When you are ready to buy, your loan choice shapes your path forward. The right program can lower your down payment, improve your monthly cash flow, and even shift how much a seller can contribute toward closing costs. Here is a clear, side-by-side look at the most common options, Conventional Loans, FHA Loans, and VA Loans, so you can choose what aligns with your season and your long-term vision.

◆ Conventional Loans ◆

Conventional loans are offered by private lenders like banks and credit unions. These mortgages are not backed by a government agency, which gives lenders flexibility in pricing and structure. Because they follow guidelines set by Fannie Mae and Freddie Mac, they’re considered the “standard” of home financing ⧫ reliable, competitive, and designed for borrowers with solid credit and financial stability.

For buyers who want options, conventional loans offer a wide range of choices when it comes to term length, rate type, and down payment size. Whether you’re purchasing your first home, upgrading to your dream property, or investing in a second home, these loans give you the freedom to tailor your financing to your long-term goals. With the right strategy, they can help you build equity faster and position your real estate purchase as part of your wealth-building journey.

Because conventional loans aren’t government-insured, they reward strong financial habits like maintaining good credit, consistent income, and responsible debt management. In exchange, borrowers can often enjoy lower monthly costs, faster closings, and fewer restrictions on property types, making this one of the most flexible and future-focused options in today’s market.

A conventional loan is often the best fit for financially established buyers, meaning, those with stable income, a strong credit profile, and the ability to contribute a moderate to larger down payment. It’s ideal for homeowners who value choice, want to avoid government restrictions, or plan to hold onto their property as a long-term investment. Whether you’re purchasing a luxury desert home, building your portfolio, or refinancing to optimize your equity, this loan offers the flexibility and freedom to create a mortgage strategy that matches your lifestyle and financial goals.

✔ Pros	✖ Cons
Flexible terms with potentially lower overall costs.	Stricter credit and income requirements than government-backed programs.
No upfront mortgage insurance when you put 20% down.	PMI applies when putting less than 20% down.

If you have steady income, strong credit, and some savings for your down payment, a conventional loan can help you minimize long-term costs and build equity faster. It’s a favorite for buyers planning to hold a home for several years or add investment properties to their portfolio. While these loans reward financial readiness, it’s safe to say that the tradeoff is tighter qualifying, but the upside is more control over terms and fewer add-on fees when your down payment is higher.

Typical credit score 620 or higher

Property types primary residence · investment property

Minimum down payment as low as 3%

The bigger your down payment, the more you save on interest and mortgage insurance over time. When your down payment is less than 20%, lenders require Private Mortgage Insurance (PMI) — a monthly fee that protects the lender in case you stop making payments. Once you reach 20% equity in your home, you can typically request to remove PMI, reducing your overall monthly payment and freeing up more money for your lifestyle or future investments.

Down payment	Contribution type	Max seller contribution
3% or less	Closing costs	Up to 6% of purchase price
3% to 25%	Closing costs	Up to 9% of purchase price
Greater than 25%	Closing costs	Up to 11% of purchase price

Knowing these limits gives you leverage when it comes to negotiating your offer. The maximum seller contribution determines how much a seller can put toward your closing costs, prepaids, or discount points — essentially reducing how much cash you need to bring to the table at closing. For example, if your down payment is under 10%, the seller can cover up to 6% of the purchase price to help offset those costs. This can mean thousands of dollars in savings, giving you more flexibility to allocate funds toward upgrades, furnishings, or simply keeping a stronger financial cushion after closing.

These contributions don’t reduce the home’s sale price. What they’ll do instead is that they help balance out your upfront expenses while keeping your loan amount steady. This is crucial information to know in today’s market, because you understanding and utilizing these concessions can make your offer more appealing to sellers while still protecting your budget. Best believe, a skilled agent will know how to structure these credits to align with lender guidelines, appraisal values, and your long-term financial goals.

⧫ FHA Loans ⧫

FHA loans are designed to make homeownership more attainable for a wider range of buyers. Backed by the Federal Housing Administration, these loans give lenders the confidence to approve borrowers with lower credit scores or smaller down payments, all while keeping interest rates competitive.

Unlike conventional loans, FHA mortgages include Mortgage Insurance Premiums (MIP) to protect the lender if the borrower defaults. While this adds an extra cost, it opens doors for those who might not otherwise qualify for financing. Many first-time buyers use FHA as a starting point, later refinancing into a conventional loan once they’ve built equity and improved their credit.

Who it’s best for: FHA loans are a great fit for buyers who may have a shorter credit history, higher debt-to-income ratios, or limited savings for a down payment. Whether you’re entering the market for the first time or getting back on your feet financially, this program helps make buying a home realistic and within reach, all while giving you a solid foundation to build from.

✔ Pros	✖ Cons
As little as 3.5% down with a 580+ score; 10% down with scores 500–579.	Mortgage Insurance Premiums (MIP) add to overall cost.
More flexible credit/income guidelines and allowances for gift funds.	Primary residence only; county loan limits may cap price.

While FHA loans offer more flexible credit and income requirements, the additional mortgage insurance premiums are what make them possible. For many buyers, this tradeoff is worth it. Here, you get into a home sooner, start building equity earlier, and can always refinance once you’re in a stronger financial position. Think of it as a stepping stone toward a conventional loan later down the line, not a permanent cost.

FHA loans also open the door to a variety of property types, including condos and multi-unit homes (as long as you live in one of the units). This makes them appealing for new investors or anyone looking to offset their mortgage by renting out a portion of the property, which is a creative way to begin building long-term wealth.

Typical credit score 580+ for 3.5% down 500 with 10% down

Property types primary residence only

Minimum down payment as low as 3.5%

Even though FHA loans are backed by the government, your lender still reviews your full financial picture, including debt-to-income ratio and employment history. Stronger credit or a slightly larger down payment can improve your terms and help you qualify for a higher loan amount. The key here is balance, as FHA gives you room to grow while still rewarding financial responsibility.

MIP (Mortgage Insurance Premium) may seem like an extra hurdle, but it’s what makes this flexibility possible. Over time, as you build equity, refinancing into a conventional loan can remove the MIP and lower your overall monthly costs, all while keeping the stability of homeownership intact.

Down payment	Contribution type	Max seller contribution
3% or less	Closing costs	Up to 3.5% of purchase price
Greater than 3.5%	Closing costs	Up to 6% of purchase price

Understanding seller contributions with FHA loans can give you a powerful advantage in negotiations. With the ability for sellers to contribute up to 6% of the home’s purchase price toward your closing costs, you can ease the upfront financial pressure and allocate your funds more strategically. These credits can cover items like appraisal fees, title insurance, or even discount points to lower your interest rate.

Used correctly, seller contributions can help you close faster and more comfortably, especially in a market where cash flow matters. Pairing an FHA loan with a smart negotiation strategy ensures you start your homeownership journey from a position of strength.

⧫ VA Loans ⧫

VA loans serve eligible veterans, active-duty service members, and certain surviving spouses. With no required down payment and no monthly PMI, they’re among the most powerful paths to homeownership and long-term wealth building.

Lenders set their own score minimums (often around 580–620+), and rates are typically competitive. A one-time funding fee may apply, which many borrowers choose to finance into the loan.

✔ Pros	✖ Cons
No down payment required for many purchases; no monthly PMI.	Limited to eligible service members, veterans, and qualifying spouses.
Competitive interest rates; flexible credit standards.	One-time funding fee may apply (often financed into the loan).

The VA loan program remains one of the most valuable benefits for U.S. service members and veterans. Beyond the no-down-payment advantage, VA loans typically feature lower interest rates than most conventional mortgages, making them one of the most affordable long-term financing options available. Plus, there’s no cap on how many times you can use your VA eligibility throughout your lifetime, a major benefit that renews as your service and circumstances evolve.

On the flip side, VA loans do include specific property condition requirements and a one-time funding fee. But those are small considerations compared to the savings and accessibility they provide. This program was built to honor your service and set you up for long-term financial security through real estate ownership.

Typical credit score lender set, often ~580–620+

Property types primary residence only

Minimum down payment none required

Although VA loans don’t require a minimum credit score by the Department of Veterans Affairs, individual lenders will still evaluate your credit history and income stability. A stronger credit profile can help secure the lowest available rate, while your Certificate of Eligibility (COE) confirms your qualification and funding entitlement.

Another unique perk is the ability to reuse your VA loan benefits multiple times. Whether you’re moving, upgrading, or investing in another primary residence, your VA benefits remain available as long as you meet the service and property occupancy requirements. It’s a lifelong resource for financial mobility and generational legacy.

Down payment	Contribution type	Max seller contribution
Any	Closing costs	Up to 4% of purchase price

VA loans allow sellers to contribute up to 4% of the home’s purchase price toward your closing costs, a major benefit that can dramatically reduce your out-of-pocket expenses. These concessions can even cover prepaid taxes, insurance, or help offset the VA funding fee, creating a smoother path to closing for eligible buyers.

In a competitive market, leveraging seller contributions effectively can make your offer stand out while keeping your cash flow intact. For veterans and military families, this balance of affordability, flexibility, and honor makes the VA loan a cornerstone of lasting homeownership.

In Conclusion ⧫ Finding the Right Loan for You

At the end of the day, your home loan should feel like a partnership — one that supports your lifestyle, grows with your goals, and builds the legacy you’re creating. The more you understand your options, the more empowered you become to make choices that move you closer to where you’re meant to be: home.

Have questions about Conventional, FHA, or VA loans? I’m happy to help you compare options and map the smartest next step. Email me or book a quick strategy session below.