Which loan is the best for me?
The easiest way to narrow down your loan options is by your FICO Score and Down Payment.
If you are in the military, retired military, or a surviving spouse, the best option for you is most likely a VA loan. Click VA Loans Explained to learn more and see if you are eligible.
If the loan amount you are looking for is within County Limits read on. If it’s higher click Jumbo Loans Explained.
FICO score will help narrow down your loan program between Conventional and FHA
• 620+ with as little as 3% down
• 580 – 619 with 3.5% down payment
• 500 – 579 with 10% down payment
Conventional Financing FICO Scores 620+
Down Payment Requirements
• The “ideal” conforming loan is an 80% loan with a 20% down payment, but you can get a conforming loan by only putting 3% down and 5% down for a high balance loan.
• Anything less than 20% down requires Private Mortgage Insurance (PMI) which reduces the risk for the lender, as it “covers the difference” and insures the loan equal to a 20% down payment.
• The smaller the down payment and the lower the FICO score, the higher the cost of the PMI. See a PMI Chart Here. (As a mortgage broker with over 80 wholesale lenders, we do have a few special lenders with PMI rates lower than on the PMI chart.)
A conforming loan is a type of conventional loan. To learn more about conventional financing options visit Conventional Loans Explained and for more information on PMI visit our PMI Explained page for useful information.
FHA Financing for FICO Scores Less Than 620
Fico scores that range from 500 – 579 require a 10% down payment, and scores 580+ require as little as 3.5% down.
FHA loans do require an upfront Mortgage Insurance Premium (MIP) and monthly Mortgage Insurance (MI).
To learn more about FHA financing and MIP/MI click on FHA Loans Explained.
For an a better overview of these four main loan types, visit our Overview of Conventional and Government Loans page.