There are five loan types in the United States which can make it hard for potential buyers to decide on which is right for them. The first thing to decide is if a loan is preferred to be government-backed or not.

The first type is a conventional loan. These loans are not insured by the federal government and come in two forms: non-conforming or conforming. A conforming conventional loan means its amount is determined by Fannie Mae or Freddie Mac, government agencies that commonly back mortgages in the United States. If a loan does not fall within these maximum limits, it is non-conforming. Jumbo loans are the most common type of non-conforming loans. This means that a home may exceed the federal loan limits for home prices set by the two government agencies. This makes it a common choice for higher-cost areas.

The other option is to get a government-insured mortgage, which is helpful for those living in the US who may have a harder time buying a home otherwise. The three types of home loans are by the Federal Housing Administration for FHA Loans, the US Department of Agriculture for USDA Loans, or the US Department of Veterans Affairs for VA Loans. FHA loans are great for those who may not have enough money for a large down payment and have a lower credit score. USDA Loans are common for low- to moderate-income buyers however the home must be in the USDA approved areas and limits. The last choice is a VA Loan which allows for a low-interest choice for active duty or veteran military members and their families. VA Loans don’t require a down payment but a fee may be applied.