Mortgage Loan Types Explained: FHA, VA, USDA, and Conventional Loans Compared

Mortgage Loan Types Explained: FHA, VA, USDA, and Conventional Loans Compared

When it comes to financing a home, not all mortgage loans are the same. The right one for you depends on your financial situation, credit score, military status, location, and long-term goals. Below is a clear breakdown of the four most common types of mortgage loans: FHA, VA, USDA, and Conventional—and how to decide which fits your needs.

FHA Loan

Best for: First-time buyers or those with lower credit scores.

• Minimum credit score: 580 (with 3.5% down)

• Down payment: 3.5% minimum

• Mortgage Insurance: Required (MIP)

• Available for: Primary residences only

• Pros: Easier to qualify, lower down payments

• Cons: Mortgage insurance required for life of loan (unless refinanced)

VA Loan

Best for: Active-duty service members, veterans, and eligible spouses.

• Minimum credit score: Varies by lender (typically 580–620+)

• Down payment: None required

• Mortgage Insurance: None (but funding fee applies)

• Available for: Primary residences only

• Pros: No down payment, no monthly mortgage insurance, lower rates

• Cons: Must meet service eligibility requirements; VA funding fee may apply

USDA Loan

Best for: Low-to-moderate income buyers in eligible rural or suburban areas.

• Minimum credit score: 640 (recommended)

• Down payment: None required

• Mortgage Insurance: Yes (guarantee fee)

• Available for: Primary residences in eligible areas

• Pros: 100% financing, competitive rates

• Cons: Location and income restrictions apply

Tip: USDA eligibility maps determine if your property qualifies.

Conventional Loan

Best for: Buyers with strong credit, steady income, and down payment flexibility.

• Minimum credit score: 620+

• Down payment: 3–20%

• Mortgage Insurance: PMI required under 20% down (cancelable)

• Available for: Primary, secondary, or investment properties

• Pros: Lower long-term costs, no mortgage insurance with 20% down

• Cons: Stricter credit and income requirements

Which Loan is Right for You?

Loan Type	No Down Payment	Government Backed	Flexible Credit	Investment Properties
FHA	No	Yes (FHA)	Yes	No
VA	Yes	Yes (VA)	Yes	No
USDA	Yes	Yes (USDA)	Somewhat	No
Conventional	No (unless special programs)	No	No (stricter)	Yes

How to Choose

• If you need zero down and qualify: consider VA or USDA.

• If you’re a first-time buyer with limited credit, FHA may be your best option.

• If you have good credit and a solid down payment, Conventional loans offer lower costs over time.

Work With the Velocity Team

We’ll help you compare real-time rates, monthly payments, and eligibility across loan types—so you can make the best decision for your future.

Not sure which loan fits your goals? [Schedule a free loan consultation] or [Apply now]