Breaking Down Mortgage Types: Conventional vs. FHA vs. VA vs. USDA
Buying a home comes with a lot of big decisions, and one of the first is figuring out which mortgage loan type fits you best. If you’ve ever Googled this and felt your brain melt a little (no judgment!), you’re not alone.
The good news? You don’t have to memorize loan lingo, that’s what your mortgage broker is for. But it does help to understand the basics so you can feel confident when it’s time to choose. For more loan type, check out my page here to learn more.
Let’s break it down, plain and simple.
Conventional Loans
Think of conventional loans as the “classic” mortgage. They’re not backed by the government, instead, they’re offered through private lenders like banks and credit unions.
Who it’s best for:
If you’ve got a solid credit score (usually 620 or higher), steady income, and some savings for a down payment, this might be your best bet.
Pros:
Competitive interest rates
Flexible terms (15 or 30 years)
No mortgage insurance if you put 20% down
Cons:
Stricter credit and income requirements
Bigger down payment if you want to skip PMI (Private Mortgage Insurance)
💡 Broker tip: If you’ve got good credit, a conventional loan can save you money in the long run, and your broker can shop around to get you the best rate.
FHA Loans
An FHA loan is like a helping hand for first-time buyers or anyone who needs a little flexibility. These loans are insured by the Federal Housing Administration and have easier approval guidelines.
Who it’s best for:
If your credit isn’t perfect or you don’t have a big down payment saved up, FHA might be your ticket in.
Pros:
Down payments as low as 3.5%
Easier credit approval
Great for first-time homebuyers
Cons:
You’ll pay mortgage insurance (MIP), even if you put more down
Slightly stricter home condition requirements
💡 Broker tip: A good mortgage broker can help you compare FHA and Conventional side-by-side, sometimes the lower rate on an FHA can balance out the insurance costs.
VA Loans
This one’s for the heroes. VA loans are backed by the Department of Veterans Affairs and are available to eligible veterans, active-duty service members, and some surviving spouses.
Who it’s best for:
If you’ve served in the military, this is hands-down one of the best loan programs out there.
Pros:
0% down payment (yep, zero)
No mortgage insurance required
Easier qualifying standards
Cons:
Only available to those with VA eligibility
VA funding fee (which can be rolled into the loan)
💡 Broker tip: A broker who understands VA loans can make sure you get every possible benefit, and save you thousands at closing.
USDA Loans
USDA loans are backed by the U.S. Department of Agriculture (yes, really) and designed to help people buy homes in eligible rural and suburban areas.
Who it’s best for:
If you’re open to living outside a big city and meet income limits, a USDA loan can be a great low-cost option.
Pros:
0% down payment
Low mortgage insurance costs
Competitive interest rates
Cons:
Location restrictions (rural or semi-rural areas only)
Income limits apply
💡 Broker tip: Your broker can quickly check if the home you’re eyeing qualifies for a USDA loan, you might be surprised how many do!
So Which Loan Is Right for You?
That depends on your credit, income, down payment, and lifestyle goals — but the best part is, you don’t have to figure it out alone. A mortgage broker can compare all four loan types side-by-side and find the best fit (and rate) for you.
