When looking for a place to develop real estate, many new home builders know that they are required to purchase homeowners insurance to be eligible for financing. There are different categories of home ownership insurance based on the type of coverage they offer. The three main types of home insurance are HO-1, HO-2, and HO-3. HO-1 and HO-2 policies are the most cost effective home insurance options, but do not insure the property or homeowner’s belongings, only the property. Many homeowners prefer to purchase HO-3 policies because they cover the home and the belongings it contains.