Explore Home Loan Options
The right mortgage path depends on what you are financing, how you use the property, your eligibility, documentation, available cash, credit profile and long-term plan. Compare the major home-loan categories before choosing a provider or paying nonrefundable costs.
Start with your goal—buy, refinance, access equity or finance an investment property—then examine program rules, total borrowing cost, payment structure, cash to close and risk.
Exploring options does not guarantee eligibility, approval, terms, rates, savings or closing.
Start with your goal
Start With Your Goal
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| Goal | Best next comparison | Primary destination |
|---|---|---|
| Buy a primary home | Best next comparisonConventional, FHA, VA, USDA, jumbo and assistance paths | Primary destination/purchase-loans/ |
| Refinance a current mortgage | Best next comparisonRate/term, cash-out and program-specific refinance | Primary destination/refinance-options/ |
| Use home equity | Best next comparisonHome equity loan, HELOC and cash-out refinance | Primary destination/home-equity-loans/ |
| Finance a rental property | Best next comparisonDSCR, conventional investment and portfolio options | Primary destination/investment-property-loans/ |
Home Loan Options at a Glance
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| Path | May fit when | Core tradeoff to compare |
|---|---|---|
| Conventional | May fit whenBorrower meets conventional underwriting and property standards | Core tradeoff to comparePricing, mortgage insurance, conforming limits and flexibility |
| FHA | May fit whenSmaller down payment or more flexible credit approach matters | Core tradeoff to compareUpfront/annual mortgage insurance and FHA property/program rules |
| VA | May fit whenEligible Veteran, servicemember or surviving spouse uses VA benefit | Core tradeoff to compareFunding fee, entitlement, occupancy and lender overlays |
| USDA | May fit whenEligible household buys an eligible rural-area primary residence | Core tradeoff to compareGeography, household income and guarantee fees |
| Jumbo | May fit whenLoan amount exceeds applicable conforming limit or needs nonconforming structure | Core tradeoff to compareStricter documentation, liquidity, reserves and pricing variability |
| Self-employed/alternative documentation | May fit whenTax-return income does not fully represent cash flow or assets | Core tradeoff to compareProvider-specific methods, costs and documentation |
| DSCR/investment | May fit whenEligible rental property supports repayment analysis | Core tradeoff to compareNon-owner occupancy, property cash flow and investor terms |
| Renovation/construction | May fit whenPurchase/refinance includes major improvements or a new build | Core tradeoff to compareDraws, contractors, budgets, inspections and completion risk |
No universal winner: A low advertised rate does not establish the lowest-cost or most suitable loan. Compare the same scenario using official Loan Estimates and account for mortgage insurance, fees, points, credits, payment changes and time horizon.
Understand the Categories Before Comparing
Mortgage terms often describe different layers of the same transaction. “Purchase” or “refinance” describes the purpose. Conventional, FHA, VA and USDA describe program or backing. Fixed-rate and adjustable-rate describe how the interest rate behaves. Bank-statement or asset-utilization describes a documentation method. DSCR describes an investment-property underwriting approach.
One loan can occupy several layers—for example, a fixed-rate conventional purchase mortgage for a primary residence. Compare equivalent scenarios instead of treating every label as a separate substitute.
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| Layer | Examples | Question |
|---|---|---|
| Purpose | ExamplesPurchase, rate/term refinance, cash-out, equity borrowing | QuestionWhat transaction are you completing? |
| Program/backing | ExamplesConventional, FHA, VA, USDA, portfolio | QuestionWhich rules and insurance/guarantee apply? |
| Rate/payment | ExamplesFixed, ARM, temporary buydown | QuestionCan the rate or payment change? |
| Documentation | ExamplesStandard income, bank statement, asset utilization | QuestionHow is repayment capacity documented? |
| Occupancy/property | ExamplesPrimary, second home, investment; condo, 1–4 unit | QuestionHow will the property be used and is it eligible? |
Purchase Loan Paths
A purchase mortgage finances the acquisition of a home. The comparison should begin before making an offer: establish a realistic housing budget, preserve cash for closing and post-closing needs, identify likely program paths, and understand property restrictions.
Prequalification and preapproval are not final approval. The property, appraisal, title, insurance, updated finances and underwriting conditions can still affect the result.
First-Time Homebuyer Options
“First-time buyer” is not a single mortgage program. A buyer may use a conventional, FHA, VA, USDA or local housing-agency path if eligible. Some programs define first-time status as not owning a principal residence during a specified prior period, while others serve repeat buyers too.
Compare the first mortgage and any assistance together. Down payment assistance may be a grant, deferred second mortgage, forgivable loan or repayable second lien, each with its own occupancy, income, education, sale and refinance conditions.
Assistance check: Ask who provides the assistance, whether it creates a lien, when repayment or forgiveness occurs, and what happens after sale, refinance, move-out or early payoff.
Conventional Loans
A conventional mortgage is not insured or guaranteed by FHA, VA or USDA. Conventional loans may be conforming—eligible for acquisition under Fannie Mae or Freddie Mac standards—or nonconforming.
Loan limits vary by year, county, property-unit count and special statutory area. For 2026, FHFA states that the baseline one-unit conforming limit is $832,750 in most of the United States; verify the current county-specific limit before publication and application.
Compare credit-based pricing, mortgage insurance, property type, occupancy, reserves, loan-level adjustments and cancellation rules rather than assuming conventional is automatically cheaper.
FHA Loans
FHA-insured mortgages are made by approved lenders and insured by the Federal Housing Administration. They may permit a smaller down payment and broader credit profiles than some conventional paths, subject to lender and FHA rules.
FHA loans include upfront and annual mortgage insurance, county-based loan limits and property/occupancy requirements. Compare the full insurance cost and duration, not only the initial cash requirement.
VA Loans
VA-guaranteed mortgages are offered by private lenders to eligible Veterans, servicemembers and certain surviving spouses. Eligibility generally begins with a Certificate of Eligibility, but the lender still underwrites credit, income, debts, occupancy, property and the complete transaction.
VA purchase loans may allow eligible borrowers to finance without a down payment and do not require monthly mortgage insurance, but a funding fee may apply unless the borrower is exempt. Entitlement, reasonable value, closing-cost rules and lender overlays matter.
Benefit protection: Confirm eligibility and compare VA against other available paths. Never steer an eligible borrower away from a VA benefit merely because another product is easier to process.
USDA Rural Housing Loans
USDA Rural Development supports direct and guaranteed single-family housing programs. The guaranteed program works through approved lenders and may provide no-down-payment financing for eligible low- and moderate-income households purchasing eligible rural-area primary residences.
Property location, household income, occupancy, fees and program rules apply. “Rural” is determined through USDA eligibility tools and may include areas borrowers do not expect, so verify the exact address and current income limits.
Jumbo and Other Nonconforming Loans
A jumbo mortgage generally exceeds the applicable conforming loan limit; other nonconforming loans may fall outside agency standards for different reasons. Jumbo is a loan-size category, not a promise of luxury pricing or relaxed underwriting.
Providers may place greater emphasis on reserves, liquidity, credit depth, property characteristics, income stability and appraisal review. A high-cost county limit may prevent a loan from being jumbo even when it exceeds the national baseline.
Fixed-Rate vs. Adjustable-Rate Mortgages
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| Feature | Fixed-rate mortgage | Adjustable-rate mortgage |
|---|---|---|
| Interest rate | Fixed-rate mortgageContract rate generally stays fixed for the loan term | Adjustable-rate mortgageMay change after the initial period under index, margin and caps |
| Principal-and-interest payment | Fixed-rate mortgageStable if loan is fully amortizing | Adjustable-rate mortgageCan rise or fall after adjustments |
| May fit | Fixed-rate mortgageLong horizon or payment certainty is important | Adjustable-rate mortgageBorrower understands adjustment risk and scenario remains affordable |
| Compare | Fixed-rate mortgageTerm, APR, points, fees and breakeven | Adjustable-rate mortgageInitial rate, index, margin, first/subsequent/lifetime caps and maximum payment |
Taxes, insurance, association charges and some mortgage-insurance amounts can change even when principal and interest are fixed. Never describe a total housing payment as permanently fixed without qualification.
Refinance and Home-Equity Options
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| Goal | Paths to compare | Do not overlook |
|---|---|---|
| Change rate, term or structure | Paths to compareRate-and-term refinance | Do not overlookClosing costs, breakeven, term reset and total interest |
| Receive cash from equity | Paths to compareCash-out refinance | Do not overlookNew first-lien balance, rate, cash received and equity remaining |
| Borrow a lump sum | Paths to compareHome equity loan | Do not overlookSecond payment, fixed/variable terms and lien risk |
| Use a revolving line | Paths to compareHELOC | Do not overlookDraw/repayment periods, variable rate, caps, fees and payment shock |
- Refinance Options →
- Rate-and-Term Refinance →
- Cash-Out Refinance →
- Home Equity Loans →
- HELOCs →
Breakeven is not enough: A refinance can reach fee breakeven and still increase lifetime interest by restarting or extending the term. Compare the existing loan and proposed loan across the period you expect to keep the financing.
Self-Employed and Alternative-Documentation Paths
Self-employed borrowers are not automatically limited to specialized loans. Standard conventional or government-backed underwriting may work when tax returns and eligible income documentation support the file.
When taxable income does not fully represent cash flow, some providers offer bank-statement, asset-utilization or other non-QM approaches. These are provider-specific and may carry different rates, fees, down payments, reserves and prepayment terms.
“Without tax returns” never means without documentation or ability-to-repay review for a consumer mortgage. The provider still verifies identity, assets, liabilities, credit, property, occupancy and the permitted income method.
Investment Properties and Second Homes
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| Use | Potential paths | Critical distinction |
|---|---|---|
| Primary residence | Potential pathsConventional, FHA, VA, USDA, jumbo/portfolio | Critical distinctionBorrower occupies under program rules |
| Second home | Potential pathsConventional, jumbo or portfolio | Critical distinctionPersonal-use and rental restrictions; not primary or investment |
| Long-term rental | Potential pathsConventional investment, DSCR or portfolio | Critical distinctionNon-owner-occupied; rent/cash-flow analysis |
| Short-term rental | Potential pathsDSCR or specialized provider-specific path | Critical distinctionMarket rent, operating history and property/location rules |
| 2–4 unit owner-occupied | Potential pathsProgram-dependent conventional/FHA/VA | Critical distinctionOccupancy plus rental-income and reserve treatment |
Occupancy is a material loan representation. Describe intended use accurately. DSCR underwriting generally focuses on eligible property rental cash flow and is distinct from an asset-utilization mortgage.
Renovation and Construction Financing
Renovation and construction financing adds project risk to ordinary mortgage underwriting. Depending on the program, funds may be held in escrow and released through draws after inspections or documented milestones.
Compare eligible improvements, contractor requirements, contingency reserves, permits, appraisal method, change orders, interest during construction, conversion to permanent financing and remedies for delays or cost overruns.
Property Eligibility Matters
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| Property | Review |
|---|---|
| Single-family home | ReviewCondition, appraisal, title, insurance, occupancy and program limits |
| Condominium | ReviewProject approval/eligibility, association finances, insurance, litigation and occupancy |
| Manufactured home | ReviewTitle, foundation, age, land ownership, property classification and program rules |
| 2–4 unit property | ReviewOccupancy, rents, reserves, appraisal and self-sufficiency/program rules |
| Rural property/acreage | ReviewAccess, utilities, comparable sales, agricultural use and program fit |
| Unique/luxury property | ReviewAppraisal depth, marketability, reserves and jumbo/portfolio appetite |
| Fixer-upper/new build | ReviewAs-completed value, plans, budget, draws, contractor and completion controls |
What Providers Evaluate
- Identity, legal capacity and required disclosures/authorizations.
- Income or permitted alternative documentation and its expected continuance.
- Employment or business history when relevant to the selected method.
- Credit history, housing history, debts and monthly obligations.
- Assets for down payment, closing costs, reserves and post-closing liquidity.
- Loan amount, LTV, DTI or program-specific repayment analysis.
- Property type, occupancy, appraisal/value, condition, title and insurance.
- Program eligibility, mortgage insurance/guarantee, loan limits and provider overlays.
- Changed circumstances before closing, including new debt, job/income changes or asset movement.
No universal threshold: Program and provider standards change. Publish current, sourced numeric rules only on the dedicated program page and label their date, scope and exceptions. Never turn a provider overlay into a universal requirement.
Compare the True Cost, Not Just the Rate
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| Measure | What it answers | Limit |
|---|---|---|
| Interest rate | What it answersRate applied to the balance | LimitDoes not include all fees or insurance |
| APR | What it answersStandardized annualized cost measure including certain charges | LimitNot a complete cash-flow forecast or suitability score |
| Monthly payment | What it answersRequired periodic payment under stated assumptions | LimitMay omit changing taxes, insurance, HOA or future ARM/MI changes |
| Cash to close | What it answersFunds due after credits, deposits and financed amounts | LimitDoes not show long-term cost |
| Points/lender credits | What it answersTrade upfront cost against rate/credits | LimitValue depends on time horizon and exact pricing |
| Five-year cost | What it answersNearer-term interest and loan-cost comparison | LimitMust use consistent scenario and holding period |
| Total interest/term | What it answersLong-horizon borrowing cost | LimitAssumes loan is kept and payments follow schedule |
Request official Loan Estimates for the same loan amount, property, occupancy, down payment, lock assumptions and term. Compare page 1 payment/cash, page 2 loan costs and credits, and page 3 comparisons and other considerations. Confirm whether the rate is locked and when it expires.
Seven-Step Comparison Workflow
- Define the goal, property, occupancy, purchase price or current balance, and timing.
- Set an affordable housing-payment range using taxes, insurance, association dues, maintenance and other debts—not only principal and interest.
- Identify eligibility gates such as VA status, USDA location/income, loan limits, property rules and first-time-buyer assistance.
- Choose documentation paths that truthfully reflect income, assets and property cash flow.
- Collect same-scenario Loan Estimates from multiple providers; record lock status and expiration.
- Compare cash to close, monthly payment, APR, loan costs, mortgage insurance, adjustment risk, penalties and five-year/holding-period cost.
- Reconfirm the final Closing Disclosure, funding sources, post-closing reserves and long-term plan before signing.
Mortgage Offer Comparison Worksheet
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| Field | Provider A | Provider B | Provider C |
|---|---|---|---|
| Program / purpose | Provider A | Provider B | Provider C |
| Loan amount / term | Provider A | Provider B | Provider C |
| Fixed or ARM details | Provider A | Provider B | Provider C |
| Rate / lock / expiration | Provider A | Provider B | Provider C |
| APR | Provider A | Provider B | Provider C |
| Points / lender credits | Provider A | Provider B | Provider C |
| Origination + other loan costs | Provider A | Provider B | Provider C |
| Mortgage insurance / guarantee fees | Provider A | Provider B | Provider C |
| Estimated taxes/insurance/HOA | Provider A | Provider B | Provider C |
| Principal + interest payment | Provider A | Provider B | Provider C |
| Total estimated monthly payment | Provider A | Provider B | Provider C |
| Cash to close | Provider A | Provider B | Provider C |
| Prepayment penalty / balloon | Provider A | Provider B | Provider C |
| Five-year cost / planned-horizon cost | Provider A | Provider B | Provider C |
| Conditions / unresolved risks | Provider A | Provider B | Provider C |
Compare written disclosures for one consistent scenario. Do not compare an unlocked quote against a locked offer, different loan amounts, different occupancies or materially different terms without labeling the difference.
Readiness Checklist
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| Category | Prepare |
|---|---|
| Identity/property | PrepareGovernment ID, address history, contract or current mortgage statement, insurance and property details |
| Income/employment | PreparePay statements, W-2s/1099s, tax returns and employment/business records required by the path |
| Assets | PrepareComplete statements, ownership, large-deposit sourcing, gift/assistance documents and reserve funds |
| Liabilities | PrepareMortgage, installment, revolving, support and other obligations; explanations when requested |
| Self-employed/alternative | PrepareBusiness history, bank statements, P&L, asset records or other provider-required evidence |
| Investment property | PrepareLeases, rent schedule, operating expenses, insurance and property/entity documents |
| Questions | PrepareRate/lock, APR, fees, mortgage insurance, adjustment terms, penalties, servicing and closing timeline |
Security: Do not place account numbers, statements, Social Security numbers, tax returns or other sensitive data into ordinary site forms, analytics, URLs, chat widgets or email. Use an approved encrypted, access-controlled document channel only.
Tennessee Homebuyer Resources, National Context
ShopRates serves a national audience and is based in Tennessee. Tennessee buyers may also review Tennessee Housing Development Agency programs, including Great Choice home-loan and down-payment-assistance resources. Program availability, amounts, household income, purchase-price, education, occupancy and participating-lender requirements can change.
State and local assistance should be compared with the first mortgage as one transaction. Outside Tennessee, search the official housing finance agency for your state and HUD-approved housing counseling resources.
Tennessee Housing Development Agency homebuyers →
THDA down payment assistance →
HUD housing counseling →
Frequently Asked Questions
What are the main types of home loans?
Major paths include conventional, FHA, VA, USDA and jumbo mortgages, plus refinance, home-equity, alternative-documentation, renovation and investment-property options. These labels describe different program, purpose, rate, documentation or property layers.
Which type of mortgage is best?
No single mortgage is best for everyone. Compare eligibility, total cost, payment structure, cash to close, property rules, timeline, risk and expected holding period using the same scenario.
What is the difference between a conventional and government-backed loan?
A conventional mortgage is not insured or guaranteed by FHA, VA or USDA. Government-backed programs use private lenders or government channels under program-specific eligibility, insurance or guarantee and property rules.
Is FHA only for first-time homebuyers?
No. FHA is not limited to first-time buyers, although its features may be useful to some first-time buyers. Borrower, property, occupancy and lender requirements still apply.
Can a VA loan have no down payment?
Eligible VA borrowers may be able to purchase without a down payment when the transaction meets VA and lender requirements. A funding fee may apply unless the borrower is exempt, and closing costs or a value gap may still require funds.
How do USDA home loans work?
USDA Rural Development supports direct and guaranteed programs for eligible households and eligible rural-area primary residences. Location, household income, occupancy, fees and other program rules apply.
When is a mortgage considered jumbo?
A mortgage is generally jumbo when its loan amount exceeds the applicable conforming limit. The limit varies by year, county, unit count and special statutory area, so verify the current location-specific limit.
Can self-employed borrowers get conventional loans?
Yes. Self-employed borrowers may qualify under standard programs when eligible documented income supports the file. Bank-statement, asset-utilization and other provider-specific paths may also be considered when appropriate.
What is the difference between a home equity loan and a HELOC?
A home equity loan generally provides a lump sum with an installment-payment structure. A HELOC is a revolving line with draw and repayment periods and commonly has a variable rate. Both place a lien on the home.
Does preapproval guarantee a mortgage closing?
No. Preapproval is conditional and is not final approval. Property, appraisal, title, insurance, updated finances, disclosures and underwriting conditions can still affect the result.
Should I compare interest rate or APR?
Compare both, along with loan costs, mortgage insurance, monthly payment, cash to close, rate-lock status and the cost over the period you expect to keep the loan. Neither rate nor APR answers every suitability question.
How many mortgage offers should I compare?
There is no required number, but multiple same-scenario Loan Estimates can reveal meaningful differences. Compare written terms from providers you have independently verified rather than relying only on advertisements or verbal quotes.
Compare Home Loan Options With a Clear Starting Point
Tell us what you are financing, how the property will be used and what documentation may be available. Compare potential paths and provider terms before making a commitment.
ShopRates does not make credit decisions or guarantee eligibility, approval, rates, savings, terms or closing.
RELATED HOME LOAN GUIDES
Sources
- CFPB — Understand different kinds of loans: consumerfinance.gov/owning-a-home/explore
- CFPB — Shopping for a mortgage: consumerfinance.gov/consumer-tools/mortgages
- CFPB — Conventional loan definition: consumerfinance.gov/ask-cfpb
- CFPB — FHA loans: consumerfinance.gov/owning-a-home/fha-loans
- HUD — FHA single-family housing: hud.gov/helping-americans/single-family-housing
- VA — Home Loan Guaranty: benefits.va.gov/homeloans
- USDA — Single Family Housing Guaranteed Loan Program: rd.usda.gov/programs-services
- FHFA — 2026 conforming limits: fhfa.gov/news/news-release
- THDA — Homebuyer resources: thda.org/homebuyers
- NMLS Consumer Access: nmlsconsumeraccess.org
This page provides general educational information and is not individualized mortgage, credit, legal, tax, real-estate or investment advice. ShopRates is not a lender, bank, mortgage broker, loan originator, servicer, underwriter, government agency or credit decision-maker. Program availability, eligibility, insurance or guarantee, rates, fees, terms and property standards vary. Independent providers make credit decisions. Review official disclosures and obtain advice from appropriately qualified professionals.