Understanding mortgage types: which is right for you?

Choosing the right mortgage matters as much as choosing the right home. Here are the most common options.

Conventional

Best for: good credit and stable income. 3–20% down. PMI if you put down less than 20%. Works for primary homes, second homes and investments.

FHA

Best for: first-time buyers and lower credit scores. As little as 3.5% down, with easier qualifying. Mortgage insurance is required, and the property must meet FHA standards.

VA

Best for: veterans, active military and eligible spouses. $0 down and no monthly PMI. There's a VA funding fee, which can be financed.

USDA

Best for: eligible rural and suburban areas. $0 down, with income limits and location rules.

Fixed vs. adjustable (ARM)

Fixed: the same rate and a predictable payment for the life of the loan. ARM: a lower starting rate that adjusts after 5, 7 or 10 years. Good if you'll sell or refinance before then, riskier if rates rise.

Jumbo

Best for: loans above the conforming loan limit, which changes yearly. Check the current FHFA limit for your county. Expect stricter requirements and larger down payments.

How to choose

• How much can you put down?
• What's your credit score?
• How long will you own the home?
• How stable is your income?
• Is it a primary home or an investment?

Get quotes on more than one loan type and compare. See preferred lenders or estimate a payment.