Conventional loans require 3-20% down payment, 620+ credit score, and PMI below 20% down (removable at 80% LTV). FHA loans require 3.5% down with 580+ credit, lower standards but permanent MIP in most cases. VA loans require zero down payment, no PMI, available only to eligible veterans/military with a funding fee. USDA loans offer zero down payment for rural properties with income limits. Each loan type has different maximum loan limits and property requirements.
A first-time buyer with a 650 credit score, limited savings, and no military service would likely use an FHA loan (3.5% down, lower credit threshold). A veteran would benefit most from a VA loan (zero down, no PMI). A buyer with 20% down and strong credit would choose conventional (no PMI, most flexibility).
Create a comparison chart: Conventional (3-20% down, PMI if <20%, removable), FHA (3.5% down, MIP for life), VA (0% down, no PMI, funding fee, veterans only), USDA (0% down, rural only, income limits). The exam frequently asks which loan is best for a specific borrower scenario.
Related Terms
Related Concepts
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
A trustee sale is a type of foreclosure where a trustee, appointed under a deed of trust, sells the property at auction to satisfy the debt.
Foreclosure is the legal process by which a lender takes possession of a property when a borrower fails to make mortgage payments. It allows the lender to sell the property to recover the outstanding debt.
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
An FHA loan is a mortgage insured by the Federal Housing Administration that allows lower down payments and credit scores than conventional loans. It is designed to help first-time homebuyers and borrowers with limited resources.
Frequently Asked Questions
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