Home loans: which program fits your situation

In the US, "home loan" and "mortgage" mean the same thing, and the first real choice is not which lender to call. It is which program to borrow under: conventional, FHA, VA, USDA, jumbo, or a documentation program built for income that does not arrive on a W-2. Each sets its own floor on credit score, down payment and debt load, and those floors decide which doors are open. If you already own the home and are not buying, start with refinancing an existing mortgage instead.

BEDRWay is not a lender, sets no terms, and quotes no rates or payments. It connects you with one licensed loan officer who lends in your state, and that person is the only one who can price your file. Nothing here is an offer of credit.

Home loan programs at a glance

Floors are program rules and common lender practice, not offers. Lenders routinely set stricter ones, called an overlay, which is why two lenders can answer the same file differently.

Conventional loans

Conventional loans carry no government insurance. Most are conforming, meaning they fit the rules Fannie Mae and Freddie Mac buy under, including a loan size cap the FHFA resets yearly. For 2026 the baseline cap on a one-unit home is $832,750, rising to $1,249,125 in the highest-cost counties. Above your county's cap it is a jumbo loan and a different underwriting world.

Lenders typically want a credit score of 620 or better. Down payments start at 5%, or at 3% on HomeReady from Fannie Mae and Home Possible from Freddie Mac, which add income limits tied to the area median.

Below 20% down you carry private mortgage insurance, and PMI is not permanent: you can ask for it once the balance reaches 80% of the original value, and the servicer must cancel it unasked at 78% LTV on the original schedule. See where you stand with the loan-to-value calculator and the PMI calculator.

FHA loans

FHA loans are insured by the Federal Housing Administration and written by ordinary lenders. The credit rule is what most people come for: 580 with 3.5% down, and 500 to 579 with 10% down. Lenders set higher floors all the time, so a 580 that meets FHA does not automatically meet the lender in front of you.

The trade is mortgage insurance: an upfront premium, normally financed into the loan, plus an annual premium collected monthly that stays for the life of most FHA loans written with less than 10% down. Conventional PMI comes off, FHA MIP mostly does not, and that is the biggest reason FHA can cost more over time even where it is easier to get.

FHA also caps loan size. The 2026 floor is $541,287 for a single-family home in a standard-cost area, and in the most expensive counties it also reaches $1,249,125. The house has to meet HUD's minimum property standards too, so a fixer-upper can fail the appraisal even when the buyer is fine.

Which wins depends on your score and how long you keep the loan. FHA vs conventional: the full cost comparison works it through; the FHA loan calculator takes your own numbers.

VA loans

VA loans are guaranteed by the Department of Veterans Affairs for eligible veterans, active duty service members, National Guard and Reserve members, and some surviving spouses. Eligibility runs on service history rather than on a score, and you prove it with a Certificate of Eligibility, which a loan officer can usually pull for you.

There is no down payment requirement and no monthly mortgage insurance, which is the strongest combination in US mortgage lending. In place of insurance there is a one-time VA funding fee, financed into the loan and scaled by down payment and by whether this is a first use. Veterans receiving VA disability compensation, and some surviving spouses, are exempt from it entirely. The VA loan calculator covers the mechanics.

USDA loans

The USDA Rural Development guaranteed loan is the other zero down payment program, and it is constrained on two sides: the property has to sit in an eligible area, a published map covering far more small-town land than "rural" suggests, and household income has to fall under a limit set against the area median. Automated underwriting generally wants a 640. In place of PMI there is an upfront guarantee fee and a smaller annual fee, both set by USDA rather than by the lender.

Jumbo loans

A jumbo loan is one above the conforming cap for its county, outside what Fannie Mae and Freddie Mac will buy. The lender keeps the risk, so the file gets tighter: higher credit scores, larger down payments, months of cash reserves after closing, fuller documentation of assets. None of it is standardised the way conforming underwriting is, so shopping matters more here than anywhere else.

If your income is 1099, self-employed or variable

Being self-employed does not push you out of conventional or FHA. The usual route is two years of federal returns plus a year-to-date profit and loss statement, and underwriting reads your net income after deductions, which is why a strong year can still underwrite thin.

When the returns do not tell the real story, non-QM programs exist for that: bank statement loans read 12 or 24 months of deposits, 1099 programs read gross contract income, and asset depletion programs convert liquid assets into a monthly figure. They ask for more down payment and a stronger score in exchange. If the property is a rental rather than a home you will live in, it is usually underwritten on the property's own rent instead of your income, which is financing an investment property with a DSCR loan.

What every lender checks

Credit score, and the 2026 model change

Every program above states a score floor, and the score a lender pulls is a mortgage specific one, not the number in a consumer app. Most pull three bureaus and use the middle score.

Debt-to-income ratio

DTI is your monthly debt payments divided by gross monthly income, and it ends more purchases than credit score does. The old guideline is 28% of income on housing and 36% on total debt; automated underwriting commonly runs to under 43% total and stretches past it with compensating factors such as reserves, a large down payment or a long employment history. Run your DTI, then work out how much house you can afford and cross-check the affordability calculator.

Down payment, and where the money may come from

Money has to be sourced and seasoned, meaning the lender can see where it came from and that it has sat still. Gift funds from family are allowed on most programs with a signed gift letter and a paper trail. Down payment assistance from a state housing finance agency is real money most buyers never look up, and the terms vary by state. Size it with the down payment calculator.

Employment, reserves and the property

Underwriting wants roughly two years of income history, though school and a career change inside the same field usually count, and cash reserves are months of housing payments left after closing: conforming often wants none, jumbo and non-QM want several. The house is underwritten too, so the appraisal has to support the price and the title has to come back clean.

Documents to have ready

• Two years of W-2s, and 30 days of pay stubs
• Two years of federal tax returns, all schedules
• 1099s, K-1s and a year-to-date profit and loss if you are self-employed
• Two to three months of personal bank statements, or 12 to 24 months for a bank statement program
• Asset and retirement account statements
• Photo ID and Social Security number
• A signed gift letter if any of the down payment is a gift
• Rent payment history, which can help a thin credit file
• Divorce decree, child support order or bankruptcy discharge papers, if they apply
• Certificate of Eligibility for a VA loan

Gathering these first is most of what separates a smooth file from a slow one. How mortgage pre-approval works covers the sequence.

Costs beyond the down payment

Closing costs commonly land around 2% to 5% of the loan amount and cover origination, appraisal, title insurance, recording and prepaid items. Sellers may contribute toward them, capped by program and by your down payment. Estimate yours before you write an offer.

Beyond that: escrow, where the servicer collects property taxes and homeowners insurance and pays them for you; discount points, money paid at closing for a different loan structure, which is a trade and not a discount; and earnest money, deposited with the offer and credited back at closing.

What happens after you apply

The sequence is application, processing, appraisal and title, underwriting, conditional approval, clear to close, then closing. How long each stage takes varies by lender, file and market, and nobody honest promises a date at the start. The step-by-step first-time buyer guide covers the whole process, including everything before you apply.

Questions people actually ask

Do I need 20 percent down to buy a house?

No. VA and USDA go to zero for those eligible, FHA starts at 3.5% and conventional starts at 3%. Twenty percent is simply the level at which private mortgage insurance stops applying on a conventional loan, which is where the number came from.

Do I have to be a first-time home buyer for FHA?

No, and it never has. FHA is an owner-occupancy program, so the house has to be your primary residence, but prior ownership does not shut you out. Some down payment assistance programs layered on top of FHA do carry a first-time rule, usually defined as not having owned a home in the past three years.

Can I get a mortgage with 1099 income?

Yes. With two years of 1099 history it documents on a conventional or FHA loan like any other income. With less history, or deductions that flatten net income, the 1099 and bank statement programs above exist for exactly that.

Sources for the dated figures above: FHFA for the 2026 conforming loan limits, HUD Mortgagee Letter 2025-23 for the FHA limits, and the Homeowners Protection Act for PMI cancellation. Each is tracked with its source and its next review date in this site's freshness registry.