Conventional loans are ideal for borrowers with good credit and stable income who can meet standard lending requirements. These loans are not government-backed and offer flexible terms for various property types.

• Ideal for borrowers with strong credit and stable income.

• Typically requires a 620+ credit score.

• Down payment options range from 3% to 20%.

• Competitive interest rates and flexible terms.

• Suitable for primary residences, second homes, and investment properties.

Key Points to Remember:

• Requires a credit score of 620+

• Down payment options from 3% to 20%

• No upfront mortgage insurance with 20% down

Tips:

• Improve your credit score to qualify for better rates

• Consider a larger down payment to avoid PMI (Private Mortgage Insurance)

Pros: ✔ Lower interest rates for qualified borrowers ✔ Flexible loan terms (fixed or adjustable) ✔ Available for various property types

Cons: ✘ Stricter credit and income requirements ✘ Larger down payments compared to government loans

FHA loans are government-backed and designed for first-time buyers and those with lower credit scores, offering lower down payment options and more lenient qualifications.

• Designed for first-time homebuyers and those with lower credit scores.

• Down payments as low as 3.5%.

• More lenient credit and income requirements.

• Requires mortgage insurance (MIP).

• Government-backed for added lender security.

Key Points to Remember:

• Down payment as low as 3.5%

• Requires a credit score of 580+ (or 500 with 10% down)

• Mortgage insurance premiums (MIP) required

Tips:

• Check eligibility for down payment assistance programs

• Budget for mortgage insurance costs when calculating payments

Pros: ✔ Low down payment requirements ✔ Easier credit qualifications ✔ Can be used for 1-4 unit properties

Cons: ✘ Mandatory mortgage insurance for the life of the loan ✘ Property must meet specific FHA standards

USDA loans help low-to-moderate-income homebuyers purchase homes in eligible rural and suburban areas with zero down payment.

• For rural and suburban homebuyers.

• No down payment required.

• Income limits apply based on location.

• Competitive fixed interest rates.

• Must meet USDA property eligibility requirements.

Key Points to Remember:

• No down payment required

• Property must be in an eligible rural area

• Income limits apply based on location

Tips:

• Use the USDA eligibility map to confirm property qualifications

• Be aware of annual guarantee fees

Pros: ✔ 100% financing available ✔ Competitive fixed interest rates ✔ Lower mortgage insurance costs than FHA loans

Cons: ✘ Property eligibility restrictions ✘ Strict income limits

VA loans are exclusive to veterans, active-duty service members, and eligible spouses, offering great benefits such as no down payment and no PMI.

• Available to eligible veterans, active-duty military, and spouses.

• No down payment and no private mortgage insurance (PMI).

• Competitive interest rates.

• Flexible credit requirements.

• Funding fee may apply, but can be rolled into the loan.

Key Points to Remember:

• No down payment or PMI required

• VA funding fee may apply (can be financed)

• Must meet service eligibility requirements

Tips:

• Use VA loan benefits for refinancing options too

• Ensure your lender is VA-approved for smooth processing

Pros: ✔ No down payment required ✔ Lower interest rates compared to conventional loans ✔ Flexible credit requirements

Cons: ✘ VA funding fee increases with multiple uses ✘ Only available to eligible military personnel

Bank statement loans are designed for self-employed individuals who may not have traditional income documentation but have consistent cash flow.

• Ideal for self-employed borrowers.

• Income verification based on 12 to 24 months of bank statements instead of tax returns.

• Higher down payment requirements.

• Flexible credit requirements.

• Useful for business owners, freelancers, and gig workers.

Key Points to Remember:

• Uses 12-24 months of bank statements instead of tax returns

• Higher down payments typically required

• Suitable for freelancers and business owners

Tips:

• Maintain clear records of personal and business expenses

• Work with lenders experienced in self-employed financing

Pros: ✔ No tax returns required ✔ Flexible income verification options ✔ Ideal for self-employed individuals

Cons: ✘ Higher interest rates than traditional loans ✘ Larger down payments needed

DSCR loans are perfect for real estate investors as they focus on the property’s income potential rather than the borrower’s personal income.

• Designed for real estate investors.

• Qualification based on rental income rather than personal income.

• No tax returns required.

• Allows financing for multiple investment properties.

• Flexible loan terms and property types.

Key Points to Remember:

• Loan qualification based on rental income

• No tax returns or W-2s required

• Common for investment properties

Tips:

• Ensure the property generates sufficient rental income

• Consider properties in high-demand rental areas

Pros: ✔ Easier qualification for investors ✔ No personal income verification needed ✔ Can finance multiple properties

Cons: ✘ Typically higher interest rates ✘ Requires solid rental cash flow projections

Stated income loans allow borrowers to declare their income without full documentation, making them useful for self-employed individuals with non-traditional income.

• Borrowers state their income without traditional documentation.

• Higher down payment requirements.

• Suitable for self-employed individuals with fluctuating income.

• Typically carries higher interest rates.

• May require strong credit and financial reserves.

Key Points to Remember:

• Income stated without traditional verification

• Higher down payments required

• Suitable for fluctuating or seasonal incomes

Tips:

• Keep accurate financial records for lender review

• Be prepared for larger reserve requirements

Pros: ✔ No need for extensive documentation ✔ Faster approval process ✔ Flexibility for self-employed borrowers

Cons: ✘ Higher interest rates ✘ Limited lender availability

Hard money loans are short-term, asset-based loans used for real estate investments, focusing on the property value rather than borrower credit.

• Short-term loans for real estate investments.

• Asset-based lending, with property value as the primary qualification.

• Fast approval and funding.

• Higher interest rates and fees.

• Ideal for fix-and-flip investors or those needing quick capital.

Key Points to Remember:

• Fast approval and funding times

• Higher interest rates and fees

• Typically used for fix-and-flip projects

Tips:

• Have a clear exit strategy before applying

• Work with reputable private lenders

Pros: ✔ Quick access to funds ✔ Flexible credit requirements ✔ Suitable for short-term investment projects

Cons: ✘ Higher costs and fees ✘ Short repayment terms