Choosing the right mortgage is a crucial step in the homebuying process. With various options available, it's important to understand the differences and select the one that best fits your financial situation and goals.
Conventional Mortgages
Conventional mortgages are loans that aren’t insured or guaranteed by the government. They typically require a higher credit score and a larger down payment compared to government-backed or other first-time homebuyer-specific loans. However, they often offer competitive interest rates and flexible terms.
FHA Loans
Federal Housing Administration (FHA) loans are designed to help first-time homebuyers with lower credit scores and smaller down payments. FHA loans are insured by the government, which reduces the risk for lenders and makes it easier for buyers to qualify. These loans typically require a minimum down payment of 3.5% and have more lenient credit requirements.
PSECU First-Time Homebuyer Program*
Designed to give credit-worthy borrowers the opportunity to own a home, our First-Time Homebuyer Program addresses the main barriers first-time homebuyers face with up to 100% financing available (no down payment needed!), no private mortgage insurance (PMI) requirement, up to 3% seller assistance allowed, low PSECU-related fees, competitive rates, and flexible terms.
VA Loans
Veterans Affairs (VA) loans are available to eligible veterans, active-duty service members, and certain members of the National Guard and Reserves. VA loans offer several benefits, including no down payment, no PMI, and competitive interest rates. These loans are guaranteed by the VA, making them a great option for those who qualify.
USDA Loans
United States Department of Agriculture (USDA) loans are designed for buyers in rural and suburban areas. These loans offer a no down payment option and competitive interest rates. To qualify, buyers must meet income requirements and purchase a home in a designated rural area.
Adjustable-Rate Mortgages (ARMs)
Adjustable-rate mortgages (ARMs) have interest rates that can change over time based on market conditions. ARMs typically start with a lower interest rate compared to fixed-rate mortgages, but the rate can increase or decrease after an initial period. ARMs can be a good option for buyers who plan to sell or refinance before the rate adjusts.
Fixed-Rate Mortgages
Fixed-rate mortgages have an interest rate that remains the same throughout the life of the loan. This provides stability and predictability for buyers, as monthly payments remain consistent. Fixed-rate mortgages are available in various term lengths, typically ranging from 10 to 30 years.
Jumbo Loans
Jumbo loans are mortgages that exceed the conforming loan limits set by the Federal Housing Finance Agency (FHFA). As of 2025, a mortgage of $806,500 or greater is considered a jumbo loan in most areas. These loans are designed for high-value properties and typically require higher credit scores, larger down payments, and lower debt-to-income ratios. Jumbo loans often come with higher interest rates due to the increased risk for lenders.
Construction Mortgages
Construction mortgages, also known as construction loans, are short-term loans used to finance the building of a new home. These loans cover the costs of land, labor, materials, and permits. Unlike traditional mortgages, construction loans are disbursed in stages as the construction progresses. Once the home is completed, the construction loan is usually converted into a permanent mortgage. Construction loans often have higher interest rates and require interest-only payments during the construction phase.
Understanding the different mortgage options available to first-time homebuyers is essential for making an informed decision. No matter what type of mortgage you end up choosing, it's important to consider your financial situation, goals, and eligibility. By selecting the right mortgage, you can confidently move forward on your journey to homeownership.
*Additional options for first-time homebuyer products/terms available. PMI may be required. Contact one of our mortgage originators to find out which one is right for you.