Financing refers to a loan or mortgage from a lender that a buyer gets in order to buy a home. There are several types of loans depending on your needs and amount of down payment a buyer may have. Here are some common forms of financing:
Conventional Loan: This is the most common type of mortgage and is generally not insured by any government program. Each bank or mortgage lender will offer different rates, fees & terms. It is best to get a “good faith estimate” from several different lenders.
FHA Loan: This is a mortgage that is insured by the Federal Housing Administration, a government agency. This loan allows buyers to purchase a home with low down payments, generally 3.5 – 5%. The buyer also pays an insurance that protects the lender in the event the borrow defaults on the loan.
VA Loan: The Veterans Affair loan is a loan backed by the government but only available to eligible Veterans, spouses and beneficiaries. This is very similar to the FHA loan with more benefits such as no down payment, competitive interest rates and other advantages.