There are several home loan options available for borrowers who want to purchase a residential property in Texas. Since there are so many choices available in the market, choosing the right home loan option can be a daunting task. Seeking an expert’s assistance is, therefore, advisable when making such a big investment. However, before seeking an expert’s assistance, borrowers must at least have the basic knowledge of the different home loans available for them. Taking this conversation further, in this blog post we briefly introduce you to the different types of home loans available in the US.
VA loan is exclusively a veteran’s home loan as it is only for veterans, active duty officers and spouses of veterans (under special circumstances). The benefit of VA loan is that it has no down payment or monthly insurance premium. It also has one time VA funding fee, which can be financed into the loan.
Federal Housing Administration or FHA loan is for all citizens of US. This type of home loan is not just for purchasing a property but also for home maintenance. The FHA home loans are further categorized into different loan programs that caters the needs of senior citizens, first-time home buyers, and others.This type of home loan has a low down payment requirement and requires the borrowers to pay mortgage insurance up front for every month.
Conventional loan is another home loan option that borrowers may consider to choose. Unlike FHA, VA, or USDA loans, the conventional loans are not insured by the federal government. The down payment of this type of loan is usually five percent. As compared to government subsidized loan types, these types of loans require higher credit scores and debt-to-income ratios. Regarding the condition of the home, conventional loans do not have restrictive requirements whereas FHA and VA loans have.
USDA loans are supported by the United States Department of Agriculture. It is part of the USDA loan program or USDA Rural Development Guaranteed Housing Loan Program. This type of loan is available for citizens with little income who wish to buy a house or property in a rural area. Similar to the VA loan, this loan also has zero percent down payment and competitive rates.
These were the different types of home loan options for borrowers. Out of the list, VA loan is a more preferred option for borrowers as it is more profitable to them. The loan is not only beneficial for buying a new property but also for refinancing the existing property. The loan does not require a down payment and also has a low credit score requirement. When making an investment as big as purchasing a home, it is advisable to seek an expert assistance to make an informed choice.