Types of Loans

Just as you have many options for the Lender you choose, you may also have many options for the Types of Loans available to you. Consult with your lender to determine which is best for you.

Conventional Fixed Rate Mortgage:

Traditionally you will be required to put 20% down and these loans fix the interest rate for terms that range from 10 years to 40 years.

Adjustable Rate Mortgages (ARM)

The interest rate is recalculated on a yearly or pre-determined basis based on market values. There are many different types of ARM loans (10/1, 7/1, 5/1, 3/1). Example: A 10/1 ARM means the interest rate is fixed for the first 10 years, after that is has an adjustable rate that changes once each year for the remaining life of the loan.

FHA Loans

These are private loans insured by the federal government. They only require 3% down to those that qualify and your credit score does not have to be pristine. Borrowers must pay mortgage insurance that is a part of the monthly loan payment. Terms are typically 15 or 30 years.

VA Loans

These loans are insured by the federal government but are only available to qualified military veterans and their families. These loans can provide no down payment and no minimum credit score requirement.

Jumbo Loans

Homes that exceed the local conforming loan limit require a jumbo loan. These are also referred to as “non-conforming” mortgages. They are riskier for the lender because they cannot be guaranteed by the government. These loans come with a variety of terms.

Construction Loans

These loans are used to finance construction and can be used for major renovations in conjunction with a more conventional loan. Typically they are short-term loans with a higher interest rate.

NACA Loans

NACA does not consider credit scores as part of the application process. These loans are focused on low to moderate income buyers. NACA does have very specific rules about how long you must remain in the property and you must attend a workshop.