Mortgage Loan Programs

There are hundreds of different loan programs available to you as a consumer. Depending on your specific situation, there may only be a few that actually fit your needs.

It may seem odd, but be sure your Mortgage Professional asks about your career(possible relocation), family goals(more children), financial goals(early payoff), etc. before recommending one program or another. The time you spend understanding some basics may put you into the right program, or keep you out of the wrong one.

What are adjustable rate mortgages?
These loans generally begin with an interest rate that is 2-3 percent below a comparable fixed rate mortgage, and could allow you to buy a more expensive home.

However, the interest rate changes at specified intervals ( for example, every year) depending on changing market conditions; if interest rates go up, your monthly mortgage payment will go up, too. However, if rates go down, your mortgage payment will drop also.

There are also mortgages that combine aspects of fixed and adjustable rate mortgages - starting at a low fixed-rate for seven to ten years, for example, then adjusting to market conditions. Ask your mortgage lender about these and other special kinds of mortgages that fit your specific financial situation.

Loan programs come in many forms and come from many sources. Just as the loan structure, like a 30 year fixed rate mortgage, can affect your interest rate and monthly payments, the source of funding for your loan can also affect your rate and payments. The source of funding can also affect the amount of your down payment and closing costs.


If you have at least 3% of the loan amount to use as a down payment, you may consider the most common type of loan, a conventional loan. These loans consist of conforming loans, which are secured by government sponsored entities (GSE) such as Fannie Mae and Freddie Mac, and jumbo loans, which are funded by private investors for loan amounts higher than the limits set by the GSE's.


Conforming loans are funded by Fannie Mae (FNMA) and Freddie Mac (FHLMC). These companies do not lend money directly to you, but work with lenders across the country to offer mortgage loans to meet your needs.

If you are looking for a large loan amount to purchase or refinance your home, you could consider a jumbo loan, which has a higher loan amount limit than the limits set by Fannie Mae and Freddie Mac. Because jumbo loans cannot be funded by these two agencies, they usually carry a higher interest rate.


If you have bad credit, you may not qualify for a conventional loan. In this case, you could consider a subprime loan. Like other loans, subprime loans come in many forms based on the terms, loan amount and loan to value ratio you are looking for. In addition companies will look at your credit and give you a credit grade, which will help them determine the best loan for your situation. With less than perfect credit, you can expect to pay higher interest rates because of the higher risk associated with making a loan to someone with a poor credit history.