Home Purchase Loans: Every Major Option Explained

Shopping for a loan to buy a house shouldn't require a finance degree, but the alphabet soup — conventional, FHA, VA, ITIN, DSCR — makes it feel that way. Here's the whole menu in one place, in plain language: what each loan is, roughly what it takes to qualify, and the kind of buyer each one actually fits. By the end you should be able to shortlist two or three that match your situation.

Quick answer

The main loans for buying a house are: conventional (the standard — best pricing with solid credit, down payments from 3%), FHA (flexible credit, 3.5% down, the workhorse for first-time buyers), VA (zero down for eligible veterans and service members), ITIN loans (for buyers without a Social Security number), and bank-statement loans (for self-employed buyers who write off heavily). The right one depends on your credit, down payment, documents, and — for VA and ITIN — your eligibility.

What you'll learn

The five loan families and who each one fits
Real down-payment floors — most are far below 20%
How credit and documentation steer the choice
How a broker shortlists the right program in one conversation

Conventional: the Default for Strong Files

Conventional loans are the standard mortgage most people picture — offered by nearly every lender and backed by the broad conforming market. Down payments start at 3% for qualifying first-time buyers (5% is more typical), and pricing rewards credit: the stronger your score, the better your rate. Put down less than 20% and you'll pay private mortgage insurance, but unlike FHA's version it drops off once you reach enough equity. If your credit is solid and your income is documented with W-2s or straightforward tax returns, conventional is usually the first quote worth pulling.

FHA: the Flexible-Credit Workhorse

FHA loans exist to make homeownership reachable — 3.5% down with credit scores that conventional lenders would price harshly, and more forgiving debt-to-income math. The trade-off is mortgage insurance that, at the usual down payment, lasts the life of the loan; the standard play is to buy with FHA, build equity, and refinance to conventional later to shed it. For a huge share of first-time buyers in California — especially anyone whose credit took bruises along the way — FHA is the loan that actually gets the keys.

VA: Earned, Not Given

If you served, the VA loan is the strongest purchase loan in the market: zero down payment, no monthly mortgage insurance ever, and competitive rates. There's a one-time funding fee (waived entirely for veterans with service-connected disability compensation). Eligibility runs on your service history, documented by a Certificate of Eligibility your lender can pull. The honest advice: if you're eligible for VA, make lenders show you why any other loan would be better — usually they can't.

ITIN and Bank-Statement: Loans for Real-World Files

Two portfolio programs cover buyers the standard market skips:

ITIN loans — for buyers who file taxes with an ITIN instead of a Social Security number. Down payments are typically higher (often 10–20%) and rates run above conventional, but they turn years of rent and tax-filing history into an owned home. Co-signers can help, and the FHA Earned Equity Program is a separate 3.5%-down FHA path open to ITIN buyers.
Bank-statement loans — for self-employed buyers whose tax returns understate real income after write-offs. Lenders qualify you on 12–24 months of business or personal bank deposits instead. Expect a larger down payment and pricing above conventional, in exchange for underwriting that matches how your business actually runs.

Program terms vary by lender and qualification — these describe typical shapes, not offers.

How to Shortlist in One Conversation

You don't have to master all five — you have to answer four questions, and the menu collapses on its own:

Did you serve in the military? If yes, VA goes to the top of the list.
Do you file taxes with an ITIN? If yes, the ITIN family (and the FHA Earned Equity Program) is your lane.
How's your credit? Strong credit points conventional; bruised credit points FHA.
How is your income documented? W-2s fit everything; heavy write-offs point to bank-statement programs.

That's the whole triage. A broker runs it in one conversation and then shops multiple lenders inside the right lane — which is where the real savings live.

Key takeaways

You don't need 20% down — conventional starts at 3%, FHA at 3.5%, and VA at zero for those eligible.
FHA is the flexible-credit path; conventional rewards stronger credit with better pricing and removable mortgage insurance.
No Social Security number doesn't mean no mortgage — ITIN loans exist for exactly that.
Self-employed with heavy write-offs? Bank-statement loans qualify you on deposits, not tax returns.

Common questions

What credit score do I need for a home purchase loan?

It varies by program: FHA works with scores conventional lenders would price harshly, conventional rewards mid-to-high scores with better rates, and portfolio programs like ITIN loans weigh payment history and alternative credit too. There's no single cutoff — the program choice adapts to the score, not the other way around.

How much down payment do I really need to buy a house?

Less than most people think: 3% conventional (first-time buyers), 3.5% FHA, 0% VA for those eligible. ITIN and bank-statement programs typically want 10–20%. Down-payment assistance programs can help cover part of it as well.

Can I get a home loan without a Social Security number?

Yes — ITIN loans are built for exactly this. You qualify with your ITIN, tax returns, and proof of income. Down payments run higher than conventional, but the path is real and well-traveled.

What's the difference between getting a loan from a bank vs. a broker?

A bank can only offer its own products at its own pricing. A broker shops your file across many lenders — including the portfolio lenders behind ITIN and bank-statement programs that banks often don't offer at all — and is paid to find the fit, not to place you in the house product.

Which loan is best for a first-time buyer?

There's no universal answer, but the most common outcomes are FHA (flexible credit, 3.5% down) and 3%-down conventional (stronger credit, cheaper insurance). Eligibility trumps both: a first-time buyer who served should look at VA before anything else.