Traditional Loan Programs

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An FHA loan is a government-backed mortgage insured by the Federal Housing Administration (FHA), designed to help low-to-moderate-income buyers qualify for homeownership. It features lower down payment requirements (as low as 3.5%), more lenient credit score criteria, and flexible debt-to-income (DTI) ratios compared to conventional loans. They are commonly used by first-time homebuyers or those with less-than-perfect credit. 

A VA loan is a mortgage backed by the U.S. Department of Veterans Affairs (VA), available to eligible veterans, active-duty service members, and some surviving spouses. It offers zero down payment, no private mortgage insurance (PMI), competitive interest rates, and flexible credit requirements. VA loans also limit closing costs and provide lifetime reuse benefits. While there’s a VA funding fee (which can be financed into the loan), some borrowers (e.g., those with service-connected disabilities) may be exempt.

A USDA loan is a government-backed mortgage offered by the U.S. Department of Agriculture (USDA) to promote homeownership in rural and some suburban areas. It features zero down payment, low interest rates, and reduced mortgage insurance costs. To qualify, borrowers must meet income limits (based on location and household size), and the home must be in a USDA-eligible area. There are two types: Guaranteed Loans (offered through approved lenders) and Direct Loans (for very low-income borrowers, funded by the USDA).

A conventional loan is a non-government-backed mortgage offered by private lenders, such as banks and credit unions. It typically requires a higher credit score (620+), a down payment of at least 3%, and a debt-to-income (DTI) ratio of 43% or lower. Borrowers who put down less than 20% must pay private mortgage insurance (PMI) until they reach 20% equity. Conventional loans come in conforming (meeting Fannie Mae and Freddie Mac guidelines) and non-conforming (jumbo or portfolio loans) types, offering flexibility but stricter qualification criteria than government-backed loans.