Guide

Understanding loan types

A quick, honest overview of the main mortgage options and who each tends to fit. Programs and eligibility vary — the right fit depends on your credit, down payment, property, and goals.

Conventional

Stronger credit and a flexible down payment.

Not part of a government program. Conforming conventional loans follow Fannie Mae / Freddie Mac rules and stay at or under the conforming limit. Often lower cost than FHA, but can be harder to qualify for.

FHA

Lower down payment or credit flexibility.

Insured by the FHA. Allows a down payment as low as 3.5% for eligible borrowers (subject to credit and program guidelines). Down-payment funds may come from family, employer, or approved gift sources.

VA

Eligible veterans, service members, and spouses.

Guaranteed by the VA through a private lender. Most VA-backed purchase loans require no down payment and no monthly PMI. Requires a Certificate of Eligibility.

USDA

Qualifying buyers in eligible rural/suburban areas.

Section 502 Guaranteed loans help low-to-moderate income households (generally under 115% of area median income) buy a primary residence in eligible areas — with no down payment for those who qualify.

Jumbo

Higher-value homes above the conforming limit.

A non-conforming loan for an amount above the applicable conforming limit ($832,750 in most U.S. counties for 2026). Uses lender-specific guidelines and often stronger credit and reserves.

ARM (adjustable-rate)

Comfortable with future rate change, or a shorter horizon.

The rate is typically fixed for an initial period, then adjusts. The starting payment may be lower than a fixed-rate loan, but payments can rise. Always ask how much the rate and payment can change.

203(k) renovation

Financing a home plus eligible repairs in one loan.

An FHA loan that combines purchase or refinance with rehabilitation funds held in escrow. Limited 203(k) covers non-structural work up to $75,000; Standard 203(k) covers major/structural work with a $5,000 minimum.

Cash-out refinance

Accessing equity while replacing your mortgage.

Replaces your current mortgage with a larger one and returns eligible equity as cash. Compare the new rate, term, payment, and total interest before deciding.

HELOC / home equity

Flexible, ongoing access to home equity.

A home equity line of credit is a revolving second lien secured by your home — borrow as needed at a variable rate. A home equity loan instead gives a fixed-rate lump sum.

Broker vs. bank

A bank or direct lender offers only its own products. A mortgage broker like EON can compare options across many lenders to find a fit — which can help when credit, down payment, property type, or timing don't match one narrow box. A broker is paid a loan-specific fee; understand who pays it. Whichever route you choose, the CFPB recommends comparing at least three Loan Estimates.

Smart shopping

  • • Request a standardized Loan Estimate from each lender and compare side by side.
  • • Compare the rate, monthly payment, origination charges, and lender credits.
  • • Verify any loan officer or company at nmlsconsumeraccess.org.
  • • You get 3 business days to review the Closing Disclosure before closing.

Sources

  1. FHFA — 2026 Conforming Loan Limit Values
  2. CFPB — Conventional loans
  3. HUD — FHA 203(b) program
  4. VA — Home loan types
  5. USDA — Single Family Housing Guaranteed Loan Program
  6. HUD — 203(k) rehabilitation mortgage
  7. CFPB — Home equity loan vs. HELOC
  8. CFPB — Broker vs. lender
  9. NMLS Consumer Access (verify licensing)
  10. CFPB — Compare Loan Estimates
Not sure which fits? Ask Ruchika