As introduced on our first page there are only two types of loans you can get out there. Private loans and government backed loans. We will go into all loan options here and where and when they may be advantageous for each situation.

GOVERNMENT LOANS

• VETERAN ADMINISTRAION (VA) LOANS: These are typically the best loans out there. Better than physician loans if you can use your full funding fee. On a first time home purchase if you qualify with the VA you can do 0% down, no mortgage insurance, and they will cover all your loan closing costs, meaning it does not cost you a penny out of pocket. They will be more lenient on lower credit scores (usually 620 credit qualifies.) The rates are lower and there is no monthly mortgage insurance.

• UNITED STATE DEPARTEMNT OF AGRICULTURE: USDA loans are loans in rural areas where the government is trying to encourage homeownership. These loans are better than the standard FHA loan but do require higher credit and keep with the lower debt-to-income ratio thresholds. They technically don't have monthly mortgage insurance, but they do have an up front closing costs guarantee fee that is essentially paying your mortgage insurance up front. The big reason someone would do a USDA vs a conventional loan is because of the lower down payment threshold. Look to see if your area is in a USDA loan qualified region HERE.

• FEDERAL HOUSING ADMINISTRATION: FHA loans are government backed loans to encourage homeownership. They typically are for people who otherwise would not be able to qualify for a conventional loan due to little to no down payment, low credit and poor credit history, and lower income. FHA loans will allow borrowers all the way down to a 580 credit score in some scenarios to purchase homes. FHA loans will allow you to purchase a home using up to 55% of your DTI, compared to a 45% to conventional. They are more lenient on foreclosure and bankruptcy history. Most states have 0% down sponsored programs, but these come with a second mortgage with a higher rate to cover the cost of the down payment and all loan closing costs, meaning you get into a home with negative equity to start. FHA loans the mortgage insurance NEVER disappears, even when you hit 20% equity. If your state does not have a 0% down program 3.5% down is the minimum. As long as you have an FHA loan, you will always have mortgage insurance. Like USDA loans, FHA loans also have the up front guarantee fee AS WELL AS the monthly mortgage insurance that is typically double the monthly rate as what you would see in a conventional mortgage. FHA has a 203K program that will allow one to borrow 110% of the property value to renovate a home, but the interest rate and cost is pretty steep. 

PRIVATE LOANS

•  CONFORMING CONVENTIONAL: Conventional loans are the standard private loan. They usually require at least a 680-700 credit score, a minimum of 3% down, and will only allow a 45% DTI for your qualifying ratios. The rates on these loans are lower than most the government programs, the mortgage insurance is not as high, and as soon as you own 20% of your property through making your monthly payments your mortgage insurance will drop off if you did the monthly program (around 8 years for 3-5% initial down payments.) If your market is appreciating you can contact your lender earlier and see if they will send an appraiser to reevaluate and get that knocked off sooner.

• NON- CONFORMING CONVENTIONAL (PHYSICIAN LOANS): We have discussed in depth physician loans. Quick hitters are the same low rates comparable and sometimes lower than normal conforming conventional loans. No monthly mortgage insurance. You need at least 700 credit to qualify, avoid jumbo loan territory with the loan limits, and can also do 0% down. For more details go to our page "Perks of Physician Loans"

• "HARD MONEY" LOANS: This is a strategy some people use to purchase a home as if they were buying it in "cash" the underwriting for a hard money loan is not as stringent as a conforming conventional mortgage, but it comes at a steep cost. Most hard money loans are in the 18-30% interest range. Most people will get a hard money loan while also starting a mortgage at the same time, then they only pay a few weeks worth of interest. This is not common, and has only been used when someone is trying to get a competitive edge or a better deal on a home that is less than the interest paid to the