# Types of Mortgage Loans: A Complete Guide to FHA, Conventional, VA, Jumbo and More By Opendoor Editorial Team | 2026-04-27 # Types of Mortgage Loans: A Complete Guide to FHA, Conventional, VA, Jumbo and More There are more than a dozen types of mortgage loans available to homebuyers — and choosing the wrong one can cost you thousands of dollars over the life of your loan. The right mortgage depends on your credit score, down payment, income, and how long you plan to stay in the home. This guide covers every major type of home loan, explains who each one is designed for, and walks you through how to choose the best option for your situation. ## The Main Types of Mortgage Loans Before diving into the details, here's a quick-reference overview of the six most common types of mortgage loans you'll encounter as a homebuyer. | Loan Type | Min. Down Payment | Credit Score | Best For | | --- | --- | --- | --- | | Conventional | 3–20% | 620+ | Most buyers with good credit | | FHA | 3.5% | 580+ | First-time buyers, lower credit | | VA | 0% | No minimum | Veterans and active military | | USDA | 0% | 640+ | Rural area buyers | | Jumbo | 10–20% | 700+ | High-value homes above conforming limits | | ARM | 5%+ | 620+ | Buyers planning to sell or refi within 5–7 years | Each of these loan types has distinct qualification requirements, costs, and trade-offs. Let's break them down one by one. ## Conventional Loans A **conventional loan** is a mortgage that is not backed or insured by a government agency. It's the most common type of home loan in the United States, accounting for roughly 65–70% of all mortgage originations. ### What Is a Conventional Loan? Conventional loans come in two categories. **Conforming loans** meet the loan limits and guidelines set by Fannie Mae and Freddie Mac. **Non-conforming loans** — most commonly jumbo mortgages — exceed those limits. For 2025, the conforming loan limit is **$806,500** in most areas, with higher limits in designated high-cost markets. Here's what you need to know about conventional loans: - **Down payment:** As low as 3%, but putting down 20% eliminates the need for [private mortgage insurance (PMI)](/articles/what-is-mortgage-insurance-pmi) - **Credit score:** Typically 620 or higher to qualify; borrowers with scores above 740 receive the best interest rates - **Loan terms:** Flexible options including a [15-year mortgage](/articles/how-much-mortgage-can-i-afford), 20-year, or the popular **30-year mortgage** - **Who it's for:** Buyers with stable income, decent credit, and some savings for a down payment **Pros:** No upfront mortgage insurance premium, PMI can be removed once you reach 20% equity, and you'll find a wide range of term and rate options. **Cons:** Stricter qualification standards compared to government-backed loans, and PMI is required if your down payment is less than 20%. Opendoor Home Loans offers a conventional 30-year fixed-rate mortgage for eligible buyers in select markets — with **$0 lender fees** as a differentiator from traditional lenders. [Check current availability at opendoor.com](https://www.opendoor.com). ## FHA Loans An **FHA loan** is a mortgage insured by the Federal Housing Administration, designed to make homeownership accessible to borrowers who may not qualify for conventional financing. It's one of the most popular types of home loans for first-time buyers. - **Down payment:** 3.5% with a credit score of 580 or higher; 10% down if your score falls between 500 and 579 - **Mortgage insurance:** Required for the life of the loan if you put less than 10% down — this includes both an upfront mortgage insurance premium (UFMIP) and an annual premium - **Loan limits:** Vary by county; check the [HUD loan limit tool](https://www.hud.gov/program_offices/housing/sfh/lender/origination) for your area - **Who it's for:** First-time buyers, borrowers rebuilding credit, and lower-income buyers who need a low down-payment option **Pros:** Low down payment requirements and more accessible credit standards make this loan easier to qualify for than most alternatives. **Cons:** The lifetime mortgage insurance requirement is the biggest drawback. The upfront premium plus annual premiums add meaningful cost over time. FHA loans also have property condition requirements that can complicate some purchases. FHA loans are also [assumable](/articles/assumable-mortgage), meaning a future buyer could take over your loan and its interest rate — a potentially valuable feature in a high-rate environment. ### FHA Loan vs. Conventional This is one of the most common comparisons buyers face. An **FHA loan vs. conventional** loan comes down to a simple trade-off: FHA loans are easier to qualify for, but conventional loans are often cheaper over the long term. If your credit score is above 700 and you can put at least 5% down, a conventional loan will typically save you money because you can eventually drop PMI. If you need more flexible credit requirements or have minimal savings, FHA may be your best path to homeownership. ## VA Loans A **VA loan** is a mortgage guaranteed by the Department of Veterans Affairs, offering what many experts consider the best mortgage terms available to any borrower — if you're eligible. - **Eligibility:** Active-duty military, veterans, National Guard members, reservists, and certain surviving spouses - **Down payment:** 0% — no down payment required - **PMI:** None required, regardless of down payment - **Funding fee:** An upfront fee applies (typically 1.25–3.3% of the loan amount), though this is waived for veterans with service-connected disabilities - **Interest rates:** Generally the most competitive of any loan type - **Who it's for:** Eligible veterans and service members — if you qualify, this should almost always be your first choice **Pros:** Zero down payment, no PMI, competitive rates, no prepayment penalty, and the loan is [assumable](/articles/assumable-mortgage). **Cons:** Limited to eligible military borrowers, and the upfront funding fee adds to closing costs for most users. If you're unsure about your eligibility, you can check directly through the [VA's official eligibility tool](https://www.va.gov/housing-assistance/home-loans). ## USDA Loans A **USDA loan** is a mortgage backed by the U.S. Department of Agriculture, designed to support homeownership in rural and qualifying suburban areas. - **Down payment:** 0% — fully financed like VA loans - **Income limits:** Your household income must fall below certain thresholds for your area - **Geographic restrictions:** The property must be located in an eligible rural or suburban zone - **Credit score:** Typically 640 or higher - **Who it's for:** Lower-income buyers purchasing in qualifying areas outside major metro centers USDA loans are a strong option if you meet both the income and geographic requirements. You can check whether a specific address qualifies using the [USDA eligibility map](https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do). ## Jumbo Loans A **jumbo mortgage** is any home loan that exceeds the conforming loan limit — **$806,500** in most U.S. counties for 2025. If you're buying a high-value home in an expensive market, a jumbo loan may be your only option. - **Down payment:** Typically 10–20%, though some lenders offer lower options for strong borrowers - **Credit score:** Usually 700 or higher required - **Cash reserves:** Lenders often require 6–12 months of mortgage payments in reserve - **Interest rates:** Can be higher or lower than conforming loans depending on market conditions and borrower profile - **Who it's for:** Buyers purchasing luxury properties or homes in high-cost areas like San Francisco, New York, or Los Angeles **Pros:** Allows you to finance homes that exceed conforming limits without taking out multiple loans. **Cons:** Stricter qualification requirements, larger down payments, and potentially higher rates. ## Adjustable-Rate Mortgages (ARMs) An **adjustable-rate mortgage** — commonly called an **ARM mortgage** — is a home loan with an interest rate that changes after an initial fixed period. - **Common structures:** 5/1 ARM (fixed for 5 years, adjusts annually), 7/1 ARM, and 10/1 ARM - **Rate caps:** Built-in limits on how much the rate can increase per adjustment period and over the life of the loan - **Initial rates:** Typically 0.5–1% lower than comparable fixed-rate mortgages - **Who it's for:** Buyers who plan to sell or refinance before the fixed period ends **Pros:** Lower initial monthly payment compared to a fixed-rate mortgage, which can free up cash flow in the early years of homeownership. **Cons:** If rates rise significantly after the fixed period, your monthly payment can increase substantially. This makes ARMs riskier for buyers who may stay in the home long-term. **When ARMs make sense:** If you're confident you'll move or refinance within 5–7 years, or if current market conditions suggest rates may decline, an ARM can save you money compared to a 30-year fixed. ## Fixed vs. Adjustable Rate: Which Is Right for You? Choosing between a fixed and adjustable rate is one of the biggest decisions in [how to get a mortgage](/articles/how-to-get-a-mortgage). Here's how they compare: | Feature | Fixed-Rate Mortgage | Adjustable-Rate Mortgage (ARM) | | --- | --- | --- | | Interest rate | Stays the same for the full term | Fixed initially, then adjusts periodically | | Monthly payment | Predictable and never changes | Can increase or decrease after fixed period | | Best for | Buyers staying 7+ years | Buyers planning to sell or refi within 5–7 years | | Starting rate | Higher | Lower (typically 0.5–1% less) | | Risk level | Low | Moderate to high after adjustment begins | **Rule of thumb:** If you plan to stay in your home for seven years or longer, a fixed-rate mortgage — whether a **15-year mortgage** or a **30-year mortgage** — usually provides the best combination of predictability and long-term value. ## How to Choose the Right Mortgage Type With so many types of mortgage loans available, use this decision framework to narrow your options: - **Are you a veteran or active-duty service member?** A VA loan should be your first choice — the terms are hard to beat. - **Are you buying in a rural or qualifying suburban area?** Check USDA eligibility for a 0% down payment option. - **Do you have limited savings for a down payment?** Consider an FHA loan (3.5% down) or a conventional loan with a 3% down payment program. - **Is the home price above $806,500?** You'll likely need a jumbo loan. - **Are you planning to sell within 5 years?** An ARM could save you money with its lower initial rate. - **Do you have good credit, stable income, and 20% down?** A conventional loan is typically your most cost-effective option. Still not sure where you stand? Start by understanding [how much mortgage you can afford](/articles/how-much-mortgage-can-i-afford) and then explore [mortgage pre-approval](/articles/mortgage-preapproval) to see what you qualify for. ## Calculating Your Mortgage Payment by Loan Type Your loan type directly affects your interest rate, required down payment, mortgage insurance costs, and ultimately your monthly payment. Even small differences add up significantly over a 15- or 30-year term. For example, on a **$400,000 home**, a conventional loan at 6.5% with 20% down results in a lower monthly payment than an FHA loan at the same rate with 3.5% down — because the FHA loan carries both a larger principal balance and mandatory mortgage insurance premiums. For qualified buyers, the conventional loan often wins on total cost. The best way to see the real numbers for your situation is to run the scenarios yourself. Use the [Opendoor Mortgage Calculator](https://www.opendoor.com/mortgage-calculator) to input your down payment, loan amount, and estimated rate — then compare monthly payments across different loan types. **\[Try the Calculator →\](https://www.opendoor.com/mortgage-calculator)** **Frequently asked questions** ## Disclosure Opendoor Home Loans LLC is not available in all markets. Products, programs, rates, and terms are subject to change without notice. This material is provided for informational purposes only and is not an offer or guarantee of credit. Contact Opendoor Home Loans for current availability. --- *Originally published at [https://www.opendoor.com/articles/types-of-mortgage-loans](https://www.opendoor.com/articles/types-of-mortgage-loans)*