Compare mortgage loan types
| Loan type | Sample rate | Min. down | Min. credit | Income proof | Best for |
|---|---|---|---|---|---|
| Conventional | 6.76% | 3% | 620 | 2 yrs returns / W-2 | Steady documented income |
| FHA | 6.73% | 3.5% | 580 | 2 yrs returns / W-2 | Lower credit, first-time |
| VA | 6.62% | 0% | 580 | COE + income docs | Veterans & service members |
| USDA | 6.74% | 0% | 640 | Income + rural address | Rural buyers under income caps |
| Bank statement★ self-employed | 7.60% | 10% | 660 | 12–24 mo statements | Self-employed w/ write-offs |
| DSCRinvestor | 7.95% | 20% | 660 | Property cash flow | Rental investors |
| ITIN | 8.25% | 15% | Alt. | ITIN + alt credit | No SSN / newcomer |
| Asset depletion | 7.45% | 20% | 700 | Liquid assets | Asset-rich, low income |
| Jumbo | 6.97% | 10% | 700 | Returns + reserves | High-value homes |
FAQ
A Qualified Mortgage (QM) meets the CFPB's Ability-to-Repay rule and can be sold to Fannie Mae or Freddie Mac on the secondary market — conventional, FHA, VA, and USDA are all QM products. Non-QM loans (bank statement, DSCR, ITIN, asset depletion, P&L-only) use alternative income documentation that doesn't fit agency guidelines. Because lenders hold or sell non-QM loans to private investors rather than agencies, the rate is higher — usually 0.75–2 percentage points above conventional.
Yes — this is a common strategy. Borrow on a bank statement loan now, then refinance to conventional once you have two years of tax returns showing sufficient net income. Plan for refinancing costs (roughly 2–5% of the loan amount) and rate risk if conventional rates rise before you're ready.
VA loans consistently carry the lowest rate for those who qualify, often below conventional. Conventional is next, followed closely by FHA and USDA. Non-QM products (bank statement, DSCR, ITIN, asset depletion) carry the highest rates because they can't be sold to Fannie/Freddie — the premium reflects retained lender risk, not a penalty.
VA and USDA loans both allow 0% down for eligible borrowers. FHA requires 3.5% (or 10% with a credit score under 580). Conventional can go as low as 3% with PMI. Non-QM products typically require 10–20% down — the larger down payment compensates for the alternative income documentation.
It depends entirely on what your tax returns show. If your net income after deductions is sufficient to qualify at the loan amount you need, conventional or FHA is almost always cheapest. If write-offs shrink your qualifying income below what you need, a bank statement or P&L-only loan can out-qualify it — at a higher rate. The loan type quiz walks through this decision in five questions.
Educational information only — not financial advice, and not a quote, pre-approval, or offer of credit. Rates and ranges are illustrative. Mortgage Merlin is a publisher, not a lender or broker.