FHA, USDA, VA, & Conventional Benefits & Qualification Guidelines

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mortgage guide

Mortgages can be confusing – especially for first-time buyers. If you’re scratching your head trying to figure out all the acronyms, calculations, and requirements, you’re not alone! In fact, half of all adults in the U.S. aren’t even sure what the minimum required down payment is to buy a home.

Let’s take a look at the four most commonly used loan types that buyers use to purchase homes. We’ll break down who they’re for, what benefits they come with, and the requirements you have to meet in order to qualify for them.


federal housing administration

The Federal Housing Administration was created in 1934, and to this day, FHA loans help first-time homebuyers make their dreams of homeownership become a reality. Even though it’s known to help first-time buyers, those who haven’t owned a home within the last three years may also be eligible for the FHA program.

Who is it for?

The main demographic we see using the FHA loan is new families looking to purchase their first home together. The FHA program can’t be used to buy an investment property; the home must be your own primary residence.

What are the benefits?

One of the main advantages is a low down payment requirement of only 3.5%. Plus, gift funds from family members are allowed to help cover that down payment. The home’s seller can also help pay for your loan’s closing costs. Fixed- and adjustable-interest rate options are available, and there aren’t any minimum income requirements.

Overall, the FHA program is tailored toward first-time buyers that may not have a lot of cash immediately available for a home purchase.

How do I qualify?

You have to meet a few basic requirements to be eligible:

  • A minimum credit score of 580
  • You can’t have owned a home within the last three years
  • The property must be your primary residence for a full year


us department of agriculture

The U.S. Department of Agriculture offers a loan option designed to help borrowers in small towns all across the country. USDA loans can only be used in designated rural areas, but they come with some nice advantages for borrowers who qualify.

Who’s it for?

The USDA loan program is for prospective homebuyers living in designated rural areas, and whose household income meets certain limits. If you’re looking to buy a home outside of these areas, or if you have an income exceeding the maximum allowed, you won’t be eligible for a USDA loan.

What are the benefits?

USDA loans offer lower interest rates than some other programs, and there are zero-down options available. That means you may not have to make a down payment at all! What’s more, 30-year, fixed rates are available.

How do I qualify?

As stated before, you need to live in an eligible geographic area and have an income that doesn’t exceed the max limits. You also need a minimum credit score of 620 to qualify.


The U.S. Department of Veterans Affairs offers one of the very best loan options available for military members. Private lenders, like banks and mortgage companies, provide VA loans for borrowers. The VA guarantees a portion of the loan, so it’s rates and benefits are some of the best you can find.

Who is it for?

The VA loan program is for veterans, active service members, and their surviving spouses. It’s a great choice for military families in nearly any situation, as long as they meet some minimum requirements.

What are the benefits?

VA loans feature competitive interest rates, a zero-down option (if the veteran has full entitlement), seller and lender credits can help you with closing costs, and there are no private mortgage insurance payments required.

How do I qualify?

First, a veteran needs to meet one of the service requirements:

  • Served six or more years in the Reserves or National Guard
  • Served 181 days during peacetime
  • Served 90 days during wartime

You’ll also need a credit score of 580 or higher. Without full VA entitlement, a down payment is required. Your lender can help you find out more about your VA entitlement with a Certificate of Eligibility (COE).


conventional loans

Conventional loans are not insured by the federal government, so the qualification requirements are a little tighter than some other programs. But if you’re in strong financial standing, you may come out ahead with a conventional loan.

Who’s it for?

Conventional loans are geared toward borrowers who have larger down payment ability, and a good credit score. Conventional loans can also be used for investment properties.

What are the benefits?

If you can make a 20% down payment, private mortgage insurance isn’t required. Conventional loans can be used for a wider range of property types. Depending on your credit score, conventional loans may offer the best interest rate.

How do I qualify?

You’ll need a minimum credit score of 620, a maximum debt-to-income ratio between 45% and 50%, and a down payment between 3% and 5%. However, a 3% down payment may not allow you to take advantage of the lower interest rates that borrowers typically choose a conventional loan for.

This article is a guest post from The Wood Group of Fairway, a Texas mortgage lender.