3 common mortgage loan types

There are many mortgage loan options available on the real estate market. If you’re searching for a new home, understanding financing options available can give you a bird's-eye view of the best interest rates and overall conditions suiting your personal situation. 

Conventional fixed rate mortgages

One of the most common types of mortgage loans homeowners borrow is a conventional fixed rate loan. This mortgage type is characterized by it’s interest rate that remains the same over the lifespan of the loan. 

Around 75 percent of residential mortgage borrowers have a conventional loan, with the most popular term limit being 30 years. However, other term options are available including, 10, 15 and 20 years. 

USDA loans

The U.S. Department of Agriculture offers USDA loans to middle and low-income households seeking to purchase property in rural areas. 

This loan type is applicable to areas with a population of 35,000 or fewer residents and usually doesn’t require a down payment. 

FHA loans

FHA loans are government backed and offered by private lenders which gives homebuyers the opportunity to qualify for a loan whereas they may have not been eligible for a traditional mortgage. FHA loans are more flexible but may come with higher interest rates and a larger down payment depending on your credit score. 

There are many types of loans for homes, so take your time while reviewing your options. Consider hiring the help of a mortgage broker to help you compare and contrast your loans best fitting your lifestyle and needs.