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FHA, VA and RHS loans are government loans. All other
loans are generally classified as conventional loans.
The Federal Housing Administration (FHA) is part of
the U.S. Department of Housing and Urban Development
(HUD). FHA administers various mortgage loan programs
that have lower down payment requirements and can be
easier to qualify for than conventional loans. FHA loans
have statutory limits.
VA loans are guaranteed by the U.S. Department of Veterans
Affairs allowing veterans and service persons to obtain
home loans with favorable terms and often without a
down payment. While it’s easier to qualify for
a VA loan than a conventional loan, lenders generally
limit the maximum VA loan to $ 417,000. The VA doesn’t
make the loans, but recommends you via a certificate
of eligibility to your lender.
The Rural Housing Service (RHS) of the U.S. Department
of Agriculture guarantees loans for rural residents
with minimal closing costs and no down payment.
A Fixed Mortgage locks in the interest rate for the
length of the loan. While you can always refinance,
a fixed rate insulates you from increasing rates, but
keeps you from automatically enjoying rate declines.
Unlike fixed-rate mortgages, the rate on this loan
is adjusted to the market annually or every 3 or 5 years.
You can usually get into this loan with lower payments
initially – 2-3% lower than traditional loans,
making buying more affordable.
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