Types of Loans

Mortgage Broker | Mortgage Lender

WHAT IS THE DIFFERENCE?

MORTGAGE BROKER

A mortgage broker acts as an intermediary who brokers mortgage loans on behalf of individuals or businesses.

MORTGAGE LENDER

A mortgage lender is a bank or financial company that lends money to borrowers to purchase a home.

LOAN TYPES

FHA

A Federal Housing Administration (FHA) loan is a mortgage that is insured by the Federal Housing Administration (FHA) and issued by an FHA-approved lender. FHA loans are designed for low-to-moderate-income borrowers; they require a lower minimum down payment and lower credit scores than many conventional loans.

FHA 203K

An FHA 203(k) loan is a type of government-insured mortgage that allows the borrower to take out one loan for two purposes – in particular, for home purchase and home renovation. conventional loans.

CONVENTIONAL

A conventional loan is a type of mortgage loan that is not insured or guaranteed by the government. Instead, the loan is backed by private lenders, and its insurance is usually paid by the borrower.

HOMESTYLE

The HomeStyle® Renovation mortgage provides a simple and flexible way for borrowers to renovate or make home repairs with a conventional first mortgage, rather than a second mortgage, home equity line of credit, or other more costly methods of financing.

CONSTRUCTION

A construction loan (also known as a “self-build loan”) is a short-term loan used to finance the building of a home or another real estate project.

VA

A VA loan is a mortgage loan that is backed by the U.S. Department of Veterans Affairs. These loans are available to people who are actively serving in the military or who have served and received an honorable discharge.

JUMBO

A jumbo loan (or jumbo mortgage) is a type of financing where the loan amount is higher than the conforming loan limits set by the Federal Housing Finance Agency (FHFA).

HOME EQUITY 

A home equity loan, also known as a “home equity installment loan” or a “second mortgage,” is a type of consumer debt. Home equity loans allow homeowners to borrow against the equity in their residence.

REFINANCE

Loan refinancing refers to the process of taking out a new loan to pay off one or more outstanding loans.

BALLOON

A balloon loan is any financing that includes a lump sum payment schedule at any point in the term. It’s usually at the end of the loan.

COMBO / PIGGYBACK

Piggyback loans, sometimes called combo loans, are made up of two loans: A first mortgage based on 80 percent of the purchase price. A home equity line of credit that is piggybacked on top of the first mortgage.

INTEREST-ONLY

An interest-only mortgage is a type of mortgage in which the mortgagor (the borrower) is required to pay only the interest on the loan for a certain period. The principal is repaid either in a lump sum at a specified date, or in subsequent payments.

REVERSE MORTGAGE

A reverse mortgage is a mortgage loan, usually secured by a residential property, that enables the borrower to access the unencumbered value of the property. The loans are typically promoted to older homeowners and typically do not require monthly mortgage payments.

SMALL BUSINESS LOAN

Small business financing refers to the means by which an aspiring or current business owner obtains money to start a new small business, purchase an existing small business or bring money into an existing small business to finance current or future business activity.

BANK STATEMENT LOAN

Bank statement loans are designed for borrowers who are not able to document their income using pay stubs, tax returns and other income verification documents required for a qualified mortgage. The bank statements provided with the loan application must be consecutive and cover the 12 to 24 months immediately prior to the application.

ADJUSTABLE RATE MORTGAGE

An adjustable-rate mortgage (ARM) is a type of mortgage in which the interest rate applied on the outstanding balance varies throughout the life of the loan.

COMMERCIAL

A commercial loan is a debt-based funding arrangement between a business and a financial institution such as a bank. It is typically used to fund major capital expenditures and/or cover operational costs that the company may otherwise be unable to afford.