Buying a home, especially for the first time, can be confusing. Like most out there, financing a home is necessary, but figuring out which loan suits you best can be intimidating. Here are some brief explanations on mortgage loans.

Conventional

Conventional loans are not insured or guaranteed by the federal government. A down payment of at least 10% is likely, though some lenders might allow a down payment as low as 5%.

FHA

An FHA or Federal Housing Administration Loan is guaranteed by the federal government insuring the lender against losses that might result from borrower default. This program allows you to make a down payment as low as 3.5%, making it ideal for first time home buyers who aren’t ready to put down a large lump sum.

VA

A loan program offered by the U.S. Department of Veteran Affairs for military service members and their families. The biggest advantage of this program is that borrowers can receive 100% financing.

USDA

This program is managed by the Rural Housing Service, which is part of the Department of Agriculture, and is offered to “rural residents” who have a steady, modest income.

 

Fixed-Rate mortgage loans have the same interest rate for the entire repayment. Your monthly payment will always be the same.

 

Adjustable Rate mortgage loans (ARMs) have an introductory interest rate, that is typically lower than a fixed rate mortgage, that lasts for a period of time and adjusts annually thereafter for the remaining time period. Your interest rate will then change and so will your monthly payment.

 

Acadiana is full of great mortgage lenders who would be more than happy to help with your home loan or answer your questions!