Home Loans

How much you need for a down payment depends on the type of home loan. Many buyers are surprised to learn that 20% down is not always required.

Here are common down payment minimums:

• Conventional loans may start at 3% down
• FHA loans require at least 3.5% down
• VA and USDA loans may let eligible buyers put nothing down
• Jumbo loans typically ask for 10% or more down

Putting 20% down lets you skip private mortgage insurance (PMI) on a conventional loan, but it is not required to buy a home. A smaller down payment keeps more cash on hand for closing costs and moving.

Speak to a loan officer about whether you may qualify for down payment assistance.

The key difference between a fixed-rate mortgage and adjustable-rate mortgage is whether your rate stays the same throughout the life of your loan or changes.

• Fixed-rate mortgages: The interest rate doesn’t change for the duration of the loan.
• Adjustable-rate mortgages (ARMs): These loans start with a set rate for the first five, seven or 10 years, then change based on the market every six months to a year up to a certain cap.

The best loan for a first-time homebuyer depends on your credit score, savings, debt, and goals. Several programs are built to make that first purchase easier.

• Conventional loans: Buyers with strong credit scores can put down as little as 3% of the purchase price of the home.
• FHA loans: These loans allow for lower credit scores, more debt, and as little as 3.5% down.
• VA loans: Eligible service members and veterans don’t have to make down payments.
• USDA loans: Buyersin eligible rural and suburban areas may be able to get a 0% down loan.

Many state and local programs also offer down payment assistance or lower rates for first-time buyers. The best move is to compare options with a loan officer who can help match you with the right program.

Whether you should choose a 15-year or 30-year mortgage comes down to how much you pay each month and how fast you want to own your home without a mortgage.

• A 15-year mortgage has a lower interest rate and you pay off your home in half the time. This can save you a lot of money in interest. But your monthly payments are higher.
• A 30-year mortgage spreads payments out longe over 30 years. This lowers your monthly bill and frees up cash, but your loan is twice as long.

In short, a 15-year loan costs more each month, but saves you money overall. A 30-year loan is easier on your budget each month, but costs more in interest over time. Use a mortgage calculator to compare, then talk with a loan officer about which loan is best for you.

The difference between conforming and non-conforming loans is whether the loan amount stays within limits set by the Federal Housing Finance Agency (FHFA).

Here is what sets them apart:

• Conforming loans meet the size limits and rules set by Fannie Mae and Freddie Mac, the two groups that back most U.S. mortgages.
• Non-conforming loans exceed those limits or fall outside the standard rules.

Conforming loans often have lower interest rates and are easier to qualify for because they follow standard rules. The most common non-conforming loan is a jumbo loan, which covers homes that cost more than the conforming limit.

A conventional loan is a mortgage that is not backed by a government agency. It is the most common home loan and works well for buyers with solid credit scores and steady income from an employer.

Key features of conventional loans include:

• Minimum 3% down payment for qualified buyers
• 620 minimum credit score
• Private mortgage insurance (PMI) required with less than 20% down, which may be removed later
• Loan limits that follow the FHFA conforming cap

An FHA loan is a mortgage insured by the Federal Housing Administration (FHA), part of the U.S. Department of Housing and Urban Development (HUD). It helps buyers with lower credit scores, more debt, and less savings become homeowners.

Key features of FHA loans include:

• A down payment of 3.5% for borrowers with credit scores of 580 or higher
• A 10% down payment option for credit scores between 500 and 579
• Easier qualifying rules than for conventional loans
• Required mortgage insurance premiums (MIP) that protect the lender for at least 11 years if the borrower makes a 10% down payment and for the life of the loan if they put down less

A VA loan is a mortgage backed by the U.S. Department of Veterans Affairs (VA) for eligible active duty service members, veterans, and surviving spouses. It is one of the best home financing tools available.

Key features of VA loans include:

• No down payment required for eligible borrowers
• No private mortgage insurance (PMI)
• Competitive interest rates
• More flexible credit rules than for conventional loans
• A one-time VA funding fee that helps fund the program, which may be waived for eligible, disabled veterans

A reverse mortgage is a home loan that allows homeowners age 62 and older turn part of their home equity into cash without selling the home or adding a monthly mortgage payment. The lender pays them. The most common type is the Home Equity Conversion Mortgage (HECM), insured by the FHA.

Key features of reverse mortgages include:

• At least one of the borrowers must be at least 62 and live in the home as their primary residence
• Funds can come as a lump sum, monthly payments, a line of credit, or a mix
• The loan is paid back when the borrower sells, moves out, or passes away

The borrower is still responsible for property taxes, insurance, and maintenance  

A USDA loan is a mortgage backed by the U.S. Department of Agriculture (USDA) that helps low- to moderate-income buyers buy homes in eligible rural and suburban areas. It is a low-cost option for buyers who qualify.

Key features of USDA loans include:

• No down payment required for eligible borrowers
• 640 minimum credit score
• Below-market interest rates and lower mortgage insurance costs
• Income limits that vary by location and household size

The home must be in a USDA-eligible area and serve as your primary residence  

A HELOC, or home equity line of credit is similar to a credit card that lets you borrow against your home equity as a revolving line of credit. It is a flexible way to access cash for big expenses, such as home renovations.

Homeowners can withdraw as much or as little of the approved amount during the draw period, which lasts between five and 10 years. Then they repay what they borrowed, plus interest, over the following 10 to 20 years.

Key features of HELOCs include:

• A revolving line you can draw from, repay, and reuse during the draw period
• A variable interest rate that can change over time
• Funds you can use for home projects, debt payoff, school, or emergencies
• You pay interest only on what you borrow

Your home secures the loan, so it must be repaid if you sell the property  

A DSCR loan is a mortgage for real estate investors that qualifies the borrower based on the property's rental income, not their personal income. DSCR stands for debt service coverage ratio, which measures whether the rent of the investment property you’re purchasing covers the mortgage payment.

Key features of DSCR loans include:

• Approval is based on the property's cash flow, not your W-2 income or tax returns
• A DSCR of 1.0 or higher means the rent covers the mortgage. Lenders prefer above 1.0.
• Lenders typically don’t check personal income, which helps self-employed investors
• Available for rental homes, multifamily units, and condos
• Commonly used by investors building or growing a rental portfolio