Denver home loans can be overwhelming without the right guidance.
Whether you’re buying your first home or you’ve purchased a property or two in the past, you’ve likely encountered several different types of home loans. Finding the right home loan may seem like a challenge, but it could potentially save you tens of thousands of dollars down the line. We’ve created a simple guide to the five basic types of Denver home loans so you can make an informed decision and purchase the house of your dreams.
If you have a good credit score, you may consider applying for a conventional loan. These loans aren’t backed by the federal government and can be either conforming or non-conforming, depending on whether they meet the standards set by the Federal Housing Finance Agency (FHFA).
There are several benefits to conventional loans, starting with their flexibility. Conventional loans can be used no matter whether you’re buying your first or second home or even if you’re buying an investment property. You may be able to pay as little as 3% down, which can be appealing for those looking to get a home immediately. Keep in mind that you’ll need at least a 620 FICO score to qualify.
Alternatively, you could opt for a government-insured loan to purchase your home. There are three main options here: FHA, USDA, or VA loans. FHA loans are perhaps the most well-known, requiring a FICO score of 580 to get a maximum of 96.5% financing. These loans are best for those who can’t put down a significant down payment.
For those looking to purchase in rural areas, USDA loans are good options. These loans only apply if you purchase a home in a USDA-eligible area, and you must also meet income requirements to qualify. Finally, for military personnel and their families, VA loans offer low-interest mortgages without the need for a down payment or a minimum credit score.
Adjustable-rate mortgages aren’t for everyone, but they may be a good option for those who know they won’t be in their home for long. With these loans, interest rates can fluctuate with the market, meaning that your monthly mortgage payment can change.
If you opt for an adjustable-rate mortgage, you may be able to save quite a bit of money on interest, especially in the first couple of years you’re in the home. Just make sure you read the fine print and know exactly what you’re getting yourself into.
Unlike its adjustable counterpart, a fixed-rate mortgage is, well, fixed. Your monthly payment will never change since your interest rate is always the same. Typically, these loans have either 15- or 30-year terms.
If you know you’re going to be in your home for quite a while and you don’t want to worry about your payments changing each month, a fixed-rate mortgage could be a promising option. Keep in mind, though, that your interest rate will probably be higher than it would be if you opted for an adjustable-rate mortgage.
As the name suggests, jumbo loans are the largest Denver home loans you’ll find. These loans are quite common in high-cost locations like New York City or Los Angeles, since they provide more money to allow buyers to purchase more expensive properties. Best of all, the interest rates on these loans are not terribly high, especially when compared with conventional loans.
To qualify for a jumbo loan, you’ll have to meet stricter requirements than with other types of loans. In most cases, you’ll need a FICO score of at least 700 and a down payment of 10-20%. You’ll also have to provide additional documentation as determined by your lender, including proof of your assets.
Working with 5280Lend for Denver Home Loans
No matter which of the various Denver home loans you’re seeking, 5280Lend can help. Our team walks you through the entire process of securing a mortgage and answers all of your questions along the way. Contact 5280Lend today to see how we can help you purchase your dream home!