Home Loan Types
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Home loan types come down to four choices you make in order: conventional, FHA, VA, or USDA, then fixed rate or adjustable, then conforming or jumbo. Conventional needs 3% to 5% down, FHA 3.5%, VA and USDA 0%. In New York City most apartments push you into a jumbo loan above $1,249,125; co-ops use a share loan, not a mortgage.
We’ve represented NYC buyers since 2017 and handed back more than $11 million in commission rebates, about $22,000 a closing. From that seat we’ve watched a few hundred financing decisions, good and bad.
Every national guide to mortgage types stops at the borough line. This page is the version for the city you’re actually buying in. It links down to 15 shorter guides, one per loan and per step.
| Loan type | Min down | Backed by | Best for |
|---|---|---|---|
| Conventional | 3% to 5% | Fannie Mae / Freddie Mac | Good credit, avoiding lifelong insurance |
| FHA | 3.5% | Federal Housing Administration | Lower credit scores, thinner savings |
| VA | 0% | Dept. of Veterans Affairs | Eligible veterans and service members |
| USDA | 0% | Dept. of Agriculture | Buyers in eligible rural areas, not NYC |
| Jumbo | 10% to 20%+ | No agency | Loans above $1,249,125 in NYC |
Every row has conditions. The last one is where New York stops matching the rest of the country.
The four home loan types you actually choose between
Start with who stands behind the loan. The government backs three of them and judges you for two.
A conventional loan is backed by Fannie Mae or Freddie Mac. Both are private companies under a federal charter. An FHA, VA, or USDA loan is insured or guaranteed by a federal agency instead. That backing is why each one can accept a smaller down payment or a weaker credit file.
Then pick a rate structure and a size. Fixed or adjustable, conforming or jumbo. That’s the whole decision tree, and the rest of this page walks each branch.
A rough default: take a VA loan if you’re eligible. Otherwise go conventional if your credit and savings support it, FHA if they don’t, and jumbo whenever the price clears the conforming limit. Our guide to types of real estate loans covers how to weigh them against your own situation, and how a mortgage works covers the mechanics that apply to all of them.
FHA vs conventional loan, the first real fork
For most buyers the real choice is FHA or conventional. FHA lets you in with less and then never lets go of the insurance.
An FHA loan needs 3.5% down at a 580 credit score, and it forgives a thin credit history or a higher debt load. The catch is mortgage insurance.
You pay 1.75% of the loan upfront, plus an annual premium. Put down less than 10% and that premium lasts the life of the loan. The only exit is a refinance into a conventional loan later.
A conventional loan asks for a stronger profile and 3% to 5% down. In return, its mortgage insurance is temporary: it drops off automatically at 78% equity, and you can request cancellation at 80%. FHA’s premium runs for the life of the loan without a refinance. Across 30 years, that gap is tens of thousands of dollars.
None of that makes FHA the wrong call. It still wins when your credit or savings can’t clear the conventional bar, which is exactly what the program is for. It’s a way in, not a place to stay. Our guide to what a conventional loan is goes deeper, and private mortgage insurance in NYC compares both kinds side by side.
Government backed loans, and who gets them
Three loan types carry a federal guarantee. They are not interchangeable, and only one is open to everyone.
- FHA is open to almost any buyer. It trades that low bar for permanent insurance, so it works best as a way in that you plan to refinance out of.
- VA is for eligible veterans, active-duty members, and some surviving spouses. Zero down, no monthly mortgage insurance, competitive rates. It’s the best deal in American finance, if you earned it. A one-time funding fee replaces the monthly insurance, and it can be financed into the loan.
- USDA is zero down for buyers in designated rural areas within income limits. It excludes all five boroughs of New York City, so it almost never applies to a city purchase. It can matter for a move to the outer suburbs.
Our sibling hub on down payments and credit covers the qualifying side of all three, including the state and federal assistance programs that can be layered on top of an FHA loan to cover the down payment and closing costs.
Jumbo loan vs conventional loan in a city priced like this
A conforming loan is one small enough for Fannie or Freddie to buy. The 2026 limit is $832,750 in most of the country and $1,249,125 in high-cost areas, which includes every New York City county. Anything larger is a jumbo loan.
In most of the country jumbo is exotic, in Manhattan it is Tuesday. The median NYC apartment sells above the conforming ceiling, so a large share of city buyers borrow jumbo without ever choosing to.
Jumbo loans want more: 10% to 20% or more down, stronger cash reserves after closing, and a higher credit score. The rate can run above conforming, or sometimes just below it, because banks keep jumbo loans on their own books and price them by relationship.
If you’re buying before your current place sells, our guide to bridge loans covers the gap financing. Doctors carrying student debt should read our physician mortgage loans guide, which sidesteps the reserve and debt-ratio hurdles a jumbo lender applies.
Fixed vs adjustable rate mortgage
A fixed-rate mortgage locks your rate for the whole term. An adjustable-rate mortgage, or ARM, is fixed for an intro period, usually 5, 7, or 10 years. After that it resets against a published index on a set schedule, held inside an annual cap and a lifetime cap.
The ARM is a bet that you will move before the music stops. It made sense in the low-rate 2010s for buyers with a short horizon, and even then roughly 85% to 95% of borrowers chose fixed between 2008 and 2022.
Today the 30-year fixed sits near 6.7% and the 15-year near 6%, so an ARM’s intro discount is thinner than it used to be. Run both numbers against how long you honestly expect to hold the place, not how long the loan runs.
The New York layer nobody’s national guide mentions
Three things change the math once the address is inside the city.
- A co-op isn’t a mortgage. You buy shares in a corporation, so the bank makes a “share loan” against the shares and the proprietary lease. Your co-op loan is not a mortgage, and the tax man agrees. There’s no mortgage recording tax on a co-op, and the building’s board can set its own limit on how much you borrow.
- The mortgage recording tax. On a condo or a house, New York charges roughly 1.8% to 1.925% of the loan amount at closing. It’s the single largest buyer closing cost, and our guide to CEMA loans covers the one legal way to cut it on a refinance or a resale.
- Assumability and special buildings. Most conventional loans can’t be assumed. FHA and VA loans can, which our assumable mortgage guide explains, and a below-market rate makes that valuable. Limited-equity buildings, like the ones in our Southbridge Towers guide, set their own financing rules on top.
What we watch on a client’s financing
The rate is the headline, the lender is the story. A NYC-based lender that has already financed apartments in your building moves faster and closes cleaner than a national call center quoting an eighth of a point less.
We tell clients three things. Shop at least three lenders, because a mortgage broker and a bank’s loan officer reach different products, which our guide to what a mortgage broker does covers. Get a real mortgage commitment letter before you waive the financing contingency, not a pre-approval. And price the whole deal, recording tax included, on our closing cost calculators before you sign.
On an average purchase our commission rebate returns roughly $22,000 at closing. For most buyers that covers the mortgage recording tax outright.
Where the 15 guides below fit
Every part of this page has its own guide. Pick the one that matches the loan you’re being sold.
Picking a loan: how a mortgage works, what a conventional loan is, types of real estate loans, physician mortgage loans.
Borrowing against a home you own: HELOC vs home equity loan, how a reverse mortgage works, bridge loans.
Changing a loan you already have: when to refinance, how to recast a mortgage, CEMA loans in NYC, assumable mortgages.
The paperwork and the people: the mortgage commitment letter, what a mortgage broker does, private mortgage insurance, Southbridge Towers financing.
Common questions
What are the main home loan types? Conventional, FHA, VA, and USDA, split further by fixed or adjustable rate and by conforming or jumbo size. Conventional and jumbo have no government backing; FHA, VA, and USDA do.
Which home loan type is best? The one you qualify for at the lowest lifetime cost. A VA loan if you’re eligible. Otherwise conventional if your credit and savings support it, FHA if they don’t, and jumbo if the price is above the conforming limit.
What is a jumbo loan in NYC? Any mortgage above $1,249,125, the 2026 high-cost conforming limit for New York counties. Because many NYC apartments sell for more, jumbo loans are common here rather than rare.
Do co-ops use mortgages? No. A co-op buyer gets a “share loan” secured by the co-op shares and the proprietary lease. There’s no mortgage recording tax on a co-op, and lending rules are set partly by the building.
Should I get a fixed or adjustable rate mortgage? Fixed if you’ll hold the home longer than the ARM’s intro period or want payment certainty. An ARM only pays off if you’re confident you’ll sell or refinance before it resets.
Nicole Fishman Benoliel co-founded NestApple in 2017. She's a lawyer admitted to the New York bar - her law degree is from La Escuela Libre de Derecho in Costa Rica, with further study at IE Business School in Madrid and an LLM from Fordham in New York. She does not act in a legal capacity at NestApple; every client is referred to an attorney who handles real estate deals full time.
