FHA Loans (Who They’re Actually Good For)

FHA loans have been around since 1934, created to expand access to homeownership.
They’re insured by the Federal Housing Administration (under HUD), which allows approved lenders to offer mortgages with lower down payments and more flexible credit rules than many conventional loans.

Translation: FHA exists to help capable buyers who don’t fit the tightest box yet.

What an FHA Loan Is

An FHA loan is a mortgage insured by the federal government.
The FHA doesn’t lend the money — it insures the loan — which reduces risk for the lender and opens the door for borrowers.

That insurance allows for:

• Lower down payments

• More flexibility with credit history

• Higher allowable debt ratios in many cases

Despite the reputation, you do not have to be a first-time buyer to use an FHA loan.

Minimum Down Payment

• 3.5% down with qualifying credit

• Funds can come from savings, gifts, or approved assistance programs

FHA is often used by buyers who want to get into a home sooner without draining cash reserves.

When FHA Usually Makes Sense

FHA loans are commonly a good fit if:

• You’re buying your first home

• Your credit is decent, improving, or recently rebuilt

• A conventional loan feels tight or expensive upfront

• You want flexibility while you build equity and options

FHA isn’t about shortcuts — it’s about access with structure.

Important Trade-Offs to Know

• FHA requires mortgage insurance, structured differently than conventional PMI

• Property condition standards are stricter

• Loan limits apply and vary by county

FHA is not always the cheapest long-term option — but it’s often one of the most accessible ways to get started.

The Bottom Line

FHA loans are a solid choice for buyers who are financially ready, even if their profile isn’t perfect on paper.

Many people use FHA as a strategic first step, then reassess once credit, equity, or income improves.

All loans are subject to underwriting and investor approval. Guidelines may change. This content is for educational purposes only and is not a commitment to lend.

VA Loans (Who They’re Actually Built For)

VA loans are a benefit earned through military service.
They’re backed by the U.S. Department of Veterans Affairs, and designed to remove common barriers to homeownership for eligible service members and their families.

When used correctly, VA loans are one of the strongest mortgage programs available.

What a VA Loan Is (Plain English)

A VA loan is a mortgage guaranteed by the Department of Veterans Affairs.
The VA doesn’t lend the money — it guarantees a portion of the loan — which allows approved lenders to offer more favorable terms.

Eligibility generally includes:

• Active-duty service members

• Veterans

• Certain surviving spouses

• Some reservists and National Guard members

Full benefits depend on eligibility status and entitlement.

Minimum Down Payment

• 0% down in many cases

• No monthly mortgage insurance

This combination alone makes VA loans uniquely powerful compared to most other loan types.

Why VA Loans Are Different

VA loans are often chosen because they offer:

• Competitive interest rates

• No monthly mortgage insurance

• Limits on certain closing costs (“allowables”)

• Flexible underwriting compared to conventional loans

The result is often lower monthly payments and less cash out of pocket.

Important Things to Know

• VA loans may include a funding fee, depending on usage and disability status

• Veterans with qualifying service-connected disabilities may be exempt from the funding fee

• Loan limits and entitlement rules can vary based on eligibility

Despite common myths, VA loans are not slower and not harder when structured properly.

The Bottom Line

VA loans are a benefit — not a loophole — and they’re best used with a clear strategy.

For eligible borrowers, they often provide one of the most efficient paths to homeownership available today.

All loans are subject to underwriting and investor approval. Guidelines may change. This content is for educational purposes only and is not a commitment to lend.

USDA Loans (Who They’re Actually Good For)

USDA loans are designed to expand homeownership in rural and semi-rural areas.
They’re backed by the U.S. Department of Agriculture and built to help moderate-income buyers purchase homes with little to no upfront cash.

Despite the name, USDA loans aren’t just for farms or remote areas — many qualifying locations are closer to town than people expect.

What a USDA Loan Is (Plain English)

A USDA loan is a mortgage guaranteed by the federal government through the USDA’s Rural Development program.

The USDA doesn’t lend the money directly. Instead, it guarantees a portion of the loan, allowing approved lenders to offer:

• 0% down payment

• Competitive fixed interest rates

• More accessible qualification standards for eligible buyers

USDA loans are intended for buyers who can afford a mortgage payment but may not have significant cash saved for a down payment.

Minimum Down Payment

• 0% down for eligible buyers

• No large upfront cash requirement

There is an upfront fee and a modest annual fee (similar to mortgage insurance), but monthly payments are often still very competitive.

When a USDA Loan Usually Makes Sense

USDA loans are often a strong fit if:

• You’re buying in a USDA-eligible area (many suburban-adjacent areas qualify)

• Your household income falls within program limits (generally up to 115% of area median income)

• You want to minimize upfront costs

• You’re purchasing a primary residence

USDA is less about “rural lifestyle” and more about location eligibility + income fit.

Important Things to Know

• Income limits apply and include total household income, not just the borrower

• Location eligibility matters more than property size or acreage

• USDA loans are 30-year fixed-rate only

• Property and appraisal standards apply

USDA loans are extremely affordable when structured correctly, but they are not one-size-fits-all.

The Bottom Line

USDA loans are one of the most underused mortgage options available.

For buyers who qualify, they can offer one of the lowest barriers to entry into homeownership — especially for those who want space, flexibility, and predictable payments.

All loans are subject to underwriting and investor approval. Guidelines may change. This content is for educational purposes only and is not a commitment to lend.

Jumbo Loans (Who They’re Actually Good For)

Jumbo loans are used when a home’s price — or the loan amount — exceeds standard conforming limits.

They’re designed for buyers with strong financial profiles purchasing higher-value properties, and when structured correctly, they can be far more flexible than people expect.

Despite the myths, jumbo loans are not rare, risky, or automatically expensive — they’re simply different.

What a Jumbo Loan Is (Plain English)

A jumbo loan is a mortgage that exceeds the loan limits set for conventional conforming loans.

Because these loans fall outside the standard Fannie Mae and Freddie Mac guidelines, they’re evaluated using portfolio or investor-specific criteria rather than a one-size-fits-all rulebook.

That means:

• More nuance in underwriting

• Greater emphasis on the full financial picture

• More room for strategy when done right

Minimum Down Payment

Down payment requirements vary by scenario, but commonly:

• 10%–20% down for primary residences

• Higher down payments may be required for second homes or certain profiles

Strong credit, assets, and reserves often matter as much as down payment percentage.

When a Jumbo Loan Usually Makes Sense

Jumbo loans are commonly a good fit if:

• You’re purchasing a higher-priced primary or second home

• Your income and assets are strong but not always “simple”

• You want flexibility around structure, terms, or reserves

• You prefer a tailored approach rather than a rigid checklist

Jumbo lending is less about thresholds and more about risk layering and overall strength.

Important Things to Know

• Credit quality matters more than credit perfection

• Cash reserves are often required

• Guidelines vary widely by lender and investor

• Interest rates are not automatically higher than conventional loans

This is one of the areas where lender access and strategy make a meaningful difference.

The Bottom Line

Jumbo loans aren’t about stretching — they’re about structuring.

For the right borrower, they offer competitive pricing, flexibility, and solutions that standard loans simply can’t.

The key is making sure the loan fits not just the property — but your broader financial picture.

All loans are subject to underwriting and investor approval. Guidelines may change. This content is for educational purposes only and is not a commitment to lend.

Conventional Loans (What Most People Mean and When They Work Best)

When most people say “conventional loan,” they’re usually referring to a conforming conventional mortgage — the most common type of home loan in the U.S.

Conventional loans follow guidelines set by Fannie Mae and Freddie Mac, which creates consistency, predictability, and flexibility when your financial profile fits the box.

What a Conventional Loan Is (Plain English)

A conventional loan is a mortgage that meets the underwriting standards established by Fannie Mae and Freddie Mac.

Those standards govern things like:

• Loan size limits (by county)

• Credit requirements

• Down payment options

• Mortgage insurance rules

Because these loans follow a standardized framework, they’re widely available and often very cost-effective for qualified buyers.

Minimum Down Payment

• 3% down for many first-time buyers

• 5%–20% down is common

• Mortgage insurance is typically required with less than 20% down, but can be removed later

The combination of lower down payment options and removable mortgage insurance is why conventional loans are so widely used.

When a Conventional Loan Usually Makes Sense

Conventional loans are often a strong fit if:

• You have good to strong credit

• You want lower mortgage insurance compared to FHA

• You plan to build equity and potentially remove MI later

• You’re buying a primary home, second home, or investment property

In many cases, conventional loans offer the best long-term flexibility.

Important Things to Know

• Loan limits vary by county and property type

• Mortgage insurance pricing depends heavily on credit score and down payment

• Loans above conforming limits fall into jumbo territory

• Guidelines are standardized — but strategy still matters

Conventional loans reward strong credit and planning more than any other loan type.

The Bottom Line

Conventional loans are the workhorse of the mortgage world.

They’re not flashy — but for buyers who qualify, they’re often the most flexible, cost-effective, and scalable option over time.

The key is knowing when conventional is the best fit — and when another loan actually makes more sense.

All loans are subject to underwriting and investor approval. Guidelines may change. This content is for educational purposes only and is not a commitment to lend.

Fixed-Rate Mortgages (When Certainty Is the Goal)

A fixed-rate mortgage is the most straightforward home loan option available.
The interest rate is locked for the life of the loan, and the principal-and-interest payment never changes.

No surprises. No adjustments. Just consistency.

What a Fixed-Rate Mortgage Is (Plain English)

A fixed-rate mortgage is a home loan where the interest rate stays the same for the entire term of the loan.

That means:

• Your rate is locked at closing

• Your principal-and-interest payment stays consistent

• Changes in the market don’t affect your loan

Fixed-rate mortgages are commonly available in 15-year and 30-year terms, with other options (10, 20, or 25 years) depending on the program.

Minimum Down Payment

Down payment requirements depend on the underlying loan type (conventional, FHA, VA, etc.), not the rate structure itself.

Common scenarios include:

• 3% down on some conventional fixed-rate loans

• 3.5% down on FHA fixed-rate loans

• 0% down on eligible VA or USDA fixed-rate loans

The fixed rate determines payment stability — not eligibility.

When a Fixed-Rate Mortgage Usually Makes Sense

Fixed-rate mortgages are often a strong fit if:

• You plan to stay in the home long-term

• You value payment certainty over short-term savings

• You don’t want your loan changing with market conditions

• You prefer simplicity over strategy-driven rate movement

This is why fixed-rate loans are often described as the “set it and forget it” option.

Important Things to Know

• Fixed-rate loans usually start with higher rates than adjustable options

• You’re trading flexibility for predictability

• Refinancing is always an option if rates drop in the future

A fixed rate protects you from rising rates — but it also means you don’t automatically benefit if rates fall.

The Bottom Line

Fixed-rate mortgages are about certainty, not optimization.

They’re ideal for buyers who want long-term stability and a predictable payment — especially when rates are competitive or when staying put is part of the plan.

They’re not always the cheapest option upfront, but they’re often the simplest to live with.

All loans are subject to underwriting and investor approval. Guidelines may change. This content is for educational purposes only and is not a commitment to lend.

Adjustable-Rate Mortgages (When Flexibility Beats Certainty)

Adjustable-rate mortgages — often called ARMs — aren’t risky by default.
They’re strategic, when used intentionally and for the right timeline.

An ARM combines a period of stability upfront with flexibility later, which can make a lot of sense depending on how long you plan to keep the home or the loan.

What an ARM Is (Plain English)

An adjustable-rate mortgage is a home loan with:

• An initial fixed-rate period, followed by

• A rate that can adjust periodically based on the market

Common ARM structures include:

• 5/1 ARM (fixed for 5 years)

• 7/1 ARM (fixed for 7 years)

• 10/1 ARM (fixed for 10 years)

After the fixed period ends, the rate adjusts at set intervals, subject to limits.

Minimum Down Payment

Down payment requirements depend on the underlying loan program — not the ARM itself.

Common scenarios include:

• 3%–5% down on conventional ARMs

• Higher down payments for certain second homes or jumbo ARMs

The adjustable rate affects payment structure, not basic eligibility.

How Rate Adjustments Actually Work

ARMs include built-in safeguards called caps, which limit how much the rate can change.

These typically include:

• Initial cap – how much the rate can change at the first adjustment

• Periodic cap – how much it can change at each adjustment

• Lifetime cap – the maximum rate over the life of the loan

These caps are designed to prevent sudden or extreme payment swings.

Borrowers are generally qualified at the worst-case payment, not the teaser rate.

When an ARM Usually Makes Sense

ARMs are often a strong fit if:

• You plan to sell or refinance within the fixed-rate period

• You expect your income to increase over time

• You want a lower initial rate than a fixed-rate loan offers

• You value short- to mid-term savings over long-term certainty

ARMs are commonly used by:

• Buyers who relocate frequently

• Buyers purchasing a “next” home, not a forever home

• Higher-income borrowers optimizing cash flow

Important Things to Know

• ARMs usually start with lower rates than fixed-rate loans

• Payments can change after the fixed period

• You’re trading long-term certainty for upfront flexibility

• Refinancing is often part of the long-term plan

ARMs are best used intentionally — not passively.

The Bottom Line

An adjustable-rate mortgage isn’t about guessing the market.
It’s about aligning your loan with your timeline and strategy.

For the right borrower, an ARM can be a smart, efficient way to reduce payments or maximize flexibility — without taking on unnecessary risk.

All loans are subject to underwriting and investor approval. Guidelines may change. This content is for educational purposes only and is not a commitment to lend.

Construction Loans (How Building Actually Gets Financed)

Building a home is exciting — and complex.
Construction loans are designed to fund the build in stages, then transition into a permanent mortgage once the home is complete.

When structured correctly, construction financing brings clarity and control to a process that otherwise feels chaotic.

What a Construction Loan Is (Plain English)

A construction loan finances the building phase of a home.

Instead of receiving all funds at once, money is released in draws as construction progresses — typically after inspections confirm that each stage of the build is complete.

Once construction is finished, the loan either:

• Converts into a permanent mortgage, or

• Is refinanced into a long-term loan

The structure depends on the program and strategy.

Common Construction Loan Structures

Construction financing typically falls into one of these categories:

• Construction-to-Permanent (One-Time Close)
One loan that covers construction and automatically converts to a permanent mortgage.

• Construction-Only (Two-Time Close)
One loan during construction, followed by a separate permanent loan after completion.

Each option has trade-offs related to rate risk, flexibility, and costs.

Minimum Down Payment

Down payment requirements vary based on:

• Loan program (Conventional, FHA, VA, Jumbo)

• Credit profile

• Whether you already own the land

Common scenarios include:

• 10%–20% down for conventional construction loans

• Lower down payment options for certain FHA, VA, or specialized programs

Equity in an owned lot may count toward down payment requirements.

When a Construction Loan Usually Makes Sense

Construction loans are often a strong fit if:

• You’re building a custom home

• You already own land or are purchasing land with the build

• You want more control over design and quality

• Existing homes don’t meet your needs or standards

Construction financing is less about speed and more about process and coordination.

Important Things to Know

• Funds are released in stages, not all at once

• Builder approval and documentation are required

• Timelines, budgets, and inspections matter

• Communication between lender, borrower, and builder is critical

This is one of the few loan types where experience matters more than rate.

Permanent Loan Options After Construction

Once the home is complete, construction loans can often transition into:

• Conventional loans

• FHA loans

• VA loans

• Jumbo loans

Choosing the right end loan is part of the strategy from day one — not an afterthought.

The Bottom Line

Construction loans aren’t hard — they’re procedural.

With the right structure and coordination, they allow you to build exactly what you want without unnecessary financial surprises.

The key is having someone who understands both the loan and the build process.

All loans are subject to underwriting and investor approval. Guidelines may change. This content is for educational purposes only and is not a commitment to lend.

Non-QM & Specialty Loans (When Life Doesn’t Fit the Box)

Non-QM loans exist for one simple reason:
real life doesn’t always fit traditional lending rules.

These loans are designed for borrowers with strong finances who don’t neatly align with standard documentation or income requirements — not because they’re risky, but because they’re different.

What Non-QM Means (Plain English)

“Non-QM” stands for Non-Qualified Mortgage.

It doesn’t mean subprime.
It doesn’t mean unsafe.
And it definitely doesn’t mean “last resort.”

It simply means the loan doesn’t follow the strict income documentation rules required for conventional, FHA, VA, or USDA loans.

Instead, Non-QM loans use alternative ways to verify ability to repay.

Common Non-QM Loan Types

Non-QM loans are often used for scenarios like:

• Bank Statement Loans
For self-employed borrowers using business or personal bank deposits instead of tax returns.

• DSCR Loans
For real estate investors qualifying based on property cash flow rather than personal income.

• Asset Depletion Loans
For high-net-worth borrowers using assets to support the loan instead of traditional income.

• Interest-Only Loans
For borrowers prioritizing cash flow flexibility.

• Recent Credit Event Loans
For borrowers who’ve had a bankruptcy, foreclosure, or major credit event in the past but are now financially stable.

Minimum Down Payment

Down payment requirements vary by program and profile, but typically:

• 10%–20% down or more

• Higher down payments may apply for certain property types or risk layers

Non-QM loans trade documentation flexibility for stronger equity positions.

When Non-QM Usually Makes Sense

Non-QM loans are often a strong fit if:

• You’re self-employed and tax returns don’t tell the full story

• Your income is seasonal, commission-based, or complex

• You’re an investor focused on cash flow, not W-2 income

• You have significant assets but limited traditional income

• You want flexibility in how your finances are evaluated

These loans are about context, not shortcuts.

Important Things to Know

• Interest rates are typically higher than traditional loans

• Guidelines vary widely by lender and program

• Documentation is different — not absent

• Strategy matters more than ever

This is where lender access and experience make a measurable difference.

The Bottom Line

Non-QM loans aren’t about bending rules — they’re about using the right rulebook.

For borrowers with strong overall financial profiles but non-traditional income, these loans can open doors that standard programs simply can’t.

The key is making sure the loan fits your long-term plan, not just today’s approval.

All loans are subject to underwriting and investor approval. Guidelines may change. This content is for educational purposes only and is not a commitment to lend.

Reverse Mortgages (What They Actually Are — and When They’re Useful)

Reverse mortgages have been part of the U.S. housing system for decades.
The most common version — the Home Equity Conversion Mortgage (HECM) — is insured by the FHA and was established by Congress in 1987.

Despite that history, reverse mortgages are often misunderstood — not because they’re new or dangerous, but because they’re rarely explained well.

What a Reverse Mortgage Is (Plain English)

A reverse mortgage allows eligible homeowners to access a portion of their home equity without making monthly mortgage payments.

Instead of paying the lender each month, the loan balance increases over time and is typically repaid when:

• The home is sold

• The borrower moves out permanently

• Or the borrower passes away

The homeowner retains title to the home and remains responsible for property taxes, insurance, and basic upkeep

Who Reverse Mortgages Are Designed For

Reverse mortgages are available to:

• Homeowners 62 years of age or older

• Owners with sufficient equity in their primary residence

• Borrowers who meet FHA eligibility and counseling requirements

They’re not income-based loans. Qualification is centered around equity, age, and ability to meet ongoing property obligations.

Common Ways People Use Reverse Mortgages

Reverse mortgages are no longer viewed as a “last resort.”
Today, they’re often used intentionally as part of a broader financial strategy.

Purchasing a Home

Eligible buyers can use a reverse mortgage to purchase a new primary residence by bringing a down payment and financing the rest — with no required monthly mortgage payment.

This is commonly used by homeowners downsizing or relocating later in life.

Improving Monthly Cash Flow

Some homeowners use a reverse mortgage to:

• Pay off an existing mortgage

• Eliminate other monthly debt

• Create additional monthly cash flow

This can reduce fixed expenses and provide more flexibility in retirement.

Retirement & Planning Strategies

Financial planners and advisors increasingly use reverse mortgages as a planning tool, not a fallback.

Common strategies include:

Establishing a standby line of credit

• Reducing withdrawals from investment accounts during market downturns

• Managing sequence-of-returns risk

• Offsetting rising living costs without liquidating assets

Used correctly, a reverse mortgage can complement — not replace — other retirement income sources.

Important Things to Know

• Borrowers must continue paying property taxes, insurance, and maintenance

• Mandatory HUD-approved counseling is required

• Loan proceeds affect home equity over time

• Heirs are not personally responsible for repayment beyond the home’s value

Reverse mortgages are non-recourse loans, meaning neither the borrower nor heirs owe more than the home is worth.

The Bottom Line

Reverse mortgages aren’t about running out of options.
They’re about using home equity intentionally.

For the right homeowner, at the right stage of life, they can provide flexibility, stability, and peace of mind — when used as part of a thoughtful plan.

All loans are subject to underwriting and investor approval. Guidelines may change. This content is for educational purposes only and is not a commitment to lend.