Conventional, FHA, VA or USDA: How Maine Buyers Can Compare Home Loans

Conventional loans: ask what fits your application

A conventional mortgage is not insured or guaranteed by FHA, VA or USDA. It does not automatically require 20 percent down. Available down-payment options and underwriting depend on the specific loan and borrower. Mortgage insurance may apply when the down payment is smaller.

The CFPB overview of loan types is a useful starting point. Ask whether the quoted loan is fixed or adjustable, how mortgage insurance is priced and what conditions apply to removing it. A program label alone does not tell you the total cost.

FHA financing: compare the insurance as well as the rate

FHA insures mortgages made by approved lenders; it does not mean every applicant or property is approved. HUD explains that eligible buyers may put as little as 3.5 percent down. A lender must evaluate the applicable credit and other requirements for the actual application.

Ask for the upfront and annual mortgage-insurance costs, how they affect the financed balance and payment, and how long insurance would remain under the proposed terms. Compare those figures with a conventional option if available. The smaller required down payment does not by itself establish which loan costs less.

VA financing: confirm entitlement and the funding fee

Eligible borrowers may use a VA-backed purchase loan. No down payment is generally required when the borrower meets the program conditions and the price does not exceed the appraised value. The program does not require monthly mortgage insurance.

Ask about the Certificate of Eligibility, available entitlement, lender approval and any funding fee or exemption. If a fee is financed, compare the larger balance and interest cost with paying it upfront. No down payment does not remove closing costs, inspections or a potential appraisal gap. Have the lender explain the complete cash requirement.

USDA financing: check the address and household rules

USDA programs are not limited to buying farms. The USDA single-family housing program page links to property and income eligibility tools. Qualifying purchase options may offer no down payment, subject to program requirements. An eligible rural address alone does not qualify the borrower.

Distinguish a USDA guaranteed loan through a participating lender from the direct-loan program. Ask which is being discussed, what household-income calculation applies, what fees apply and whether the property meets requirements. Do not rely on a listing’s financing description as an approval.

Check MaineHousing and the property before choosing

MaineHousing’s First Home Loan Program has its own eligibility, lender and property requirements. Ask a participating lender how the program and any available assistance fit the underlying mortgage. Confirm current limits, education requirements and assistance terms; the state program is not automatic approval.

Give the lender accurate property details early, especially for a condo, manufactured home, multifamily property or home needing repairs. Ask for comparable Loan Estimates showing cash to close, total payment, fees and insurance. Your next step is a short list of eligible options with the reasons each fits or fails your purchase. Sources reviewed November 3, 2026.

Plan the purchase around confirmed options

Get my free Maine Home Buyer’s Guide by completing the Home Buyer Guide form with your name and email. Use it to organize the search, offer and closing steps while a participating lender confirms the programs available to you. I can help keep the property search consistent with those requirements.