What do the terms conventional, FHA, VA, and USDA mean in terms of mortgages? These are different types of mortgages from different private and public organizations. Mortgages can be divided into two categories: government backed and non-government backed. Non-governemtn backed loans are conventional loans and FHA, VA, and USDA are government backed mortgages.
FHA stands for Federal Housing Administration, VA stands for Veterans Affairs, and USDA stands for US Department of Agriculture. Each organization (and private, conventional mortgages) has different mortgage products that fit different consumer needs.
Mortgages from the Federal Housing Administration are usually good for people who want low down payment or have lower credit scores. With this though, there usually is a private mortgage insurance requirement. These are always fixed mortgages. Learn more about FHA loans at Bankrate.
Mortgages from the Veterans Affairs are made for veterans and those who are active duty. VA loans do not require a down payment and do not have mortgage insurance! Frequently there are not specific credit score requirements, but lenders may have specific requirements (this is a case-by-case basis). Learn more about VA loans at Bankrate.
Mortgages from the US Department of Agriculture are mortgages for homes in specified rural areas and borrowers with specific income requirements. They are designed to drive borrowers to agriculture and rural areas by providing a zero-down payment mortgage product. Learn more about USDA loans at Bankrate.
Conventional mortgages are not-government backed and privately funded. There are credit score requirements, income requirements, income requirements, and they usually require a substantial down-payment. The also have total loan amount limits. Once you go over a loan amount limit, you go into jumbo loan territory. Learn more about conventional mortgages at NerdWallet.
There are other mortgage products out there. They usually are variations of conventional mortgages though because they are privately funded. This is where you start to look at home equity loans, bridge loans, investor/rental loans, and rehab loans. There is also hard-money loans for auction and high-risk real estate.
Conventional, FHA, VA, and USDA Overview
Each government organization or private mortgage (conventional mortgage) has it’s benefit. You have to find a good loan officer to help you explore your mortgage options. Search for loan officers based upon what mortgages they can provide – Conventional, FHA, VA, and USDA.