What are the Different Mortgage Types?

When shopping for a home, one of your first steps will likely be securing a loan. There are many types of mortgage loans, and three of the most common loans for first-time homebuyers are conventional, FHA and VA loans. Read on to learn more about the characteristics of these loans to discover what you may qualify for and the best fit for your financial situation.

Conventional Loans

Conventional loans are offered by private banks, credit union, mortgage brokers, lenders and any other savings institutions because they aren’t created by or insured through a government entity. In addition to the notable lack of government formalities, oftentimes a conventional loan will offer lower interest rates.

Best fit for: Conventional mortgages are ideal for borrowers with good credit and funds for a down payment. In addition, there are many low down payment options available.

How we can help: Conventional mortgages can come in a variety of shapes and forms, usually with a 15- or 30-year term. A mortgage professional will be able to assist in figuring out a percentage for your down payment and a structure that works best for your financial standing.

FHA Loans

Typically, a Federal Housing Administration (FHA) insured loan is easier to qualify for. They are available in a variety of fixed-rate and adjustable-rate loan options, and they allow for a lower down payment. FHA loans are backed by government-provided mortgage insurance, with both an upfront premium which may be financed and a monthly mortgage insurance payment.

Best fit for: FHA mortgages are a good fit for homebuyers looking to purchase with a low credit score or less than perfect credit. This is also a good option for first time homebuyers.

How we can help: Elevations is an FHA-approved lender, and our mortgage team is equipped to help homebuyers weigh the pros and cons of each mortgage type including FHA loans.  

VA Loans

A VA loan is available through a program with the United States Department of Veterans Affairs. VA loans assist service members, veterans and eligible surviving spouses to become homeowners. They don’t require mortgage insurance, and the VA sets the qualifying standards, dictates the terms of the mortgages offered and guarantees a portion of the loan. VA home loans are provided by private lenders such as credit unions, banks and mortgage companies. Those looking to lock in a VA loan typically have to pay a one-time VA Funding Fee that can be financed.

Best fit for: Most active-duty military and veterans may qualify for VA loans. This is also a viable option for spouses of military members who meet the criteria. Note that VA loans are only available when purchasing primary residences.

How we can help: Elevations mortgage professionals are experienced in navigating a VA loan’s wide range of options.

Bottom Line

If you’re in the market for a new house, make sure you understand your loan options and contact a mortgage professional with knowledge in all types of loan programs. In addition to conventional, FHA and VA loans, Elevations Credit Union offers Jumbo, CHFA, USDA and portfolio loans. Mortgage loans are available throughout Colorado, including Boulder, Broomfield, Denver Metro, Fort Collins, Lafayette, Longmont, Louisville and Loveland.

If you are considering your loan options and want an expert opinion, please contact our mortgage team. We are here to help. You may also try our mortgage affordability calculators or sign up for a complimentary seminar.