Loan Type Comparison

Compare different mortgage loan programs to find the best fit for your situation.

Feature
Conventional
FHA
VA
USDA
Minimum Down Payment 3-5% 3.5% 0% 0%
Minimum Credit Score 620-680 580 (500 with 10% down) No VA minimum (lenders typically require 620) 640 typically
Mortgage Insurance PMI required if <20% down
Removable at 80% LTV		 MIP for life of loan
(if <10% down)		 No mortgage insurance
VA Funding Fee applies		 Annual guarantee fee
For life of loan
Maximum DTI 43-45%
Up to 50% with strong factors		 43%
Up to 50% with compensating factors		 41% guideline
No hard maximum		 41%
Some flexibility
Loan Limits (2026) $832,750
Higher in high-cost areas		 $541,287-$1,249,125
Varies by county		 No limit
With full entitlement		 No set limit
Based on income/area
Property Types Most property types
Primary, secondary, investment		 Primary residence only
1-4 units		 Primary residence only
1-4 units		 Primary residence only
Single-family
Location Requirements None None None Rural areas only
Check eligibility map
Income Limits None None None 115% of area median income
Eligibility Anyone who qualifies Anyone who qualifies Veterans, active military, surviving spouses Income-eligible buyers in rural areas
Closing Costs 2-5% of loan amount 2-5% of loan amount
Can finance some costs		 Can be paid by seller (up to 4%)
VA limits lender fees		 Can be financed or paid by seller

Loan Program Details

Conventional Loans

Not backed by a government agency. Offered by private lenders and usually sold to Fannie Mae or Freddie Mac.

Best For:

  • Buyers with good to excellent credit (680+)
  • Those with 10-20% or more for down payment
  • Investment properties or second homes
  • Buyers who want to avoid permanent mortgage insurance

Pros:

  • PMI is removable once you reach 20% equity
  • Lower overall cost for strong credit borrowers
  • Can be used for investment properties
  • More property type flexibility

Cons:

  • Stricter credit requirements
  • Higher down payment needed for best rates
  • PMI required with less than 20% down

FHA Loans

Insured by the Federal Housing Administration. Designed to help first-time and lower-income buyers achieve homeownership.

Best For:

  • First-time homebuyers
  • Buyers with lower credit scores (580-680)
  • Those with limited down payment savings
  • Buyers recovering from bankruptcy or foreclosure

Pros:

  • Low down payment (3.5%)
  • Lower credit score accepted
  • More forgiving of past credit issues
  • Higher DTI ratios allowed

Cons:

  • MIP for life of loan (if under 10% down)
  • Property must meet FHA standards
  • Primary residence only
  • Loan limits may restrict buying power

VA Loans

Guaranteed by the Department of Veterans Affairs. One of the best mortgage options available, exclusively for eligible veterans and service members.

Best For:

  • Veterans and active-duty military
  • National Guard and Reserve members
  • Surviving spouses of service members
  • Anyone eligible who wants to minimize out-of-pocket costs

Pros:

  • No down payment required
  • No mortgage insurance
  • Competitive interest rates
  • No loan limit with full entitlement
  • Limited closing costs

Cons:

  • VA Funding Fee (can be financed)
  • Primary residence only
  • Property must meet VA minimum requirements
  • Limited to eligible veterans/service members

USDA Loans

Backed by the U.S. Department of Agriculture. Designed to promote homeownership in rural and suburban areas.

Best For:

  • Buyers in rural or suburban areas
  • Low to moderate income households
  • Those who want zero down payment
  • Buyers who don't qualify for other programs

Pros:

  • No down payment required
  • Lower mortgage insurance than FHA
  • Below-market interest rates
  • Flexible credit guidelines

Cons:

  • Geographic restrictions (rural areas)
  • Income limits apply
  • Guarantee fee for life of loan
  • Single-family homes only

Which Loan is Right for You?

Choose Conventional If:

  • Your credit score is 680 or higher
  • You have 10-20% for down payment
  • You want to remove PMI eventually
  • You're buying an investment property

Choose FHA If:

  • Your credit score is 580-680
  • You have only 3.5% for down payment
  • You're a first-time homebuyer
  • You have past credit issues

Choose VA If:

  • You're a veteran or service member
  • You want zero down payment
  • You want to avoid mortgage insurance
  • You want the best rates available

Choose USDA If:

  • You're buying in a rural area
  • Your income is below area median
  • You want zero down payment
  • You don't qualify for VA

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