Conventional loans (or Conforming Loans) are a mortgage that "Conforms" to the guidelines issued by Fannie Mae or Freddie Mac. Conventional loans are generally the most widely used loan programs, although, due to recent market volatility, other loan programs exist that may actually be better than a conventional loan. A large portion of the loans that we originate today are FHA loans, and in fact, the USDA Rural Housing loan is arguably the best 100% loan product on the market today.
USDA Loans (Also Known As Rural Housing Loans)
Rural Housing Loans are sponsored by the USDA and offer 100% financing to borrowers that qualify to buy properties that are located in specific areas that have been determined to be "underdeveloped" by the US Department of Agriculture. This loan program has nothing to do with farming or livestock as the name might imply. It is, however, a tremendously flexible loan program for those interested in buying property in the approved areas. In our area, virtually everything north of Nine Mile Rd. in Escambia, most of Baldwin County (except for the area around Fairhope), and all of Santa Rosa County with the exception of Gulf Breeze proper. This loan program is for the purchase of a primary residence. Second homes and investment properties do not apply. For more information, please call 888-257-8383.
FHA Loans
The Federal Housing Administration (FHA), which is part of the U.S. Dept. of Housing and Urban Development (HUD), administers various mortgage loan programs. FHA loans have lower down payment requirements and, with gifting, often may allow for very little money out of pocket for the borrower. FHA loans cannot exceed the statutory limit.
VA loans
VA loans are guaranteed by U.S. Dept. of Veterans Affairs. The guaranty allows veterans and service persons to obtain home loans with favorable loan terms, usually without a down payment. In addition, it is easier to qualify for a VA loan than a conventional loan. Lenders generally limit the maximum VA loan to $203,000. The U.S. Department of Veterans Affairs does not make loans, it guarantees loans made by lenders. VA determines your eligibility and, if you are qualified, VA will issue you a certificate of eligibility to be used in applying for a VA loan. VA-guaranteed loans are obtained by making application to private lending institutions. A VA certificate of eligibility is not a guarantee of loan approval, but rather proof that you meet the minimum eligibility requirements of the U.S. Dept. of Veterans Affairs.
Interest Only Loans
Interest Only loans are programs that allow the borrower the option of making just the interest payments on the outstanding principal balance. The advantages of such a program would be that the rates are often considerably lower than those of a conventionally amortized loan, allowing for the borrower to qualify for a larger loan than might otherwise be possible.
