The right loan program can affect your down payment, monthly payment and even which homes you can buy. In this episode of the YMA Nation Podcast, I break down the differences between FHA, USDA and conventional loans. Here is a quick summary to go along with it.
Conventional Loans
Conventional loans are offered by many lenders and are not government-insured. They often reward stronger credit with better pricing and can be used for primary homes, second homes and investment properties. Private mortgage insurance (PMI) usually applies with less than 20% down and can typically be removed once you build enough equity.
FHA Loans
FHA loans are insured by the Federal Housing Administration and are known for flexible credit guidelines and lower down payment options. They include mortgage insurance premiums and must be used for a primary residence. FHA can also be used for two- to four-unit properties when you live in one unit.
USDA Loans
USDA loans are designed for eligible buyers purchasing in qualifying rural and suburban areas, and they may offer financing with no down payment. Income limits apply, and the property must be in an eligible area. Parts of the Upstate qualify, so it is worth checking the USDA eligibility map for homes you are considering.
Quick Comparison
- Lowest down payment: USDA for eligible buyers and areas, followed by low-down-payment FHA and conventional options
- Most flexible credit: often FHA
- Most property types: conventional
- Location rules: USDA only
How to Choose
Talk with a licensed lender who can compare programs side by side using your credit, income, savings and the homes you are considering. Getting pre-approved early also makes your offers stronger.
For more first-time buyer tips, visit our First-Time Home Buyer Guide, or estimate payments with our mortgage calculator.
Loan guidelines, limits and eligibility change. This article is general information, not lending advice.
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