Mortgage Loans
Conventional Fixed-Rate Mortgages
This "traditional" type of loan maintains its original interest rate throughout the entire life of the loan. (Any change in monthly loan payments will be due to increases in other charges like insurance or taxes that will naturally occur over time.) Fixed-Rate Mortgage Loans come in various terms such as 10, 15, 20, or 30 years. In determining the length of your loan, you may want to consider the total amount of interest you want to pay over the course of your loan. This may be a good option for those who plan to stay in this home for many years.
Adjustable Rate Mortgages
An Adjustable-Rate Mortgage, or ARM, is a home loan with an interest rate that can change periodically. This means that the monthly payments can go up or down. Generally, the initial interest rate is lower than that of a comparable fixed-rate mortgage. After that period ends, interest rates — and your monthly payments — can go lower or higher. This may be a good option for those who know they will only be in the home for 5-7 years.
Government Backed Loans
FHA Loans
FHA loans are backed by the Federal Housing Administration and offer lower down payments and credit requirements, making them easier for many people to obtain. In some areas, you can secure an FHA loan with just 3.5% down. However, you must pay an upfront mortgage insurance fee of 1.75% of the loan amount, along with monthly mortgage insurance payments. Depending on your down payment, you might have to pay this insurance for the life of the loan.
USDA Loans
USDA loans are government-backed loans that can help you buy a home in a suburban or rural area. USDA loans don’t require a down payment with a qualifying credit score. The home you want to buy must also be in an eligible rural area. You can check your potential home’s eligibility on the USDA website.
VA Loans
The U.S. Department of Veterans Affairs backs VA loans. VA loans are only for veterans, current military personnel and qualifying surviving spouses. The approval process will require you to have a valid certificate of eligibility (COE) as proof that you qualify for the loan. Like USDA loans, VA loans don’t require any down payment when buying a home. However, both types of loans still require the homebuyer to pay closing costs.
Grant Assistance Programs
Homeownership Set-aside Program
The Homeownership Set-aside Program (HSP) provides down payment, closing cost, and repair assistance to first-time homebuyers earning at or below 80% of the Area Median Income (AMI) for households purchasing or constructing homes in Colorado, Kansas, Nebraska, and Oklahoma. The HSP is provided to households as a forgivable grant with a five-year retention period.