The Edge Program

Did you know that if you want to kick butt on your next real estate investment, you need to make sure you get the right loan? In this post, we’re going to talk about three different types of loans and how to choose the one that’s right for you. I’ll walk you through the details of each so you can maximize your investment for your specific situation.

Making A Smart Investment

Part of maximizing your real estate investment is making sure that you have the right financing with your investment strategy. If you’re not doing this for the investment, maybe we need to get you thinking that way. Let’s go through a few things that you’re going to want to consider when you’re thinking about buying a house.

How long are you going to be in the property? Are you going to keep it for 3, 5, or 10 years? Is this your forever home? How much money do you have for a down payment? Would the house you’re buying now turn into a rental down the line? Have you thought about that? How’s your credit? Are there quick things to do to increase your score and help out your interest rate?

All of these questions come into play when you’re searching for the right home loan. The top three loan types that you’re going to come across are FHA, VA, and conventional. Each of these loans come with their pros and cons. Knowing which one is the best for you will depend on your financial situation, and your lender should break down these options for you.

FHA Loan

The first loan kicks butt for the person who has lower credit, lower-income, or is buying a multi-unit property. The FHA loan is a government-backed loan that allows buyers to purchase a home with only a 3.5% down payment. This can be a great option for first-time homebuyers. It caters to borrowers with lower credit scores because it helps out with your interest rate by insuring the loan.

There are, however, some cons of this loan. For one, you have higher closing costs on an FHA loan. The FHA loan requires a funding fee of 1.75% that gets added to your loan amount after your down payment is applied. This is what helps the government ensure the loans and give you a better interest rate. You also have monthly mortgage insurance for the life of the loan. You would need to refinance into a conventional loan down the line to remove your monthly mortgage insurance.

Another con is that if you’re buying a condo, it must be FHA approved. You cannot get an FHA loan on a condo that has not been previously approved by FHA. Still, this type of loan is great for those that don’t have perfect credit, may not have as much money laying around, but can still make their monthly payments.

Conventional Loans

A kick-butt conventional loan may be the option for you. It can be great for first-time homebuyers as well as move-up home buyers. It’s also a great option if you’re buying a rental home or a long-term purchase. Unlike an FHA loan, a conventional loan is also a great option for condos.

A conventional loan typically offers the best terms and is best used for borrowers with a minimum of 3-5% down. Mortgage insurance will be removed once you pay off 20% of the mortgage, and if you put 20% down you don’t have to pay it. Now that kicks butt.

The con for a conventional loan is simply qualifying for the loan. You need to make sure you have great to excellent credit and have your savings in check. Feel free to contact me if you have more questions on how to qualify.

VA Loans

VA loans kick butt for our vets. They’re an unbelievable product, built for the veterans of America. This loan is a zero down, zero mortgage insurance product specifically for our veterans that have served in the military. It’s also considerably cheaper, in the short-term and long-term, than an FHA loan. Rates will be comparable to putting 25% down on a conventional loan. This loan can be used as many times as needed with some caveats, and a vet can have multiple homes utilizing the program.

As far as the cons of VA loans go, there are very few—but they’re very glaring. A veteran can only use this for a primary residence purchase, and they must intend to live in the home for 12 months. The other large concern with VA loans is that nobody knows what they are and how to use them.

Many professionals in the industry try to push VAs buyers into a different loan program. Do not let this happen. If you are a veteran and someone’s trying to steer you into a different loan program, you know who to call. If I was a vet, I definitely would use the VA loan program. I’m not, so I can’t, but I can help you utilize your VA benefits and get into a home today.

The Kick Butt Mortgage Guide

It’s never too early to begin getting your financing in line. Buying a house is exciting, but first and foremost, it’s an investment. Part of that investment is getting a kick-butt mortgage and making sure you maximize your return.

If you like this information, make sure you pick up a copy of my free book, the Kick Butt Mortgage Guide. It’s an A to Z home buying guide full of everything you need to make sure that you kick butt in your mortgage process.

I hope this helped answer some of your questions about the different loan types. If you want to specifically talk about your situation, reach out to me directly and I’d be happy to walk you through the process!


Ryan Speltz Loan Officer

Ryan Speltz

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