Types of mortgages: conventional, FHA, VA, USDA and jumbo
How the main US mortgage types compare on down payment, mortgage insurance and who can get them.
Sourced from official pages · Updated September 30, 2026💡 Key takeaways
- The main US mortgage types are conventional, FHA, VA, USDA and jumbo; each has different down-payment and insurance rules.
- Government-backed loans (FHA, VA, USDA) can allow smaller or no down payments.
- Conventional loans with less than 20% down usually require PMI.
- Loans above the conforming limit ($832,750 in most of the US in 2026) are jumbo loans.
At a glance
| Type | Down payment | Mortgage insurance / fee | Who it is for |
|---|---|---|---|
| Conventional | As little as 3% on programs such as Fannie Mae HomeReady and Freddie Mac Home Possible; 20% avoids PMI | PMI usually required with less than 20% down | Borrowers with good credit; loans within conforming limits are eligible to be bought by Fannie Mae and Freddie Mac |
| FHA | As low as 3.5% (CFPB) | Mortgage insurance is required on all FHA loans; upfront premium is 1.75% of the base loan amount (HUD) | Buyers who need lower down payments or have lower credit scores than most conventional loans allow |
| VA | No down payment requirement for eligible borrowers (VA) | No monthly mortgage insurance; a one-time VA funding fee applies unless exempt | Eligible veterans, service members and surviving spouses |
| USDA | 100% financing possible (USDA) | Guarantee fees apply — see USDA | Low- and moderate-income buyers (income up to 115% of area median) in eligible rural areas |
| Jumbo | Lenders usually require larger down payments and stronger credit than conforming loans | Depends on lender | Loans above the conforming loan limit ($832,750 in most of the US in 2026) |
Fixed-rate vs adjustable-rate (ARM)
With a fixed-rate mortgage the interest rate stays the same for the whole term. With an adjustable-rate mortgage (ARM) the rate is fixed for an initial period and then can change. ARMs have limits (caps) on how much the rate can change, so read the terms carefully. See the guide on fixed vs adjustable-rate mortgages.
How to choose
Compare Loan Estimates for each type you qualify for. The right choice depends on your down payment, credit, how long you plan to stay and whether you qualify for a government-backed program. A larger down payment reduces the amount you borrow and can remove PMI on a conventional loan.
How lenders and investors fit in
Most home loans are made by a lender and then sold or guaranteed. Conforming conventional loans can be bought by Fannie Mae and Freddie Mac. FHA loans are insured by the Federal Housing Administration, VA loans are guaranteed by the Department of Veterans Affairs and USDA loans by USDA Rural Development. The backing changes the risk to the lender, which is why the rules and costs differ.
Term length: 15, 20 or 30 years
A shorter term has a higher monthly payment but far less total interest, and 15-year rates are usually lower than 30-year rates (see current benchmark rates). A longer term lowers the payment but costs more in interest. The mortgage calculator shows both side by side.
A quick way to narrow your choice
- Do you qualify for VA or USDA? If yes, price them first.
- Is a small down payment your main constraint? Compare FHA and low-down-payment conventional loans.
- Will your loan exceed the conforming limit? Then compare jumbo lenders.
- How long will you stay? That decides fixed vs adjustable.
Choosing between a conventional loan and a government-backed loan
| Question | Conventional | FHA | VA | USDA |
|---|---|---|---|---|
| Minimum down payment (as sourced) | As low as 3% on some programs; 20% avoids PMI | 3.5% | None required for eligible borrowers | None (100% financing possible) |
| Mortgage insurance or fee | PMI usually required under 20% down | Upfront premium 1.75% plus annual premium | One-time funding fee unless exempt | Guarantee fees apply |
| Who it is for | Borrowers with good credit | Buyers needing lower down payments | Eligible veterans, service members and surviving spouses | Low- and moderate-income buyers in eligible rural areas |
| Property use | Primary, second home or investment (rules vary) | Owner-occupied | Owner-occupied | Owner-occupied primary residence |
What you need to qualify (typical lender review)
Lenders generally look at four things: your credit history, your income and employment, your debts relative to income (the debt-to-income ratio) and your down payment and cash reserves. Each loan type sets different guidelines for those items. For example, a jumbo loan is not eligible for purchase by Fannie Mae or Freddie Mac, so lenders often set stricter rules.
Documents commonly requested include recent pay stubs, W-2s or tax returns, bank statements, identification and information about your existing debts. Self-employed borrowers are usually asked for more documentation of income.
How to compare lenders on the same loan type
- Pick the loan type and term you want to compare.
- Request Loan Estimates from at least three lenders on the same day; the form is standardized so you can compare page by page.
- Compare the interest rate, the APR, the origination charges and the estimated cash to close.
- Ask each lender what the rate lock covers and for how long.
- Use the mortgage calculator to see the full monthly payment with taxes, insurance and PMI.
Beyond the loan type: costs of owning a home
The mortgage payment is only part of the cost. Plan for property taxes, homeowners insurance (and flood insurance where needed), maintenance, utilities and any HOA dues. The escrow guide explains how taxes and insurance are collected with your payment, and the affordability calculator helps you set a budget that includes them.
⚠️ Common mistakes to avoid
- Choosing a loan by the monthly payment alone and ignoring mortgage insurance and total interest.
- Assuming a government-backed loan is always cheaper than a conventional loan.
- Not checking whether you qualify for VA or USDA benefits.
- Looking at only one lender instead of comparing several Loan Estimates.
- Forgetting taxes, homeowners insurance and HOA dues when judging affordability.
- Skipping a written comparison of Loan Estimates.
- Not asking about how long a rate lock lasts.
🛠️ Try it yourself
❓ Frequently asked questions
Which mortgage type has the lowest down payment?
VA and USDA loans can require no down payment for eligible borrowers. FHA allows as little as 3.5%, and some conventional programs allow 3%.
Do I need 20% down?
No. Twenty percent avoids PMI on a conventional loan, but many buyers put down less.
What is a conforming loan?
A loan within the county loan limit that meets Fannie Mae and Freddie Mac guidelines.
Can I switch loan types later?
You can refinance into a different type if you qualify; compare the closing costs first.
Can I buy with a low credit score?
Programs and lenders set their own minimums. FHA loans allow lower scores than most conventional loans, but ask each lender for its requirements.
What is the difference between a lender and a broker?
A lender funds the loan itself; a broker shops your application to several lenders. Compare Loan Estimates either way.
How long does it take to close?
It varies by lender, loan type and how quickly documents are provided; ask your lender for a timeline.
📚 Sources
This guide is general information, not financial, tax or legal advice. Rules and limits change; confirm with the sources above or a licensed professional.