Choosing the wrong mortgage can cost you tens of thousands of dollars over the life of a loan. A 30-year fixed-rate conventional loan is the most common choice for buyers with solid credit, offering predictable monthly payments and no mandatory mortgage insurance if you put down 20% or more. Buyers with scores below 680 or limited savings often qualify more easily for an FHA loan, which accepts 3.5% down but requires both upfront and annual mortgage insurance premiums.
Government-backed options: VA and USDA loans
VA loans remain the best deal in US mortgage lending for eligible veterans and active-duty military. They require no down payment, no private mortgage insurance, and carry compétitive rates. USDA loans offer similar zero-down terms for buyers in designated rural and suburban areas. Both programs have income and property eligibility requirements, so verify your qualifications before counting on either in your budget planning.
Jumbo loans and adjustable-rate mortgages
In high-cost markets like Los Angeles, Manhattan, and the Bay Area, many buyers need jumbo loans that exceed the conforming loan limit, which stood at $766,550 for most counties in 2024. Jumbo lenders typically require 10 to 20% down, a debt-to-income ratio below 43%, and substantial cash reserves. Adjustable-rate mortgages start with a fixed period of 5 or 7 years, then adjust annually based on market indexes, making them suitable for buyers who plan to sell before rate adjustments begin.
