Mortgage Types Comparison
Definition
A comparison of the major mortgage loan types—conventional, FHA, VA, and USDA—covering their eligibility requirements, down payment amounts, mortgage insurance rules, and best use cases.
Example
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).
Exam Tip
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 Financing Terms
Deed (in foreclosure context)
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
Trustee 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
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.
Conventional Loan
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.
FHA Loan
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.
VA Loan
A VA loan is a mortgage guaranteed by the Department of Veterans Affairs available to eligible veterans, active-duty service members, and surviving spouses. It offers no down payment and no private mortgage insurance requirements.
Frequently Asked Questions
Test Your Financing Knowledge
Practice with exam-style questions to make sure you can apply Mortgage Types Comparison and other financing concepts.