Types of loans and what underwriters expect

A plain-English comparison of the main mortgage types: who they fit, typical down payment, credit, debt-to-income, mortgage insurance, and property rules.

Rates shown are weekly national averages from the Freddie Mac Primary Mortgage Market Survey®. They are not an offer of credit, and APR is not shown. Your rate and APR depend on credit, down payment, points, loan size, and lender.

Conventional (conforming)

Current average rate: ask a lender (no free national average published)

Who it’s for: Borrowers with solid credit; any property use (primary, second home, investment) with different terms.
Loan size: Up to the conforming limit: $832,750 for a 1-unit home in most of the U.S. in 2026; up to $1,249,125 in high-cost areas (FHFA).
Down payment: As little as 3% on certain programs (Fannie Mae allows up to 97% LTV in limited cases); 20% avoids PMI.
Credit score: 620 for manual underwriting; automated (DU) has no fixed minimum since Nov. 2025, lender overlays common.
DTI: Up to 50% via DU; 36% (up to 45%) manual (Fannie Mae).
Mortgage insurance: Private mortgage insurance (PMI) if under 20% down. You can request removal at 80% loan-to-value and it ends automatically at 78% of the original value (CFPB).
Property/occupancy: Primary residence, second home, or investment property allowed.

FHA

Current average rate: ask a lender (no free national average published)

Who it’s for: Buyers with lower scores or smaller down payments.
Down payment: 3.5% with 580+; 10% with 500–579 (HUD).
Credit score: 500 minimum; 580 for 3.5% down. Lenders often set higher.
DTI: Manual underwriting 31%/43%, up to 40%/50% with compensating factors; automated approvals can go higher (HUD).
Mortgage insurance: Upfront MIP 1.75% of the base loan; annual MIP 0.55% for most loans (paid monthly), for 11 years if you put 10%+ down, otherwise for the loan term.
Property/occupancy: Primary residence; home must meet HUD minimum property standards; FHA loan limits apply by county.

VA

Current average rate: ask a lender (no free national average published)

Who it’s for: Eligible veterans, service members, and some surviving spouses (Certificate of Eligibility).
Down payment: Typically $0.
Credit score: No VA minimum; lenders may set one.
DTI: VA uses DTI plus a “residual income” test; lenders set their own limits.
Mortgage insurance: No monthly mortgage insurance. One-time VA funding fee: first use 2.15% (under 5% down), 1.5% (5%+), 1.25% (10%+); after first use 3.3% under 5% down. Exempt for many veterans with service-connected disability.
Property/occupancy: Primary residence; must meet VA Minimum Property Requirements.

USDA (Guaranteed)

Current average rate: ask a lender (no free national average published)

Who it’s for: Moderate-income buyers in USDA-eligible rural/suburban areas; household income limits apply.
Down payment: $0 for eligible buyers.
Credit score: No published USDA minimum; 640+ gets streamlined credit review; many lenders require 640.
DTI: Set by USDA guidelines and the automated GUS system; ask your lender.
Mortgage insurance: Guarantee fee: 1% upfront and 0.35% annual (FY2026), instead of PMI.
Property/occupancy: Primary residence in an eligible area.

Jumbo

Current average rate: ask a lender (no free national average published)

Who it’s for: Loans above the conforming limit ($832,750 in most areas for 2026).
Down payment, credit, DTI: Set entirely by each lender; usually stricter than conventional, often with larger reserves.
Mortgage insurance: Varies by lender; many jumbo loans require larger down payments instead.
Property/occupancy: Varies by lender.

Other options

Adjustable-rate (ARM) vs fixed

Current average rate: ask a lender (no free national average published)

Fixed: Same rate and principal-and-interest payment for the life of the loan.
ARM: Lower starting rate for a set period (e.g., 7 years on a 7/6 ARM), then adjusts every 6 months based on an index, within caps. Ask what the maximum payment could be.

HELOC / home equity loan

What it is: Borrowing against equity in a home you already own. A HELOC is a revolving line with a usually variable rate; a home equity loan is a lump sum, usually fixed (CFPB).
Risk: Your home is the collateral; missing payments can lead to foreclosure.

Non-QM / bank-statement loans

What it is: Loans outside the federal “Qualified Mortgage” rules, often for self-employed borrowers who qualify with bank statements instead of tax returns.
Trade-offs: Typically higher rates, larger down payments, and different protections than a Qualified Mortgage (CFPB). Terms vary widely by lender.

What the underwriter checks (all loan types)

Identity, Social Security number, and credit report
Income & employment: recent pay stubs, W-2s (usually 2 years), tax returns if self-employed or with other income; verbal job verification near closing
Bank statements (usually the last 2 months) to show down payment, closing costs, and reserves
Sourcing of large deposits: a paper trail for any deposit that isn’t regular pay
Gift letters if family is helping, plus proof the money moved
Appraisal to confirm the home’s value and condition
Title search and title insurance to confirm clear ownership
Homeowners insurance (and flood insurance if required)

Still have questions?

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Sources

Disclaimer: This page is general educational information, not financial, legal, tax, or real estate advice. Program rules, fees, and limits change, and lenders, title companies, and inspectors set their own requirements and prices (lender “overlays”). Figures are national or program-level and vary by state, county, property, and lender. Confirm details with a licensed lender, attorney, or other professional before you decide. Last reviewed October 15, 2026.