Almost all lenders and other real estate professionals will recommend that VA loan to those who qualify, but it’s still important to understand how it differs from other mortgage products.
These loans also require no money down as a down payment but are restricted to certain locations and income limits of the buyer. They are backed by the United States Department of Agriculture.
USDA loans were designed to encourage home ownership in rural areas and for those with lower incomes. USDA loans may be available for suburban areas as well.
These loans allow for a down payment as low as 3.5% of the purchase price, but do require borrowers to pay PMI. There are income limits for those who can use an FHA loan, which is insured through the Federal Housing Authority.
FHA loans are popular for those looking to fix up an existing home that is need of repairs, but can be used for the purchase of any home if the buyer meets the eligibility requirements.
Most lenders will require a 20% down payment for a conventional mortgage. You may be able to use a conventional mortgage with a lower down payment but will almost certainly need to pay PMI. These mortgages have the least number of restrictions associated with them, as they are not backed by any sort of government office. Lenders tend to be stricter with their lending requirements, such as credit score and debt-to-income ratio, when using conventional loans because they are not guaranteed.