Home Buying Resources

Financing Options

All the choices for home financing can seem overwhelming, especially if this is your first time buying a home. Do you want a fixed- or adjustable-rate mortgage? What about an interest-only loan? What about a 15-year or 30-year loan?

The good news is, you don't have to figure out all of your mortgage options on your own. We are always available to answer your questions! Since we receive a number of questions from buyers about mortgages, we created this quick home financing guide to help you get started. If you have a pressing question, feel free to call us at (434) 296-9860.

house in Charlottesville

What Type of Loan Do You Want?

While it seems like there are hundreds of different loan products available, there are actually only four main types of loans. Let's take a look at the similarities and differences.

Conventional Mortgage

This is the standard loan used by buyers who have good to excellent credit and who make down payments of at least 10%.

FHA Mortgage

These loans often apply to buyers who have lower credit scores, as FHA mortgages offer a down payment as low as 3.5% and lower interest rates. However, FHA mortgages do also require mortgage insurance premiums, which can result in higher overall costs.

VA Mortgage

All veterans and active military members can qualify for VA loans. These types of loans offer up to 100% financing, simplified loan approvals, and lower interest rates. They can cost much less than conventional loans.

USDA Mortgage

These types of loans are available to buyers who are looking for homes in rural or low-density areas, may have lower credit scores, and are buying modest homes. USDA loans offer up to 100% financing and below-market interest rates. Because of the government’s loose definition of the term "rural," some areas in Albemarle County can quality for USDA loans.

What Interest Rate Do You Prefer?

In addition to the four types of mortgages listed above, you can either choose a fixed-rate mortgage or an adjustable-rate mortgage when choosing a loan. The type of interest rate that's best for you depends on your financial history, how long you want to stay in your home, and how much you want to pay each month. Here is a quick overview of these kinds of mortgages.

Fixed-Rate Mortgages

The interest on a fixed-rate mortgage will not change, so your monthly payments won't change. This type of loan is great if you want predictable, consistent monthly payments.

Adjustable-Rate Mortgages (ARMs)

The interest rate on an ARM will often be lower initially, but as interest rates do fluctuate with the market, they can be somewhat unpredictable or even result in higher payments. ARMs are a good choice if you anticipate an increase in income or are planning to stay in your home for only a short period of time.

Determine Your Budget for Loan Payments

calculator and home balance sheet

The biggest question you have to ask yourself when researching mortgages is "what do you want to pay each month?" Knowing the answer will not only help you choose the right loan, it will also help you narrow your price range. (Another way to identify your price range is to get pre-qualified for a mortgage.)

Our helpful mortgage calculator will allow you to calculate your monthly mortgage payments based on your home's price, number of years, interest rate, and annual tax and insurance. Try it out below!

Talk with a Trusted Lender

If you're having trouble choosing, talk to a lender about which mortgage may be best for you. We have excellent working relationships with several lenders in Charlottesville, and we would be happy to provide you with a recommendation. Just give us a call at (434) 296-9860.

Get Pre-Approved for a Mortgage

Getting pre-approved for a mortgage is one of the best ways to a) find out how much you can afford and b) have an advantage over other buyers. A mortgage pre-approval means you have asked a lender to take a detailed look into your finances and tell you exactly how much financing you can qualify for.

Contact Us About Pre-Approval

If you're serious about buying a home and want to take the first step, contact us and we can provide you with additional information. We are more than happy to talk with you about your plans!