First-time Homebuyer Loans

A fixed-rate mortgage is a home loan with a fixed interest rate that does not fluctuate with market rates. Most commonly, fixed-rate mortgages refer to a “30-year fixed” loan, where the interest rate and payment will remain the same for 30 years. But these are available in different term lengths.

An adjustable-rate mortgage is a type of mortgage in which the interest rate applied on the outstanding balance varies throughout the life of the loan. Typically, the initial interest rate is fixed for a period of time, after which it resets periodically, often every year.

The interest rate is the amount you will pay every year on your mortgage loan expressed at a percentage rate. The Annual Percentage Rate (APR) includes the interest plus any other charges related to your mortgage loan. The APR includes the interest rate plus any fees or points associated with your loan. The interest rate does not include any additional fees associated with your loan. For this reason, the APR is usually higher than the interest rate.

Private Mortgage Insurance (PMI) is generally required when you have a conventional mortgage loan and your down payment is less than 20%. This insurance policy protects the lender if you stop making your mortgage payments and adds additional costs to the monthly mortgage payment. If you refinance and your home’s equity is less than 20%, PMI is generally required. PMI is not a permanent cost and may be removed when you have at least 20% equity in the property financed.

A Federal Housing Administration (FHA) Loan is a government-backed mortgage insured by Housing and Urban Development (HUD) that has historically been for borrowers seeking minimal down payment or who fall below standard lending guidelines. Today, FHA loans have emerged as the primary source of financing for low down payments and/or lower credit score purchases and refinances and provide excellent financing for most homeowners. FHA loan guidelines have recently changed to reflect higher home values in areas where FHA loan limits were previously too low to help the average household.

A VA loan is a loan guaranteed by the Department of Veterans Administration for qualified veterans and active-duty military personnel and their spouses who are first- or second-time home buyers.

A USDA loan is a loan guaranteed by the United States Department of Agriculture (USDA). They offer $0 money down, lenient eligibility requirements, and competitive interest rates. They are particularly favorable to those living in rural or low-income areas. Homes must be located in eligible areas to qualify for a USDA loan.