There’s more than one way to finance your next home purchase

Special to 318 Forum

For the typical homebuyer, a mortgage is the largest loan ever taken out. Most picture signing a conventional loan and then settling into a lengthy cycle of house notes. But there are other types of available loans, depending on your situation. Here’s a look at some of your options.

Convential Loans

With this or any other loan, you’ll be asked to provide income and tax information, along with verification of assets and debts. You’ll also have to meet certain credit standards to get the best rates. How much cash you have on hand also plays a role. If you have enough to hand over a down payment of 20% of the home’s value, you’ll be offered a conventional loan. Buyers without a 20% down payment may still be offered conventional loans, but with the additional cost of mortgage insurance. The term will typically be for 30 years.

FHA Loans

Depending on where you live, there could be municipal government, nonprofit, or state and local programs offering down payment assistance to employees or to first-time homebuyers.

Those with less savings or lower credit scores may also qualify for a loan from the Federal Housing Administration, rather than a conventional loan. The government regulates and insures these loans, offering potential homeowners the opportunity to borrow with a down payment as low as 3.5%. Certain income requirements remain.

USDA Loans

If you’re amenable to living in a more rural setting, the U.S. Department of Agriculture offers loans with no down payment for borrowers in low- and moderate-income brackets. You might have to deal with a longer commute in order to buy or build outside of the city center, but you’ll also enjoy the benefits of lower costs, more land and nature’s quiet. Those purchases usually have a lower interest rate, as well.

VA Loans

Veterans, current military and eligible spouses qualify for home loans through the Department of Veterans Affairs. These mortgages are serviced through traditional lenders, but are guaranteed by the federal government. So, borrowers enjoy a lower rate of mortgage interest than they otherwise would. They may also be eligible to make lower or no down payments, while also avoiding mortgage insurance.