Government-Backed Loans
Government-backed loans provide extra security for lenders, making it easier for buyers to qualify.
FHA Loan (Federal Housing Administration) – Established in 1934, FHA loans were created to increase homeownership after the Great Depression. They offer down payments as low as 3.5% and more lenient credit requirements.
VA Loan (Veterans Affairs) – Introduced in 1944 as part of the GI Bill, VA loans help active-duty military, veterans, and eligible spouses purchase homes with zero down payment and no private mortgage insurance (PMI).
USDA Loan (United States Department of Agriculture) – Designed for rural and suburban homebuyers, this loan program offers 100% financing with low mortgage insurance costs.
Conventional Loans
Unlike government-backed loans, conventional loans are not insured by the government but are still widely used by homebuyers.
Conforming Loans – These loans meet the guidelines set by Fannie Mae and Freddie Mac, two government-sponsored enterprises (GSEs) established in the mid-20th century to stabilize the housing market. First-time buyers can qualify with as little as 3% down.
Non-Conforming Loans (Jumbo Loans) – These loans exceed conforming loan limits and are ideal for higher-priced homes but often require larger down payments and higher credit scores.
Which Loan is Right for You?
The best loan for you depends on your financial situation, credit score, and homeownership goals. Many first-time buyers choose FHA or conventional loans, while VA and USDA loans are excellent options if you qualify.