Home loans come in three major types: conventional, Federal Housing Administration (FHA), and Department of Veterans Affairs (VA). While they are all issued by banks and other approved lenders, each of them has benefits and drawbacks that make them unique. To find out which loan is right for you, we will discuss these loans and how they differ from one another.

Conventional loans

A conventional loan is a type of loan that is not insured by the federal government. It means it carries no guarantee for your lender if you fail to repay the loan. Because of this, you will probably have to pay for private mortgage insurance (PMI) if your down payment is less than 20 percent. 

Conventional loans have two categories: conforming or non-conforming loans. Conventional conforming mortgage loans are available to everyone. These loans should comply with the guidelines set by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).

Since they don’t have government insurance and pose a higher risk for lenders, expect that they have stricter qualifications and credit and income requirements than for VA-guaranteed and FHA-insured loans. For example, you should have an outstanding credit score, a steady income, and afford the down payment. 

FHA-Insured Loans

An FHA-insured loan is insured by the Federal Housing Administration. Anyone can apply for this type of loan. While it is easier to qualify for it than a conventional mortgage, keep in mind that it has a maximum loan limit that varies depending on the average housing cost in a given region. 

For example, if you secure an FHA loan in Miami and you get behind on your mortgage payments, you get access to special loss mitigation options. You can also be offered good terms, including a low down payment because the loan is insured. If you default on this loan, the FHA will compensate the lender for the loss, primarily if the house isn’t worth enough to fully repay the debt through a foreclosure sale.

VA-Guaranteed Loans

A VA-guaranteed loan is a loan guaranteed by the US Department of Veterans Affairs (VA). It is available only to certain borrowers through VA-approved lenders. Therefore, your lender is protected against loss if you fail to repay the loan. To qualify for this type of loan, you have to be a veteran, a current member of the US armed forces, a reservist or national guard member, or an eligible surviving spouse.

This type of mortgage loan can be guaranteed with no down payment and no private mortgage insurance requirement. However, you usually have to pay a one-time funding fee between 1.25-3.6 percent of your loan amount. To learn more about VA-guaranteed loans, ask for help from our mortgage brokers in Florida.


Navigating the world of loans can be overwhelming, mainly if you have limited knowledge about them. The good news is you can now have an easier time choosing the right type of loan that meets your needs by remembering the information listed above. Don’t forget to reach out to professionals like us to help you stay well-informed about different types of loans.

Whether you need VA loans or conventional loans in Miami, you can count on Halpern & Associates. We also offer a mortgage calculator. Contact us to see how we can help you!

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