Selecting the Best Loan Program

There are many sources and forms of loan programs. Just like the source of your loan funding which can affect your down payment and closing costs, the mortgage rates and the time period of your loan also affect your monthly installments and interest rate.

When you pay at least 3% of the total amount as the down payment, then it is called a conventional loan. Companies like Freddie Mac and FannieMae, which secure conforming loans, are government sponsored entities (GSE). Private and local companies and state federal government provide home loans at low down payments.

For low income groups, who are purchasing a home for the first time, there is the Housing and Urban Development Department (HUD), which offers you an insured mortgage through the FHA (Federal Housing Administration). The FHA takes care of the defaulters and the reimbursement of the lenders.

The Veteran’s Administration of the US was established with a view to help veterans realize their American dream by buying their own house. If you are eligible as a military officer or as a veteran or have any other entitlement, then you can have your FHA mortgage insurance combined with a certification from the VA. VA loans have many similar benefits as those of FHA. Besides this, these loans require no or very low down payments.