Types of loans

For the most part, you don't have to concern yourself with the difference between the three main kinds of loans (Conventional, FHA, and VA loan). It's your lender's job to try to pick the best loan for your needs and qualifications, not yours. But since you'll hear these terms bandied about frequently, you might want to know what they mean, so here ya go.

Conventional. This is a fancy word for "normal". A conventional loan is just a regular, normal loan.

FHA. The U.S. government offers the FHA loan program to make home-buying easier. The government guarantees part of the loan if you default, which means that they pay the bank if you fail to make your payments. Since the loan is partially guaranteed, it's easier to get. Don't get excited about the government making your payments for you, though -- if you fail to make your mortgage payments the bank will still take the house back from you. The government pays the bank after the bank has already repossessed your house. Note that not all sellers will agree to an FHA loan, because there's a little more red tape involved, and because the house can't be a fixer-upper -- the house has to be in excellent shape to pass an FHA inspection.

VA. VA loans are an option for veterans, and it's possible to put 0% down on one. Just like with FHA loans, the VA itself doesn't lend money, it just guarantees part of the loan so lenders feel comfortable lending the money. VA-guaranteed loans can be combined with second mortgages (which is when the bank makes the main loan covering most of the price of the house, and the seller makes a separate loan to the buyer for the rest of the price.) VA loans can be assumed by any future qualified buyer, so your hands aren't tied if you need to sell -- you can sell to anybody, not just another veteran. (visit the VA's home loan site for more)