Denver Mortgage Options.

Conventional mortgage loans are so called because they are the most common type. They are issued by lenders that assess your creditworthiness, down payment, debt-to-income ratio, and other factors to determine how much money you can borrow for the purchase of a home. Conventional loans are not backed by the federal government.

There are two main options to explore when it comes to conventional loans: fixed-rate and adjustable rate mortgages (ARMs). The option you choose may depend on several factors. For example, if you plan to purchase and stay in a home for the foreseeable future, say 10 years or more, your best bet is probably to go with a standard, 30-year fixed loan. 

The U.S. Department of Urban Development oversees the Federal Housing Administration (FHA), which offers a variety of loan programs suited to many first-time home buyers.  These federally-backed loans are offered by FHA-approved lenders and tend to deliver incredible value for buyers who qualify.

They typically require a lower down payment, perhaps as low as 3.5%, although borrowers will have to pay for mortgage insurance to offset added risk.  They also feature lower interest rates, and are less restrictive in terms of creditworthiness.  For example, buyers with less-than-ideal credit scores may still qualify for FHA loans, whereas they might be denied loan approval or subjected to incredibly high interest rates for conventional loans.

VA loans are backed by the Department of Veterans Affairs (VA) and are issued by qualified lenders.  They are available to military veterans and National Guard and Reserve members who meet minimum active-duty service requirements, as well as those discharged for reasons like hardship, certain disability, or reduction of force, for example.

Veterans who qualify for VA loans often receive more favorable terms than conventional loans, including lower rates and fewer restrictions for eligibility, in terms of creditworthiness.  In some cases, VA loans require no down payment.

If the home you’re buying is more expensive than the limit for conventional mortgages, you’ll need a jumbo mortgage. Because they’re larger loans, most jumbo loans require a larger down payment, usually around 25 to 30 percent. Homebuyers also need to have high credit scores, typically over 740 and will be required to show proof of 6 to 12 months of income. Finally, mortgage rates on jumbo loans tend to be higher, although depending on the lender, you can still get a competitive rate.