Mortgage loans in the USA: conventional, FHA, VA and down payment

Most home purchases in the USA are financed with a mortgage. Understanding the loan types, the down payment and mortgage insurance helps you choose well. This guide is informational; terms change by lender and over time, so compare offers and confirm current numbers.

The main loan types

• Conventional: not backed by a government agency. With a down payment under 20% you usually pay PMI (private mortgage insurance) until you reach enough equity.
• FHA: insured by the Federal Housing Administration, with a lower down payment and more flexible credit, in exchange for a mortgage insurance premium.
• VA: for eligible veterans and service members, often with no down payment and no monthly mortgage insurance.
• USDA: for eligible rural and some suburban areas, with low or no down payment.

Down payment and PMI

A 20% down payment on a conventional loan lets you avoid PMI, but many buyers put down less and pay PMI until they build equity. FHA and low-down-payment programs make buying possible with less cash, at the cost of mortgage insurance.

What to check before signing

• Get pre-approved: it tells you your budget and makes your offer stronger.
• Compare the APR, not just the rate: the APR includes fees and reflects the true cost.
• Fixed vs. adjustable (ARM): a fixed rate stays the same; an ARM can change after an initial period.
• Credit score: a higher score usually means a better rate.
• Debt-to-income (DTI): lenders look at how your total debt compares with your income.

With your down payment planned and the APR compared, you borrow with more confidence. When you find the home, always review the costs, too, in the closing costs guide.

Informational content, not an offer or financial advice. Rates, insurance and eligibility change: confirm with official sources and your lender.