Loan Options Summary

Key Open Doors is not a lender, but we do like for our clients to be well informed regarding their options. Below is a breakdown of the different loan types that could help you obtain the property you want. Please note that a full loan application and underwriting process are required for loan approval through our third party recommendations.

Loan Options:

Loan Type	Description	Pros	Cons	Recommended for
Fixed-Rate	Interest rate remains constant throughout the loan term (10-30 years).	Predictable monthly payments; Protection against rising interest rates.	Higher initial interest rates compared to ARMs; Less flexibility if interest rates fall.	Homebuyers seeking long-term stability; Investors seeking predictable cash flow.
Adjustable-Rate (ARM)	Interest rate adjusts periodically based on a specified index.	Lower initial interest rates; Potential for lower payments if rates decrease.	Risk of increased payments if interest rates rise; Less predictability.	Homebuyers anticipating rising income or short-term ownership; Investors in short-term projects.
Conventional	Requires higher credit score (620+) and larger down payment (often 20%, but can be as low as 3% with PMI).	Competitive interest rates; PMI can be removed once sufficient equity is built.	Higher qualification requirements.	Homebuyers with strong credit and financial stability; Investors with significant down payment.
FHA	Backed by the FHA; Allows for lower credit scores (500+ with larger down payments) and smaller down payments (3.5% with higher credit scores).	More accessible qualification requirements.	Requires upfront and annual Mortgage Insurance Premiums (MIP).	First-time homebuyers; Borrowers with less-than-perfect credit.
VA	Guaranteed by the VA; Available to eligible veterans, active-duty military, and surviving spouses.	Often requires no down payment and no PMI; Competitive interest rates.	Strict eligibility requirements.	Eligible veterans, active-duty military, and surviving spouses.
USDA	Offered by the USDA for properties in designated rural areas.	Often requires no down payment; Below-market interest rates.	Income limits apply; Geographic restrictions.	Eligible borrowers seeking homes in qualifying rural locations.
Investment Property	Specifically designed for rental or resale properties.	May offer features tailored to investor needs.	Generally higher interest rates and stricter loan-to-value (LTV) ratios.	Real estate investors.
Portfolio	Held by smaller lenders; More flexible underwriting guidelines.	Potential for approval with unique circumstances.	Typically higher fees and interest rates.	Investors with multiple properties or those who don't qualify for conventional loans.
Hard Money	Short-term, high-interest loans secured by the property.	Quick access to funds.	Very high interest rates and short repayment terms; Risky for inexperienced investors.	Experienced investors undertaking short-term projects like fix-and-flips.
Blanket	Covers multiple properties under a single loan.	Simplifies management for owners of multiple properties.	More complex qualification requirements.	Investors owning several rental properties.
Rehab Loan	Combines purchase and renovation financing into a single loan.	Funds for purchase and repairs in one loan closing; Streamlined process; Can finance up to a certain percentage of the after-repair value (ARV).	May have stricter qualification requirements; Potentially higher interest rates compared to standard purchase loans; Requires detailed renovation plans and cost estimates.	Homebuyers purchasing properties in need of significant renovations; Investors focused on fix-and-flip or buy-and-hold renovation projects.