Q: Which Type of Financing Is Right for You?

Here are the three types of home financing options. Which is right for you?

Looking to buy a home? Click here to search for a home.
Looking to sell a home? Click here for a FREE home valuation.

There are three different types of financing you can use to buy a home:

1. Conventional financing. Many people don’t know that you can use conventional financing and put down as little as 3%. With conventional financing, you’ll have a lower PMI (private mortgage insurance) rate if you put down less than 20%, but you’ll likely have a higher interest rate, so compare financing types before moving forward. It’s a bit more difficult to qualify for this type of financing, so if you have bad credit or a high debt-to-income ratio, this may not be the best option for you. However, if you have great credit and put 20% down, this is often the best financing for you.

​​2. FHA financing. FHA stands for Federal Housing Administration. With this loan, you can buy a home with as little as 3.5% down. This loan is easier to qualify for because you can have a lower credit score and a higher debt-to-income ratio than what you'd need for conventional financing. Typically the interest rate for FHA financing is lower than with conventional financing, but the PMI rate is often a bit higher. If you’re putting down 10% to 19%, your PMI insurance will come off the loan after 10 years.

​Be sure to compare financing types before settling on one.

3. VA loan. You can only qualify for this loan if you or your spouse is a veteran. You can buy a house with this loan for as little as 0% down up to any loan amount. Little known fact: You can get up to a $2 million loan, though you still have to have the income to qualify. This is a wonderful loan, easy to qualify for, they work with lower credit scores, and they allow a much higher debt-to-income ratio.

If you have any further questions about these financing options or real estate in general, reach out via phone or email. We would love to help you.