Making Sense of Mortgages

For many, a mortgage is the biggest financial commitment they’ll ever make. Yet the process often feels like learning a new language overnight. Conventional, Fixed, adjustable, FHA, VA, USDA—it’s easy to get overwhelmed. Understanding the basic mortgage types before you start shopping can help you choose a loan that fits your budget, lifestyle, and long-term plans, rather than one that keeps you up at night.

Government-backed loans are designed to make homeownership more accessible. FHA loans, insured by the Federal Housing Administration, are popular with first-time buyers and those with lower credit scores or smaller down payments. These loans are more forgiving than conventional mortgages, but they come with mortgage insurance premiums that increase the overall cost. Still, for many buyers, FHA loans provide a realistic path to owning a home sooner rather than later.

VA loans are available to eligible veterans, active-duty service members, and some surviving spouses. Backed by the Department of Veterans Affairs, these mortgages often require no down payment and don’t include private mortgage insurance. Interest rates are typically competitive, making VA loans one of the most affordable mortgage options available for those who qualify. The main limitation is eligibility—you must meet specific service requirements.

USDA loans, backed by the U.S. Department of Agriculture, are aimed at buyers in eligible rural and suburban areas. Most communities in the North Country qualify. These loans often require no down payment and offer lower interest rates. Income limits apply, and not every property qualifies, but for buyers in designated areas, USDA loans can be a powerful and affordable option.

Conventional mortgages are not backed by the government and are typically offered to borrowers with stronger credit profiles. These loans can be fixed or adjustable and usually require higher credit scores and larger down payments. There are conventional options with smaller down payments; however, borrowers who put down at least 20 percent can avoid private mortgage insurance, which can save significant money over time. To learn more about PMI read Private Mortgage Insurance Versus Home Owners Insurance. Conventional loans offer flexibility and competitive pricing for well-qualified buyers.

At the end of the day, the “best” mortgage isn’t universal—it’s personal. Your credit score, income stability, future plans, and comfort with risk all matter. And keep in mind what’s best for you as a buyer is typically not what’s best for the seller. If you are in a competitive market, you should take this into account and discuss it with your real estate professional. The most competitive offer is one with the least amount of contingencies. Sellers are looking to mitigate risk as much as possible.

The best financing you could have from a seller’s perspective is no financing—cash. Cash is definitely king.

Next best for a seller is a conventional offer without private mortgage insurance (PMI). Because removing PMI removes one less opportunity for it to fall apart. After that would be conventional with PMI and then the government loans. Government loans are last for two reasons. First, they have an appraisal process that is more strict on the property. Second, buyers getting a government backed loan, are typically doing so because the are not able to get qualified for a conventional loan; they’re not as well qualified. A VA mortgage is an exception to that. VA buyers are often well qualified to get a conventional loan, but choose not to because of the benefits offered with a VA loan.

Always utilize your resources while deciding, including your mortgage lender and real estate professional. Not Sure how to select the right representation? Check out our article on How to Choose The Right Buyer's Agent.  That’s what we’re here for. Taking the time to understand your options helps you borrow with confidence and choose a mortgage that supports your goals.