If you’re currently looking to buy a home or thinking about refinancing, it’s important to know about the different types of home loans available. As mortgage rates are predicted to keep rising, it’s probably in your best interest to lock in a good rate sooner than later. This article will go over the options you have when taking out a home loan.

Conventional Loan

This is a loan that’s not backed up by any government institution, and is the most common type of loan. The usual terms of the loan are 10,15, 20, and 30 years. People usually go with the 30-year term.

It’s possible to get a conventional loan at a 3% down payment and a credit score of 620. But keep in mind that the lower your credit score is, the more money you may need to put down for a down payment.

About 75% of home loans are conventional loans, so this is a good idea for just about everyone. The only people who should not consider a conventional loan are those without the minimum credit score or those who need significant payment assistance.

FHA Loan

FHA loans are provided by the Federal Housing Administration. These government-backed loans give mortgage insurance to lenders. In fact, the FHA is the biggest mortgage insurer in the world, working with lenders such as local banks, credit unions and online lenders. FHA loans have 15 and 30-year term options.

You’ll need a credit score of at least 580 to qualify for a 3.5% down payment. But if your credit score is below 580, you can still qualify if you agree to a 10% down payment rate. FHA loans are a good choice for people who don’t have a strong enough credit score for a conventional loan.

USDA Loan

USDA loans are backed the US Department of Agriculture and are available in specific areas of the country. USDA loans are designed specifically for people in rural areas who might not qualify for a conventional loan.

There is no down payment needed for a USDA loan, but most lenders require a fair credit score as a minimum requirement. If you or a family member live in a rural area and can’t qualify for a conventional loan, this is a good option to consider.

Find The Right One

When you’re looking at home loans you’re going to come across many different options. But not every mortgage loan will be the right one. That’s why it’s important to look at these different options and see which one’s right for you.