Let’s talk about lending! (Hooray)

There are many different types of loan packages for you to choose from when financing. Conventional, FHA, USDA, VA, ARMs, are just a few and we’re going to discuss those here.

1. FHA Loans

Insured by the Federal Housing Administration (FHA). The FHA was created in 1934 by Franklin Delano Roosevelt as part of his “New Deal” program. The purpose of the FHA was to provide liquidity to the primary mortgage market by guaranteeing mortgage made by banks.

Best for: First-time buyers, buyers with lower credit scores, and those with limited savings.

Typical features:

• Down payment as low as 3.5%
• More flexible credit requirements
• Mortgage insurance required
• Available for primary residences only

2. Conventional Loans

Not backed by the government and offered by private lenders.

Best for: Buyers with good credit and stable income.

Typical features:

• Down payments from 3% to 20%+
• No upfront mortgage insurance fee
• Private Mortgage Insurance (PMI) usually required if putting down less than 20%
• Often lower long-term costs for qualified borrowers

3. VA Loans

Guaranteed by the U.S. Department of Veterans Affairs.

Best for: Eligible veterans, active-duty military members, and certain surviving spouses.

Typical features:

• No down payment required in many cases
• No PMI
• Competitive interest rates
• Funding fee may apply

4. USDA Loans

Backed by the United States Department of Agriculture.

Best for: Buyers in eligible rural and some suburban areas.

Typical features:

• No down payment required
• Income limits apply
• Property must be in an eligible area
• Lower mortgage insurance costs than FHA

5. Fixed-Rate Mortgages

Can be conventional, FHA, VA, or USDA.

Best for: Buyers who want predictable payments.

Typical terms:

• 30-year fixed
• 20-year fixed
• 15-year fixed

The interest rate remains the same for the life of the loan.

6. Adjustable-Rate Mortgages (ARMs)

Interest rate changes after an initial fixed period.

Examples:

• 5/6 ARM
• 7/6 ARM
• 10/6 ARM

Best for: Buyers planning to move or refinance before the adjustment period begins.

Risk: Monthly payments can increase if rates rise.

7. Jumbo Loans

For homes exceeding conforming loan limits set by Federal Housing Finance Agency.

Best for: Luxury or high-cost housing markets.

Typical features:

• Larger down payments
• Higher credit score requirements
• More cash reserves required

8. Interest-Only Loans

Borrowers pay only interest for a set period.

Best for: Certain high-income borrowers with irregular cash flow.

Risk: Little or no principal reduction during the interest-only period.

Quick Comparison

Loan Type	Typical Down Payment	Government Backed?	Best For
FHA	3.5%	Yes	First-time buyers
Conventional	3%–20%+	No	Strong credit borrowers
VA	0%	Yes	Veterans and service members
USDA	0%	Yes	Rural homebuyers
Jumbo	Usually 10%–20%+	No	Expensive homes
ARM	Varies	Sometimes	Short-term ownership plans

This is just a sampling and we always recommend consulting with your favorite professional lender for up to date details.