A Quick Guide to Home Loans: Conventional, FHA, and VA

If you're thinking about buying a home, one of the first (and biggest!) steps will be financing. We’re breaking down three of the most common types of home loans: Conventional, FHA, and VA loans.

Conventional Loans

Conventional loans are the most common type of mortgage and aren’t backed by the government. Instead, they come from private lenders like banks and credit unions.

Here’s what you need to know:

• Typically requires a higher credit score (usually 620 or above).
• Down payments start as low as 3%, but if you put down 20% or more, you can skip Private Mortgage Insurance (PMI).
• Often offers competitive interest rates and flexible term options (like 15- or 30-year loans).

If you have strong credit and stable income, a conventional loan could be a great fit since it often comes with lower overall borrowing costs.

FHA Loans

FHA loans, backed by the Federal Housing Administration, are designed to help buyers, especially first-timers, get into a home with more flexible requirements.

Why consider an FHA loan?

• Down payments can be as low as 3.5% (perfect if you don’t have a huge savings cushion).
• More lenient credit score requirements (often 580 or higher).
• Requires mortgage insurance (MIP), which adds to your monthly payment but helps offset the risk for lenders.

If you’re working on building your credit or don’t have a large down payment, an FHA loan might be your best bet for homeownership.

VA Loans

VA loans are a fantastic benefit for veterans, active-duty service members, and some surviving spouses. These loans are backed by the Department of Veterans Affairs and come with some serious perks:

• No down payment required (a huge advantage!).
• No PMI, which means lower monthly costs.
• Competitive interest rates and flexible credit requirements.

To qualify, you’ll need a Certificate of Eligibility (COE) from the VA and meet specific service requirements. If you’re eligible, a VA loan is often the most affordable path to homeownership.

Chart provided by Todde Greenough at Empower Residential Mortgages ([email protected])

Which Loan is Right for You?

The best-fit financing option will depend on your financial situation, credit score, and homeownership goals. The first step is to talk to a trusted mortgage professional who can help you explore your options and find the right fit.

Still have questions? We're happy to connect you with a lender who can guide you through the process!