Mortgage Loan Products
1. Conventional Loans
Description:
- Traditional loans not insured by the government.
- Require higher credit scores.
-
Available in conforming (meets Fannie Mae/Freddie Mac limits) and
non-conforming (jumbo loans).
Key Features:
- Down payments as low as 3% for qualified buyers.
-
Private Mortgage Insurance (PMI) required if the down payment is less
than 20%.
- Fixed or adjustable-rate options.
2. FHA Loans (Federal Housing Administration)
Description:
- Government-insured loans designed for low-to-moderate-income borrowers.
Key Features:
- Credit score requirements as low as 580 with a 3.5% down payment.
- Down payment can be as low as 10% with a score of 500–579.
- Upfront and annual mortgage insurance premiums (MIP) are required.
3. VA Loans (Veterans Affairs)
Description:
- Loans guaranteed by the Department of Veterans Affairs for eligible military members,
veterans, and their families.r suburban areas.
Key Features:
- No down payment required.
- No PMI.
- Competitive interest rates.
- A one-time funding fee applies (can be rolled into the loan).
4. USDA Loans (United States Department of Agriculture)
Description:
- Loans designed for low-to-moderate-income borrowers in rural or suburban areas.
Key Features:
- No down payment required.
- Low mortgage insurance premiums.
- Must meet income eligibility guidelines.
5. Jumbo Loans
Description:
- Loans that exceed the conforming loan limits set by Fannie Mae and Freddie Mac.
Key Features:
- Higher credit score and significant down payment required (10–20%).
- Higher interest rates compared to conforming loans.
6. Fixed-Rate Mortgages
Description:
- Loans with an interest rate that remains constant throughout the loan term.
Key Features:
- Predictable monthly payments.
- Available in terms of 10, 15, 20, or 30 years.
7. Adjustable-Rate Mortgages (ARMs)
Description:
- Loans with an interest rate that starts lower and is fixed for an initial period, then adjusts
periodically based on a benchmark index.
Key Features:
- Common terms: 5/1 ARM, 7/1 ARM, or 10/1 ARM (fixed for the first 5, 7, or 10 years,
then adjusts annually).
- Lower initial rates than fixed-rate mortgages.
8. Interest-Only Loans
Description:
- Borrowers pay only the interest for a specified period (usually 5–10 years), followed by
principal and interest payments for the remaining term.
Key Features:
- Lower initial monthly payments.
- Higher payments after the interest-only period ends.
9. Construction Loans
Description:
- Short-term loans to finance the construction of a home.
Key Features:
- Interest-only payments during construction.
- Converts to a permanent mortgage (construction-to-permanent loans) or requires a
separate permanent mortgage after completion.
10. Reverse Mortgages
Description:
- Available to homeowners aged 62 or older, allowing them to convert home equity into
cash.
Key Features:
- No monthly mortgage payments; loan is repaid when the borrower sells the home, moves,
or passes away.
- The most common type is a Home Equity Conversion Mortgage (HECM), insured by the
FHA.
11. Bridge Loans
Description:
- Short-term loans that help borrowers bridge the gap between buying a new home and
selling their current one
Key Features:
- Secured by the borrower’s existing home.
- Higher interest rates than traditional mortgages.
12. Balloon Mortgages
Description:
- Loans with low monthly payments for a set period, followed by a large "balloon"
payment for the remaining balance.
Key Features:
- Suitable for borrowers planning to sell or refinance before the balloon payment is due.
- Risky if the borrower cannot refinance or pay the lump sum.
13. Portfolio Loans
Description:
- Loans held by the lender instead of being sold to secondary markets.
Key Features:
- Flexible underwriting guidelines.
- Often used for unique borrower situations or non-standard properties.
14. Home Equity Loans
Description:
- A loan secured by the equity in a borrower’s home, providing a lump sum upfront.
Key Features:
- Fixed interest rates.
- Used for large expenses like renovations or debt consolidation.
15. Home Equity Line of Credit (HELOC)
Description:
- A revolving line of credit secured by the home’s equity.
Key Features:
- Variable interest rates.
- Borrowers can draw funds as needed during a set draw period, followed by a repayment
period.
