There is so much excitement when it comes to buying a new home. Shopping around for furniture and researching decorating ideas is also fun. But, the financial side of buying a home can put a damper on things, especially if you are a first-time buyer. Things can get a little overwhelming. However, it does not have to be all doom and gloom.

Once you have figured out the basics, like your down payment, monthly installments, and reviewed your credit report, the rest is pretty simple. So, what are the pros and cons of different mortgage types? Well, to make things a little easier for you, we’ve done the homework, so you don’t have to. All you have to do is decide which option is best suited for your needs.

Conventional Mortgage

Conventional loans are the most popular of all mortgage types. Conventional loans are not backed or insured by the government. Instead, they are taken out via a bank or private lender. Usually, a conventional mortgage requires a down payment. If you are going to take out a conventional loan via your bank, they typically look at your credit report and debt-to-income ratio when evaluating your application.


  • Borrowing costs tend to be lower than other mortgage types
  • Can be used to buy a second home or investment property
  • You have the option to cancel private mortgage insurance (PMI) once you have 20 percent equity


  • Your debt-to-income ratio must be between 45-50 percent
  • Your FICO credit score has to be 620 or higher
  • A lot of documentation is required (assets, employment, down payment etc.)

Government Insured Mortgages

There are three U.S. government agencies that can help U.S. citizens become homeowners. The Federal Housing Administration (FHA), the U.S. Department of Agriculture (USDA), and the U.S Department of Veterans Affairs (VA loans). FHA loans are for those who don’t have enough savings for a large down payment. The FICO score is also a little lower with 580 being the minimum. USDA loans are for those on a low household income. The USDA can help you become a homeowner in eligible rural areas. Generally, a down payment is not required. VA loans are for members of the U.S. military, both active and veterans may be eligible for low-interest mortgages that do not require a down payment.


  • Credit requirements are not as strict
  • A good option if you don’t qualify for a conventional loan
  • Not restricted to first-time buyers
  • No large down payment needed


  • Overall borrowing costs are higher
  • You will likely have to pay mandatory mortgage premiums that cannot be cancelled

Contact Us

Taking out a mortgage is not an easy decision. You should really asses your financial situation and do your research before you take any action.

If you would like more information about different types of mortgages and what options are best for you, get in touch with JAM properties LLC. We are a residential redevelopment and real estate investment company based in Orange County, CA and Phoenix, AZ. We buy houses for cash and can help you sell your home fast.

Phone: 949-438-4343

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