# QUIZ: Which home loan should you pick?

Bethany Ramos

###### Dec. 7, 2018.

What’s an affordable home loan for you and your family? Take our quiz.

Are you a veteran or active-duty servicemember?

Are you planning to renovate your new home as soon as you move in?

How much money have you set aside for a down payment?

Do you need help paying your down payment?

Are you thinking about buying a house in a rural or suburban area?

Do you need a larger loan to purchase a house in a higher price range?

Do you plan to live in your home for several years or decades?

#### Score 13-17: USDA.

The USDA loan is attractive to those who qualify because it can offer up to 100-percent financing with no money down. The U.S. Department of Agriculture Rural Development guarantees this type of loan, reducing a lender’s risk and making up to 100-percent financing available. To take advantage of this loan type, you’ll need to purchase in an eligible USDA-designated rural area. But not to worry, “rural” doesn’t always mean country. Many suburban areas qualify for USDA financing too.

Remind me, where can I find a Cornerstone near me? We’re lending in 38 states (and the District of Columbia).

#### Score 18-22: VA.

Made available to eligible servicemembers and veterans of the U.S. Armed Forces, VA home loans are backed by the U.S. Department of Veterans Affairs. This home loan type remains affordable to the servicemembers who qualify because, like the USDA loan, VA backing reduces some of a lender’s risk. In most cases, VA loans come with up to 100-percent financing, no down payment, and no mortgage insurance required.

#### Score 23-27: FHA.

An FHA loan is insured by the Federal Housing Administration, which helps to lower a lender’s risk and typically lowers the loan’s down payment. And compared to conventional, non-government-backed home loan types, an FHA loan has more flexible credit requirements. An FHA loan comes with a minimum 3.5 percent down payment and is frequently used among first-time buyers.

#### Score 28-35: Conventional.

Unlike USDA, FHA, and VA loans, a conventional loan isn’t guaranteed by the federal government. Broken into two categories of conforming and non-conforming loans, conventional loans are popular with many homebuyers since they typically offer competitive loan terms and interest rates that could result in a lower monthly payment. Conventional loans are available with fixed-rate or adjustable-rate mortgage terms, ranging from 10 to 30 years, and as low as a 3-percent down payment option for first-time buyers who qualify.

#### Score 36-43: Renovation.

A renovation home loan can be helpful when buying a fixer-upper: This loan program allows you to roll the cost of your home improvements into the cost of buying a house. A renovation home loan can also be used to refinance. Many first-time buyers take out renovation loans to buy affordable homes in need of repair in more desirable neighborhoods. To secure a renovation loan, you’ll normally need to hire a professional contractor for the job. The total renovation loan amount granted will also be based on the projected value of your home after the repairs are complete.

#### Score 44-49: Jumbo.

A jumbo home loan is a non-conforming mortgage, which means that it exceeds the loan limits set in place by Fannie Mae and Freddie Mac. With a jumbo loan, a lender assumes more risk and is liable in the case of a default. Jumbo loans are available with fixed-rate or adjustable-rate mortgage terms and typically require a minimum 10-percent down payment, a higher credit score, and up to a 43 percent debt-to-income ratio. Jumbo loans have higher loan limits and can purchase homes between $453,101 and$3,000,000.