In how many categories are the primary types of mortgage loans classified?

The classification of primary types of mortgage loans is commonly organized into four categories: conventional loans, FHA loans, VA loans, and USDA loans. Each of these categories serves different populations and comes with distinct requirements and benefits.

Conventional loans are not insured or guaranteed by the federal government and typically require higher credit scores. FHA loans, backed by the Federal Housing Administration, are designed to help lower-income borrowers with lower credit scores obtain financing. VA loans are available to eligible veterans, active-duty service members, and some members of the National Guard and Reserve, offering favorable terms and often requiring no down payment. USDA loans are aimed at rural home buyers and also feature low-to-no down payment options.

By understanding these categories, borrowers can make informed decisions based on their financial situations and eligibility. This framework helps loan officers guide clients more effectively in selecting the right loan product that best suits their needs.