Financing
Last updated: Jan 20258 min readTypes of Mortgages Compared
Conventional, FHA, VA, USDA—which is right for you?
Different mortgage types have different requirements, benefits, and trade-offs. Understanding your options helps you choose the best fit for your situation.
1Conventional Loans
The most common mortgage type:
Requirements:
Pros:
Cons:
Requirements:
- Credit score: 620+ (680+ for best rates)
- Down payment: 3-20%
- DTI ratio: 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
2FHA Loans
Government-backed, first-time buyer friendly:
Requirements:
Pros:
Cons:
Requirements:
- Credit score: 580+ (500 with 10% down)
- Down payment: 3.5%
- DTI ratio: Up to 50%
Pros:
- Lower credit requirements
- Lower down payment
- Higher DTI allowed
Cons:
- Mortgage insurance for life of loan
- Upfront MIP + annual MIP
- Property must meet FHA standards
3VA Loans
For military service members:
Eligibility:
Benefits:
Considerations:
Eligibility:
- Active duty, veterans, surviving spouses
- Meet service requirements
- Certificate of Eligibility required
Benefits:
- No down payment required
- No monthly mortgage insurance
- Competitive interest rates
- No prepayment penalties
Considerations:
- VA funding fee (can be financed)
- Property must be primary residence
4USDA Loans
For rural and suburban areas:
Requirements:
Benefits:
Limitations:
Requirements:
- Property in eligible rural area
- Income below 115% of area median
- Credit score: 640+ typically
Benefits:
- No down payment
- Low mortgage insurance
- Competitive rates
Limitations:
- Geographic restrictions
- Income limits
- Primary residence only
Pro Tips
- Compare loan estimates from multiple loan types
- Don't assume you won't qualify—get pre-approved
- VA and USDA loans have unique benefits worth exploring
- Your lender can help determine the best fit