The Most Popular Home Loans Explained: FHA, VA, Conventional & Jumbo — And Who They’re Best For
If you're beginning your homeownership journey, one of the biggest questions you'll face is: which mortgage is right for me? Whether you're buying your first home, upgrading to your dream property, or exploring investment options, the type of loan you choose can have a big impact on your interest rate, down payment, and long-term financial goals.
Below, we break down the most popular home loan types—Conventional, FHA, VA, the Jumbo loan—and who each one is best suited for. As a bonus, we’ll also touch on two other loan types that can help in specific buying situations: USDA and Adjustable Rate loans.
Let’s Start With The Basics: The FHA Loan
An FHA loan is a government-backed mortgage insured by the Federal Housing Administration. It’s designed to make homeownership more accessible—especially for first-time buyers or those with lower credit scores and smaller down payments.
With a down payment requirement as low as 3.5% and more lenient credit qualifications, FHA loans help open the door to homeownership for many who might not qualify for a conventional loan. They also allow for higher debt-to-income ratios, making them a great option for buyers with moderate financial challenges.
The Most “Popular” One: The Conventional Loan
A conventional loan is a popular mortgage option that’s not backed by a government agency. Instead, it’s offered by private lenders and typically adheres to the guidelines set by Fannie Mae and Freddie Mac.
Conventional loans are ideal for borrowers with strong credit, steady income, and the ability to make a down payment (which can be as low as 3% in some cases). These loans offer flexibility in terms, competitive interest rates, and are often a first choice for buyers purchasing a primary residence, second home, or investment property.
The Loan That Helps Veterans Achieve Homeownership: The VA Loan
A VA loan is a mortgage benefit available to eligible veterans, active-duty service members, and certain members of the National Guard and Reserves. Backed by the U.S. Department of Veterans Affairs, this loan offers $0 down payment, no private mortgage insurance (PMI), and competitive interest rates. VA loans are one of the most powerful financing tools available for those who’ve served, helping military families become homeowners without the upfront financial burden many other loans require.
For Larger Purchases: A Jumbo Loan Will Be Best Suited
A jumbo loan is a type of mortgage used to finance homes that exceed the conforming loan limits set by Fannie Mae and Freddie Mac. In most parts of California, this means any loan amount over $806,500 (in 2025), reaching $1,209,750 in some high-cost areas and counties.
Because these loans are larger and not backed by federal programs, they typically require higher credit scores, larger down payments, and more detailed financial documentation. Jumbo loans are ideal for buyers purchasing high-value homes, especially in competitive markets like Northern California.
When Your Financial Situation is “Outside the Box”: Choose a Non-Qualified Mortgage Loan
If you're self-employed, a business owner, or someone with unique income streams that don’t fit traditional lending guidelines, a Non-Qualified Mortgage (Non-QM loan) might be your best bet.
Unlike conventional loans that require strict income documentation like W-2s or tax returns, Non-QM loans allow more flexibility—using bank statements, asset qualifiers, or other forms of income verification. These loans open doors for creditworthy buyers who may not meet the standard criteria but still have the means to purchase a home.
Two Other Loan Types to Consider: Adjustable Rate & USDA Loans
While Conventional, FHA, VA, and Jumbo loans are the most common, there are a couple of other options worth knowing about. USDA loans are backed by the U.S. Department of Agriculture and are designed to help low-to-moderate income buyers purchase homes in eligible rural and suburban areas—with zero down payment in many cases.
Adjustable Rate Mortgages (ARMs) offer a lower initial interest rate that adjusts over time, which can be a smart short-term option for buyers who don’t plan to stay in their home long-term. These aren’t for everyone, but in the right situations, they can be great tools.
Choosing the Right Loan: What to Consider
Before you choose a mortgage, ask yourself:
How much can I comfortably put down?
What’s my current credit score?
Am I eligible for special loan programs like VA?
Do I plan to stay in this home long-term or just a few years?
Each of these answers will help you find the right loan structure—not just for approval, but for long-term financial success. Connect with us to schedule a consultation call.