Common Real Estate Loan Programs
Below is a brief explanation of some of the most commonly used loan programs. Consult your Loan Officer for further details.
Fixed Rate Home Loan
A loan which has an interest rate that remains constant throughout the life of the loan.
Buydown
A fixed rate loan where the interest rate and payment are reduced for a specific period of time by paying the interest in advance (the buyer or seller can pay for the buydown).
Balloon Home Loan
A fixed rate loan that is amortized over a 30 year period, but becomes due and payable at the end of a shorter term (ie: 5, 6, 7 or 10 years). Some of these loans have an option to be extended with a new rate or rolled into another type of loan. Usually, the rates on these loans are lower than a regular 30 year fixed rate loan.
Graduated Payment Mortgage (GPM)
A fixed rate loan which has payments starting lower than the payments on a standard fixed rate loan, then increasing by a predetermined amount each year for a specific number of years (usually 5).
Adjustable Rate Mortgage (ARM)
A loan which has an interest rate that can change, either upward or downward, at specified periods during the life of the loan. The change in the interest rate is usually tied to a financial index over which the lender has no control.
FHA Home Loan
FHA loans are available as a fixed rate, ARM, GPM or buydown. They are loans that are insured by the Federal Housing Administration and offer low down payments and lower income requirements. There is a maximum FHA loan limit which varies from region to region.
VA Home Loan
Fixed loans are available with no down payment to eligible Veterans, in-service Veterans and certain other Reservists and National Guard members. VA loans are guaranteed by the Veteran's Administration. The maximum VA loan is currently $203,000 with no down payment. A VA GPM loan is also available with a minimal down payment. (ARM loans are not presently available.)
