What Are The Different Mortgage Loan Types?

Conventional

Available to those with a credit score of at least 620.

Conventional loan interest rates are usually slightly higher than FHA Loans; however, a FHA loan may require you to pay mortgage insurance for the life of the loan - costing you more than a conventional loan.

Maximum Loan Amounts

For conventional loans in 2024, the majority of the United States will have a maximum loan amount of $726,200. For high cost areas, such as Alaska, Hawaii, Guam and the Virgin Islands the maximum loan amount is $1,089,300. To borrow a larger amount see Jumbo Loans.

Down Payment Requirements

Conventional loans require at least a 3% down payment, a higher down payment is required in the following situations:

FHA

Available to those with a credit score of at least 500.

Maximum Loan Amounts

For FHA loans in 2024, the majority of the United States will have a maximum loan amount of $472,030. For high cost areas, such as Alaska, Hawaii, Guam and the Virgin Islands the maximum loan amount is $1,089,300. If you need to borrow more than $472,030, and have a credit score of at least 620, you can apply for a Conventional loan. To borrow an even larger amount see Jumbo Loans.

Down Payment Requirements

Your credit score will determine the required down payment you must make for a FHA loan:

The amount of your down payment will also determine how long you will be required to pay mortgage insurance. If you put at least 10% down you will be required to pay mortgage insurance for 11 years, less than 10% will result in mortgage insurance being required for the life of the loan.

Insurance Requirements

For example, let's assume you're purchasing a $300,000 dollar home, you put 3.5% down, and you receive a .55% insurance rate:

The amount of your down payment will determine how long you will be required to pay mortgage insurance.

USDA

There is no credit score requirement for a USDA loan; however, the borrower must live in a qualifying rural area and meet certain income eligibility requirements.

If you live in an area that has a population of 35,000 or less and your income is considered low and moderate, you may qualify for a USDA loan.

The USDA provides online tools to help you determine your eligibility:

Maximum Loan Amounts

For USDA loans in 2024, the majority of the United States will have a maximum loan amount of $377,600. For high cost areas, such as Alaska, Hawaii, Guam and the Virgin Islands the maximum loan amount is $1,089,300.

Down Payment Requirements

There is no down payment requirement for USDA loans.

Guarantee Fee

USDA loans don't require traditional mortgage insurance but do require you to pay two types of fees, referred to as the Guarantee Fee. A one-time payment when the loan is originated and a monthly fee that will last for the life of the loan. The initial one-time payment can be paid at closing or be rolled into your loan.

For example, let's assume you're purchasing a $200,000 dollar home:

VA

The U.S. Department of Veteran Affairs has no credit score requirement for a VA loan; however, your lender may require you to have a minimum of a 580 credit score.

Additionally, the borrower must be an active-duty service member, veteran, or spouse of a service member and must meet the requirements to be eligible.

For service members, you must meet one of the following requirements:

• 181 days of active service during peacetime.
• 90 consecutive days of active service during wartime.
• 6 years of service with the National Guard or Reserves, or 90 days under Title 32 with at least 30 consecutive days of service.

Certificate of Eligibility (COE)

You'll need to provide your lender with a Certificate of Eligibility that proves you're eligible for a VA loan.

Maximum Loan Amounts

The VA does not limit how much money you can borrow but your lender may use the same maximum's as a Conventional Loan. For Conventional Loans in 2024, the majority of the United States will have a maximum loan amount of $726,200. For high cost areas, such as Alaska, Hawaii, Guam and the Virgin Islands the maximum loan amount is $1,089,300.

Down Payment Requirements

For standard VA Loans there are no down payment requirements. For VA Jumbo Loans a down payment may be required depending on the amount you're borrowing and your credit score.

Funding Fee

VA loans don't require traditional mortgage insurance but do require you to pay a one-time fee, called the Funding Fee. The Funding Fee can be paid at closing or be rolled into your loan.

Your Funding Fee rate will be determined by your down payment percentage and whether or not this is your first VA loan:

For example, let's assume you're purchasing a $200,000 dollar home:

Jumbo

If you need to borrow more than the maximum allowed for a Conventional Loan then a Jumbo Loan may be for you.

Maximum Loan Amounts

Requirements

Jumbo Loans are met with a stricter set of requirements because they are non-conforming and are for larger sums of money when compared to a Conventional Loan.

Insurance Requirements

Because of the stricter requirements to be approved for a Jumbo Loan lenders typically don't require any form of mortgage insurance; however, each lender has their own requirements and policies. Check with your lender to find out their insurance requirements on Jumbo Loans.