When you are ready to purchase a home, maybe the most crucial decision you will make is selecting the perfect mortgage loan. With so many various financing choices to consider, each tailored for various money scenarios, you’ll want to know what loans are out there—so that you can pick the one which best fits your bottom line and future aspirations.

No matter if you’re a first-time buyer, repeat offender, or low-saver, there’s likely a mortgage program out there for you. Below is an overview of the most popular home purchase loan programs, who they work best for, how they work, and the most important advantages and disadvantages.

1.Conventional Loan

A traditional loan is a government agency-uninsured mortgage. It is made by private lenders and is regulated by the rules of Fannie Mae and Freddie Mac.

Who it’s best for:

• Good to excellent credit homebuyers
• Homebuyers who have stable income and have some money in the bank
• Homebuyers who can afford to make a down payment of 3%–5%

Key features

May be used for primary, secondary, or investment homes

Private Mortgage Insurance (PMI) will be required if you put down less than 20%

PMI can be dropped when you have 20% equity

 Advantages: Good rates, generous terms

 Disadvantages: Tighter credit/income standards than government-sponsored loans

2.FHA Loan (Federal Housing Administration)

An FHA loan is a government-insured mortgage that is intended to assist low- to moderate-income homebuyers.

Who it’s best for:

• First-time homebuyers
• Homebuyers with poor credit scores (580+)
• Homebuyers with low down payments (as low as 3.5%)

Key features:

Guaranteed by the federal government

Requires upfront and yearly mortgage insurance premiums (MIP)

Relaxed on credit and debt-to-income (DTI) ratios

 Pros: Easier approval, minimal down payment

 Cons: Continuous mortgage insurance—even at 20% equity

3.VA Loan (Veterans Affairs)

A VA loan is an insured government loan provided to eligible veterans, active-duty military personnel, and some surviving spouses.

Who it’s best for:

• Service members and veterans
• Participants seeking zero down payment
• Key characteristics:
• No down payment is needed
• No PMI necessary
• Competitive rates
• Must be eligible for military service

 Pros: No down payment, no PMI, low credit requirements

 Cons: Only for veterans approved; VA funding fee must be paid

4.USDA Loan (U.S. Department of Agriculture)

A USDA loan is a zero-down-home mortgage for buyers who are buying homes in rural or suburban communities.

Who it’s best for:

Low- and moderate-income borrowers

Those who are buying in eligible rural communities

Buyers who want 100% financing

Key features:

0% down payment

Low interest rates

Income and place limitations

 Pros: No down payment, reduced rates

Cons: Income and place limitations; upfront guarantee fee

5.Jumbo Loan

A jumbo loan is a home loan that is above Fannie Mae and Freddie Mac conforming loan levels.

Who it’s ideal for:

Homebuyers who are buying more costly homes (typically over $750,000–$1M)

Homebuyers with excellent credit and high incomes/assets

Features:

Not insured by the government

Usually needs 10%–20% down

Increased interest rates and tougher qualifications

 Pros: Enables financing of high-cost homes

Cons: Higher down payments, tougher credit/income

6.Adjustable-Rate Mortgage (ARM)

An ARM has a lower initial interest rate that will change after a set time period (e.g., 5, 7, or 10 years).

Homebuyers who sell or refinance before the rate is modified

Homebuyers who prefer lower initial payments

Key features:

Introductory fixed period (e.g., 5/1 ARM = fixed for 5 years)

Changes in interest every year based on market index

Can result in higher payments in the future

 Pros: Lower starting rate

 Cons: Possible rate hikes after introduction

7.First-Time Homebuyer Programs

Numerous states and localities have first-time buyer programs that include:

Down payment grants

Reduced interest rates

Closing cost grants

Tax credits (such as Mortgage Credit Certificates)

These may usually be paired with FHA or conventional mortgages to reduce out-of-pocket expenses.

Example:

Virginia Housing (former VHDA) provides low-interest mortgages, down payment grants, and homebuyer education at zero cost to eligible residents.

How to Pick a Good Home Loan

The right mortgage is based on your:

• Credit score
• Income and employment history
• How much money you’ve saved for the down payment
• Where you are and what kind of property you want
• For how long you plan to live in the house

A smart game plan:

Get pre-approved by a good lender or mortgage broker

Compare loan types side-by-side

Ask fees, PMI, closing costs, and about eligibility for assistance programs

Select a loan that suits your lifestyle and future finances

Final insight: The Right Loan Makes All the Difference

There is no single mortgage option. You’re a first-time buyer, a veteran, or you just want a better rate – there’s no one-matches-all mortgage. Knowing your home loan options for a home is part of your homeownership experience.

Select a reputable mortgage professional who will guide you through your choices, compare, and help you make the most, best-informed choice.