USDA (United States Department of Agriculture) is a type of government loan offered to rural residents who have a low income and cannot acquire a conventional loan. In this type of loan, borrowers can receive up to 100% of the purchase price. Like FHA loans, VA Loans are insured by the government to protect the lender from a borrower default. VA Loans are loans offered by the US Department of Veterans Affairs (VA) to military members and their families. While this sounds enticing, look at the mortgage rates explained section below to see how that affects the amount of money you pay over the course of the loan. With this type of loan, you can make a down payment as low as 3.5% of the purchase price. There are three type of government insured mortgages: FHA, VA, and USDA.įHA (Federal Housing Administration) is a mortgage program ran by the Department of Housing and Urban Development (HUD) that insures the lender against a borrower defaulting. Government Insured vs Conventional Mortgages Since the future is unsure for a lot of people, the most common type of mortgage is a 30 year fixed rate loan. This type of mortgage might be good for a family that has to move to an area for a short amount of years. There are also hybrid ARMs such as 5/1 ARM which means that the interest rate stays fixed for 5 years, then adjusts every year after that. While adjustable rates usually start off at a lower interest rate than fixed rate mortgages, they often can end up much higher.

Adjustable rate mortgage (ARM) loans have interest rates that change every year based on the world index. Fixed rate mortgage loans mean that the interest rate stays the same across the entire life of the loan.

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