Government-backed mortgages include the FHA Home Loan (Federal Housing Administration) and the VA Loan (Veterans Affairs). Both the FHA mortgage and VA mortgage are guaranteed by the government and they generally feature lower interest rates and associated fees than other mortgage types. An FHA mortgage is insured by the government and generally requires more lenient qualification and lower down-payment. The maximum loan amount for an FHA mortgage (single-family) ranges depending on the city of residence. A VA (Veterans Affairs) mortgage shares many of the same advantages as an FHA home mortgage. However, to qualify for this mortgage, you must be a qualifying veteran, the unmarried widow of a veteran, a Public Health Service Officer, or an active-duty serviceman.
Fannie Mae is the common name of the Federal National Mortgage Association and Freddie Mac is the common name for the Federal Home Loan Mortgage Corporation. These institutions are congressionally chartered companies that buy mortgages from lenders and resell them as securities on the secondary home mortgage market. Prior to loan approval, both Fannie Mae and Freddie Mac check at a number of factors including credit ratings, level of total leverage, and employment history. Approved mortgages by Fannie Mae and Freddie Mac qualify for a lower interest rate. A specialized mortgage company can be of great assistance when checking for eligibility and shopping for the best rate from various lenders for Freddie Mac Mortgage as well as Fannie Mae loans.
Finally, conventional mortgages that surpass the thresholds set by the government agencies are named jumbo mortgages. Currently, any mortgage over $350,000 is classified as a jumbo mortgage. Usually, jumbo loans have up to 1 percentage point higher interest rates than conforming mortgages and higher down-payment requirements. In case of bad credit history, the loan approval process include a complete consideration of the prospective borrower’s credit history, assets, employment and other factors that can affect his/her ability to service the mortgage.