There is no single mortgage. A home loan can be backed by the government or sold to Fannie Mae and Freddie Mac, it can require no down payment or 20%, it can carry a fixed rate or one that adjusts, and it can run for 15 years or 30. The type you choose decides how much cash you need upfront, what your monthly payment looks like, and how strict the eligibility rules are. This guide explains the five main mortgage types, conventional, FHA, VA, USDA, and jumbo, and the fixed-rate versus adjustable-rate choice that cuts across all of them.
This article is general educational information only, not personal financial advice. The limits and programme rules below are the published figures from the Federal Housing Finance Agency (FHFA, 2024), the US Department of Housing and Urban Development (HUD, 2025), the US Department of Veterans Affairs (VA, 2025), and the US Department of Agriculture (USDA, 2025). Limits are set annually and vary by county, so confirm the figures that apply to your area and your loan before you rely on them.
What Is a Conventional Mortgage?
A conventional mortgage is a home loan that is not insured or guaranteed by a government agency. Most conventional loans are conforming loans, meaning they meet the size and underwriting standards set by Fannie Mae and Freddie Mac, the two government-sponsored enterprises that buy mortgages from lenders. A conforming loan must be at or below the conforming loan limit for the county, and it must meet Fannie Mae’s and Freddie Mac’s credit, documentation, and property standards. Because the lender can sell a conforming loan onward, conforming loans are the most widely available mortgage type, and they usually carry the lowest rates for borrowers with strong credit.
For 2025, the baseline conforming loan limit for a one-unit property is $806,500 in most of the United States, and the ceiling in high-cost areas is $1,209,750 (FHFA, 2024). The FHFA has announced a 2026 baseline of $832,750, effective for loans acquired in 2026. The limit applies to the amount borrowed, not the purchase price, and it is higher for properties with two to four units. A loan above the limit for its county is not conforming, and it falls into the jumbo category, explained below.
Conventional loans generally require a down payment of at least 3% for qualified first-time buyers, through programmes such as Fannie Mae HomeReady and Freddie Mac Home Possible, and 5% or more for other buyers. If the down payment is below 20%, the lender will usually require private mortgage insurance, or PMI, which protects the lender, not the borrower, and which can be cancelled once the loan balance falls to 80% of the home’s value under the Homeowners Protection Act, subject to its conditions. Conventional loans also tend to have the strictest credit requirements of the main types: the Consumer Financial Protection Bureau notes that borrowers with scores in the mid-to-high 700s or above generally receive the lowest mortgage rates, while borrowers in the mid-600s and below generally pay the highest rates and have the fewest choices (CFPB, 2024). For the steps that come before a conventional application, see our guide to mortgage pre-approval and how to get one.
What Is an FHA Loan?
An FHA loan is insured by the Federal Housing Administration, part of the US Department of Housing and Urban Development (HUD). The FHA does not lend the money itself; it insures the loan, which lets the lender accept a smaller down payment and a lower credit score than a conventional loan would usually allow. FHA loans are designed for buyers who would otherwise struggle to qualify, including first-time buyers and buyers with a limited credit history, and they are the commonest government-backed route into home ownership.
The headline feature is the down payment: 3.5% of the purchase price with a credit score of 580 or higher, and 10% with a score from 500 to 579 (HUD, 2025). The trade-off is mortgage insurance. FHA loans carry an upfront mortgage insurance premium of 1.75% of the base loan amount, which is usually financed into the loan rather than paid in cash, plus an annual premium paid monthly for the life of the loan in most cases, including when the down payment is below 10%. That insurance cannot generally be cancelled in the way PMI on a conventional loan can, which means the monthly cost of an FHA loan stays higher for longer, even after the balance falls.
FHA loans also have their own loan limits, set by county. For 2025, the floor, which applies in most counties, is $524,225 for a one-unit property, and the ceiling in high-cost areas is $1,209,750 (HUD, 2025). FHA loans must be for a primary residence, not an investment property, and the property must meet the FHA’s minimum property standards, which can require repairs before closing if the home has safety or habitability problems. The appraisal also doubles as a check on those standards, which is stricter than a conventional appraisal. For a first-time buyer comparing the cash needed upfront, see our guide to first-time homebuyer down payment assistance.
What Is a VA Loan?
A VA loan is guaranteed by the US Department of Veterans Affairs for eligible service members, veterans, and some surviving spouses. It is the most generous mortgage type for those who qualify, because it requires no down payment at all, and it charges no private mortgage insurance, whatever the down payment. Instead of mortgage insurance, the borrower pays a one-time VA funding fee, which is typically 2.15% of the loan amount for first-time use with no down payment, and which can be financed into the loan. Veterans with a service-connected disability, and some surviving spouses, are exempt from the funding fee (VA, 2025).
Eligibility is based on service, not income: the borrower needs a Certificate of Eligibility, which the VA issues based on length and character of service, and the lender then applies its own credit and income checks, because the VA does not set a minimum credit score itself, although most lenders require one. VA loans must be for a primary residence, and the property must meet the VA’s minimum property requirements. There is no maximum loan amount set by the VA, although lenders may apply their own limits, and for loans above the conforming limit, a down payment may be required on the portion above the limit.
The absence of a down payment and of mortgage insurance makes the VA loan the cheapest monthly option for an eligible borrower in most cases, and it also allows the seller to pay some of the buyer’s closing costs, within limits the VA sets. The funding fee is the cost of that generosity, and it is worth comparing the total cost, including the fee, against a conventional loan with a down payment, because a borrower with a large down payment and strong credit can sometimes do better with a conventional loan. For most eligible borrowers with little cash to put down, however, the VA loan is usually the first type to consider.
What Is a USDA Loan?
A USDA loan is guaranteed by the US Department of Agriculture for buyers in eligible rural and some suburban areas. Like the VA loan, it requires no down payment. Unlike the VA loan, it has an income limit: household income must generally be at or below 115% of the area median income for the county, and the property must be in an area the USDA designates as eligible, which the USDA publishes on its eligibility map (USDA, 2025). The programme is aimed at low- to moderate-income buyers in places where conventional lending is thinner, and it is often overlooked by buyers who assume “rural” means remote: many towns on the edge of metropolitan areas qualify.
The cost structure is a guarantee fee rather than mortgage insurance: an upfront fee of 1% of the loan amount, which can be financed into the loan, and an annual fee of 0.35% of the remaining balance, paid monthly. Those fees are lower than FHA mortgage insurance in most cases, which is part of why a USDA loan can be the cheapest option for an eligible buyer in an eligible area. The loan must be for a primary residence, the property must meet USDA standards, and the borrower’s total debt, including the new mortgage, must fit within the programme’s debt-to-income limits. Our guide to calculating debt to income ratio for a mortgage explains the ratio lenders use for this test.
The main limitation is geography and income: if the property is not in an eligible area, or the household income is above the limit, the programme does not apply, and the buyer must use another type. Because the eligibility map and the income limits change, check both on the USDA website before assuming a property or a household qualifies. For buyers who do qualify, the combination of no down payment and low fees makes the USDA loan one of the best-value mortgages available.
What Is a Jumbo Loan?
A jumbo loan is a mortgage for an amount above the conforming loan limit for its county, so it cannot be sold to Fannie Mae or Freddie Mac. Because the lender keeps the loan or sells it to a private investor, rather than to the government-sponsored enterprises, jumbo loans carry stricter requirements: a higher credit score, a larger down payment, often 10% to 20%, larger cash reserves after closing, and fuller documentation of income and assets. The rate on a jumbo loan is usually slightly higher than on a conforming loan, reflecting the extra risk the lender keeps, although the gap has narrowed in recent years and can be small.
For 2025, any one-unit loan above $806,500 in most counties is a jumbo loan, and in high-cost areas the threshold is the county’s higher limit, up to $1,209,750 (FHFA, 2024). That means the same loan amount can be conforming in one county and jumbo in another, so the county limit, not the loan amount alone, decides the category. A buyer whose loan is just above the limit sometimes reduces the amount borrowed, by increasing the down payment, to bring the loan under the conforming limit and qualify for the easier terms. The size of that saving depends on the rate and the PMI difference, and it is worth calculating before deciding.
Jumbo loans are not a government programme and are not aimed at a particular group of buyers; they are simply the market’s answer for expensive homes. They come in the same fixed-rate and adjustable-rate structures as other loans, and they can be used for purchases and for refinancing. The underwriting is the point that differs: expect the lender to look harder at reserves, to require a second appraisal in some cases, and to take longer to close. If you are buying in a high-cost area, ask the lender early whether your loan will be conforming or jumbo at the price you are considering, because the answer changes the down payment and the documentation you will need.
Fixed-Rate or Adjustable-Rate: Which Structure Fits Which Type?
Every mortgage type above can be structured as a fixed-rate loan, where the interest rate and the principal-and-interest payment stay the same for the whole term, or as an adjustable-rate mortgage, known as an ARM, where the rate is fixed for an initial period, often five, seven, or ten years, and then adjusts at set intervals based on a benchmark rate plus a margin. Our guide to what a fixed interest rate means explains the mechanics, and our guide to the current mortgage rate explains where rates are now.
A fixed-rate loan suits a buyer who plans to stay in the home for a long time and values a payment that never changes. A 30-year fixed loan has the lowest monthly payment of the fixed options, because the amount is spread over the longest term, while a 15-year fixed loan has a higher monthly payment but far less total interest: on a clearly labelled hypothetical $250,000 loan at 7%, the 30-year payment is $1,663.26 a month with $348,772.25 of total interest, while the 15-year payment is $2,247.07 a month with $154,472.72 of total interest, a saving of about $194,299.53. That trade-off, lower payment against lower total cost, is the same one explained in our guide to how a loan payoff calc works.
An ARM suits a buyer who expects to move or refinance before the adjustment period begins, because the initial rate is usually lower than the fixed rate available at the same time. The risk is that the rate, and the payment, can rise after the initial period, and by more than the buyer expects if rates have moved sharply. The loan documents state the caps on how much the rate can rise at each adjustment and over the life of the loan, and those caps are the numbers to read before choosing an ARM. A buyer who chooses an ARM should run the payment at the highest rate the caps allow, not just at the initial rate, and confirm the household budget can absorb it.
Frequently Asked Questions
Which mortgage type is best for a first-time buyer?
It depends on the buyer’s situation. A conventional loan usually gives the lowest total cost for a buyer with strong credit and a down payment of 10% or more. An FHA loan suits a buyer with a smaller down payment or a lower credit score. A VA loan is usually best for an eligible veteran, and a USDA loan for an eligible buyer in a rural area. Compare the monthly payment, the total cost including insurance or fees, and the cash needed to close, not just the rate.
What credit score do you need for a conventional loan?
Fannie Mae and Freddie Mac do not publish a single minimum, and lenders set their own requirements, but most require a score of at least 620 for a conventional loan, and the best rates generally go to borrowers in the mid-to-high 700s or above (CFPB, 2024). FHA loans accept scores from 500 with a 10% down payment, and 580 with 3.5% down, which is why they are the usual route for lower scores.
Can you get a mortgage with no down payment?
Yes, through a VA loan if you are eligible, or a USDA loan if the property and your income qualify. Both require no down payment. Conventional and FHA loans always require a down payment, although assistance programmes can cover it: see our guide to first-time homebuyer down payment assistance.
What is the difference between a conforming and a jumbo loan?
A conforming loan is at or below the FHFA loan limit for its county and meets Fannie Mae’s and Freddie Mac’s standards, so it can be sold to them. A jumbo loan is above that limit, is kept by the lender or sold privately, and carries stricter credit, down payment, and reserve requirements. For 2025 the baseline limit is $806,500 for a one-unit property (FHFA, 2024).
Do FHA loans have income limits?
No. FHA loans have no income limit, unlike USDA loans, which cap household income at 115% of the area median income. FHA loans do have loan limits by county, a down payment requirement, and mortgage insurance, but a high income does not disqualify a borrower.
The Bottom Line
The five main mortgage types solve different problems. A conventional loan is the standard choice for a borrower with strong credit, with a conforming limit of $806,500 for 2025 and a 2026 baseline of $832,750. An FHA loan trades mortgage insurance for a 3.5% down payment at a score of 580 or above. A VA loan offers no down payment and no mortgage insurance to eligible service members and veterans, for a funding fee. A USDA loan offers no down payment to low- to moderate-income buyers in eligible rural areas. A jumbo loan covers amounts above the conforming limit, with stricter terms. Within any type, the fixed-rate versus adjustable-rate choice, and the 15-year versus 30-year choice, decide the monthly payment and the total interest. Compare the full cost, not just the rate, and confirm the current limits for your county before you apply.
This article is general educational information only, not personal financial advice. Mortgage programmes, limits, and rates change, and lenders apply their own requirements, so confirm the terms that apply to your loan with your lender before relying on any figure in this guide.