In our experience here at Harbor Mortgage Company, many people assume that mortgages are all the same, but that is not the case at all. In reality, there are multiple distinct types of mortgage loans, and not all of them will be suited for every borrower. To help you find the best mortgage for your needs, our team has put together this brief overview of the most common types of mortgage loans.
- Conventional. Conventional mortgage loans are home loans that are not insured by the federal government but do comply with federal limits. They are a great choice for anyone with strong credit (a FICO score of 620 or above), but they do require a higher down payment than other options.
- Jumbo. Jumbo mortgage loans are a type of conventional mortgage that does not comply with the federal loan limits. The ceiling for conforming loans in 2021 is $548,250 for most of the US, and up to $822,375 for certain high-cost areas. Any loan that lets you borrow more than that is considered a jumbo loan. These mortgages are a good choice for those looking to buy high-end homes in affluent areas, but they do require better credit, more financial assets, and stricter documentation in order to qualify.
- Government-Issued. Certain government agencies, including the Federal Housing Administration (FHA), the US Department of Agriculture (USDA), and the US Department of Veterans Affairs (VA), also back mortgage loans. FHA loans are designed to help people without a large down payment or great credit become homeowners, while USDA loans are designed to help moderate- to low-income borrowers in rural areas do the same. VA loans provide flexible, low-interest mortgages for members of the US military (whether active or retired) and their families.