Buying a home is usually both exciting and stressful. Obviously, there’s no better feeling than landing the perfect home. Financing that residence, on the other hand, can be a struggle for many buyers.

That’s why it’s good to be aware of the various loan options at your disposal. Continue reading as we discuss some of the most popular mortgage programs available.

Conventional mortgages

There are a number of reasons why borrowers choose a conventional loan over other loans. First, you can use this type of mortgage whether you’re purchasing your first or forever home. You’ll also have the ability to cancel private mortgage insurance (PMI) once you reach 20% equity.

So what’s the downside of a conventional loan? Well, the PMI we just mentioned adds up in a hurry. Lenders also require a fairly high credit score in order to qualify for a conventional mortgage.

Government-backed programs

Calling all first-time buyers! A government-backed loan allows you to achieve your homeownership goals, for less. Just be sure to research which program makes the most sense for your situation.

FHA

FHA home loans offer plenty of flexibility. Take advantage of relaxed credit score requirements, low monthly mortgage insurance, and a low down payment. It’s possible to get into your own home for as little as 3.5% down thanks to an FHA loan.

VA

The VA loan is reserved for veterans, active-duty military, and qualified surviving spouses. Eligible borrowers enjoy low interest rates, no mortgage insurance, and no down payment. What’s more, you can refinance up to 100% of your home’s value with a VA mortgage and take advantage of even greater savings.

USDA

Perhaps you’re looking to buy a home in a rural area but don’t have much saved for a down payment. Not to worry, as you may qualify for a USDA loan. There’s no down payment required or maximum mortgage amount.

Jumbo loans

Eyeing a larger, more expensive property that could serve as your forever home? Then it’s definitely worth exploring a jumbo loan. Those who opt for such financing should expect to come up with, at the very least, a 10% down payment.  

Jumbo loans are most commonly used in higher-priced areas, such as Denver. Eligibility depends on your debt-to-income (DTI) ratio and property type, among other factors. Lenders tend to reserve jumbo loans for those with high credit scores.

Adjustable-rate mortgages

Often known as ARMs, these loans feature lower than average rates and smaller monthly payments. This type of mortgage has a fixed interest rate for the first three, five, or seven years based on your choosing. However, following the end of your introductory period, market interest rates ultimately dictate your rate.

There’s no question that an adjustable-rate mortgage has its risks. If you anticipate earning a similar or lower salary in the next few years, an ARM probably isn’t the best bet. Alternatively, you could make an argument for this loan type if you foresee a significant pay increase down the road. 

Fixed-rate mortgages

These are pretty self-explanatory: a mortgage with an interest rate that remains the same for the duration of the loan. You don’t have to worry about your payment increasing, and you’re free to refinance at any time. These are the main reasons why homeowners select a fixed-rate mortgage.

The other question you’ll need to ask yourself is when you want to pay off your home. Sure, you could go with the traditional 30-year mortgage and leave it at that. Or you may decide on a 15-year mortgage and end up saving tens of thousands of dollars in interest. 

Finance your next home with ease

At American Home Agents, we understand the stress of buying a home. And with home values on the rise throughout Colorado, you may be reluctant to move forward with the process. This is where our dedicated team of real estate agents makes all the difference.

Part of what separates our brokerage is that we partner with American Financing, a family-owned and operated national mortgage company. American Financing knows mortgage inside and out, and they’ll do whatever it takes to get you into your own home. In fact, they’ll customize any home loan to meet your needs.

So what are you waiting for? Get in touch with an experienced mortgage consultant at American Financing and let them find the best type of mortgage loan for you. Once you’re pre-approved, reach out to one of our agents and begin your home buying journey!

Contact American Home Agents today at (303) 695-5900.