Which Mortgage Program Is Right for Me?

What Mortgage Program Is Right for Me? A Plain-English Guide to Your Options

If you’ve been asking yourself “what mortgage program is right for me?” — you’re asking exactly the right question. The loan type you choose affects your down payment, your monthly payment, your interest rate, and how easy it is to qualify. And the options are more varied than most people realize.

This guide breaks down every major mortgage program in simple terms: who each one is designed for, what the key requirements are, and how to think about your own situation. If you’ve ever been told you don’t qualify — or you’re not sure where to start — keep reading.

Quick Comparison: Mortgage Programs at a Glance

Program	Min. Credit Score	Min. Down Payment	Best For	Mortgage Insurance?
FHA	580 (flexible)	3.5%	First-time buyers, lower credit scores	Yes (MIP)
Conventional	620 (flexible)	3%–20%	Strong credit, higher-priced homes	Only below 20% down
VA	No minimum (lender sets)	0%	Veterans, active-duty military	No
USDA	640 (typical)	0%	Rural/suburban buyers, moderate income	Yes (lower than FHA)
Non-QM / Portfolio	Varies by lender	Varies	Self-employed, complex income, recent credit events	Varies
DreamBuilder	Below 580 (flexible)	3.5%	Near-FHA buyers, credit or income challenges	Yes

FHA Loans: The Most Common Starting Point for First-Time Buyers

FHA loans are insured by the Federal Housing Administration and are one of the most widely used mortgage programs in the country — especially for first-time buyers and anyone working with limited savings or a less-than-perfect credit history.

Who FHA loans are generally for:

• Buyers with lower credit scores with a 3.5% down payment
• Buyers with less-than-perfect credit history who have stable income
• First-time buyers who want a lower barrier to entry

Key FHA loan details:

• Minimum 3.5% down payment at the 580 credit score threshold. NOTE: lower credit scores are possible with FHA.
• FHA loan limits vary by county — the home must fall within the limit for your area
• Primary residence only — FHA loans cannot be used for investment properties. (2-4 unit homes are acceptable as long as you live in one of the units).
• Requires mortgage insurance premium (MIP) both upfront and annually for the life of the loan in most cases

FHA Mortgage Loan Guide for Washington State homes

Conventional Loans: For Buyers With Stronger Credit and More Flexibility

Conventional loans are not backed by the government. They’re offered by private lenders and typically require stronger credit and a larger down payment than FHA loans — but they come with fewer restrictions and can be more cost-effective over time for well-qualified buyers.

Who conventional loans are generally for:

• Buyers with credit scores of 620 or higher (better rates come with scores of 740+). Minimum credit scores are no longer required for Fannie Mae, however credit history is still important.
• Buyers who can put 20% down and want to avoid mortgage insurance entirely
• Buyers purchasing higher-priced homes that exceed FHA loan limits
• Buyers purchasing second homes or investment properties

Key conventional loan details:

• Down payments as low as 3% for some programs, but private mortgage insurance (PMI) applies below 20%
• PMI can be removed once you reach 20% equity — unlike FHA’s MIP, which typically stays for the life of the loan
• Can be used for primary residences, second homes, and investment properties
• Generally faster to close and less documentation-intensive than government-backed loans

Conforming Mortgage Guide for Washington State Homes

Conforming vs. Jumbo: A Quick Distinction

Conventional loans fall into two categories based on loan size. Conforming loans stay within the limits set annually by the Federal Housing Finance Agency (FHFA) — in 2026, that’s $832,750 for most of the country, with higher limits in certain high-cost areas. Homes located in King County, Pierce County and Snohomish County have a conforming loan limit of $1,063,750 for a 1-unit.

Jumbo loans exceed those limits. They typically require a credit score of 700 or higher, a larger down payment (often 10–20%), and more extensive documentation — but they’re the right tool for buyers purchasing higher-priced homes where conforming limits aren’t enough.

Jumbo and Non-Conforming Mortgage Guide for Homes in Washington State

VA Loans: The Most Powerful Benefit Most Veterans Don’t Use First

VA loans are available to eligible veterans, active-duty service members, National Guard members, reservists, and surviving spouses — and they’re one of the strongest mortgage benefits available to anyone. If you or anyone in your household has served, this should be the first program you explore.

Who VA loans are for:

• Veterans, active-duty military, National Guard, reservists, and eligible surviving spouses
• Buyers who want to purchase with no down payment
• Buyers who want to avoid private mortgage insurance

Key VA loan details:

• No down payment required in most cases
• No private mortgage insurance (PMI) — ever
• Competitive interest rates, often below conventional market rates
• A one-time VA funding fee applies (can be financed into the loan; waived for some disabled veterans)
• Primary residence only

VA loans are frequently underused simply because buyers don’t realize they qualify. If you’ve served, check your eligibility before looking at any other program.

VA Loan Guide for Homes in Washington State

USDA Loans: Zero Down for Buyers Outside Major Cities

USDA loans are backed by the U.S. Department of Agriculture and are designed to support homeownership in eligible rural and suburban areas. They’re one of the most underused programs available — largely because buyers assume they don’t live in a qualifying area when many actually do.

Who USDA loans are for:

• Buyers purchasing in USDA-eligible rural or suburban areas
• Buyers whose household income falls within USDA limits for their area and family size
• Buyers who want to purchase with no down payment

Key USDA loan details:

• No down payment required
• Household income limits apply and vary by location and family size
• Property must be in a USDA-eligible area — check the USDA’s eligibility map before assuming you don’t qualify
• Primary residence only
• Mortgage insurance is required but typically lower-cost than FHA’s MIP

USDA Loans Guide for Homes in Washington State

Non-QM and Portfolio Loans: When Your Situation Doesn’t Fit the Standard Mold

Standard loan programs are designed for buyers with straightforward W-2 income, established credit histories, and conventional documentation. A significant number of qualified, financially capable buyers don’t fit that profile — and that’s exactly where non-QM and portfolio lending come in.

Non-QM stands for non-qualified mortgage. These are loans that fall outside the standard guidelines set by Fannie Mae, Freddie Mac, or the government agencies — but they are legitimate, lender-reviewed products built for specific situations. Portfolio loans are held by the lender itself rather than sold on the secondary market, giving the lender flexibility to set their own underwriting standards.

Non-QM or portfolio loans may be right for you if you are:

• Self-employed with income that doesn’t translate cleanly through standard tax returns
• A real estate investor purchasing a non-primary property
• A buyer with a recent credit event — bankruptcy, foreclosure, or short sale — that disqualifies you from conventional programs
• A high-asset borrower with irregular or non-traditional income
• Someone whose debt-to-income ratio exceeds standard guidelines despite overall financial strength

Non-QM and portfolio loans aren’t a last resort — they’re a different tool for a different set of circumstances. For the right buyer, they’re often the best fit from the start.

Specialty Loan Programs for Washington State Homes

What If You’re Close But Not Quite There? The DreamBuilder Program

There’s a gap many buyers fall into: they’re near FHA qualification but one or two factors — a credit score a bit below the threshold, a documentation challenge, or a debt-to-income ratio that’s slightly elevated — puts a traditional loan just out of reach. Standard programs say no. But that doesn’t mean all lenders will.

The DreamBuilder program is a lease-to-own mortgage pathway built specifically for this situation. It uses flexible underwriting to evaluate your full financial picture rather than relying solely on automated scoring — and for many applicants, the first conversation reveals that a standard FHA loan is already within reach.

DreamBuilder at a glance:

• Credit score flexibility below the standard 580 FHA threshold
• Flexible underwriting that considers your full financial history, not just automated outputs
• 30-year fixed rate structure for payment stability
• 3.5% minimum down payment, consistent with FHA guidelines
• 12-month rental history requirement
• Primary residence only
• Built around the goal of transitioning into a traditional FHA or conventional mortgage

Learn more about how the DreamBuilder program works and who it’s designed for.

So, What Mortgage Program Is Right for You?

The answer depends on your specific combination of credit score, income type, savings, service history, and where you want to buy. What looks like a clear FHA situation on the surface may turn out to be better served by a conventional or non-QM product once a lender reviews the full picture. And what feels like a disqualifying situation may not be disqualifying at all.

The most useful step you can take is a real conversation with a lender who knows the full range of options — not just the two or three programs that show up first in a Google search.

Schedule a free consultation to find out which program fits your situation today. One conversation can answer what hours of searching can’t.

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Frequently Asked Questions: Choosing a Mortgage Program

What mortgage program is best for first-time buyers?

FHA loans are the most common starting point for first-time buyers because they allow credit scores as low as 580 and down payments as low as 3.5%. However, if you have military service history, a VA loan is typically the stronger option. The best program depends on your individual credit, income, and savings.

Can I get a mortgage with a credit score below 580?

Yes, in some cases. Standard FHA loans require a minimum 580 credit score for a 3.5% down payment, but some lenders — including flexible underwriting programs like DreamBuilder — work with scores below that threshold. Non-QM and portfolio lenders also have more flexibility than conventional programs.

What is the easiest mortgage to qualify for?

VA loans tend to have the most flexible credit requirements if you’re eligible. For non-veterans, FHA loans are generally the most accessible standard program. Buyers who don’t qualify for either may find options through non-QM lenders or programs with flexible underwriting like DreamBuilder.

What is a non-QM loan?

A non-QM (non-qualified mortgage) is a home loan that doesn’t meet the standard guidelines set by Fannie Mae, Freddie Mac, or the government agencies. Non-QM loans are designed for buyers with complex income situations, recent credit events, or other factors that make standard programs difficult to access. They are legitimate mortgage products, not predatory loans.

What is the difference between FHA and conventional loans?

FHA loans are government-insured and allow lower credit scores and smaller down payments, but they require mortgage insurance for the life of the loan in most cases. Conventional loans are not government-backed, typically require stronger credit, but allow mortgage insurance to be removed once you reach 20% equity. Conventional loans can also be used for investment properties; FHA loans cannot.

Do I need 20% down to buy a home?

No. Most mortgage programs allow significantly lower down payments. FHA loans require as little as 3.5%, conventional programs can go as low as 3%, and VA and USDA loans require no down payment at all for eligible buyers. The 20% figure is the threshold at which private mortgage insurance is no longer required on conventional loans. There are also down payment assistance programs available that may work for you.

Can I get a mortgage if I have student loans?

Yes. Having student loans doesn’t disqualify you from a mortgage — but how your student loan payments are counted in your debt-to-income ratio (DTI) varies by program, and that difference can matter.

For conventional loans, lenders typically use your actual monthly payment. For FHA loans, if your loans are in deferment or on an income-driven repayment plan with a $0 payment, lenders are generally required to count a calculated percentage of the outstanding balance instead — which can affect your DTI even if you’re not currently making payments. VA loans tend to be more flexible, using the actual payment when one is documented. Non-QM and portfolio lenders have the most flexibility and may evaluate student loan debt on a case-by-case basis.

The bottom line: student loans make qualification more complex, but they rarely make it impossible. The right program and lender can make a significant difference in how your debt load is evaluated.

What is a USDA loan and do I qualify?

A USDA loan is a zero-down mortgage program backed by the U.S. Department of Agriculture for buyers in eligible rural and suburban areas. Eligibility is based on both property location and household income. More areas qualify than most buyers expect — the USDA’s online eligibility map is the fastest way to check your specific address.

What is a lease-to-own mortgage program?

A lease-to-own mortgage program allows buyers who are near — but not yet at — full qualification to move into a home and build toward ownership. Programs like DreamBuilder use a structured lease period with equity-building built in, and are designed to transition the buyer into a traditional FHA or conventional mortgage. It’s a pathway to ownership, not a permanent alternative to it.