- There are a number of fixed-rate mortgage options available to help a borrower buy a house.house image by Michael Shake from Fotolia.com
There are numerous types of mortgages for a potential borrower to choose from when shopping for a loan to buy a house. The two major categories are fixed-rate and adjustable-rate mortgages. A fixed-rate mortgage has the same interest rate throughout the entire term of the loan, while an adjustable-rate mortgage offers a rate that can rise or fall during the loan's term. Not all fixed-rate mortgages are the same, however. - Some conventional fixed-rate mortgages are underwritten by the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corp. (Freddie Mac). This type of mortgage is the most common on the market today. It requires a minimum down payment of 5 percent as well as a minimum credit score of 620.
- A Federal Housing Administration mortgage is the second most common fixed-rate mortgage on the market. It is a government mortgage underwritten by the U.S. Department of Housing and Urban Development. It has lower down payment and credit score requirements than a Freddie Mac/Fannie Mae mortgage: 3.5 percent and 580, respectively.
- A USDA mortgage is another type of government mortgage program. It is underwritten by the U.S. Department of Agriculture and was created to help rural residents buy a house. There is no down payment requirement, and the minimum credit score is 580. However, the borrower must purchase a home in a USDA-designated rural area to qualify for the program.
- Another popular fixed-rate mortgage option is a VA (or Veterans Affairs) mortgage. This program was created by the federal government to give military veterans and spouses the opportunity of buy a home with lesser requirements than those for a conventional mortgage. Veterans can qualify for this mortgage with no down payment and a minimum credit score of 580.
