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Home Loans: Types, Requirements and How to Qualify

A clear, no-pressure guide to your home loan options, how to qualify, and how to get pre-approved.

If you’re preparing to buy a home, this guide will help you compare purchase mortgage options and understand the steps to qualify.

Compare conventional, FHA, VA, USDA, and jumbo home loans, understand what lenders review, and learn how a mortgage advisor can help you move from pre-qualification to closing with more confidence.

Get Pre-Qualified
What You'll Learn

In this guide, you’ll learn:

  • The different types of home loans and who each one is designed for.
  • How mortgages work and what affects your monthly payment.
  • What lenders look for when reviewing a mortgage application.
  • How to get pre-qualified and prepare for the home buying process.
  • Which resources can help you compare loan options with confidence.

What is a home loan?

Simple financing, explained clearly.

A home loan, also called a mortgage, is financing used to purchase or refinance a home. You borrow a set amount from a lender, then repay it over a fixed term with interest.

Your monthly payment usually includes principal, interest, property taxes, and homeowners insurance, often shortened to PITI.

  • Is a mortgage the same as a home loan?

For most buyers, yes. The terms are used interchangeably. The loan is the debt, and the mortgage is the legal agreement that pledges the home as security.

Home Loan Basics

  • Borrow money from a lender to buy or refinance a home.
  • Repay over 15 to 30 years with interest.
  • Monthly payment can include principal, interest, taxes, and insurance.
  • The home secures the loan, which helps keep rates lower than unsecured borrowing.

How home loans work

Five moving parts that shape the payment.

These five pieces shape how your home loan is structured, how your payment is built, and how different mortgage options compare.

Principal & Interest

Principal is what you borrow. Interest is what the lender charges to lend it.

Loan Term

Longer terms lower the monthly payment, while shorter terms can reduce total interest.

Fixed vs. ARM

Fixed rates stay the same. Adjustable rates can change after the intro period.

Escrow

Taxes and insurance are often collected monthly and paid from escrow.

Mortgage Insurance

Some low-down-payment loans include insurance that protects the lender.

Your monthly payment is influenced by several factors including your loan amount, interest rate, loan term, property taxes, homeowners insurance, and, in some cases, mortgage insurance. Comparing these pieces side by side can help you understand why two home loans with the same purchase price may have different monthly payments.

What is a home loan?

Types of Home Loans

Compare conventional, FHA, VA, USDA, and jumbo mortgage options to determine which home loan best fits your goals.

Compare conventional loan options if you have strong credit and want flexibility. Learn more about our FHA home loans if you need lower down payment or more flexible credit guidelines. Eligible military borrowers can explore VA home loans, buyers in eligible rural or suburban areas may benefit from USDA rural loans, and higher-priced purchases may call for jumbo mortgages.

Conventional

Conventional

Best for:

Strong credit and flexible options

Down payment: Some conventional programs allow as little as 3% down for qualified borrowers.

Compare Conventional Loan Options →

FHA

FHA

Best for:

First-time buyers and borrowers who need more flexible credit guidelines

Down payment: 3.5% minimum down payment may be available for eligible borrowers, subject to FHA and lender guidelines.

Compare FHA Home Loans →

VA

VA

Best for:

Eligible veterans, service members, and qualifying borrowers with VA entitlement

Down payment: 0% down may be available for eligible veterans, service members, and qualifying borrowers with VA entitlement.

Compare VA Home Loan Benefits →

USDA

USDA

Best for:

Eligible rural and suburban properties

Down payment: 0% down may be available in eligible rural or suburban areas, subject to property and income eligibility.

Review USDA Rural Loan Options →

Jumbo

Jumbo

Best for:

Higher-priced homes above conforming loan limits

Down payment: Requirements vary by lender and loan amount.

Learn About Jumbo Mortgages →

Loan TypeBest ForDown Payment NoteMortgage InsuranceKey Benefit
ConventionalGood credit and steady incomeSome conventional programs allow as little as 3% down for qualified borrowers.Required if down payment is below 20%Flexible terms and cancellable PMI
FHAFirst-time buyers and flexible credit needs3.5% minimum down payment may be available for eligible borrowers, subject to FHA and lender guidelines.RequiredMore flexible credit guidelines
VAEligible military borrowers0% down may be available for eligible veterans, service members, and qualifying borrowers with VA entitlement.No monthly PMIPowerful benefit for eligible borrowers
USDAEligible rural and suburban properties0% down may be available in eligible rural or suburban areas, subject to property and income eligibility.Program guarantee fees may applySupports eligible rural housing purchases
JumboHigher-priced homesRequirements vary by lender and loan amount.Varies by lenderFinancing above conforming limits

How to get a home loan

How to get a home loan, step by step.

Getting approved is easier to understand when you know what comes next. For a deeper walkthrough, read our mortgage approval process guide.

1

Review Your Credit

Check reports early so there is time to correct errors or pay down balances.

2

Establish Your Budget

Find a payment that fits your life, not just the maximum approval amount.

3

Gather Documents

Pay stubs, W-2s, bank statements, ID, and income documentation speed things up.

4

Compare Loan Options

Match your down payment, credit, and goals to the right program.

5

Get Pre-Qualified

Set a realistic budget and show sellers you are a serious buyer.

6

Submit Application

Once under contract, complete the formal application and lock in loan details.

7

Underwriting

An underwriter verifies income, assets, credit, and property details.

8

Closing Day

Sign final documents, funds are transferred, and the home becomes yours.

Pre-approval

Get confident before you tour homes.

Pre-approval establishes your budget, strengthens your offer, and removes much of the uncertainty from house hunting.

You can start with a mortgage pre-qualification using a soft credit pull, which gives you a budget without affecting your credit score.

Start Your Pre-Qualification

Documents Needed

  • Recent pay stubs
  • Federal tax returns
  • Photo ID
  • W-2s or 1099s
  • Bank statements
  • Additional income docs
  • Avoid These Mistakes
•Opening new credit cards
•Financing furniture before closing
•Changing jobs without discussing it first
•Missing requested documents
•Making large undocumented deposits

Home loan requirements

What lenders usually review.

Requirements vary by program and by lender, but most mortgage approvals are built around the same six factors.

Credit Score

Your credit score can affect which loan programs are available and how your rate is priced. Higher scores usually create more options, but some programs may allow more flexible credit profiles.

Debt-to-Income Ratio

DTI compares monthly debt payments to gross monthly income. Lenders use it to understand how comfortably the proposed mortgage payment fits with your existing obligations.

Income

Lenders review stable, documentable income. Salary, hourly income, commissions, bonuses, self-employment income, retirement income, and other eligible income may all be considered.

Employment

Most approvals include employment and income verification. A recent job change is not always a problem, but lenders may ask for extra documentation if your income type or pay structure changed.

Assets and Reserves

Lenders review funds for your down payment, closing costs, and sometimes extra cash reserves. Some mortgage programs, particularly jumbo mortgages, may require larger cash reserves or additional documentation.

Down Payment

Your required down payment depends on the loan type. Eligibility, property type, loan amount, and program guidelines all matter, which is why comparing options early can be useful.

Mortgage insurance

What is PMI on a home loan?

Private mortgage insurance, or PMI, is typically required on a conventional loan when your down payment is less than 20%. It protects the lender, not the borrower, and is usually added to your monthly mortgage payment.

PMI is not always permanent. On most conventional loans you can request removal once you build enough equity, and it generally cancels automatically once your balance reaches a set percentage of the home’s original value. FHA loans carry their own mortgage insurance under different rules, which is one reason it can be worth comparing the long-term cost of each program before you choose.

Read Our PMI Guide

PMI at a Glance

•What it is: insurance that protects the lender on lower-down-payment loans
 
•When it applies: often on conventional loans with less than 20% down
 
•How it is paid: usually added to your monthly payment
 
•How it ends: may be removed as you build equity, subject to program rules
 

Home loan calculator

Turn a price range into a monthly payment.

Estimate how home price, down payment, loan term, interest rate, taxes, insurance, and mortgage insurance can affect your monthly payment.

Estimated monthly payment $0

This estimate uses the numbers entered here. It is not a quote or commitment to lend. Actual payment can vary based on credit, program, property taxes, insurance, HOA dues, mortgage insurance, and final underwriting.

Principal & interest $0
Taxes, insurance & MI $0
Get a Personalized Estimate

First-time buyers

You may need less upfront than you think.

Many first-time buyers assume they need perfect credit or a large down payment. In reality, FHA home loans, conventional low-down-payment options, down payment assistance, and state or local programs can help reduce barriers.

Explore First-Time Buyer Programs

Helpful next steps

Continue comparing programs, costs, and qualification steps with these related buyer resources.

→ Down payment assistance
→ PMI guide
→ Approval process
→ Soft pull pre-qualification

Service area

Local mortgage guidance where you are buying.

Federal Hill Mortgage helps buyers and homeowners compare home loan options across Maryland, Pennsylvania, Delaware, Virginia, Washington, DC, North Carolina, Texas, and Florida.

Our loan officers can help you understand qualification requirements, compare purchase mortgage programs, and choose financing that fits your goals.

Speak With a Loan Officer
Maryland Pennsylvania Delaware Virginia Washington, DC North Carolina Texas Florida

Meet Your Mortgage Advisor

Meet Your Mortgage Advisor

Tammy Saul, JD, MBA

CEO & Co-Founder | Individual NMLS #175722

CEO & Co-Founder JD, MBA Founded Federal Hill Mortgage in 2005

Tammy Saul, JD, MBA is CEO and Co-Founder of Federal Hill Mortgage and one of the most accomplished mortgage professionals in the United States. Since founding Federal Hill Mortgage in 2005, Tammy has successfully handled thousands of home purchase, refinance, home equity, and construction loans, including complex and time-sensitive transactions.

She is the official #1 producing loan officer in her home state, a distinction she has held since 2023, and the official #1 producing female loan officer in the United States for first-lien units. Tammy also ranks among the nation’s top mortgage brokers and has been featured by Scotsman Guide, National Mortgage News, and Mortgage Professional America Magazine.

With a background in law, business, and mortgage lending, Tammy brings a strategic, detail-oriented, and problem-solving approach to every transaction. She is known for simplifying complex financing, educating borrowers about their options, anticipating potential obstacles, and executing with the speed and precision needed to move loans from pre-qualification through closing.

Service areas: Maryland, Pennsylvania, Delaware, Virginia, Washington, DC, Texas, and Florida.

Read Tammy's Bio

Sources

Sources & Helpful Homebuyer Resources

Mortgage guidelines can vary by loan program, lender, property type, and borrower profile. The resources below can help you verify program details and learn more about home loan options from primary or government-backed sources.

FHA Loans

HUD’s FHA Single Family Housing Policy Handbook 4000.1 explains FHA eligibility, underwriting, down payment, mortgage insurance, property, and documentation guidelines.

 

View HUD FHA Handbook →

VA Loans

The U.S. Department of Veterans Affairs explains VA home loan eligibility and how eligible borrowers can request a Certificate of Eligibility.

Request a VA COE →
 

USDA Loans

USDA’s Single Family Housing Guaranteed Loan Program explains property eligibility, income limits, primary residence requirements, and rural housing guidelines.

 

Review USDA Guidelines →

Conventional Loans

Fannie Mae and Freddie Mac publish conventional loan program guidelines, including low-down-payment options such as HomeReady and Home Possible.

 

Fannie Mae HomeReady →
Freddie Mac Home Possible →

Homebuyer Education

The CFPB provides homebuying tools, Loan Estimate and Closing Disclosure explainers, and the “Your Home Loan Toolkit” guide for mortgage shoppers.

 

Read CFPB Toolkit →
 

Frequently asked questions

Home loan questions buyers ask most.

These answers cover common qualification, down payment, timeline, and pre-approval questions.

  • Lenders look at credit, income, debt-to-income ratio, employment history, and assets. They weigh your full financial picture, so it is worth getting pre-qualified even if one area is not perfect.

  • It depends on the loan. Conventional loans generally look for scores in the low-to-mid 600s, while FHA loans can allow lower scores for eligible borrowers.

  • Yes. VA and USDA loans may allow 0% down for eligible buyers, FHA loans may allow 3.5% down for eligible borrowers, and some conventional programs allow as little as 3%.

  • Pre-qualification can happen the same day. Full pre-approval often takes 1 to 3 business days after documents are submitted. Contract to closing commonly runs 30 to 45 days.

  • It depends on your situation, but FHA loans are often considered flexible because of lower down payment and credit requirements. Eligible veterans may find VA loans especially affordable.

  • Pre-qualification gives an estimated budget. Pre-approval is a more thorough review of documented income, assets, and credit, and it carries more weight with sellers.

Ready to explore your options?

Start with clarity, not pressure.

Whether you are buying your first home or comparing financing programs, Federal Hill Mortgage can help you understand your options and take the next step with confidence.

Get Pre-QualifiedSpeak With a Loan Officer

© 2026 Federal Hill Mortgage Company, LLC. All rights reserved.

Federal Hill Mortgage Company, LLC is a broker and lender licensed in MD, DE, PA, VA, DC, NC, TX, & FL. We are an Equal Housing Lender.

Individual NMLS #175722 | Company NMLS #176351 (For licensing information, go to: www.nmlsconsumeraccess.org)