If you are looking at home loans, it helps to know how each option works.

Eligibility, costs, and mortgage interest rates vary, so choosing the right program can save you money.

Let’s break it down in plain language before you move forward with an online mortgage preapproval.

Conventional: You’ll usually need about 3% down with stronger credit. Many lenders prefer a minimum credit score for mortgage around 620 or higher.

FHA: With just 3.5 percent down and a score of 580+, FHA is more flexible and allows a higher DTI ratio for mortgage than Conventional.

VA: For eligible veterans and service members, VA loans often mean zero down. Many lenders approve applicants with credit scores around 600–620.

USDA: These loans offer 100 percent financing in specific areas. You’ll need to meet county income limits and the property must qualify.

Conventional: You’ll pay PMI if your down payment is under 20%. The good news is it can be removed once you build equity.

FHA: Comes with annual MIP and an upfront UFMIP. How long you pay depends on your down payment and loan term.

VA: No PMI here. Instead, you’ll pay a Funding Fee that changes depending on your service history and down payment.

USDA: Requires a Guarantee Fee upfront and an annual fee. The benefit is that these fees can usually be financed into the loan.

Conventional: Works for primary homes, second homes, and investment properties. If you borrow above the conforming loan limits, you’ll need a jumbo loan.

FHA and VA: These programs are for primary residences only, so you can’t use them for second homes or investments.

USDA: Only available for primary residences in eligible rural areas. Always check the USDA eligibility map before you start house hunting.

Choose Conventional if you want cancelable PMI and competitive mortgage rates with stronger credit.

Pick FHA if you need more flexible credit guidelines and a lower down payment, especially if you’re a first-time buyer.

Select VA if you qualify for VA home loan benefits like zero down and no monthly PMI.

Go with USDA if your income meets local limits and your dream home is in a qualifying area.

Remember that your mortgage interest rate is influenced by several things: credit score, discount points, lock period, LTV, occupancy, and property type.

Always check mortgage rates today across different terms, whether it’s a 30-year fixed, 15-year fixed, or 5/6 ARM, so you know which fits your budget and goals.

When you apply for a mortgage, lenders want to understand how much risk they’re taking.

These signals help decide your mortgage rates, your approval strength, and the terms you’ll be offered during online mortgage preapproval.

In simple terms, lower is better.

Most programs like to see a DTI ratio for mortgage between 36% and 43%. Some lenders stretch up to 50% if other factors are strong.

Want to improve your odds? Paying down credit card balances or reducing a car payment can quickly bring your DTI into a healthier range.

Each program has its own starting point. Conventional loans usually begin near 620. FHA 3.5 percent down works with a score of 580 or higher.

VA loans often approve borrowers in the 600 to 620 range. The higher your credit score, the better your mortgage interest rates and insurance costs.

Pro tip: avoid opening new credit lines before applying.

Lenders like to see two years of steady work. Salaried income is the easiest to verify, while variable income usually requires longer averaging. Cash reserves also make a big difference.

For jumbo loans and investor loans, having two to six months of PITI saved can strengthen your file and improve approval chances.

Not all properties price the same. Primary residences usually qualify for the best terms. Second homes are a bit more expensive, and investment properties are the priciest.

Condos, multi-units, and manufactured homes may come with extra rules. Be clear whether your loan is for a purchase, a rate-term refinance, or a cash-out refinance.

Having your paperwork ready speeds things up. Expect to provide IDs, two months of bank statements, recent pay stubs, W-2s or 1099s, and two years of tax returns.

If you’re self-employed, you’ll also need business returns and a year-to-date profit and loss statement. Don’t forget insurance declarations and HOA documents if they apply.

Certain things can slow the process. Large unexplained deposits raise questions, and gift funds require proper documentation with a donor letter.

Quick wins include paying down revolving balances, avoiding hard credit inquiries, and correcting any errors on your credit report.

Once that’s done, you’ll be ready to request online mortgage preapproval with more confidence.