This is for informative and educational purpose only; the information provided does not include additional fees/charges that might be pertinent to your loan.
Before you buy a house, you need to factor in the amount you are putting down for a house, which is also called a down payment. Down payment is a portion of the purchase price of a house that you must pay up front. The down payment is not a loan from a mortgage lender. Assuming you want to purchase a home for $200,000 and you put down $6,000, which is 3 percent of the purchase price, the mortgage lender will provide you with a loan of $194,000, which is 97 percent of the purchase price. Some of the types of mortgage loans are:
A conventional fixed rate mortgage is a mortgage in which the interest rate on the loan does not change throughout the life of the loan. The down payment for conventional loans can be as low as 3 percent. Borrowers with a 20 percent down payment do not have to pay for mortgage insurance. Typically, the term of a conventional loan is usually 15, 20, or 30 years. One of the advantages of a conventional fixed rate mortgage is that it enables borrowers to know the interest and principal payments loan since the rate will remain the same throughout the duration of the loan.
VA loan is a mortgage loan option available to veterans and active duty military members. It makes it possible for veterans and active military members to purchase a house without requiring a down payment.
Federal Housing Administration loan (FHA loan) is for borrowers with low-to-moderate income. This loan requires a lower minimum down payment and credit scores. With a 10 percent down payment you can obtain an FHA loan. To get an FHA loan, you must go through a lending institution approved by the FHA.
US Department of Agriculture loans (USDA loans) is for rural and suburban homebuyers with low-to-moderate income and it does not require a down payment.