Which loan type is right for me? Conventional, FHA, or VA loans When you begin the process of applying for a mortgage, one of the first things you must determine is which loan program best suits you needs. CONVENTIONAL loans are made by institutional lenders without FHA insurance or VA guarantee. Conventional loans can be made with as little as 5% down, but loans with a down payment of less than 20% typically require private mortgage insurance. The FHA loan program is a product of the National Housing Act of 1934. Through this program, the Government insures loans for lenders for one to four family dwellings. The FHA mortgage insurance premium is charged regardless of the loan-to-value ratio. VA loans are for qualified veterans and active service members. The Veterans Administration guarantees loans made by private lenders with little or no money down. The VA charges a funding fee that is reduced when a down payment is made. In comparing the features of each type of mortgage, you should be aware of the following: Conventional loans typically have a higher maximum loan amount (up to 227,150.00) The initial investment you will have to make is usually less for a FHA loan than for a conventional loan. If you are a qualified veteran, you can obtain a VA loan with no down payment. Qualifying ratios are typically more liberal on VA loans. VA loans are assumable to qualified borrowers. Conventional mortgage rates are slightly lower than FHA or VA rates (typically) Conventional mortgage programs offer a wider variety of adjustable rate programs and creative financing. There are fewer restrictions on gift funds for closings with VA loans.