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Mortgage Rates by Loan Type

Updated: Jul 7

Mortgage rates can vary depending on the type of loan you're considering. It can be daunting to understand all of your options when it comes to getting a mortgage and getting the right type of mortgage can save you thousands of dollars in interest and/or closing costs.


The two main factors that determine the best product for you are your credit score and down payment (or equity position in the home if you are refinancing.) Everyone has a different financial situation. Some loans are best for buyers with smaller down payments and some loans tend to be best for borrowers with lower credit scores. An experienced mortgage professional will guide you towards the right mortgage product based on your particular financial situation and goals, but this article will give you a good overview so that you are more informed about your mortgage options. 


Conventional Loans

Description: These are loans that are not backed by the government. Instead, they are backed by private lenders or government-sponsored enterprises such as Fannie Mae and Freddie Mac. These loans can be used to purchase or refinance a primary residence, second/vacation home, or investment properties. Conventional rates can be fixed or adjustable and generally come in terms from 8 to 30 years.


Credit Score: 620 is the minimum credit score required for a Conventional loan. However, rates for Conventional loans increase with lower credit scores, so generally speaking Conventional loans are best for borrowers with credit scores over 700.


Down Payment/Equity: Down payment amounts will depend on whether you are a first-time home buyer and the type of home you are trying to finance. First time home buyers purchasing a primary residence using a Conventional loan can put as little as 3% down. If you are not a first-time home buyer, a down payment of at least 5% is required when purchasing or refinancing a primary residence. Purchase and refinance transactions for second/vacation homes and investment properties will require 20% down payment in most cases.


Any conventional loan with less than a 20% down payment will have private mortgage insurance or PMI included in the monthly payment.


For a more detailed product description, please visit our Conventional product page.


FHA Loans (Federal Housing Administration)

Description: An FHA loan is a government-backed loan insured by Housing & Urban Development (HUD). These loans can be used to purchase or refinance a primary residence. You do not have to be a first-time home buyer to use FHA financing, but you can only have one FHA loan at a time, unless you meet one of the qualifying exceptions. FHA rates can be fixed or adjustable, and generally come in 15 or 30 year terms.


Credit Score: 580 is the minimum credit score required for an FHA loan; however, most scenarios require a credit score of 620 for approval. Unlike Conventional loans, FHA rates do not significantly increase with lower scores, making them a very attractive option for borrowers with less than perfect credit.


Down Payment/Equity: FHA requires a 3.5% minimum down payment for purchase transactions. FHA also offers several refinance options including FHA streamline refinances, FHA simple refinances, FHA rate/term refinances, and FHA cash out refinances, all with varying loan to value calculations.


All FHA loans will require mortgage insurance. There are two components of FHA mortgage insurance – upfront premiums which are financed into your loan amount, and monthly premiums that are included in your monthly payment.


For a more detailed product description, please visit our FHA product page.


VA Loans (Veterans Affairs)

Description: VA loans are another type of government loan that are guaranteed by the U.S. Department of Veterans Affairs. VA loans are strictly reserved for veterans and active-duty service members that have met the requirements for VA loan eligibility. These loans can be used to purchase or refinance a primary residence. VA rates can be fixed or adjustable, and generally come in 15 or 30 year terms.


Credit Score: 620 is the minimum credit score required for a VA loan.


Down Payment/Equity: VA loans allow for 100% financing, so no down payment or equity is required when purchasing or refinancing a home with VA financing.


An additional benefit to VA loans is that mortgage insurance is not required. However, VA does require an upfront Funding Fee that is financed into your loan amount. The amount of the Funding Fee is determined by whether you are using your VA benefit for the first time or if this is a subsequent use of a VA loan. Disabled veterans are exempt from the VA Funding Fee.


For a more detailed product description, please visit our VA product page.


USDA Loans (U.S. Department of Agriculture)

Description: A USDA loan is another type of government-backed loan, insured by the US Department of Agriculture. This type of loan can be used to purchase a primary residence in an eligible rural area. Borrowers looking to use USDA financing must also have household income below the area median income. USDA considers all income from the household, not just the income from the borrower(s). You do not have to be a first-time home buyer to obtain USDA financing. You also cannot have the means to obtain Conventional financing, generally defined as having the ability to make a 20% down payment. USDA loans are only offered in 30 year fixed rate terms.


Credit Score: 620 is the minimum credit score required for a USDA loan.


Down Payment/Equity: There is no down payment required for a USDA loan. Another great and unique feature of USDA loans is the ability to finance closing costs. If the appraised value of the home is greater than the purchase price, borrowers can finance eligible closing costs into their loan, as long as the total loan amount does not exceed the appraised value.


USDA loans do have a form of mortgage insurance that they call their Guarantee Fee. There is an upfront portion rolled into the loan amount as well as a monthly component included in the mortgage payment.


For a more detailed product description, please visit our USDA product page.


Jumbo Loans

Description: Jumbo loans are for borrowers that need loan amounts that exceed their areas conforming loan limit. As of 2025, the conforming loan limit for most areas in the U.S. is $806,500. That limit is higher in higher-cost housing markets such as California, New York, Hawaii, Washington D.C. and a few others. Jumbo rates are offered in a variety of terms including 15 and 30 year fixed rates and well as 3/1, 5/1, and 7/1 adjustable rates. These loans can be used to purchase a primary residence, second/vacation home, or even an investment property.

 

Credit Score: 660 is the minimum credit score required for a Jumbo loan. However, your interest rate can be severely impacted by your score so you will typically need a score of 740 or higher to get a market rate for a Jumbo loan.


Down Payment/Equity: You will need at least a 10.01% down payment/equity on Jumbo loans when you are purchasing or refinancing a primary residence or a second/vacation home due to the additional risk lenders take with the higher loan amounts. You will need a 20% down payment/equity if you are using a Jumbo loan to purchase or refinance an investment property.


For a more detailed product description, please visit our Jumbo product page.

 

How I Can Help You

When it comes time to purchase a home or refinance an existing loan, I want to help you! Hopefully articles like this give you good information and a better understanding of the mortgage world, but let me use my experience and expertise to help you with your particular situation.


I tell my clients and referral partners that a mortgage transaction starts with a simple conversation. Let’s talk about your financial situation, budget, and goals so that I can help you determine the best solution for you. During a 10-minute informal conversation, we can get you on the right path as it relates to a home purchase or mortgage refinance. 


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Travis Chapman

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Derek Chapman

Vice President

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Chase Newell

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Cell: 901-356-0568

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