Which Loan Should You Choose?

One of the first steps in the home buying process is to get preapproved for your loan. Just as there are different types of homes, there are different types of loans. Everyone’s personal situation is different, so it’s important to find the one that best fits for you. 

Each loan program has its own set of benefits and requirements, and depending on the one you choose, it will determine your interest rate, minimum down payment, and additional loan terms. 

Navigating through the preapproval process can seem overwhelming and complicated. But you don’t have to do it alone. Our trusted in-house lender partners are available to support you and guide you through the process from start to finish. 

Today, we’ll be going over the 3 most common types of loans - FHA, conventional, and VA

FHA loans are government-backed mortgages that generally have looser requirements, making them ideal for people with lower credit scores and lower down payment. The interest rates are typically lower than conventional loans, but require the buyer to pay an upfront fee of 1.75% of the loan amount at the close of escrow.

- Minimum credit score: 640
- Minimum down payment: 3.5%
- Los Angeles/Orange County loan limit: $1,089,000
- San Bernardino/Riverside County loan limit: $644,000

Conventional loans are generally the most common type of loan among homebuyers. It is most beneficial for people with higher credit scores or larger down payment. Mortgage insurance is required if you put less than 20% down, however, it will automatically fall off once your home equity hits 22%.

- Minimum credit score: 620
- Minimum down payment: 5%
- Los Angeles/Orange County loan limit: $1,089,000
- San Bernardino/Riverside County loan limit: $726,000

VA loans are specifically for veterans or people on active duty. They are one of the few loan programs that don’t have a minimum credit score or down payment needed to qualify, and don’t require any mortgage insurance. Based on your down payment, there is a funding fee at the close of escrow.

- Minimum credit score: N/A
- Minimum down payment: N/A
- Los Angeles/Orange County loan limit: $1,089,000
- San Bernardino/Riverside County loan limit: $726,000

In addition to the 3, there are other loan programs available (like down payment assistance, jumbo, 1st & 2nd, bank statement, DSCR, etc.), so it’s important to find the one that works best for you. That’s why we’re here to help!

Schedule a call with us below! Our team of full-time real estate professionals and trusted lender partners are here for you.