Types of Mortgages Compared

Different mortgage types have different requirements, benefits, and trade-offs. Understanding your options helps you choose the best fit for your situation — and the wrong choice can cost you thousands.

Conventional loans

The most common mortgage type, not backed by the government.

• ▸Requirements: 620+ credit (680+ for best rates), 3–20% down, DTI under 45%.
• ▸Pros: lower fees than government loans, no upfront mortgage insurance, PMI cancellable at 20% equity.
• ▸Cons: stricter credit requirements, PMI required under 20% down.

FHA loans

Government-backed, first-time-buyer friendly.

• ▸Requirements: 580+ credit (500 with 10% down), 3.5% down, DTI up to 50%.
• ▸Pros: lower credit floor, low down payment, higher DTI allowed.
• ▸Cons: mortgage insurance premium (MIP) for the life of the loan on most cases, stricter property standards.

VA loans

For eligible veterans, active service members, and some surviving spouses.

• ▸Requirements: service eligibility (Certificate of Eligibility), no official minimum credit (lenders usually want 580–620).
• ▸Pros: 0% down, no PMI, competitive rates, no required monthly mortgage insurance.
• ▸Cons: funding fee (can be financed), VA appraisal can be strict, limited to primary residences.

USDA loans

For eligible rural and suburban areas.

• ▸Requirements: property in a USDA-eligible area, income under local limits, 640+ credit typical.
• ▸Pros: 0% down, below-market rates, reduced mortgage insurance.
• ▸Cons: geographic limits, income caps, guarantee fee.

How to choose

Match the loan to your profile:

• ▸Strong credit + 20% down → conventional, no PMI.
• ▸Lower credit or small down payment → FHA.
• ▸Eligible veteran → VA — almost always the best deal if you qualify.
• ▸Rural/suburban, under income cap → USDA.

Run your numbers through the What-If Studio with each loan type — the difference in monthly cost and cash-to-close is often larger than people expect.