At some point in every adult’s life the monthly rent payments begin to get old, and they start to toy with the idea of owning their own house. However, if you are considering taking this step, remember that the responsibility of a homeowner is much greater than that of someone who merely rents an apartment. The care and maintenance of your living space will be up to you. Plumbing, air conditioning, yard work, you’ll be responsible for it all.

This added responsibility is completely moot if you are unable to purchase a house in the first place. Few people are able to purchase a house with personal savings, therefore you will almost certainly have to take out a loan. The prospect of even where to begin to secure a loan can be quite daunting to a prospective home buyer, due in large part to the vast number of types of loans available. The most common type is the conventional loan where the buyer is responsible with coming up with a large deposit, known as the down payment. There are also financing options available for those who are unable to come up with a down payment, and there are even government issued loans for those who qualify. A home loan is most likely going to be the most important piece of finance you ever purchase, so it is important to carefully learn the details.

The most popular loan, the one which most people think of when they think of getting the loan, is a conventional loan. This loan, however, may not be the best loan out there. In order to get a conventional loan, the borrower must have good credit and make a down payment of at least 3%, which could easily end up being a large amount of money. On a $100 000 house, for example, the down payment would be $3000. In addition, there are any number of things which could appear on your credit report that would prevent you from being able to apply for this loan. There are, however, a number of other options.

A couple of the more accepted alternative home loan programs are 100% financing and government loans. One-hundred-percent financing loans are obtainable through the VA, FHA and conventional ways.

Both the VA, or Veteran’s Administration, and the FHA, or Federal Housing Authority, will provide 100% financing loans, but at a price. Since these loans require no down payment, they are a higher risk investment, and as such are subject to higher interest rates.

These are just a few of the options available to you. If you continue with your loan research you will see there are myriad other types and sub-types. For example:

A no income verification loan permits people with good credit but no confirmable income or assets to get out of their residence and into a home. Inadequate credit loans allows borrowers with less-than-perfect credit to be eligible for competitive interest rates to buy a home. Such type of loan may even be utilized to consolidate debt, lower payments or for making home improvements. Pre-approval programs permit you to evaluate what house you can manage to pay for, also provide you the information and restrictive approval you would require to buy a home, even before you have a property picked. First time homebuyer programs are admired as they permit customers with fine credit, but not a long credit history or lots of money to put down, to get into a home. New construction loans permits the buyer to obtain a fixed interest rate even as the home is under construction and to keep that loan after they move in, eventhough there has been a change in the interest rates. But be cautious; this is a benefit if the interest rates reduce. But if you lock in a certain rate and the interest rates go down at the time of construction, you would still be paying the interest rate which you locked in.

Graham McKenzie is the content coordinator for a leading South African leading Home loans and Bond Origination portal which provides access to FNB Home loans.

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