Compare Mortgage Loan Types
Find the perfect mortgage for your situation. Compare features, requirements, and benefits of each loan type.
Choosing the Right Mortgage Matters
Not all mortgages are created equal. The type of loan you choose can significantly impact your monthly payment, total interest paid, and even whether you qualify. Understanding the differences between loan types is crucial to making an informed decision.
Below, we’ll break down the most popular mortgage types, their requirements, pros and cons, and who they’re best suited for.
Conventional Loans
Conventional loans are traditional mortgages not backed by the government. They typically offer competitive rates for borrowers with good credit and stable income.
Borrowers with good credit (620+), stable income, and at least 3-5% down payment.
Key Features:
- Down payment as low as 3%
- Loan limits up to $766,550 (2024)
- PMI required if down payment < 20%
- Fixed or adjustable rates available
- 15, 20, or 30-year terms
👍 Pros
- Competitive interest rates
- Flexible loan amounts
- PMI can be removed
- Various term options
👎 Cons
- Requires good credit
- Stricter qualification
- PMI if down payment < 20%
- Higher down payment preferred
FHA Loans
FHA loans are backed by the Federal Housing Administration and designed to help first-time homebuyers and those with lower credit scores achieve homeownership.
First-time homebuyers, borrowers with lower credit scores (580+), and those with limited down payment funds.
Key Features:
- Down payment as low as 3.5%
- Credit score minimum: 580
- Loan limits vary by county
- Requires mortgage insurance (MIP)
- More lenient qualification standards
👍 Pros
- Low down payment (3.5%)
- Lower credit score OK
- Easier to qualify
- Assumable loans
👎 Cons
- Mortgage insurance required
- MIP for life of loan
- Lower loan limits
- Property must meet standards
VA Loans
VA loans are guaranteed by the Department of Veterans Affairs and offer exceptional benefits to eligible veterans, active-duty service members, and surviving spouses.
Veterans, active-duty military, National Guard, Reserves, and eligible surviving spouses.
Key Features:
- Zero down payment required
- No mortgage insurance (PMI)
- Competitive interest rates
- No minimum credit score
- Limited closing costs
👍 Pros
- 0% down payment
- No PMI required
- Lower interest rates
- Easier qualification
👎 Cons
- Military service required
- VA funding fee (waived for disabled vets)
- Property must meet VA standards
- Limited to primary residence
USDA Loans
USDA loans are backed by the U.S. Department of Agriculture and designed to promote homeownership in eligible rural and suburban areas.
Low-to-moderate income buyers purchasing in eligible rural or suburban areas.
Key Features:
- Zero down payment option
- Income limits apply
- Property must be in eligible area
- Low mortgage insurance costs
- Competitive interest rates
👍 Pros
- 0% down payment
- Low interest rates
- Low mortgage insurance
- Flexible credit requirements
👎 Cons
- Location restrictions
- Income limits
- Longer processing time
- Primary residence only
Jumbo Loans
Jumbo loans exceed the conforming loan limits set by Fannie Mae and Freddie Mac, designed for financing luxury properties and homes in high-cost areas.
High-income borrowers with excellent credit purchasing expensive homes above conforming loan limits.
Key Features:
- Loan amounts above $766,550
- Typically requires 10-20% down
- Excellent credit required (700+)
- Lower debt-to-income ratios
- Larger cash reserves needed
👍 Pros
- Finance luxury properties
- Competitive rates for qualified buyers
- No loan limits
- Flexible loan terms
👎 Cons
- Stricter qualification
- Higher down payment
- Excellent credit required
- More documentation needed
Quick Comparison Table
Feature | Conventional | FHA | VA | USDA | Jumbo |
---|---|---|---|---|---|
Min. Down Payment | 3% | 3.5% | 0% | 0% | 10-20% |
Min. Credit Score | 620 | 580 | No minimum | 640 | 700+ |
Mortgage Insurance | If < 20% down | Required (MIP) | None | Required | Varies |
Loan Limits | Up to $766,550 | Varies by county | Up to $766,550 | Varies by county | Above $766,550 |
Best For | Good credit buyers | First-time buyers | Veterans/Military | Rural buyers | Luxury homes |
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