What Types of Home Loans Are Available?
So, you’re ready to buy a home, and you’re wondering—what types of home loans are out there? No worries, I’m here to help!
I’m Katie Masters with Streetlight Realty, and today, we’re breaking down some of the most common home loan options so you can find the one that fits you best.
Conventional Loans
Best for: Buyers with good credit who want flexibility.
Conventional loans are one of the most popular mortgage options out there. They’re not backed by the government, which means fewer restrictions, but they do usually require a higher credit score.
Key Features of Conventional Loans:
✅ Typically requires a credit score of 620+.
✅ Down payments as low as 3%—despite the common myth that 20% is required!
✅ You will have to pay private mortgage insurance (PMI) if you put down less than 20%, but once you reach 20% equity, PMI goes away.
A lot of people assume you must put 20% down, but that simply isn’t true. I’ve seen buyers do 3%, 5%, and 10%!
FHA Loans
Best for: First-time homebuyers or those with lower credit scores.
FHA loans are government-backed and allow lower credit scores, making them a great option for first-time homebuyers—or really, anyone looking for a more accessible loan option.
Key Features of FHA Loans:
✅ Credit scores as low as 580 may qualify.
✅ Down payment of just 3.5%.
✅ Requires mortgage insurance (MIP) for the life of the loan unless refinanced.
I personally used an FHA loan when I bought my home! The catch is that, like conventional loans under 20%, you’ll have to pay mortgage insurance. However, for many buyers, it’s worth it to get into their dream home sooner rather than later.
VA Loans
Best for: Military service members, veterans, and eligible spouses.
VA loans are amazing if you qualify! I’ve worked with many VA buyers, and this is hands down one of the best loan options available.
Key Features of VA Loans:
✅ No down payment required (100% financing).
✅ No private mortgage insurance (PMI).
✅ Competitive interest rates.
These loans are only available to active-duty military, veterans, and eligible surviving spouses, but if you’ve served, this is one of the best ways to buy a home.
USDA Loans
Best for: Buyers purchasing in rural or suburban areas.
If you’re buying in a rural or suburban area, you might qualify for a USDA loan, which is another zero down payment option!
Key Features of USDA Loans:
✅ No down payment required.
✅ Typically requires a credit score of 640+.
✅ Lower mortgage insurance costs compared to FHA loans.
Not sure if your home qualifies? I can help you check! Many people are surprised to find out that their dream home might meet the USDA eligibility requirements.
Bridge Loans
Best for: Homeowners who need to buy a new home before selling their current one.
If you’re in a situation where you need to buy before selling your current home, a bridge loan might be the right solution.
Key Features of Bridge Loans:
✅ Short-term financing (usually 6-12 months).
✅ Helps you buy your new home before selling your old one.
✅ Requires equity in your current home to secure the loan.
Bridge loans can be a great tool, but they often come with higher interest rates and short repayment terms, so they’re best for people who are confident in selling their home quickly.
Which Loan is Right for You?
Choosing the right loan depends on your financial situation, credit score, and homebuying goals. Here’s a quick recap:
| Loan Type | Best For | Down Payment | Credit Score Requirement | Mortgage Insurance? |
|---|---|---|---|---|
| Conventional | Buyers with good credit | 3% – 20% | 620+ | Yes, if <20% down |
| FHA | First-time buyers, lower credit | 3.5% | 580+ (or 500 with 10% down) | Yes (MIP required) |
| VA | Veterans & military members | 0% | No minimum (lender-specific) | No |
| USDA | Rural & suburban buyers | 0% | 640+ | Yes (lower than FHA) |
| Bridge | Homeowners buying before selling | Varies | Depends on lender | No |
What Type of Loan Did You Get? Let’s Chat!
There are many different types of home loans out there, and finding the right one is key to getting into your dream home with confidence.
I used an FHA loan when I bought my home because it was the best fit for me and my family. What about you? Let me know in the comments what type of loan you ended up using!
If you’re still unsure which loan is right for you, give me a call! I can connect you with a trusted lender who can answer your questions and help you get started.
Learn More and Explore Homes!
Want to learn more about buying a home? Check out our videos for home buyers here and get more helpful tips and tricks on our home buyer education page.
If you’re ready to look at homes, visit Streetlight Realtors to find your dream home in the Dayton area.
Contact Team MVE
Ready to find your perfect home or need more help understanding home buying? Reach out to Team MVE:
- Jonas Helbert: (937) 626-4181
- Katie Masters: (937) 901-8177
- Email: mve@streetlightrealtors.com
We’re here to help make your home buying journey easy and fun. Let’s find your dream home together!
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SLR Experts
Streetlight Realty is located in Washington Twp, OH, and serves the entire Miami Valley. Whether you are looking to buy or sell real estate, we have experts who can assist you in the process. You can call Jonas Helbert at 937-626-4181 or Katie Masters at 937-901-8177 with any Real Estate questions. We are here to help!