By KS Team
Choosing the right mortgage is one of the biggest decisions in the home buying process, and it's a conversation we have with nearly every client we work with. There isn't a single "best" loan type, since the right choice depends on your finances, your goals, and sometimes even your background, like military service. We want to walk you through the main types of mortgages available today, so you can go into the process with a clearer sense of what might fit your situation. Whether you're buying your first home in Arlington or upgrading to something larger, understanding your options is the first step.
Key Takeaways
- Conventional loans are the most common option, but they aren't the only choice
- Government-backed loans like FHA, VA, and USDA loans offer unique benefits for qualifying buyers
- Jumbo loans are often necessary in higher-priced markets like the DC metro area
- Choosing between a fixed-rate and adjustable-rate mortgage depends on your long-term plans
Conventional Loans
Conventional loans are the most common type of mortgage, and they aren't backed by a government agency the way FHA or VA loans are. They typically require a stronger credit profile and a larger down payment, though options exist for buyers who can put down as little as three percent. Lenders vary somewhat in their exact requirements, which is part of why shopping around matters.
We often walk clients through whether a conventional loan makes sense given their credit and savings, since it's usually the starting point for most buyers in our market. It's a good baseline to compare against before exploring whether a government-backed option might serve you better.
We often walk clients through whether a conventional loan makes sense given their credit and savings, since it's usually the starting point for most buyers in our market. It's a good baseline to compare against before exploring whether a government-backed option might serve you better.
What to Know About Conventional Loans
- Down payments can range from as little as three percent to twenty percent or more
- Private mortgage insurance is typically required if you put down less than twenty percent
- Loan limits follow guidelines set by the Federal Housing Finance Agency, which are adjusted annually
- Strong credit generally leads to better interest rates on this loan type
FHA Loans
FHA loans are backed by the Federal Housing Administration and are designed to make homeownership more accessible, particularly for buyers with lower credit scores or smaller down payments. They've become a popular option for first-time buyers in our market.
We frequently recommend clients look into FHA financing if a conventional loan feels out of reach right now, since the qualification requirements are often more flexible.
We frequently recommend clients look into FHA financing if a conventional loan feels out of reach right now, since the qualification requirements are often more flexible.
What to Know About FHA Loans
- Down payments can be as low as three and a half percent with qualifying credit
- Mortgage insurance premiums are required for the life of most FHA loans
- Credit score requirements are generally more flexible than conventional loans
- FHA loans have their own set of loan limits that vary by county
VA Loans
VA loans are available to eligible veterans, active-duty service members, and some surviving spouses, and they come with some of the most favorable terms available. Given our proximity to so many military families here in the DC metro area, this is a loan type we discuss often. It's one of the strongest benefits available to those who qualify, and we always want to make sure eligible buyers know about it.
We always encourage eligible buyers to look into the VA home loan program directly, since the benefits can make a significant difference in affordability. Even buyers who assume they don't qualify are sometimes surprised to learn they do.
We always encourage eligible buyers to look into the VA home loan program directly, since the benefits can make a significant difference in affordability. Even buyers who assume they don't qualify are sometimes surprised to learn they do.
What to Know About VA Loans
- No down payment is required for most eligible borrowers
- Private mortgage insurance is not required, which can lead to real monthly savings
- A VA funding fee applies, though it can sometimes be rolled into the loan
- Eligibility is based on service history, so it's worth confirming your status early
USDA Loans
USDA loans are backed by the U.S. Department of Agriculture and are designed for buyers purchasing in eligible rural and some suburban areas. While much of our market is more urban, there are pockets within reach of the DC metro area where this loan type can apply.
We recommend checking the USDA property eligibility map if you're considering a home slightly further out from the city, since eligibility depends specifically on location.
We recommend checking the USDA property eligibility map if you're considering a home slightly further out from the city, since eligibility depends specifically on location.
What to Know About USDA Loans
- No down payment is required for eligible buyers
- Household income limits apply based on the local area
- Properties must be located within a USDA-designated eligible zone
- Mortgage insurance costs tend to be lower than FHA loans
Jumbo Loans
Jumbo loans are used to finance homes that exceed the conforming loan limits set for the area, which is a common situation here in Arlington and much of the DC metro area given local home prices. These loans typically come with stricter qualification requirements, since lenders take on more risk with larger loan amounts.
We work with jumbo loans regularly given our market, and we always recommend getting pre-approved early so you understand exactly what you qualify for before you start touring homes. This step alone can save a lot of time and disappointment later in the search.
We work with jumbo loans regularly given our market, and we always recommend getting pre-approved early so you understand exactly what you qualify for before you start touring homes. This step alone can save a lot of time and disappointment later in the search.
What to Know About Jumbo Loans
- Loan amounts exceed the conforming limits set by Fannie Mae and Freddie Mac
- Higher credit scores and larger down payments are typically required
- Interest rates can vary more than conventional loans depending on the lender
- Cash reserves are often required as part of the approval process
Fixed-Rate vs. Adjustable-Rate Mortgages
Beyond the loan type itself, you'll also need to decide between a fixed interest rate and an adjustable one, and this decision often comes down to how long you plan to stay in the home. Each option comes with real trade-offs worth understanding.
We always walk clients through both scenarios using our mortgage calculator, since seeing the actual numbers side by side tends to make the decision much clearer.
We always walk clients through both scenarios using our mortgage calculator, since seeing the actual numbers side by side tends to make the decision much clearer.
What to Know About Rate Types
- Fixed-rate mortgages keep the same interest rate for the life of the loan
- Adjustable-rate mortgages typically start lower but can change after an initial period
- Fixed rates offer predictability, which many buyers prioritize for long-term homes
- Adjustable rates can make sense for buyers who plan to move or refinance within a few years
Frequently Asked Questions
What's the most common type of mortgage?
Conventional loans are the most common option for most buyers, though the right choice depends on your credit, savings, and goals. Government-backed loans like FHA, VA, and USDA loans can offer real advantages for buyers who qualify. We always recommend reviewing all your options with a lender before deciding.
Do I need a jumbo loan to buy in Arlington?
It depends on the price of the home, since jumbo loans are only needed when the loan amount exceeds the conforming limit for the area. Given local home prices, many buyers in Arlington and the surrounding DC metro area do end up needing one. We can help you understand where that threshold sits for your specific search.
How do I know if a fixed-rate or adjustable-rate mortgage is right for me?
It largely depends on how long you plan to stay in the home, since fixed rates offer predictability while adjustable rates often start lower but can change over time. Our mortgage calculator is a helpful tool for comparing both scenarios side by side. We're also happy to walk through the numbers with you directly.
Contact KS Team Today
Understanding your mortgage options is one of the most important steps in the home buying process, and we're here to help you navigate it, whether you're searching in Arlington, Alexandria, McLean, or elsewhere in the DC metro area. We also share regular tips and walkthroughs on our YouTube channel if you'd like to see these concepts explained in more detail.
If you're thinking about buying a home in Virginia, Maryland, or DC, reach out to KS Team and we'll help you figure out which mortgage option fits your situation best. We're always happy to walk through your specific numbers and answer any questions along the way.
If you're thinking about buying a home in Virginia, Maryland, or DC, reach out to KS Team and we'll help you figure out which mortgage option fits your situation best. We're always happy to walk through your specific numbers and answer any questions along the way.
