If you’re a first-time homeowner, you may be excited about your new home and getting ready to celebrate moving into it! Or, if you’re an experienced homeowner, you might be entertaining the idea of selling your current property and trading up for a new one.

Whatever your goals are with home ownership, knowing how to approach the home-buying process is an essential part of the experience. And knowing there are different types of real estate loans helps you leverage a competitive edge when securing home financing.

In this post, we’ll explain some options to help you gain a competitive advantage when buying a home.

The Different Types of Real Estate Loans

There are different types of real estate loans available to investors. It is essential to understand the features of each before committing to a specific loan.

FHA Loans

FHA loans provide an opportunity for borrowers with lower incomes to become homeowners. One of the advantages of an FHA loan is the low down payment requirement of just 3.5%.

While many conventional loans require a minimum credit score ranging between 620-680, FHA loans still offer a path to homeownership for those with lower credit scores. You can purchase single-family homes, condos, and approved multiple-family units with FHA loans.

VA Loans

VA loans are special mortgages designed specifically for veterans and active military personnel. They offer low-interest rates, no down payments, and no monthly mortgage insurance required.

Borrowers must also meet certain eligibility requirements. These include having an honorable discharge, a verifiable income, and a job that meets the VA’s needs.

By using a VA loan, veterans and active personnel can purchase or refinance a home with advantageous terms.

Conventional Loans

A conventional loan is any loan that is not insured by the government. Banks and financial institutions, such as credit unions, typically issue these loans.

To qualify for a conventional loan, borrowers must have a good credit score, documented income, and a low debt-to-income ratio. Typically, conventional loans require a down payment of at least 5 percent of the purchase price.

Rental Loans

A rental loan is a loan used to purchase a rental property. It could be a single-family home, duplex, apartment, or other type of property that is bought to generate income from rent payments.

These loans come with longer terms (15-30 years) and higher interest rates than a standard mortgage loan. Knowing more about rental loans will help you decide if they suit you.

USDA Rural Development Loans

USDA Rural Development Loans are government-backed loans provided to low-income individuals and families in rural areas. These loans are made available through the U.S. Department of Agriculture. They are used to help build, buy or repair a home or to finance a business in rural areas.

Eligibility for a loan is based on income and location. A borrower’s creditworthiness and repayment ability determine the loan amount and interest rate.

Find the Best Loan Solution for You!

Real estate loans offer several benefits and can be tailored to the individual needs of a borrower. They can be used to finance multiple types of real estate projects and investments.

With proper research and advice, they can be used to achieve successful and profitable results. What are you waiting for? Take the first step and contact a real estate loan specialist today to find the best loan solution for you.

All the expert advice you need is just a click away. Be sure to bookmark our page and check back often for the latest real estate news.