Conventional home loans are the most common type of home loan. Conventional loans are typically offered by private lenders and are not backed by the government. These loans usually require a higher credit score and down payment than an FHA loan, but offer more flexibility in terms of the type of property and loan amount.
The most common type of conventional loan is the 30-year fixed-rate mortgage, but other popular options include 15-year fixed-rate mortgages, adjustable-rate mortgages (ARMs), jumbo loans, and interest-only loans.
Federal Housing Administration (FHA) loans are mortgage loans that are insured by the government. They are popular for first-time homebuyers because they require a lower down payment and credit score.
FHA loans are available for both single-family homes and multi-family homes. They come with adjustable-rate mortgages (ARMs) and fixed-rate mortgages.
A balloon payment is a type of home loan where the borrower makes small payments over a period of time, and then pays off the remaining balance with a large lump sum payment at the end of the loan period.
With balloon payments, borrowers are usually able to take advantage of lower interest rates, but the large lump sum payment at the end of the loan period can be difficult to manage.
Adjustable-rate mortgages (ARMs) are loans with interest rates that fluctuate over time. The interest rate is typically lower than a fixed-rate loan, but the rate can change and the monthly payments may be higher or lower.
ARMs are popular for borrowers who plan to stay in their home for a short period of time, or those who expect their income to increase in the near future.
Fixed-rate mortgages are the most common type of loan. The interest rate is set for the entire loan period, and the monthly payments remain the same.
Fixed-rate loans are popular for borrowers who plan to stay in their home for a long period of time, or those who want the security of knowing their rate and payments won’t change.