By OfferPrep Editorial · Last reviewed October 24, 2026 · 2 min read
The How Lending Works series
Two questions come first
Who backs the loan? Conventional loans follow Fannie Mae or Freddie Mac rules. FHA, VA, and USDA loans are insured or guaranteed by a government agency, but private lenders still make them.
Fixed or adjustable? A fixed-rate loan keeps the same interest rate for the life of the loan. An adjustable-rate (ARM) loan has an initial fixed period, then the rate can change on a schedule. Ask how often, by how much, and the most it could ever be.
The comparison
| Conventional | FHA | VA | USDA | |
|---|---|---|---|---|
| Designed for | Broad range of buyers | Buyers with smaller down payments or credit still being built | Eligible veterans, service members, some surviving spouses | Eligible buyers in eligible rural and suburban areas with income limits |
| Down payment | Varies by program | Low minimum set by HUD | No program down payment requirement; lenders may have their own | No program down payment requirement; lenders may have their own |
| Ongoing cost to ask about | Private mortgage insurance (PMI) with smaller down payments; can usually be removed later | Mortgage insurance premium (upfront and annual) | VA funding fee (some borrowers are exempt) | Upfront and annual guarantee fees |
| Property rules | Lender standards | FHA property standards | VA minimum property requirements | Location and property eligibility |
Figures and rules change, so check the official sources below and get specifics in writing from any lender you consider.
Other names you'll hear
- Jumbo: a loan above the conforming limit for your county.
- Renovation loans: FHA 203(k), Fannie Mae HomeStyle, and VA renovation options. See Renovation Loans Demystified.
- Down payment assistance: grants or second loans layered on top. See Down payment assistance in NC.
Questions to ask about any loan type
- What mortgage insurance or fees come with this loan, and can they ever be removed?
- Are there property or location rules that could affect the homes I look at?
- How would this loan compare on a Loan Estimate to another type for the same scenario?
Next: Your Loan Estimate, decoded
Once you pick a direction, every lender has to show you the same three-page form. Here's how to read it.
Every free guide comes with OfferPrep's monthly educational newsletter: one plain-English lesson at a time. Browse all free guides.
Sources
Figures on this page were checked against the official sources below on October 24, 2026. Programs and limits change; confirm current figures with the source or a licensed lender before you rely on them.
- CFPB, loan options
- HUD, FHA loans
- VA, home loans
- USDA Rural Development, Single Family Housing Guaranteed Loan Program
OfferPrep is not affiliated with, endorsed by, or acting on behalf of the U.S. Department of Veterans Affairs or any government agency. VA-guaranteed loans are made by private lenders; eligibility is determined by the VA and by lender requirements, and program details change without notice.