A. There are various types of loans available.
- FHA (Federal Housing Administration) – Requires a minimum down payment of 3.5%. Other costs associated with this loan are the up-front mortgage insurance premium and the monthly mortgage insurance premium that is charged to the buyer for participating in this program. Seller can contribute up to 6% in closing costs assistance to the buyer.
- Conventional Loans – Require minimum down payments of 5%, 10%, 15%, 20% or more (varies with each lender). Monthly mortgage insurance may be required for down payment amounts less than 15%. Seller can contribute up to 6% in closing costs assistance to the buyer when the buyer’s down payment is 10% or greater. 3% closing costs assistance when the buyer’s down payment is 5%.
- VA (Veteran’s Affairs) – Available to active duty and retired veterans only, this program does not require the buyer to have a down payment. Seller can contribute up to 6% in closing costs assistance to the buyer.
- Doctor Loans – Currently only offered by a few banks, these loans are available only to MD’s.
In addition to the particular loan you choose, you can also select the duration of the loan – whether it be 30, 20, or 15 years, and whether you want a fixed or adjustable rate mortgage. Shorter mortgage durations result in higher monthly payments, but save you interest over the total life of the loan. With a fixed rate mortgage, your interest rate remains fixed for the entire term of the loan. With an Adjustable Rate Mortgage (ARM), your interest rate and monthly payments usually start lower than a fixed rate mortgage but can change either up or down according to a pre-determined schedule. NOTE: Speak with your lender about the specifics of each program and the associated pros and cons to help you select the right one for you.