Loan Program Options

FHA loans are mortgages insured by the Federal Housing Administration (FHA) and are governed by FHA policy guidance (U.S. Department of Housing and Urban Development, n.d.).

FHA loans are widely used by first-time buyers because they allow lower down payments and offer more flexible credit requirements than many conventional options. These features can help you enter the market with confidence while maintaining a healthy financial cushion.

• Low down payment options may be available for eligible borrowers under FHA policy guidelines. (U.S. Department of Housing and Urban Development, n.d.)
• FHA financing generally includes upfront and annual mortgage insurance requirements. (U.S. Department of Housing and Urban Development, n.d.)
• FHA loans are commonly offered in long-term fixed-rate structures, subject to program rules and lender underwriting. (U.S. Department of Housing and Urban Development, n.d.)

This option can be helpful when you're looking to enter homeownership with flexibility while keeping upfront expenses more manageable.

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Conventional loans aren’t insured by a government agency. Some conforming conventional programs—such as HomeReady® and Home Possible®—are designed to support eligible buyers with low down payment options and other program flexibilities (Fannie Mae, n.d.; Freddie Mac, n.d.).

Conventional loans are a strong fit for buyers with solid credit, consistent income, and stable savings. These loans often reward financial readiness with lower long-term costs and more flexibility compared to other programs.

• Some programs offer low down payment options for eligible borrowers. (Fannie Mae, n.d.; Freddie Mac, n.d.)
• Certain programs may allow gifts and eligible grants to help cover down payment and/or closing costs (program rules apply). (Fannie Mae, n.d.; Freddie Mac, n.d.)
• Private mortgage insurance (PMI) may be required on low down payment conventional loans, with cancellation rules that depend on the loan, servicer, and program requirements. (Fannie Mae, n.d.; Freddie Mac, n.d.)

This program fits well when you’re focused on long-term flexibility and want the ability to adjust or improve your loan terms over time.

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VA loans offer significant advantages for eligible veterans, active-duty service members, and some surviving spouses. These benefits are made possible through a program backed by the U.S. Department of Veterans Affairs, designed to support homeownership among those who have served.

VA-backed home loans may help eligible borrowers buy a primary residence after they qualify for a Certificate of Eligibility (COE) and meet VA and lender requirements. (U.S. Department of Veterans Affairs, n.d.)

• No down payment may be available in many cases for eligible borrowers (program and lender conditions apply). (U.S. Department of Veterans Affairs, n.d.)
• VA loans generally do not require monthly mortgage insurance, but other costs may apply. (U.S. Department of Veterans Affairs, n.d.)
• A VA funding fee may apply for many borrowers (some are exempt). (U.S. Department of Veterans Affairs, n.d.)

For eligible borrowers, this option supports a more streamlined entry into homeownership without requiring large upfront reserves.

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USDA loans are designed to help eligible buyers purchase homes in qualifying rural or suburban areas. These loans support homeownership in communities where population density and income thresholds meet program guidelines.**

The USDA Single Family Housing Guaranteed Loan Program helps approved lenders provide eligible households the opportunity to own a primary residence in eligible rural areas. (U.S. Department of Agriculture, Rural Development, n.d.)

• No-down-payment financing may be available for eligible applicants, depending on program and lender requirements. (U.S. Department of Agriculture, Rural Development, n.d.)
• Applicants must meet income eligibility and generally cannot exceed 115% of area median income. (U.S. Department of Agriculture, Rural Development, n.d.)
• Eligibility depends on location, household income, and underwriting, and lender overlays may apply. (U.S. Department of Agriculture, Rural Development, n.d.)

For eligible rural or suburban areas, this structure helps keep early costs predictable while maintaining stability as you settle into homeownership.

**USDA eligibility and total costs vary by location and household income; lender overlays and program fees may apply.

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There is no single “best” loan. The right program depends on your credit, savings, location, income, eligibility, and long-term financial goals. Each option—FHA, Conventional, VA, and USDA—supports a different financial profile. 

In some cases, yes. Depending on timing and documentation, a lender may be able to review whether switching programs is possible. This is determined on a case-by-case basis.

Not necessarily. Many buyers use low-down-payment options or permitted assistance programs. Eligibility and approval depend on meeting loan guidelines—not on the down payment amount alone.

Many programs allow down payment or closing cost assistance when permitted by loan guidelines. Your lender can confirm which combinations are allowed based on the specific loan type and your financial profile.

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Choosing your loan program is easier when you know what to compare. Here are the steps that help you move forward with clarity: 

Confirm how much you’re comfortable investing upfront while keeping a reliable emergency fund in place.

Evaluate differences in down payment requirements, mortgage insurance rules, eligible assistance options, and long-term costs.

Income, credit, location, property type, and service history (for VA loans) all contribute to program eligibility.

A licensed mortgage professional such as Anne King (NMLS #253976) can walk you through each option, helping you understand how different loan types align with your financial goals.

Choosing the loan that reflects both your current financial picture and your future wealth goals helps you step into homeownership with confidence and stability.

The goal is to select the option that feels stable, manageable, and aligned with how you want to grow into homeownership—not just today, but in the years ahead.

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