Looking to buy a home in Central Pennsylvania? Mortgage rates are at historic lows and there's a lot to attract first time home buyers this spring.  If you're curious about the different kinds of mortgages available, here's a summary of some common home loan programs.

The classification of loans is usually based on their loan-to-value ratio where value is either the sale price or the appraised value—whichever is less.  The lower the ratio the, the less risky the loan is for the lender.

Conventional Loans—These loans are generally viewed as the most secure because the loan-to-value ratio is lowest with a down payment of 20% or more.  Borrowers can still obtain these loans with a lower down payment through a private mortgage insurance program.  This insurance acts as additional security for the lender in the event that the borrower defaults.

FHA-Insured Loans—In order to make loans more affordable, the Federal Housing Administration (FHA) insures these loans to protect the lender from the borrower’s default.  These loans have a high loan-to-value ratio but they also have competitive interest rates.  In order to qualify for an FHA loan, the property in question must meet FHA standards.  There is no prepayment penalty and the loans are assumable.

VA-Guaranteed Loans—Such loans are only available to eligible veterans and their spouses and the home must be owner occupied.  Eligibility depends on length of service and the years of service.  There is no prepayment penalty on these loans and they are assumable after certain qualifications and a processing fee are satisfied.

Agricultural Loan Programs—The Farm Service Agency (FSA) is an agency associated with the Department of Agriculture that helps people who want to buy or run a family farm.  The FSA can also provide loans to people in rural areas who want to improve single-family homes.  These loans are available to families with low to moderate incomes and they have low interest rates.

If your looking for personal service and have questions regarding loans, be sure to connect with one of our mortgage specialists at www.homenat.com.  Home National Mortgage has local offices serving all of Lancaster, Lebanon, York, Hershey, Harrisburg, and Cumberland County PA.