Mortgage Loan Types Explained: Conventional, FHA, VA, USDA, CHFA and NC Home Advantage

At a glance

Conventional loans

A conventional loan is any mortgage not backed by a government agency. A conforming loan meets Fannie Mae and Freddie Mac standards, including the loan limit FHFA sets each year: $832,750 for a one-unit home in most areas for 2026, higher in some high-cost areas. Larger loans are often called jumbo loans. With less than 20% down, lenders usually require private mortgage insurance, which protects the lender, not you.

FHA loans

FHA doesn't lend money; it insures loans made by approved lenders. HUD says the minimum required investment is 3.5% in most cases and can come from several sources, such as gifts. FHA loans carry mortgage insurance premiums (MIP), which the VA describes as what FHA requires to insure a loan against future loss. The home has to be your primary residence and meet FHA property standards.

VA loans

VA-backed purchase loans are for people who qualify for a VA Certificate of Eligibility and will live in the home. The VA lists these features: no down payment as long as the price isn't higher than the appraised value, no PMI or MIP, fewer closing costs (which the seller may pay), and no penalty for paying off early. Most borrowers pay a one-time VA funding fee unless exempt; the VA lists the fee rates and exemptions.

USDA loans

USDA Rural Development's Section 502 Guaranteed Loan Program backs loans from approved lenders for homes in eligible rural areas. Household income can't exceed 115% of median household income, the home must be your primary residence, and the loans are 30-year fixed-rate only, with 100% financing. USDA has an online map to check whether an address is eligible. (USDA also runs a separate direct loan program for lower-income households.)

CHFA (Connecticut Housing Finance Authority)

CHFA is Connecticut's state housing finance agency. Its programs are offered through participating lenders and include:

• Fixed-rate first mortgages through government-insured (FHA, VA, USDA) and conventional (HFA Advantage and HFA Preferred) programs.
• Down Payment Assistance Program (DAP): a second mortgage for down payment and closing costs, used with a CHFA first mortgage.
• Time To Own: forgivable down payment and closing cost help for eligible first-time buyers.
• Rate discounts CHFA lists for military members and veterans, police officers and state troopers, Connecticut-certified teachers who qualify, people with disabilities, public housing residents, and homes in federally targeted areas.

CHFA programs have income limits, some have sales price limits, and some require homebuyer education. CHFA defines a first-time homebuyer as someone who hasn't owned a home in the past three years.

NC Home Advantage Mortgage (NCHFA)

The North Carolina Housing Finance Agency's NC Home Advantage Mortgage is a fixed-rate mortgage for first-time and move-up buyers through participating lenders. NCHFA lists these requirements:

• The home is in North Carolina and becomes your principal residence within 60 days of closing.
• Annual income up to $158,000 and a credit score of 640 or higher (660 for manufactured homes).
• An FHA, USDA, VA or conventional loan that meets that loan type's sales price limits.

Down payment assistance is up to 3% of the loan amount, and NCHFA also offers a $15,000 option for first-time buyers and military veterans who meet more criteria. The assistance is repaid only if you sell, refinance or transfer before year 15; it's forgiven 20% a year at the end of years 11 through 15.

Terms to know

• Fixed-rate vs. adjustable-rate: see the fixed vs. ARM guide and the payment calculator.
• Loan Estimate: the standard form lenders give within three business days of an application, showing the rate, payment and costs.
• Points: fees paid at closing to lower the rate.
• Escrow: money collected with each payment for property taxes and insurance.

The tax side

If you itemize, mortgage interest and property taxes may be deductible within federal limits, and points paid to buy a home have their own rules. Whether itemizing beats the standard deduction depends on your whole return. For a Connecticut buyer's tax to-do list, see the first home tax checklist. Nothing here recommends a loan type, program or lender.