Getting loans help a person to get money and he may use it for several different purposes. Many people may have heard about the mortgage loan and it is the loan which is obtained by an individual from the lender by using his property or the assets of the person as collateral. Under this mortgage loans there are two major types found and they are the government loans and the conventional loans. These two loans highly vary from one with the other and let us analyze the major difference between these two types of loans.
Mortgage loans given by Government
There are loans which are highly subsidized or processed by the government and the mortgage loans are also formulated by the government. In this case of the mortgage loans the government deals with two great different branches and they are the FHA and the VA. Many people may not know about this FHA and the VA. The FHA is the one which is elaborated as the federal housing administration and the VA is said as the veteran’s affairs. In this FHA most of the home buyers are highly involved and in the VA mostly the service members, veterans and the spouses are highly involved. These are the great different categories formed under the government loans and they act by following the regulations made by the government. In the VA loans the funding fee is highly low when compared to the loan and the down payments. But in the FHA the mortgage insurance and the loan plays a very important role.
The loans which are found to be highly conventional is the conventional loans and this type of loan is considered to be a mortgage form which is not highly guaranteed and insured by the government agency which also includes the FHA and also the VA. Under this conventional loan there are two great types and they are the conforming and the non-conforming. The conforming part in the conventional loans has certain role and they are as follows
The loan size will be found to the greater extent and it is also a beneficial part for the people who get such loans. The next is the size of the down payment and this size is also conformed highly in this conforming guidelines. The very next guidelines are about the debt to the income ratio which will differ from one loan to the other. The credit history also plays a very major role and it must be carefully accessed by the people who get this loan. These are the major guidelines which are to be understood and to be clear. But in the non conforming category there is no guide lines found they never meet the conforming guidelines category. This type of loan is typically used by the people to get higher loan amounts and it is totally different from the conforming category.
All the above said are the two great differentiation found in the mortgage loans and the person who is about to get the loan must understand these two concepts clearly