Jan 11 2023

What is a home mortgage?

Get the basics on each type of home mortgage to find the one that’s right for you.

A home mortgage is a loan granted by a mortgage lender, bank, or other financial institution, used to buy a house. It’s the most popular way to become a homeowner; nearly 90 percent of homebuyers finance their purchase.*

When you take out a home mortgage:

  • You, the borrower, will apply for and obtain a loan from a lender for a house.
  • You’ll establish a plan to pay off your mortgage in monthly installments for a set time, called the loan term.
  • You’ll also agree to a mortgage interest rate, charged as the cost of borrowing a home mortgage and paid back in the monthly payments you make.

For most people, buying a home may be one of the largest purchases you’ll ever make. As the numbers show*, the majority of people don’t have the cash to purchase a house. That's where a home mortgage comes in. Where you might otherwise be out of luck, you could take out a mortgage to help achieve your dream of homeownership, if you qualify.

Which home mortgage is right for you?

There are several decisions to make when it comes to getting a home mortgage. Depending on the current market conditions, some loans might be better than others. Nonetheless, you’ll want to find a mortgage that’s tailored to suit your budget and needs.

Phone a friend: Get in touch with a local Academy Loan Officer.

So, what are the different options?

1. You’re a first-time homebuyer.

  • FHA Loan - May be helpful if you don’t have great credit or a large amount saved for a down payment; available to first-time and repeat homebuyers who qualify.
  • USDA Loan - May be helpful if you’d like to purchase outside city limits, have low- to moderate-income, and want to put zero percent down; available to first-time and repeat homebuyers who qualify.
  • State Housing Loan and Down Payment Assistance Programs May be helpful if you have low- to moderate-income, are an underserved minority, are disabled or elderly, or work in certain professions (like teaching or the military, depending on the state) and need an affordable path to homeownership; available to first-time and repeat homebuyers who qualify.

2. You have a higher credit score and money for a down payment.

  • Conventional Loan – May be helpful if you have a credit score of 620 or higher and some funds for a down payment; one of the most common home mortgage types.

3. You’re in the military or a Veteran.

  • VA Loan - May be helpful if you’re Active-Duty, a Veteran, or an eligible family member and would like to buy a house without a down payment.

4. You’re making repairs and renovations to your new or current home.

  • Renovation Loan Can be used to buy and update a fixer-upper or refinance and renovate your current home, all with just one application, one loan, and one monthly payment.

5. You need a large loan amount for a high-cost home.

  • Jumbo Loan May be helpful if you’d like to purchase a more expensive primary or second home and have funds for a down payment.

6. You want to build a new house.

  • Construction Loan Can be used to build your home from the ground up and roll construction costs into your monthly mortgage payment.

7. You want to buy a second home.

  • Secondary Loan – Can be used to buy a home away from home—at the beach, in the mountains, or in the city; cannot be used for an investment property.

8. You want to buy an investment property.

  • Investment LoanCan be used to purchase a rental property for the purpose of generating income.

9. You’re a teacher, first responder, or medical professional.

  • Specialty Loan May be helpful if you have a special/unconventional circumstance—such as an MD using projected income to qualify—or work as a teacher, first responder, or in another specialized field.

10. You want to lower your monthly payment or tap into your equity.

  • Refinance Loan May be helpful if you want to lower your interest rate, change your loan term, reduce your monthly payment, or cash out on home equity.

11. You’re retired or retiring soon.

  • Reverse Mortgage May be helpful if you’re 62 or older and would like to pull from your home’s equity while still living in your house.

Get ready now, so you can act when the time is right.

Even though the housing market has shifted, there are still great opportunities out there. Getting mortgage ready now can prepare you to act on your dream home when you see it, whether it’s a few weeks or a few months from now. To get mortgage ready: Contact your local Academy Loan Officer.

This is for informational and educational purposes only and not intended as an advertisement as defined by Regulation Z. Please consult a trusted professional as personal circumstances may vary. No specific results are guaranteed. MAC124-1484842.

All mortgage products are subject to credit and property approval. Rates, program terms, and conditions are subject to change without notice. Not all products are available in all states or for all amounts. Additional conditions, qualifications, and restrictions may apply. Please contact Academy Mortgage for more information.