This type of loan also requires you to pay private mortgage insurance (PMI) if your down payment is less than 20% of the home’s value. Since conventional loans aren’t backed by the government, lenders typically charge a higher down payment (typically at least 5%) compared to unconventional government loans. 1 This type of mortgage is a deal between you and a lender that meets underwriting guidelines set by Fannie Mae and Freddie Mac-government-sponsored enterprises that purchase mortgages from lenders. Government Mortgages (Unconventional Loans)Ī conventional loan is the most common type of mortgage-making up more than 70% of all mortgages. Whether you get a mortgage through a broker, bank, credit union or direct lender, you’ll likely choose from at least one of these main types of mortgage loan categories:Ģ. That’s why at Ramsey we teach people about the different types of mortgages and their pros and cons so you can make a confident decision when buying a house. That’s because mortgage programs keep inventing new ways to “help” people who aren’t financially ready to buy a house to buy one anyway.īut getting the wrong mortgage could cost you tens of thousands of dollars and decades of debt-not to mention a lifetime of money fights! We don’t want that for you.
It feels like there are a bazillion types of mortgage loans to choose from.
