What types of mortgage loans are available?

Choosing the right mortgage is one of the most important decisions you will make as a homebuyer. Each loan type has its own advantages, requirements, and trade-offs. Here is what you need to know about the options available for Northwest Indiana homebuyers.

Conventional loans

Conventional loans are the most common mortgage type. They are not insured by the federal government and are backed by Fannie Mae or Freddie Mac. Down payments can be as low as 3% for first-time buyers with good credit. Credit scores of 620 or higher are typically required. Private mortgage insurance (PMI) is required if you put less than 20% down, but PMI can be removed once you reach 20% equity. Conventional loans work well for buyers with good credit and a solid down payment.

FHA loans

FHA loans are insured by the Federal Housing Administration and are designed to help buyers with lower credit scores or smaller down payments. You can qualify with a credit score as low as 580 with a 3.5% down payment, or as low as 500 with 10% down. FHA loans have more flexible debt-to-income requirements. The trade-off is that mortgage insurance is required for the life of the loan unless you refinance. FHA loans are popular with first-time buyers in Northwest Indiana.

VA loans

VA loans are available to eligible veterans, active-duty service members, and surviving spouses. They offer zero down payment, no mortgage insurance, and competitive interest rates. The VA does not set a minimum credit score, though most lenders prefer 620 or higher. VA loans are one of the most powerful financing options available and are an excellent benefit for those who have served. Many Northwest Indiana veterans take advantage of this program.

USDA loans

USDA loans are backed by the U.S. Department of Agriculture and are available for homes in eligible rural and suburban areas. Many parts of Northwest Indiana qualify, especially in less densely developed communities. USDA loans offer zero down payment and competitive rates. Most lenders require a credit score of 640 or higher. Income limits apply, and the home must be in a designated eligible area. USDA loans are a great option for buyers who want to put no money down and are looking in qualifying areas.

Jumbo loans

Jumbo loans are for home prices that exceed the conforming loan limit set by Fannie Mae and Freddie Mac, which is $766,550 in most of Indiana in 2026. These loans require higher credit scores, typically 700 or above, and larger down payments of 10% to 20%. They are available for luxury homes in Northwest Indiana communities like Munster and St. John where prices can exceed conforming limits.

How to choose the right loan

Your choice depends on your credit score, down payment savings, employment history, and long-term plans. I help clients compare their options and connect them with lenders who specialize in the type of loan that fits their situation. There is no single best loan. The best loan is the one that works for your specific financial picture.

For a complete overview of the buying process, visit my Buyer's Guide.