Loan Options

Buy a Home with Confidence

Not sure which loan fits your budget and timeline? Start here, then tap “Get Pre-Qualified” and we’ll guide you to the right option for your situation.

Understanding Where To Start

The Big Picture

Every buyer is different. Credit, savings, income, and location all shape which loan feels best. Below is a simple rundown of the four most common purchase options we help Minnesota families use every day.

A mainstream mortgage that’s not part of a government program.

A government-insured loan with flexible credit guidelines and low down payment options for qualified buyers.

A powerful benefit for eligible Veterans, Service Members, and some surviving spouses

A government-backed option designed to help eligible buyers purchase homes in qualified rural areas

What is a

Conventional Loan

A mainstream mortgage that’s not part of a government program. Often the best long-term cost for well-qualified buyers. (Think Fannie Mae/Freddie Mac guidelines.) See the CFPB’s overview of conventional loans for a neutral, plain-language guide.

How it works:
Put less than 20% down and you’ll usually have private mortgage insurance (PMI)—which protects the lender, not you. The good news: for many loans, PMI can be removed after you build enough equity.

Best For...

  • Solid credit and steady income

  • Flexible down payment (often 3%–20%+)

  • Buyers who want the option to drop PMI later

Pros

  • Often lower overall cost than FHA if your credit/income are strong

  • PMI can usually be canceled once you hit required equity levels

Considerations

  • Tighter credit/income standards than FHA

  • PMI applies under 20% down (until you reach the removal threshold)

Not sure which loan fits?

That’s what we’re here for. Tell us a bit about your budget and timeline, we’ll compare your options side-by-side and recommend the best path.

What is a

FHA Loan

A government-insured loan with flexible credit guidelines and low down payment options for qualified buyers. HUD notes FHA down payments can be as low as 3.5%

How it works:
FHA loans include mortgage insurance in two parts: an upfront premium (usually financed into the loan) and an annual premium built into your monthly payment.


Many buyers can qualify with 3.5% down if they meet credit requirements. (HUD resource on FHA basics.)

Best For...

  • First-time or returning buyers who want a lower down payment

  • Credit that’s building or bouncing back

Pros

  • Lower down payment options

  • More accommodating credit guidelines

Considerations

  • Mortgage insurance applies; compare total cost vs. Conventional for your profile

  • County-specific FHA loan limits apply (see CFPB’s FHA overview)

Quick Tips

  • Don’t let “20% down” scare you—there are low and zero-down paths that may fit your situation. (FHA, VA, USDA)

  • With Conventional, PMI is common under 20% down—but can often be removed later.

  • The lowest payment isn’t always the best total cost. We’ll run numbers both ways and show you the tradeoffs (rate, MI, fees, and future PMI removal).

What is a

VA Loan

A powerful benefit for eligible Veterans, Service Members, and some surviving spouses—often no down payment, no monthly mortgage insurance, and competitive rates.

How it works:
Most VA loans do not require a down payment or monthly MI. There’s typically a one-time VA funding fee (with some exemptions), which helps keep the program running.

Best For...

  • Eligible VA buyers who want low upfront costs and strong terms

Pros

  • $0 down for most eligible buyers

  • No monthly mortgage insurance

  • Limits on certain closing costs (see VA guidance)

Considerations

  • VA funding fee applies unless exempt; amount varies by use and down payment (see official tables)

Compliance and Disclaimer

Programs, rates, and eligibility change, your exact terms depend on your credit, income, property, and program rules. We’ll confirm details and provide written estimates before you decide.


Equal Housing Lender • NMLS #295556 • Minnesota-based since 2000

What is a

USDA Rural Development

A government-backed option designed to help eligible buyers purchase homes in qualified rural areas, frequently with $0 down (subject to income, location, and lender approval).

How it works:
You apply through approved lenders for the Single Family Housing Guaranteed Loan Program (Section 502 Guaranteed). There are income limits and geographic eligibility requirements. (USDA also offers a separate Direct program for lower-income buyers.)

Best For...

  • Buyers whose target area is USDA-eligible

  • Moderate-income households seeking zero-down options

Pros

  • Often no down payment

  • Competitive fixed-rate options via approved lenders

Considerations

  • Must meet area eligibility and household income limits

  • Guarantee fees and program rules apply (via USDA)

Beyond the Mortgage: Helping You Find Your Home

Securing the right loan is just the beginning. Through our Homebuyer Concierge Service, we’ll personally connect you with recommended Minnesota realtors who know the market inside and out. It’s our way of making sure you have the right team beside you, from pre-approval to closing day.

At Equity Source Mortgage, we’re more than loan officers, we’re your lifelong partners in homeownership.

Whether it’s your first home, your next home, or simply making your current one the right fit through refinancing, we’re here to guide you with clarity, care, and confidence.

NMLS #295556

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