What Kind of Home Loan Works for Me?
March 30, 2022
Here are four types of mortgages to choose from.
FHA Loan
An FHA loan is one that is insured by the U.S. Federal Housing Administration and granted by lenders who are approved by the agency. FHA loan programs are generally designed with first-time homebuyers in mind, making them easier to qualify for than conventional home loans. With a government organization backing the loans, lenders are protected from losses when granting home loans to borrowers who may otherwise be considered high-risk. That is why FHA loans are known for having less stringent eligibility requirements, with minimum credit scores of 580, a debt-to-income ratio of 43% or less, and a low- down payment of 3.5%.
VA Home Loan
Backed by the U.S. Department of Veterans Affairs, VA home loans are available to active or retired members of the U.S. military, as well as to certain qualifying relatives. Applicants are required to have a certificate of eligibility from the VA in order to apply for a VA loan. This loan type has many of the same benefits as the FHA loans, with lower credit requirements. However, one of the things that makes VA home loans particularly attractive to eligible servicemembers is that they do not require any down payment. In fact, about 90% of VA borrowers put down no money at all when they buy homes.
USDA Mortgage
Similar to both the VA and FHA programs, USDA home loans are designed to make homeownership more affordable for Americans. USDA loans are backed by the United States Department of Agriculture, and meant for borrowers looking to buy homes in qualifying rural areas. Since this loan type is meant for low and moderate-income individuals, the USDA sets income limits for their programs, generally no higher than 115% of the median income for the area.
Conventional Mortgage
Also known as a traditional mortgage, a conventional home loan is one that is not insured by any government agency. That means that you won’t need to meet specific requirements other than those set by the lender.
While conventional loans are the most popular mortgage option, they are at times more difficult to qualify for. They usually have stricter stipulations than other loan types. Most conventional loan lenders require a credit score of 620 or higher and a minimum down payment of 5% with private mortgage insurance required. That being said, conventional loans typically offer lower interest rates compared to other loan types.
It’s important that you know exactly what you are getting into when buying a house, and your mortgage is huge part of that. Talk to a experienced loan officer about your choices, and see what the best mortgage option is for you!
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FHA Loan Articles
June 30, 2026FHA loans offer low down payment options and more forgiving credit requirements for borrowers who may not qualify for a conventional mortgage or need to save more money out of pocket at the front end of the mortgage. But even with more forgiving credit requirements, some borrowers are tempted to omit certain debt information from their home loan applications. What does it mean to conceal a debt or financial situation from your loan officer?
June 30, 2026Some borrowers start working on their credit scores but get impatient with the process because they can't predict when their efforts will change their FICO scores. How long does it take for your FICO scores to update when you pay off a loan, reduce your credit card balances, or take other steps to make yourself a better credit risk? The short answer is that credit reporting procedures are not standardized, and it may take more time than you realize to get those positive credit actions added to your credit report.
June 29, 2026Mortgage interest rates are "moving targets" shaped by national economic trends and the borrower's specific financial profile. What is your FHA loan interest rate? Much depends on the financial data you bring to the table. Lenders set interest rates daily based on a snapshot of market conditions, but the rate ultimately offered also reflects risk, equity, and the lending institution's internal operational costs.
June 28, 2026An FHA appraisal differs from a conventional appraisal. While the goal of a conventional appraisal centers on market value, the FHA appraisal also focuses on the buyer's safety and soundness. FHA lenders select the appraiser, not the home buyer.
June 24, 2026FHA loan closing costs vary by property price and geographic location, rather than by a single nationwide flat fee. Total settlement charges combine percentage-based fees, local government taxes, and marketplace service costs. If you are new to buying a home, you'll want to get familiar with the closing cost issues discussed here to avoid budgetary surprises later on.
