HOME BUYING
From Listings to Living
You ask three lenders for a quote on the same $400,000 home and get three different answers: one pitches a conventional loan with 5 percent down, another an FHA loan, and a third asks whether you ever served in the military. None of them is wrong. They are offering different types of mortgage loans, each built for a different borrower.
The main types of mortgage loans split on one question: who stands behind the loan if you stop paying. Conventional loans have no government backing, and the ones that fit under the 2026 conforming limit of $832,750 in most counties can be sold to Fannie Mae or Freddie Mac. Jumbo loans sit above that limit. FHA, VA and USDA loans carry a federal insurance or guarantee that lets lenders accept less money down. A second question, fixed rate or adjustable, applies across almost all of them. And loans that fall outside the federal Qualified Mortgage rules form a category of their own, called non-QM.
This page is the map. Each section is short and links to the deep dive when one exists.
Leevli Editorial Team
| Loan type | Who backs it | Minimum down payment | Insurance or fees | 2026 limit (one unit) | Usually fits |
|---|---|---|---|---|---|
| Conventional conforming | No government backing; eligible for purchase by Fannie Mae or Freddie Mac | Varies by program; under 20 percent requires PMI | PMI below 20 percent down, cancellable later | $832,750 baseline; up to $1,249,125 in high-cost areas | Solid credit, 5 to 20 percent down |
| Jumbo | Lender or private investors | Set by the lender | Set by the lender | Above the conforming limit | Higher-priced homes in costly markets |
| FHA | Insured by the Federal Housing Administration (HUD) | 3.5 percent with a 580 score; 10 percent from 500 to 579 | 1.75 percent upfront plus annual premium | $541,287 to $1,249,125 by county | Lower scores, small down payments |
| VA | Partly guaranteed by the Department of Veterans Affairs | Typically none | No mortgage insurance; funding fee unless exempt | No limit with full entitlement | Eligible service members, veterans and certain eligible spouses |
| USDA guaranteed | 90 percent guarantee from USDA Rural Development | None for qualified buyers | 1.00 percent upfront guarantee fee and 0.35 percent annual fee (fiscal year 2027) | None listed on USDA's program page; household income capped at 115 percent of median | Moderate incomes in eligible rural areas |
| Non-QM | Private lenders and investors | Set by the lender | Can be priced above QM limits | None set by agencies | Borrowers or loans that do not fit QM rules |
Sources for each row appear in the sections below. Two things the table cannot show: lenders add their own requirements, called overlays, to every program, and your own price depends on credit, down payment and the day you lock.
Many first-time buyers end up comparing these three. The short logic:
If your credit history is the deciding factor, our guide to loans with a bad credit history compares minimum scores and waiting periods across all of these programs.
A conforming loan is a conventional loan small enough for Fannie Mae or Freddie Mac to buy. The Federal Housing Finance Agency sets that size each year. For 2026, FHFA's conforming loan limit announcement put the baseline for one-unit homes at $832,750, an increase of $26,250 from 2025. In areas where 115 percent of the local median home value exceeds the baseline, the limit rises, up to a ceiling of $1,249,125. Alaska, Hawaii, Guam and the U.S. Virgin Islands have higher statutory limits.
Conventional loans are the most flexible on property type: they can finance a principal residence, a second home or an investment property, which FHA, VA and USDA purchase loans do not. With less than 20 percent down, expect PMI, and count it in the payment when you work out how much house you can afford.
Any mortgage above the conforming limit for its county is a jumbo loan. Fannie Mae and Freddie Mac cannot buy it, so the lender keeps it or sells it to private investors and sets its own credit, down payment and cash reserve rules. Ask for those rules in writing early, because they differ more between lenders than conforming rules do.
Illustrative example: you agree to buy a $1.6 million house in Los Gatos with 20 percent down, so you borrow $1,280,000. That is above the $1,249,125 ceiling, so it is a jumbo loan whatever the county's own limit, anywhere outside the four special areas. Putting down $350,900 instead would bring the loan to $1,249,100, inside the ceiling, but only if the county's limit is at the ceiling. Check the county figure before you plan around it.
FHA does not lend money. It insures loans made by approved lenders, using the rules in HUD's Handbook 4000.1. A decision credit score of 580 or higher qualifies for maximum financing, which means 3.5 percent down on a purchase; from 500 to 579, the loan is capped at 90 percent of value. Borrowers pay an upfront premium of 1.75 percent of the base loan and an annual premium. The home must be your principal residence, which can be one unit of a 2 family home.
FHA also caps loan size by county. HUD's 2026 loan limit announcement set the one-unit range at $541,287 in lower-cost areas to $1,249,125 in the highest-cost areas, for case numbers assigned on or after January 1, 2026. Our guide on how to qualify for an FHA mortgage covers debt ratios, income and waiting periods.
FHA loans can also be assumed by a later buyer who passes the servicer's review, a feature that matters when today's rates are higher than the seller's rate. Our guide to assumable mortgage listings explains how buyers find them.
The VA guarantees part of the loan, which, in the words of VA's Home Loan Guaranty Buyer's Guide, takes the place of a down payment. Active-duty service members, veterans with discharges other than dishonorable, National Guard and Reserve members, other uniformed service personnel and certain eligible spouses may be eligible, though a non-veteran can assume a VA loan that already exists. The guide lists the program's main features:
Illustrative example: an Army veteran relocating to Colorado Springs with full entitlement and a $450,000 purchase can finance the whole price, with no monthly mortgage insurance, provided the lender approves her income and credit and the home appraises at or above the price.
USDA's Single Family Housing Guaranteed Loan Program, also called Section 502 Guaranteed, lets approved lenders offer 100 percent financing in eligible rural areas, backed by a 90 percent loan note guarantee. The program page lists these requirements:
USDA's program page says there are no credit score requirements, though you must show you can manage debt, and lenders may set their own floor. The fees are set each fiscal year; USDA's fiscal year 2027 notice lists a 1.00 percent upfront guarantee fee and a 0.35 percent annual fee, effective from October 1, 2026.
Do not guess eligibility from a map in your head. A buyer looking near London, Kentucky, or on the edge of a metro area, should enter each specific address on USDA's eligibility site before making an offer that depends on this loan.
Every type above comes in a fixed-rate version, and most also come as adjustable-rate mortgages. The CFPB's comparison of fixed-rate and adjustable-rate mortgages sums up the difference: a fixed rate is set at closing and does not change, while an ARM's rate can go up or down after an introductory period, following an index of market rates, within whatever caps the loan sets.
| Feature | Fixed rate | Adjustable rate (ARM) |
|---|---|---|
| Starting rate | Usually higher | Often lower for the first months or years |
| Payment over time | Principal and interest stay the same | Can rise or fall after the introductory period |
| What limits changes | Nothing to limit | Rate caps on each change and over the life of the loan, if the loan has them |
| Fits best | Long stays and tight budgets | Buyers confident they will sell or pay off before the first reset |
The CFPB's warning is the one to keep: do not assume you will be able to sell or refinance before the rate changes. If you cannot afford the higher payment on today's income, consider another loan. If the goal is a lower fixed rate rather than a lower starting rate, our guide to points on a mortgage shows when buying down the rate pays off.
A Qualified Mortgage meets a federal standard designed to make the loan more affordable. The CFPB's guide to Qualified Mortgages lists the main conditions: no interest-only period, no negative amortization, no balloon payment except in limited small-lender cases, no term longer than 30 years, and limits on APR and on upfront points and fees for most loans. All FHA, VA and USDA loans are qualified loans; conventional and jumbo loans must meet the requirements to qualify.
A non-QM loan sits outside those limits. It can be the right tool for a borrower whose income is hard to document or for a feature the QM rules exclude, such as a long term; our analysis of the 40-year mortgage shows what that costs. Lenders still have to make a good-faith effort to confirm you can repay, but the QM price limits do not apply, so compare any non-QM offer against an agency loan before you accept it.
One category is not on this list at all: a home equity loan or line of credit borrows against a home you already own rather than financing a purchase. Our comparison of HELOC vs home equity loan covers that decision.
The building has to qualify as well as the buyer, and each of the types of mortgage loans above reviews it differently.
Illustrative example: a buyer touring towers in Brickell who plans to use FHA or VA should confirm each building's status before writing an offer, because an unapproved building can force a switch to another loan type, or to a portfolio lender, late in the deal. If approval problems keep coming up, our condo vs house comparison weighs the other trade-offs.
The next step after this overview is a loan officer who can quote two or three of these types on the same day. When you have a price range, shortlist homes on Leevli listings that fit both the loan and the building rules.
Loan type often depends on the building and the neighborhood, and residents know which financing has actually worked there.
Listings show the property, but they rarely explain the lived reality around it. On Leevli, a mover can explore the city, review neighborhood and building information, and ask a verified resident the specific questions that remain unanswered. That human layer helps readers know what to investigate before signing a lease, making an offer, or choosing between two addresses.
Conventional loans, which split into conforming loans that Fannie Mae and Freddie Mac can buy and jumbo loans above the limit; government-backed FHA, VA and USDA loans; and non-QM loans outside the federal Qualified Mortgage rules. Each can be fixed rate or, for most programs, adjustable. Term length, such as 15 or 30 years, is a separate choice on top of the type.
FHFA set the 2026 baseline at $832,750 for one-unit properties, up $26,250 from 2025. In high-cost areas the limit can reach $1,249,125, and Alaska, Hawaii, Guam and the U.S. Virgin Islands have higher limits. FHFA resets the figures every year, so check the current table for your county before you plan around a number.
A jumbo loan is a conventional mortgage larger than the conforming limit for its county. Because Fannie Mae and Freddie Mac cannot buy it, the lender or a private investor sets the down payment, credit and reserve requirements. Rules differ more from lender to lender than with conforming loans, so compare written requirements from at least two lenders.
For eligible borrowers, VA is often cheapest because it carries no monthly mortgage insurance, though many borrowers pay a one-time funding fee. Between conventional and FHA, it depends on credit and down payment: FHA's premium does not change with your score, while PMI can be cancelled. Compare same-day Loan Estimates over the years you expect to keep the loan.
Household income at or below 115 percent of the area median, a primary residence in an eligible rural area, and U.S. citizen, non-citizen national or qualified alien status. Loans are 30-year fixed only. USDA sets no credit score requirement, but you must show you can manage debt, and lenders may set their own minimum.
For USDA's fiscal year 2027, which began October 1, 2026, the program charges a 1.00 percent upfront guarantee fee and a 0.35 percent annual fee on purchase and refinance loans. On an illustrative $250,000 loan, the upfront fee is $2,500. The fees can change each fiscal year, so confirm them on your Loan Estimate.
A fixed rate fits buyers planning to stay for many years or who need a predictable payment. An ARM can fit buyers confident they will sell or pay off before the first rate change. The common mistake is choosing an ARM because you expect to refinance; the CFPB warns that your home's value or your finances may not cooperate when the time comes.
A Qualified Mortgage avoids interest-only payments, negative amortization, most balloon payments and terms over 30 years, and most face limits on APR and on points and fees. A non-QM loan can include those features and can be priced higher, because the QM price limits do not apply. Government-backed loans are all qualified, so test them before accepting a non-QM offer.
Only if the building qualifies for that program. Conventional loans need a project that meets Fannie Mae or Freddie Mac standards, FHA needs an approved project or single-unit approval, and VA needs a project on its approved list or a VA review. Check the building's status before you make an offer that depends on one loan type.
Not for borrowers with full entitlement. VA's Buyer's Guide says there is no loan limit if you have full entitlement and can afford the loan. If part of your entitlement is tied up in another VA loan, the county limit affects how much VA guarantees, which may mean a down payment on the amount above it.
This article is informational and does not constitute legal, financial, tax or insurance advice.
