Kitchen within Davidson Home

Loan Types 101

Which Loan is Best for You?

Kitchen inside of Davidson Home

Option 01

Conventional Mortgage

This is your standard bread-and-butter mortgage. It’s the most popular type of mortgage out there, and for good reason. It’s simpler than many other loans, your interest rate stays the same, and you have an option between 30-year and 15-year terms.

Kitchen within Davidson Home

Option 02

FHA Mortgage

If your credit score is lower, an FHA mortgage might just be the answer. Insured by the Federal Housing Administration, these loans are available to people with lower FICO scores and down payments as low as 3.5 percent.

FHA loans are especially popular among first-time buyers. In recent years, nearly half of first-time home buyers used an FHA loan.

Kitchen inside Davidson Home

Option 03

USDA Mortgage

The USDA’s Rural Development program helps low-to-moderate income home buyers in certain areas secure an affordable mortgage. Eligible home buyers can secure a mortgage with as little as $0 down.

While borrowers must have mortgage insurance, USDA loans feature relatively low interest rates, and the program is popular among first-time home buyers. Check your eligibility here.

Living Room inside Raleigh-Area Davidson Home

Option 04

VA Mortgage

Backed by the Department of Veterans Affairs, these mortgages relax the restrictions of conventional mortgages for members of the armed forces, both current and former.

Eligible applicants can secure low-interest loans, often without a down payment. Closing costs are generally lower for VA loans, and at Davidson Homes Mortgage, we cover the appraisal fee for all VA loans.

Option 05

Refinancing

This option allows you to renegotiate the terms of your mortgage, sometimes giving you lower monthly payments, lower interest rates, etc. Or you can cash out refinance, pulling out up to 100% equity in a VA loan or 80% in a conventional loan.

If you locked in a rate last year at 5.5 percent interest, but the market rates drop down to 3.5 percent, you should consider refinancing. That said, it isn’t free. You’ll need to pay a few fees, so it’s worth calculating the net benefits. When done right, though, refinancing will save you thousands in interest.

What are you waiting for?

Check out our secure, digital application today.