Mortgage Loan Types Compared: Conventional, FHA, VA, USDA, Jumbo

At a glance

The five types, side by side

If you only read one thing on this page, read this table. Each row is one dimension that actually matters when the loan hits your monthly budget.

	Conventional	FHA	VA	USDA	Jumbo
Minimum down	3-5%	3.5%	0%	0%	10-20%
Minimum credit score	620	580	620	640	700+
Mortgage insurance	PMI, cancels at 80% LTV	MIP for life of loan	None (one-time fee)	0.35% annual, lower than PMI	None
Upfront fee	None	1.75% MIP	2.15% funding fee	1% guarantee	None
Loan limit (2026)	$832,750	$524,225	No limit (full entitlement)	Area median income cap	Above conforming
Best for	Strong credit, 10%+ down	Lower credit, first-time	Veterans and active duty	Rural / low income	Expensive homes

Advantage for the buyer Costs you should know about

Most common (~70% of mortgages)

Conventional Loan

What most people get. No government backing. The bank hands you the money, you promise to pay it back. If you stop paying, the bank is on the hook for the loss, which is why they want to see decent credit and some cash down.

What it actually is

A conventional loan is any mortgage not insured or guaranteed by the US government. Most of them get sold on to Fannie Mae or Freddie Mac afterward (government-sponsored enterprises that buy loans and bundle them into bonds), which is why there is a standard "conforming loan limit" of $832,750 in 2026 - the biggest loan Fannie and Freddie will take off the bank's hands in most counties.

Who it is for

Buyers with credit score 620 or above (ideally 740+ for the best rate)
Anyone with at least 3% down (first-time) or 5% (repeat buyer)
Standard home purchase under the conforming limit

What you actually pay

Down payment: 3% first-time, 5% otherwise
Credit score minimum: 620 (best rates at 740+)
PMI (private mortgage insurance): 0.5-1.5% / yr if less than 20% down
When PMI goes away: Automatically at 78% LTV, request at 80%
Upfront fees: None

Pros

Lowest total cost over the life of the loan if you have the credit for it
PMI eventually falls off (unlike FHA MIP)
No upfront insurance or funding fees
Can be used for primary home, second home, or investment property

Cons

Higher credit requirement than FHA
PMI is more expensive than FHA MIP for lower credit scores
More paperwork and stricter underwriting

When it makes sense

You have credit above 680 and at least 10% down. If you can put 20% down, you skip PMI entirely and this is almost always the cheapest option.

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Government-insured

FHA Loan

Backed by the Federal Housing Administration. The US government promises the bank it will cover the loss if you default, so the bank can lower its own requirements. Built specifically for first-time buyers, lower credit, and smaller savings.

What it actually is

FHA stands for Federal Housing Administration, a part of HUD. The loan still comes from a regular bank, but FHA insures it. If you stop paying, FHA pays the bank. That guarantee is why the bank can accept weaker credit and smaller down payments than they would for conventional. You pay for that insurance (that is what MIP is).

Who it is for

First-time buyers with limited savings
Credit score between 580 and 680
Buyers in a county where the FHA loan limit covers what you need ($524,225 in most places in 2026)

What you actually pay

Down payment: 3.5% with 580+ FICO, 10% with 500-579
Credit score minimum: 580 (lower than any other type)
Upfront MIP: 1.75% of loan amount, financed into the loan
Annual MIP: 0.55% of balance / yr, paid monthly
MIP duration: Life of the loan unless 10%+ down

Pros

Lowest credit requirement of any mainstream loan
Small down payment
Easier qualification process
Rates often competitive with conventional for lower credit scores

Cons

MIP for the life of the loan is the big one - adds up to tens of thousands over 30 years
Upfront MIP cost (even though it is financed in, you pay interest on it)
Loan limits are lower than conventional
Must be primary residence (no investment properties)
Property has to pass FHA appraisal, which is stricter

When it makes sense

Credit between 580 and 680, low savings, planning to refinance to conventional once your credit improves and you have 20% equity. If you can qualify conventional, almost always do that instead - the MIP for life of loan is a tax that never goes away.

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For veterans

VA Loan

If you served in the US military, this is probably the best mortgage you can get. No down payment required, no monthly mortgage insurance, competitive rates. The only cost is a one-time funding fee, and even that is waived for disabled veterans.

What it actually is

A VA loan is a mortgage from a regular bank with the Department of Veterans Affairs guaranteeing a portion of it. The guarantee is strong enough that banks happily lend without a down payment and without requiring mortgage insurance, because the VA is standing behind part of the loan. The funding fee you pay goes into a reserve that covers VA's losses on defaults - that is why it exists.

Who it is for

Veterans with a Certificate of Eligibility (COE)
Active-duty military after 90 days of service
Reserve and National Guard after 6 years
Surviving spouses in some cases

What you actually pay

Down payment: $0 (yes, zero)
Credit score minimum: No VA minimum, lenders usually want 620+
Funding fee (first use): 2.15% of loan, financed in
Funding fee (subsequent use): 3.3%
Disabled veterans: Funding fee waived
Mortgage insurance: None, ever

Pros

Zero down payment
No monthly mortgage insurance
Interest rates typically lower than conventional
More forgiving on credit
Can be reused multiple times through your life

Cons

You have to be eligible - this is not a loan anyone can get
Must be primary residence (no vacation homes or rentals)
Property has to meet VA Minimum Property Requirements (basic habitability)
Funding fee adds about $8,000 on a $400,000 loan

When it makes sense

Always consider it first if you are eligible. The math almost always beats conventional unless you have 20%+ down and excellent credit, in which case conventional with no PMI may edge it slightly on total cost.

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Lesser known

USDA Loan

Not many people know this exists. The US Department of Agriculture runs a loan program for buyers in rural and low-density areas (which includes a lot of suburbs you would not think qualify). Zero down payment and low monthly fees, with income limits.

What it actually is

USDA Rural Development loans are mortgages insured by the Department of Agriculture to encourage home ownership in less-populated areas. The "rural" definition is more generous than it sounds - many outer suburbs qualify. Check the USDA eligibility map by zip code before you assume you cannot use it.

Who it is for

Buyers of homes in USDA-eligible areas (check the map at eligibility.sc.egov.usda.gov)
Low-to-moderate income (max 115% of the area median)
Primary residence only

What you actually pay

Down payment: $0
Credit score minimum: 640 (some lenders go lower)
Upfront guarantee fee: 1% of loan, financed in
Annual fee: 0.35% of balance / yr, paid monthly (cheaper than PMI)
Income limit: 115% of area median household income

Pros

Zero down payment, same as VA, but anyone can use it (if income and location qualify)
The annual fee is lower than conventional PMI
Flexible on credit

Cons

Location restriction - most urban cores are out
Income limits exclude higher earners
The annual fee lasts the entire loan, like FHA MIP

When it makes sense

You are looking at a home outside a major metro, your household income is at or below local median, and you want to save your cash for things other than a down payment. Can be cheaper than FHA for a buyer who qualifies.

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For expensive homes

Jumbo Loan

Any mortgage above the conforming loan limit of $832,750 in 2026 (or up to $1,249,125 in high-cost areas like California and Hawaii). The bank cannot sell it to Fannie Mae or Freddie Mac, so they keep the full risk themselves - which is why the requirements are stricter.

What it actually is

A jumbo loan is simply a mortgage too big to be a "conforming" loan. Fannie and Freddie will not buy it, so the bank keeps the loan on their books. Keeping a 7-figure loan on the balance sheet means the bank wants real certainty you can pay. So: higher credit score, larger down payment, more documented reserves.

Who it is for

Buyers of homes above $832,750 in most areas (above $1.25M in high-cost coastal counties)
High earners with strong credit (700+ typically required)
Buyers with 10-20%+ down available and 6-12 months of reserves in the bank

What you actually pay

Down payment: 10-20%, sometimes 25%+ for the biggest loans
Credit score minimum: 700, often 720+ for best rate
Interest rate: Slightly above conforming rates (varies by lender)
Reserves required: Often 6-12 months of payments in the bank
Mortgage insurance: No PMI available on jumbo

Pros

Lets you buy homes above the conforming limit
No mortgage insurance even with less than 20% down
Rates have narrowed significantly against conventional in recent years

Cons

Higher credit score, bigger down payment, more documentation
Lender is taking full risk, so underwriting is more conservative
Not all banks offer them, so shopping around matters more

When it makes sense

You are buying above the conforming limit and cannot (or do not want to) split into two smaller loans. If your purchase is just above the limit, consider a conforming loan plus a HELOC or second mortgage, since combined it might cost less than one jumbo.

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Pick your state to run real numbers

All 51 state calculators let you pick a loan type after you enter home price and down payment. Property tax, insurance, and PMI/MIP all auto-fill from the state defaults.

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