When it comes to home buying, picking the right loan is very important. Every loan out there has different pros and cons. The infographic below lays out the loans in a simplified way.
Conventional Home Loans: These loans have the lowest rates. Your credit must be excellent. You will need 10% or more to put down on the home. If you put under 20% however, you will be charged PMI which means your monthly payment will be higher. It is better to save and put down the 20% with a conventional loan. There are also typically fewer home condition requirements than other loans, making it a great loan to purchase a fixer with.
FHA Loans: You can still get low rates with FHA loans, but you will have PMI. FHA loans are great for first time home buyers or those with good credit. There are also structural requirements for an FHA loan. The home must be in good condition with little to no repairs. The repairs include exterior paint chipping, termite, and a functional stove in the kitchen. You agent should be able to determine which homes will qualify for an FHA.
VA Loan: VA loans are very similar to the FHA loans. They are great for first time buyers who have served the US military and qualifies for a VA loan. You can put 0% down on a house and not have any PMI. This is the major difference between a FHA and VA loan. The home must be in good condition as well with little to no repairs.
ARM Loan: With interest rates possibly going up next year, this may not be the best loan. ARM loans increase or decrease with interest rates. Fixed rates loan are typically better especially if you refinance later on. The requirements of this loan is very similar to conventional.
This is just a brief explanation into each individual loan. Check back for more information on the loans.