Understanding Loan Types
Choosing the right mortgage is one of the most important financial decisions you'll make. Here are the most common options:
Conventional
Standard mortgage not backed by a government agency. Typically requires a credit score of 620+ and 3-20% down payment.
Best for: Buyers with good credit and savings for a down payment.
FHA
Government-insured loan with lower requirements. Minimum 3.5% down with a 580+ credit score. Requires mortgage insurance (MIP).
Best for: First-time buyers or those with lower credit scores.
VA
Available to veterans, active-duty military, and eligible spouses. Often requires no down payment and no mortgage insurance.
Best for: Eligible military members and veterans.
USDA
Zero-down-payment loans for homes in eligible rural and suburban areas. Income limits apply.
Best for: Buyers in qualifying rural areas with moderate income.
FHA 203(k)
An FHA-backed renovation loan that lets you finance both the purchase price and the cost of repairs or improvements into a single mortgage. Comes in Standard (major renovations, $5K+ in repairs) and Limited (cosmetic fixes up to $35K) versions.
Best for: Buyers purchasing fixer-uppers who want one loan for the purchase and renovation.
HomeStyle Renovation (Fannie Mae)
A conventional renovation loan that finances the home purchase and renovation costs in one mortgage. No minimum repair amount, and renovations can include luxury upgrades like pools or landscaping.
Best for: Buyers with good credit who want to renovate with more flexibility than FHA 203(k).
CHOICERenovation (Freddie Mac)
Similar to HomeStyle, this conventional renovation loan finances purchase and improvements. Also allows financing for resilience upgrades (storm shelters, flood-proofing).
Best for: Buyers looking to combine purchase and resilience or renovation improvements.
Jumbo
For loan amounts exceeding conforming loan limits ($766,550 in most areas for 2024, higher in high-cost markets). Stricter qualification requirements: typically 700+ credit score, 10-20% down, and strong reserves.
Best for: Buyers purchasing high-value properties above conforming loan limits.
Construction-to-Permanent
Finances the construction of a new home and converts to a traditional mortgage once building is complete. Avoids closing twice.
Best for: Buyers building a new home from the ground up.
Energy Efficient Mortgage (EEM)
An FHA or VA add-on that lets you finance energy-efficient improvements (solar panels, insulation, windows) into your mortgage. The cost of improvements is added to the base loan.
Best for: Buyers who want to make green upgrades at purchase without a separate loan.
State & Local First-Time Buyer Programs
Many states and municipalities offer down payment assistance, reduced interest rates, or forgivable second mortgages for first-time buyers. Programs vary widely; check your state housing finance agency.
Best for: First-time buyers who may qualify for local assistance programs.
Doctor / Professional Loans
Specialized loans for physicians, dentists, and other high-earning professionals. Often allow 0-5% down with no PMI and may exclude student loan debt from DTI calculations.
Best for: Medical professionals and high-earning professionals with student debt.
This is not an exhaustive list of loan types. Additional options exist including portfolio loans, bridge loans, interest-only mortgages, and more. Speak with multiple lenders to discuss which loan products best fit your financial situation. Loan terms, rates, and eligibility requirements vary by lender and change over time.