Conventional loans are, by far, the most popular type of mortgage for all home buyers. The U.S. Census Bureau reported that conventional loans made up 73.8 percent of new home sales in the first quarter of 2018, the highest share in a decade. It’s been above 71 percent over the previous seven quarters.

While most home buyers believe that they need to have at least 20% of the sales price for a down payment, that simply is not true. Unfortunately, many individuals Disqualify Themselves due to this myth. The fact is some conventional mortgages only require five to ten percent down and some require no down payment at all. That does not mean everyone qualifies for a no money down conventional mortgage. There are a number of factors considered in determining the necessary down payment amount. It could be that a conventional loan is not the best loan for you and your individual circumstances. Talking with an experienced professional could give you a very good idea of which program is right for you. Could be the best 10-minute investment you’ve made in years.

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FHA loans came in a distant second, making up just under 12 percent of all loans in Q1, followed by VA loans with just 8.7 percent and, in last place, was cash at a 5.2 percent share of new home sales.

Conventional mortgages are ideal for borrowers with good or excellent credit. Although, depending on the financial institution and the borrower’s circumstances, people with credit problems might qualify for a conventional loan. Usually, credit unions and independent banks, which often have more personalized relationships with their customers, are more likely to bend Fannie Mae rules, which most big banks follow.
An FHA loan is a loan that’s insured by the Federal Housing Administration. The FHA does not lend money, it just backs qualified lenders in case of mortgage default. There are certain criteria both borrowers and lenders must meet to get FHA approval.

Like with FHA loans, VA loans are insured by the U.S. Department of Veterans Affairs, or VA. The VA does not lend money; it insures qualified lenders. If a borrower defaults on their home loan, then the lender is protected by the VA. The lenders and borrowers must both meet qualifications to be VA eligible.

Choosing the type of mortgage is one step in the process. They are other things to consider, such as Fixed rate vs Adjustable rate. 15-year loan vs 30 year. 20% down payment vs No money down. These and other issues need to be explored in detail in order for you to make an informed decision, and we are here to help you.

To get an idea of which loan might be right for you, start by getting the basic facts.
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