There are three main categories: Conventional, FHA, and VA. All three are available in 15 and 30 year terms, with some programs having other loan term options. Within the three main categories are these loan types: Fixed Rate, ARM’s, and Balloon loans. Both fixed rate and Balloon loans are available with buydown options.

Federal Housing Administration (FHA)

Borrowers qualify under FHA guidelines. In most cases, both one-time and monthly mortgage insurance premiums are required for lower down payments. The minimum down payment starts as low as 3%. Your total housing expenses and all of your other obligated debt should not exceed 41% of your gross monthly income under FHA programs. The down payment can be from a gift or borrowed funds by secured collateral.

Veteran’s Administration (VA)

Borrowers who are veterans may qualify under VA guidelines. There is no mortgage insurance, but there is a one-time funding fee. The borrower must be a veteran and provide a certificate of eligibility. Qualifying is based on net income, family size, and a provision for utilities and maintenance. Total housing expense and all other debt can not exceed 41% of gross monthly income. Up to 100% LTV financing is available.

Fixed Rate

Available for most loan types regardless of down payment. The interest rate and the principal and interest payment amount remain fixed for the life of the loan.

ARM – Adjustable Rate Mortgage

The initial payment is usually lower than a fixed rate loan and adjusts periodically. The adjusted period can be set to specific intervals, such as monthly, semi-annually, annually, etc. Maximum and lifetime caps control the amount of the adjustment.

Balloon Loan

A loan with an initial interest rate for a five or seven-year period that is lower than fixed rates. Payments are based on a 30-year amortization, but the loan balloons at the end of the 5 or 7 years. This is a good loan for those who may not remain in their home for more than this initial period. Similar loans are available that remain fixed for a period of time (3, 5, 7, and 10 years) and then convert to an ARM.

Buydown

An interest rate subsidy paid up front by the borrowers, sellers, or lender to lower the initial monthly payments. This allows the buyer to qualify at the lower rate and enjoy benefits of a fixed or balloon mortgage

Interest Rate Lock In

What Is A Lock-In

A lock-in, also called a rate-lock or rate commitment is a lender’s promise to hold a certain number of discount points for you, for a specified period of time, while your loan request is processed.

Will You Be Charged For a Lock In?

A lender may charge an up-front fee for locking in the interest rate and discount points depending on the length of the lock-in and the type of loan for which you are applying.

How Long Are Lock-In’s Valid?

Lock-in’s are usually valid for 15, 30, 45, or 60 day periods.