Shopping for a mortgage can feel like decoding inside baseball, with a lot of acronyms and industry jargon. Conventional, FHA, VA, USDA and jumbo loans are the primary types of home loans you’ll hear about – but what does each actually mean for your wallet and ability to buy a home?
This guide breaks down each major type of home loan in plain English, walks you through who qualifies and tells you which options make the most sense for particular situations.
- There are five primary types of home loans: conventional, FHA, VA, USDA and jumbo. Each is designed for specific borrower profiles and financial situations.
- Conventional loans are defined as any not backed by the federal government. They reward borrowers who have strong credit with lower fees and qualification for more property types.
- FHA, VA and USDA mortgages are all government-backed loans that provide federal guarantees of repayment to private lenders should borrowers default. This enables the lenders to offer lower down payment and credit score requirements.
What Are The Main Types Of Home Loans?
Most mortgages fall into one of two broad categories: conventional loans and government-backed loans. “Government-backed” means that a federal agency insures or guarantees the loan. By reducing the risk for lenders, this typically makes it easier for borrowers to qualify. Conventional loans are privately funded and do not carry a government guarantee.
Within these two umbrella categories, there are five primary loan types home buyers should know about:
1. Conventional Loans
A conventional loan is any mortgage not backed by the federal government. Think of it as the go-to “standard” option.
Most conventional loans are known as “conforming” mortgages, because they fall within loan limits set annually by the Federal Housing Finance Agency (FHFA) and can be sold to Fannie Mae or Freddie Mac on the secondary market. For 2026, the baseline conforming loan limit is $832,750 for a single-family home in most counties and $1,249,125 in high-cost areas.
Mortgages above these limits are considered “non-conforming,” often referred to as jumbo loans (more on these later). Conventional loans can be used on the broadest range of property types. Primary homes, vacation homes and investment properties all qualify.
2. FHA Loans
FHA loans are insured by the Federal Housing Administration, a division of the U.S. Department of Housing and Urban Development (HUD). You can get an FHA loan with a FICO score as low as 500 with a 10% down payment, or 580 with at least 3.5% down. The 2026 FHA floor loan limit is $541,287 in most counties, and up to $1,249,125 in high-cost areas.
The trade-off: FHA loans require steep mortgage insurance premiums (MIP) to be paid up front at closing and annually, usually for the life of the loan. The upfront MIP is 1.75% of the loan amount, while the annual premium averages 0.55% of the loan amount for most borrowers, an amount rolled into their monthly loan payments. Unlike with private mortgage insurance (PMI), which is no longer required once you reach 20% equity in your home, you’ll pay the FHA annual MIP for the life of the loan unless you put 10% or more down – in which case you’ll still pay it for 11 years.
3. VA Loans
VA loans are specifically for eligible veterans, active-duty service members and certain surviving spouses to buy a primary residence, and they are guaranteed by the U.S. Department of Veterans Affairs. They require no down payment and no PMI, and typically carry competitive interest rates.
To qualify for a VA loan, a borrower needs a Certificate of Eligibility (COE) showing they have served 90 consecutive days of active duty during wartime, 181 days during peacetime or 6 years in the National Guard or Reserves. The VA doesn’t set a minimum credit score, but most VA-approved lenders do, starting at 580 or 620. For most VA borrowers with full VA entitlement, there’s another perk as well: no loan limits.
4. USDA Loans
USDA loans are guaranteed by the U.S. Department of Agriculture through its Rural Development program. Like VA loans, they require no down payment, but they’re available only for USDA-eligible rural properties. There’s also a limit on who can apply for one: USDA borrowers must have a household income below 115% of the area median income.
USDA loans charge a 1% upfront guarantee fee, which can be financed into the loan, and a 0.35% annual fee. While the USDA doesn’t set a minimum credit score, most USDA lenders require a 640 or higher credit score to qualify.
5. Jumbo Loans
When the home you want requires a loan that exceeds the FHFA’s baseline loan limit, you’re in jumbo loan territory. Because Fannie Mae and Freddie Mac cannot purchase these loans (also known as non-conforming loans), lenders are taking on the entire risk of your potential default themselves. That’s why jumbo mortgages tend to have stricter requirements across the board.
Expect to need a credit score of 700 or higher, a down payment of 10% or more and substantial cash reserves. Interest rates on jumbo loans are also usually slightly higher than those for conforming loans to account for the greater risk.
Compare Mortgage Offers From Verified Lenders:
Eligibility Requirements: How To Qualify For Each Loan Type
Not sure which loan is right for you? Here’s an at-a-glance breakdown of the key borrowing requirements for each mortgage category.
| Loan Type | Minimum Credit Score | Minimum Down Payment | Income Limits | Property Types Allowed | Mortgage Insurance Required |
|---|---|---|---|---|---|
| Conventional | 620 (varies by lender) | 3% for certain first-time home buyer programs; 5% for others | None | Primary, vacation and rental homes | Yes, with less than 20% down; costs vary; cancelable after reaching 20% equity |
| FHA | 500 with at least 10% down; 580 with at least 3.5% down | 3.5% | None | Primary residence only | Yes, usually for life of loan, or for 11 years with 10% or more down |
| VA | None from VA, but many lenders start at 580 or 620 | None | None | Primary residence only | No, but some borrowers pay a one-time VA funding fee |
| USDA | None from USDA, but 640 from many lenders | None | 115% of area median income | Primary residence only | Yes, plus a 1% upfront guarantee fee is required |
| Jumbo | Typically 700+ | 10% – 20% | No formal limit, but high income typically required | Primary, vacation and rental homes | Yes, with less than 20% down in many cases |
What’s Your Goal?
Buy A Home
Discover mortgage options that fit your unique financial needs.
Refinance
Refinance your mortgage to have more money for what matters.
Tap Into Equity
Use your home’s equity and unlock cash to achieve your goals.
Pros And Cons Of Each Mortgage Type
Every loan has its benefits – and some catches. Here’s a look at both for each type.
Conventional Loans
| Pros | Cons |
|---|---|
| Most widely available mortgage type, offered by most lenders | Typically have strictest credit score minimums, making them harder to qualify for |
| Allowed for primary homes, vacation homes and investment properties | PMI required – costing between 0.2% – 2% of loan amount annually – if you put down less than 20% |
| PMI cancels automatically once you reach 22% equity, and you can request cancellation after reaching 20% equity | Conforming-loan limits may curtail how much you can borrow in an expensive area |
| Low 3% down payment loan options for first-time buyers; 5% minimum down payment for other borrowers |
FHA Loans
| Pros | Cons |
|---|---|
| Lowest required credit score (500 with 10% down, 580 with 3.5% down) | Costly MIP for the life of the loan in most cases |
| Competitive interest rates, especially for borrowers with lower credit scores | Lower loan limits cap the amount you can borrow compared to conventional or jumbo loans |
| More lenient DTI (up to 50%) than with other government-backed loans | Property must pass a stringent FHA property appraisal and meet HUD standards |
| Gift funds for down payment and closing costs allowed from a wider range of sources than with most other loan types | Limited to primary residences only (no rental or vacation homes) |
VA Loans
| Pros | Cons |
|---|---|
| Zero down payment required | Available only to military veterans, active-duty service members or eligible surviving spouses, and only for primary residences (no rental or vacation homes) |
| No mortgage insurance premiums | One-time VA funding fee (2.15% for first use), though some with a service-connected disability may be exempt |
| Competitive interest rates due to VA guarantee | Property must pass a VA appraisal |
| No loan limits for borrowers with full entitlement | Seller concessions are limited to 4% of the home’s value |
USDA Loans
| Pros | Cons |
|---|---|
| Zero down payment | Property must be in a USDA-approved rural area |
| Lower mortgage insurance costs than with FHA loans | Lenders typically require higher minimum credit scores and a max DTI of 41% |
| Competitive interest rates, typically lower than those of conventional loans | Household income limits of 115% of area median income apply |
| USDA guarantee fees are typically lower than FHA MIP costs | For primary residences only (no rental or vacation homes) |
Jumbo Loans
| Pros | Cons |
|---|---|
| Can borrow beyond conventional and FHA loan limits for more expensive homes | Requires 700+ credit score and DTI of 43% or lower |
| Allowed for primary homes, vacation homes and rental properties | Higher interest rates than conforming loans due to increased risk |
| Some lenders may waive PMI even if you put down less than 20% | Higher down payment of 10% – 20% usually required |
| Steeper closing costs and loan fees with higher loan amounts |
Ready To Become A Homeowner?
Get matched with a lender that can help you find the right mortgage.
How To Decide Which Home Loan Is Right For You
To narrow down your options, it’s critical to know what scenarios each loan is designed for. Here’s how to decide.
Choose a conventional loan if:
You have a solid credit score (620 or higher) and can put down 3% – 5%, or you want the flexibility of buying a primary residence, vacation home or rental property.
Choose an FHA loan if:
You have less-than-stellar credit and minimal money saved for a down payment – you can put down just 3.5% with a 580 or higher credit score, or 10% if your score is even lower (500 – 579).
Choose a VA loan if:
You are an eligible military veteran, active-duty service member or eligible surviving spouse. and want to maximize your buying power with no down payment or loan limits (with full VA entitlement).
Choose a USDA loan if:
You want to buy a property in a USDA-eligible rural area, earn a low-to-moderate income and don’t have cash savings for a down payment. You can use USDA’s eligibility map to learn where you can buy.
Choose a jumbo loan if:
You want to buy a home with a loan outside of conforming limits, and have strong credit (700+ credit score), significant income and a large down payment (10% – 20%).
Take The First Step To Buying A Home
Find a lender that will work with your unique financial situation.
FAQ
The Bottom Line: Shop Around For Different Types Of Home Loans
Understanding the details about the main types of home loans – conventional, FHA, VA, USDA and jumbo – helps you start to demystify mortgage lending. Each category exists to cater to different borrowers and situations; mortgages are not one-size-fits-all.
Compare multiple home loan lenders and read up on your options so you know exactly what you’re getting into. Choosing the best home loan is just as important as finding your dream home. The right mortgage can save you thousands of dollars and offer you a stepping stone to building long-term wealth through homeownership.
Deborah Kearns
Deborah Kearns is an award-winning independent journalist with more than 15 years of experience covering real estate, mortgages and personal finance. Her work has appeared in the Wall Street Journal, Kiplinger, U.S. News & World Report, Quartz, CNN, Forbes, Fortune, Newsweek, The Associated Press and dozens of other outlets. She previously led content and communications at a Top 15 national mortgage company and held writing and editing roles at Bankrate, NerdWallet, LendingTree and RE/MAX. She holds a bachelor's degree in journalism from the University of Florida and a master's degree in public relations from Ball State University.
