Understanding the Different Loan Types
Understanding the right loan options for you is key to making the best choice for your financing.
Conventional loans are available and guaranteed through private lenders, including banks, credit unions, mortgage lenders, or through two government-sponsored enterprises: Fannie Mae and Freddie Mac. To qualify for a conventional loan, a borrower must complete an official mortgage application and all required documentation of their financial and credit history, including their current credit score. Most conventional home loans have a fixed mortgage rate, meaning that the rate will remain the same during the duration of the loan. Conventional loans have stricter lending requirements by banks and lenders because the federal government does not guarantee them.
Key Aspects of Conventional Financing:
Down Payments as Low as 3%
Fixed Mortgage Loans
A Jumbo Loan exceeds the limits set by the Federal Housing Finance Agency (FHFA). They are not backed by Fannie Mae or Freddie Mac and require stricter underwriting guidelines. They are designed to finance luxury or investment properties or homes in highly competitive local real estate markets. Their strict guidelines include larger down payments and a tighter debt ratio.
Key Aspects of Jumbo Loans:
For Loans Larger than $510,400
Fixed & Adjustable Rate options
Great for homes $1 million+
FHA loans are insured by the Federal Housing Administration and allows borrowers to purchase homes with down payments as low as 3.5%, debt-to-income ratio, and credit score guidelines are not as strict as conventional loans. They require mortgage insurance premium (MIP) to be paid through the life of loan and are strictly for a borrower's primary residence.
Key Aspects of FHA financing:
3.5% minimum down payment for all property types
Monthly mortgage insurance is required.
Primary residence, 1-4 Units
VA Loans are issued by private lenders and backed by the United States Department of Veterans Affairs. They offer flexible underwriting and down payment guidelines and are designed to help U.S. veterans, active duty service members, and widowed military spouses purchase a home.
Key aspects of VA financing:
Zero Down Payment Required
No Monthly Mortgage Insurance
Must pay a one-time funding fee at closing
Homes must be VA-approved
Serving our military community
Qualified Mortgages (QM) are regularly associated with most mortgages that are underwritten, including FHA, VA, Jumbo, Fannie, and Freddie Mac loans.
Non-QM loans don’t meet the typical standards for qualified mortgages. They use non-traditional methods of income verification to help borrowers get approved for a home loan. Matador offers a variety of Non-QM loans for our borrowers who may not qualify for a traditional QM loan.
Key Aspects of Non-QM Financing:
Bank Statement Loans
Foreign National Loans
Asset Based Loans