A mortgage is likely the largest financial commitment you will ever make. Getting the right one — the right type, the right rate, the right term — can save you tens of thousands of dollars over the life of the loan. Getting the wrong one can cost you just as much, or more. This guide covers everything you need to make an informed decision.
[PRIMARY_KW] come in many forms. Conventional, FHA, VA, USDA, fixed rate, adjustable rate, jumbo — each one is designed for a different buyer profile and financial situation. The wrong product for your situation is not just inconvenient; it can be genuinely expensive.
Types of Mortgages Explained
Conventional Loans
Not backed by any government agency. Issued by private lenders (banks, credit unions, mortgage companies) and often sold to Fannie Mae or Freddie Mac on the secondary market. Conventional loans typically require a 620+ credit score, 3% to 20% down payment, and DTI below 45%. Best rates go to borrowers with 740+ scores and 20% down. The most common mortgage type for borrowers with solid credit.
FHA Loans
Backed by the Federal Housing Administration. Requires only a 580 credit score (500 with 10% down) and as little as 3.5% down. The tradeoff: mandatory mortgage insurance premiums (MIP) for the life of the loan if you put less than 10% down. FHA loans are the go-to for first-time buyers or borrowers with credit challenges. See our complete FHA loan guide.
VA Loans
Available to eligible veterans, active-duty service members, and surviving spouses. No down payment required. No private mortgage insurance. Rates typically below conventional. The VA charges a funding fee (1.25% to 3.3% of the loan amount) but it can be rolled into the loan. One of the best mortgage products available for those who qualify. Our VA loan guide covers every detail.
USDA Loans
Zero down payment mortgages for properties in eligible rural and suburban areas. Low rates, low fees. Income limits apply. About 97% of US land area qualifies — check the USDA eligibility map to see if your target property qualifies.
Jumbo Loans
Loans exceeding the conforming loan limit ($766,550 in most areas for 2024). Require stronger credit (typically 700+), larger down payments (10%–20%), and higher income. Rates are comparable to conventional loans but requirements are stricter.
Fixed vs. Adjustable Rate
A 30-year fixed mortgage is the most popular product — the rate and payment never change. A 15-year fixed pays off faster and carries a lower rate but higher monthly payment. Adjustable-rate mortgages (ARMs) start with a fixed rate for 3, 5, 7, or 10 years then adjust annually. ARMs make sense when you plan to sell or refinance before the adjustment period starts.
Current Mortgage Rates (May 2025)
| Loan Type | Rate Range | Notes |
|---|---|---|
| 30-year fixed conventional | 6.8% - 7.5% | Most common product |
| 15-year fixed conventional | 6.1% - 6.8% | Lower rate, higher payment |
| 5/1 ARM | 6.2% - 7.0% | Fixed 5 years, then adjusts |
| 30-year FHA | 6.5% - 7.2% | Plus MIP 0.55%/year |
| VA Loan (30-year) | 6.3% - 7.0% | No PMI, eligible borrowers only |
| USDA Loan | 6.4% - 7.1% | Rural properties, income limits |
Rates change daily and vary by lender, location, credit score, and down payment. These are market averages as of May 2025. See our current mortgage rates guide for daily updates and context.
How to Qualify for a Mortgage
Lenders evaluate five key factors. Understanding each helps you predict what you will be offered before you apply.
- Credit score: Minimum 620 for conventional, 580 for FHA, no official minimum for VA (but most lenders want 620+)
- Down payment: 3% minimum for conventional (with PMI), 3.5% for FHA, 0% for VA and USDA
- Debt-to-income ratio: Most lenders cap at 43% back-end DTI (all debts divided by gross income)
- Employment and income: Typically 2 years stable employment history; self-employed borrowers need 2 years of tax returns
- Property appraisal: The home must appraise at or above the purchase price