Compare Mortgage Programs: FHA, VA, USDA & Conventional Loans

The 97% LTV Standard program (formerly Conventional 97) offers conventional financing with just 3% down payment, making homeownership accessible to first-time buyers who don't qualify for income-restricted programs. Unlike income-restricted programs such as HomeReady, Home Possible, and USDA, there are no income limits, allowing higher-earning first-time buyers to access low down payment options. The program offers standard mortgage insurance that can be canceled once you reach 20% equity, unlike FHA's lifetime mortgage insurance in many cases. Borrowers have access to a full range of property types including condos and PUDs, and can choose from various loan terms and rate options.

This program requires at least one borrower to be a first-time homebuyer, limiting eligibility for repeat buyers. The mortgage insurance rates are higher than income-qualified programs like HomeReady, and borrowers face standard risk-based loan-level price adjustments (LLPAs) that can significantly increase costs based on credit score and loan-to-value ratio. Homeownership education is required for high LTV loans, adding time to the process. The program lacks the pricing advantages and reduced fees available through targeted affordable housing programs.

HomeReady offers exceptional value through significant cost savings and flexible qualification criteria. All loan-level price adjustments (LLPAs) are waived, potentially saving thousands of dollars in fees. The program features reduced mortgage insurance coverage (25% vs. standard rates) for loans above 90% LTV, lowering monthly payments. Very low-income first-time buyers may qualify for a $2,500 credit toward down payment or closing costs. HomeReady allows flexible income sources including non-occupant co-borrower income and rental income from boarders, making qualification easier. The program accepts gifts, grants, and Community Seconds with no minimum personal contribution required. First-time homebuyer status is not required, and the program covers 1-4 unit properties including manufactured homes.

Borrowers must meet strict income limits of 80% of Area Median Income, which can be restrictive in high-cost areas. Lenders must verify income eligibility using official Fannie Mae tools, adding complexity to the approval process. Homeownership education is required if all borrowers are first-time homebuyers. Properties must be in eligible census tracts, and some areas may not qualify. The program requires more documentation for alternative income sources, potentially lengthening the approval process.

Home Possible provides excellent flexibility with no minimum borrower contribution required for 1-unit properties, allowing 100% gift funding for down payment and closing costs. Standard risk-based credit fees are waived, reducing overall loan costs. The program allows up to 105% total loan-to-value with eligible Affordable Seconds programs, enabling buyers to finance both purchase and improvements. Rental income from the subject property can count up to 30% of qualifying income, and the program accommodates 2-4 unit properties with additional requirements. Both purchase and no cash-out refinance transactions are permitted, and non-occupying co-borrowers are allowed with adjusted LTV limits.

The program has an 80% AMI income limit that may exclude middle-income buyers in expensive markets. Manually underwritten loans require a minimum 660-680 credit score depending on loan type, which is higher than FHA requirements. For 2-4 unit properties, borrowers must contribute 3% of personal funds if LTV exceeds 80%, and landlord education is required for purchase transactions. The program requires homeownership education if all borrowers are first-time homebuyers and when credit is established through non-traditional references only.

HomeOne serves first-time homebuyers without income restrictions, making it ideal for higher-earning buyers who exceed AMI limits for other programs. The program offers up to 97% LTV with potential for 105% total LTV using Affordable Seconds, providing significant leverage for buyers with limited savings. There are no geographic restrictions or census tract requirements, offering broad availability nationwide. The program allows both purchase and no cash-out refinance transactions, providing ongoing benefits for borrowers. HomeOne features automated underwriting through Loan Product Advisor for streamlined processing.

The program strictly requires at least one borrower to be a first-time homebuyer for purchase transactions, eliminating move-up buyers. All borrowers must occupy the property as their primary residence - non-occupying co-borrowers are not permitted, reducing family support options. The program is limited to 1-unit properties only, excluding multi-unit investments. Fixed-rate mortgages are required, eliminating ARM options. Standard 35% mortgage insurance coverage is required for LTV above 95%, which is higher than some competing programs. Only Loan Product Advisor Accept decisions are eligible, requiring strong credit and income profiles.

FHA loans offer the most flexible credit requirements, accepting scores as low as 500 with 10% down or 580 with 3.5% down, making homeownership accessible to borrowers with credit challenges. The program has no income limits and serves borrowers nationwide without geographic restrictions. FHA accepts all property types including manufactured homes and allows both purchase and refinance transactions. Down payment funds can come from gifts, grants, or employer assistance programs with minimal restrictions. The program permits non-occupying co-borrowers and offers streamlined refinancing options for existing FHA borrowers. Debt-to-income ratios can be more flexible than conventional loans, especially with compensating factors.

FHA loans require both upfront and annual mortgage insurance premiums, with annual premiums typically remaining for the life of the loan for loans over 90% LTV. Loan limits are lower than conventional conforming limits in many areas, restricting buying power in expensive markets. The program has stricter property condition requirements and may require repairs before closing, potentially complicating transactions. FHA loans may be less attractive to sellers in competitive markets due to perceived complexity and appraisal requirements. The mortgage insurance cannot be removed without refinancing in most cases, creating long-term cost implications.

VA loans provide unmatched benefits for eligible veterans, active duty service members, and surviving spouses. The program requires no down payment regardless of loan amount, and no monthly mortgage insurance, creating significant monthly savings and eliminating the need for substantial cash reserves. VA loans typically offer competitive interest rates and have no prepayment penalties. The program allows cash-out refinancing up to 100% of home value and offers the Interest Rate Reduction Refinance Loan (IRRRL) for streamlined refinancing of existing VA loans. Loan limits are generous, often exceeding conventional conforming limits in many areas. The VA guaranty provides lender confidence, often resulting in more flexible underwriting.

Eligibility is strictly limited to qualified veterans, active duty personnel, reservists, National Guard members, and surviving spouses, excluding the general population. The program requires a VA funding fee (though this can be financed and is waived for disabled veterans), adding to loan costs. Properties must meet VA minimum property requirements, which can be stricter than conventional standards and may require repairs before closing. Only primary residences are eligible - the program cannot be used for investment properties or second homes. Some sellers may be hesitant to accept VA offers due to perceived appraisal and inspection complexities.

USDA loans offer 100% financing with no down payment required, making homeownership possible for buyers with minimal savings. The program provides competitive fixed interest rates and allows the guarantee fee to be financed into the loan amount. Income limits are set at 115% of Area Median Income, which is higher than other income-qualified programs, serving moderate-income families. The annual guarantee fee is typically lower than FHA mortgage insurance premiums, reducing long-term costs. Down payment and closing costs can come from gifts, grants, or seller concessions. The program offers both purchase and refinance options, including streamlined refinancing for existing USDA borrowers.

Eligibility is strictly limited to USDA-designated rural and suburban areas, which excludes most major metropolitan areas and suburban locations. Properties must be in eligible areas and meet USDA standards, potentially limiting housing choices. The program has income limits that may exclude higher-earning families even in rural areas. Processing times can be longer than other loan programs due to USDA approval requirements. Only primary residences are eligible, and there are restrictions on property size and use. The program requires an upfront guarantee fee (though it can be financed) and ongoing annual fees.