Skip To Content

What are the 3 Types of Mortgages?

You are ready to start looking at houses, you saved money, you know what area you want to live in. Here’s a general overview of the 3 types of Mortgages  

The 3 types of mortgages are:

  • Conventional 
  • Jumbo 
  • Government Insured Mortgages. 

Just giving you a general overview of these mortgages to help you with deciding which mortgage works best for you. 

Conforming mortgage. The conforming mortgage is a mortgage that is insured by the Federal Housing Administration – FHA, for a single family home, FHA sets the loan limits at $548,250 for a single-family home in 2021. This is an increase from 2020, where the loan limit for a single family home is $510,400. 

Who should get a conventional conforming loan? Someone who has strong credit, has a stable income, stable employment and has at least a 3% down payment. Did you know that about a conventional loan, a minimum down-payment could be 3%? This fact is usually surprising when I let my clients know this if they haven’t gone and been pre-approved for a loan. 

Jumbo loan. This is a non-conforming conventional mortgage. You’ll use this one if you’re looking for loan limit amounts that are more than $548,250. You may use this type of mortgage when you’re purchasing a high-end house. Remember that a jumbo mortgage is based on how much money you need. It’s not based on the price of the house. Some of the qualifications that you’ll need are: good to excellent credit, high income and a substantial down-payment. 

Government insured mortgages. Did you know that the U.S government has played a role in helping more Americans purchase houses? There are 3 types of government insured mortgages: 

  1. FHA – Federal Housing Administration, this is where you don’t need to have pristine credit, you could put a down payment less than 10% (keep in mind you will be paying additional insurance annually till the end of mortgage-PMI). 
  2. USDA – US Department of Agriculture. This helps moderate to low-income buyers who are  purchasing houses in USDA-designated rural areas. 
  3. Veteran Affairs, the VA loan. The VA loan provides flexible, low interest rate mortgages for members of the US Army, either active or veterans and their family members. The VA loans do not require a down payment. However, just because they don’t require it does not mean you cannot put anything down when you sign the sales agreement, especially in the type of market that we are currently in, where there are not too many houses on the market, and you have plenty of competition. Moreover, closing costs are generally capped for these loans. If you qualify for this type of mortgage, it would be great for you to do this. Thank you for your service.

These are the 3 types of mortgages that I decided to share with you this week. If you’d like to know more about any other mortgages, please fill out the form on this link

Trackback from your site.

Leave a Reply