5 Types of Mortgage Loans for Home Buyers

Home for sale with a sold sign

If you’re embarking on the exciting journey of home ownership, you’ve already learned that there are a lot of choices you will need to make. One choice, in particular, is the type of mortgage loan you want to apply for.

Ace Loan Company in Coral Springs is one of the best mortgage companies in the Coral Springs area. We are here to help you make the most informed decision for your needs. Choosing the best Coral Springs mortgage loans begins with education about loan options. Today, we’re going to share five types of mortgage loans for home buyers.

1. Conventional Loan

A conventional loan is one that’s not backed by a government agency. It is one of the most common types of mortgage loans for home buyers. Conventional loans are backed and services by private mortgage lenders, such as banks and credit unions.

To qualify for a conventional loan, you will typically need a 620 credit score or better and a down payment of at least 3%. Conventional loans are generally repaid over a 30-year, 15-year, or 20-year term.

2. FHA Loan

An FHA loan is one type of government-backed loan that’s perfect for buyers who need a loan with looser financial requirements. These loans are backed by the Federal Housing Administration, offer low down payments, and have lower credit score requirements.

While FHA loans offer many incentives, it’s essential to keep in mind that these loans include mortgage insurance that will increase your monthly payments. Even buyers who put down a larger down payment will still require the insurance.

3. Fixed-rate Mortgage Loan

A fixed-rate mortgage loan is a type of loan that refers to a fixed interest rate for the entire term of the loan. For instance, a 30-year mortgage will carry the same interest rate for the life of the loan unless you refinance. Buyers who want a predictable interest rate regardless of market changes will prefer a fixed-rate mortgage.

4. Adjustable-rate Mortgage Loan

An adjustable-rate mortgage is a home loan with an interest rate that fluctuates over time to adjust to the current market. Buyers who choose an adjustable-rate mortgage will typically start with a lower interest rate compared to a fixed-rate mortgage. But this low-interest rate won’t always last. After the initial period, your interest rate may fluctuate. This can make it difficult to budget accordingly.

5. Jumbo Loan

A jumbo loan is a type of mortgage used to finance properties that are too expensive for a conventional loan. The maximum amount for a conforming loan is $647,200 in most counties. If your home purchase exceeds this amount, you will need to consider a jumbo loan. These loans are considered riskier for lenders because they can’t be guaranteed by Fannie Mae and Freddie Mac.

To qualify for a jumbo loan, lenders may require you to have a credit score of 700. Some lenders may also require your debt-to-income ratio to be no more than 45%.

Coral Springs Mortgage Loans

Are you looking for one of the best mortgage companies in Coral Springs? Ace Loan company in Coral Springs is here to help. We offer a variety of mortgage services like conventional loans and VA loans to help you achieve your dreams. Contact Ace Mortgage Loan Corporation to learn more.

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