Quick answer
The main types of home loans are conventional, FHA, VA and USDA. Conventional loans aren’t government-backed and start at 3% down. FHA loans are insured by HUD and allow 3.5% down with a 580 score. VA loans are for eligible veterans and service members, and USDA loans for eligible rural addresses; both allow 0% down.
Beyond those, jumbo loans cover amounts above the conforming limit, and non-QM loans such as bank-statement loans serve self-employed buyers. Construction and renovation loans finance building or repairs.
Program figures on this page were verified in , using 2026 loan limits. Program terms and eligibility are subject to Fannie Mae, Freddie Mac, HUD, VA, USDA and lender guidelines and may change.
At a glance: home loan types
- Conventional: 3% down, about 620+ credit, PMI removable
- FHA: 3.5% down at 580+, mortgage insurance often for the life of the loan
- VA: 0% down, no monthly mortgage insurance, military service required
- USDA: 0% down, eligible rural address and income limit
- Others: jumbo, non-QM, construction, renovation
- Also choose: fixed or adjustable rate, and the term
How do the main types of home loans compare?
| Loan | Minimum down | Typical credit | Mortgage insurance or fee | Best fit |
|---|---|---|---|---|
| Conventional | 3% on some programs; 5% common | About 620+ | PMI below 20% down; can be canceled at 80% of original value | Solid credit; buyers who want to remove MI later |
| FHA | 3.5% with 580+; 10% with 500–579 | 580+ for 3.5% down | 1.75% upfront plus an annual premium; life of the loan with less than 10% down | Lower scores or higher debt ratios |
| VA | 0% with full entitlement | No VA minimum; lenders often about 580–620 | No monthly MI; funding fee 2.15% on first use, waived for many disabled veterans | Eligible veterans, service members, some surviving spouses |
| USDA | 0% | No published minimum; 640+ for automated approval | 1% upfront plus 0.35% a year | Eligible rural addresses, households under the income limit |
Program terms and eligibility are subject to Fannie Mae, Freddie Mac, HUD, VA, USDA and lender guidelines and may change. FHA premiums per HUD Handbook 4000.1 and Mortgagee Letter 2023-05; VA per the VA funding fee schedule; USDA per its fiscal year 2027 fee notice.
How much can you borrow with each loan in Tennessee?
| Loan | 2026 one-unit limit |
|---|---|
| Conventional (conforming) | $832,750 in most of Tennessee; $1,029,250 in the Nashville metro, including Davidson, Robertson and Sumner counties |
| FHA | $541,287 in most counties, including Montgomery, Madison, Knox, Shelby and Hamilton; $1,029,250 in the Nashville metro |
| VA | No limit with full entitlement |
| USDA | No set limit; household income limits and debt ratios cap it |
| Jumbo | Above the conforming limit; set by each lender, often with 10%–20% down |
2026 limits per the HUD FHA Mortgage Limits lookup and FHFA conforming limits; 2027 limits are typically announced in late November. See our county guides, such as the Robertson County guide, for each county’s figure.
What are the pros and cons of each loan type?
- Conventional: PMI can come off once you reach enough equity, and the loan works for primary homes, second homes and investment property. It can be harder to qualify for with lower scores or high debt.
- FHA: more flexible on credit and debt-to-income ratios. With less than 10% down, the annual premium lasts for the life of the loan, so many borrowers later refinance to drop it.
- VA: 0% down and no monthly mortgage insurance, with no VA loan limit at full entitlement. The home must meet VA’s minimum property requirements and be your primary residence.
- USDA: 0% down at an eligible address. Income limits count every adult in the household, and the annual fee lasts for the life of the loan.
What other types of home loans are there?
| Loan | What it’s for |
|---|---|
| Jumbo | Loan amounts above the conforming limit |
| Bank statement and other non-QM loans | Self-employed buyers whose tax returns understate their income; usually more down |
| DSCR | Investment property qualified on the rent it brings in |
| Construction | Building a home; one-time close options exist for VA and conventional |
| Renovation (FHA 203(k), conventional renovation) | Buying and repairing a home with one loan |
| Manufactured home | Manufactured homes on a permanent foundation that meet program rules |
Program terms and eligibility are subject to agency and lender guidelines and may change.
Should you choose a fixed-rate or adjustable-rate mortgage?
Every loan type above also comes with a rate structure and a term. A fixed-rate loan keeps the same rate for the life of the loan. An adjustable-rate mortgage (ARM) is fixed for a set period, such as five or seven years, then adjusts with a market index. An ARM can fit if you expect to sell or refinance before the fixed period ends; a fixed rate fits if you want certainty. See the CFPB’s comparison, and 15-year vs. 30-year for choosing the term.
Home loan types FAQ
What is the best type of loan for a first-time buyer?
It depends on your situation. Eligible veterans often look at VA first, buyers at rural addresses under the income limit at USDA, and buyers with lower scores at FHA. Buyers with stronger credit often compare conventional. THDA programs can add down payment assistance. Program terms are subject to agency and lender guidelines.
Can I switch loan types after I apply?
Often, yes, before closing, though it may mean new disclosures, a new appraisal for some programs, and a later closing date. After closing, the way to change loan types is a refinance, which depends on qualifying again at the time.
Which loans can be used for a second home or rental?
FHA, VA and USDA loans are for primary residences only. Conventional loans can finance second homes and investment properties, usually with larger down payments, and DSCR loans qualify investors on the property’s rent. Program terms are subject to agency and lender guidelines.
What is a government-backed loan?
A loan insured or guaranteed by a federal agency: FHA loans by HUD, VA loans by the Department of Veterans Affairs, and USDA loans by USDA Rural Development. Private lenders make the loans; the agency’s backing lets them offer lower down payments.
Where these figures come from
| Figure | Source | As of |
|---|---|---|
| Loan types overview | CFPB, Loan options | Retrieved Oct 26, 2026 |
| FHA down payment, credit and MIP | HUD Handbook 4000.1; Mortgagee Letter 2023-05 | Current handbook |
| VA funding fee | VA.gov | Rates effective Apr 7, 2023 |
| USDA fees | USDA Rural Development, FY2027 fee notice | FY2027, from Oct 1, 2026 |
| 2026 FHA and conforming limits by county | HUD FHA Mortgage Limits lookup; FHFA conforming loan limits | Calendar year 2026 |
| Fixed vs. adjustable rates | CFPB, Ask CFPB | Retrieved Oct 26, 2026 |
Related guides
- How do you choose the right mortgage?
- USDA loan vs. VA loan.
- Can you buy a home with 0% down in Tennessee?
- How much down payment do you need?
- About Christopher Armantrout, the licensed originator who wrote this page.
Not sure which loan fits you? Talk to Valor Mortgage.
I’ll check which programs you qualify for and lay them out side by side, with the down payment, mortgage insurance or fees, and limits for your county, so you can pick the one that fits.
Call me at (615) 671-9178. That’s the fastest way to get a straight answer on what you’d qualify for and which loan types you qualify for.
If it’s after hours, grab a time on my calendar. Pick a slot that works and I’ll call you then.
If your life is too chaotic for a phone call right now — I understand — start an application and I’ll review it and reach out with a plan.
Valor Mortgage, LLC · Christopher Armantrout, Mortgage Loan Originator, NMLS #1210804 · Valor Mortgage, LLC is powered by Encore Lending Group, LLC, NMLS #1249911 · Licensed in Tennessee · Equal Housing Opportunity
724 S Main St, Springfield, TN 37172 · (615) 671-9178 · christopher@valor.mortgage · NMLS Consumer Access
The dollar figures on this page are illustrative examples for general information only and are not an offer, a rate quote, or a commitment to lend. Actual interest rates and APRs vary based on loan program, borrower qualifications, property, market conditions and other factors. Program fees, limits and terms are set by the agencies named above and change without notice; all loans are subject to credit approval, income verification and property appraisal. Not all applicants will qualify.