Types of Refinance Mortgage Loans

Conventional
Type	Limit	Best for	Advantages
ARMs	Conforming	Short-term homeowners Clients with future income growth potential	Low initial interest rate
30-year fixed rate	Conforming	Long-term homeowners looking for stability	Long-term interest rate and monthly payment stability
15-year fixed rate	Conforming	Clients looking for stability and speedy payoff	Interest rate & payment stability Faster equity/payoff Less overall interest
Jumbo	Affordability	Clients seeking higher value	No limit Covers more value

Government-insured
Type	Limit	Best for	Advantages
FHA	Conforming	Clients with limited credit or income	Low down payment Easier credit and income requirements
VA	Affordability	Eligible past/present service members and spouses	Low interest rate Low down payment Costs covered
USDA	Affordability	Limited income clients in USDA designated rural areas	100% financing Assists limited income clients

Conventional home loans are those not insured by a federal agency, such as the Federal Housing Administration (FHA), the U.S. Department of Veterans Affairs (VA) or the U.S. Department of Agriculture (USDA). Conventional options come in many varieties – fixed-rate, ARMs, conforming, non-conforming, jumbo, etc.

Adjustable-Rate Mortgage

An adjustable-rate mortgage gives borrowers the advantage of a low introductory rate for the first few years of the home loan. These loans can help short-term homeowners beat the higher interest rates found in counterparts. ARMs can be a good option for short-term homeowners or those who can reasonably expect to have a higher income over time.

The 30-Year Fixed Rate Home Loan

The 30-year fixed rate home loan is the gold standard of the industry. It gives homeowners long-term stability with one predictable monthly payment amount over the three decades of the loan. The fixed interest rate keeps the homeowner free from the fear of rising interest rates. These loans particularly appeal to homeowners who expect to settle down in one house for a long period of time.

The 15-Year Fixed Rate Home Loan

The 15-year fixed rate home loan provides the same stability as the 30-year fixed rate option. While the 15-year option has a higher monthly payment, it builds home equity faster, and you pay less interest over the entire term.

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FHA Home Loans

The Federal Housing Administration (FHA) runs several lending programs that can help homebuyers with limited credit or income, including first-timers. Government-insured FHA home loans – which come as fixed-rate or ARMs – offer affordable interest rates, a low minimum credit score and a down payment as low as 3.5 percent.

FHA Cash-Out Refinance

If you've been in your home for some time or you've made some upgrades – or both, chances are your home may be worth more than what you owe on your mortgage. The difference between your home's value and what you owe on it is your available equity, and when you choose a cash-out refinance, you can gain access to that extra equity.

VA Home Loans

The Department of Veterans Affairs (VA) partially guarantees home loans for eligible past and present service members and spouses. The “guaranty” can bring with it no down payment, reduced interest rates, coverage of costs and no maximum amount other than what your credit and income can support.

VA Jumbo Loans

The VA guaranty only goes to the value of the federal conforming loan limit for the local area. However, eligible service members can take out a “jumbo” loan with a value higher than that dollar figure.

Jumbo Loans

Each county in the United States has a “conforming loan limit” set by the federal government. Conforming loans remain at or underneath this dollar limit. However, lenders can make so called “jumbo loans” that exceed the cap. By being able to borrow this high-dollar figure, borrowers can reduce the down payment for an expensive home.

USDA Home Loans

The U.S. Department of Agriculture (USDA) helps low and moderate income homebuyers in USDA designated rural areas – including some small towns, suburbs and exurbs. By providing up to 90% coverage, the USDA empowers eligible applicants to borrow the entire value of the loan, eliminating the need for a down payment. These 30-year fixed rate home loans require no mortgage insurance and have no limit beyond what you can pay.