but higher payments later
✅ Best for short-term investors or those expecting increased future income
🏡 Loan Options for Special Property Types
🏢 Condo Loans
✅ Conventional & FHA loans available (but condo must be FHA-approved)
✅ Lenders check HOA financials, reserves & insurance
✅ Best for buyers wanting low-maintenance living
There may also be non-QM loan products available if not an FHA approved property.
🏠 Manufactured & Mobile Home Loans
✅ FHA, VA, USDA, and some Conventional loans available
✅ Home must be permanently attached to land (not on wheels)
✅ Typically higher interest rates & stricter lender requirements
🏡 Multi-Family Loans (2-4 Units)
✅ FHA, VA, & Conventional options available
✅ Live in one unit, rent out the others (FHA allows owner-occupied multifamily)
✅ Down payment varies—3.5% (FHA), 15-25% (Conventional)
🏚️ Fixer-Upper & Renovation Loans
✅ FHA 203(k) & Fannie Mae Homestyle Loans available
✅ Covers home purchase + renovation costs
✅ Requires detailed contractor estimates & approval
🏠 Investment Property Loans
✅ Conventional & Non-QM loans available
✅ Requires higher down payments (15-25%)
✅ Best for buyers looking to rent out properties
🔹 Which Loan is Right for You?
There’s a perfect loan for every buyer! As a mortgage broker, I help match you with the best loan type & lender for your needs.
📞 Let’s Chat! Call or message me today to explore your options.
📧 Theresa@SummitLendingUSA.com
📞 (913) 705-0049
🌐
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