Buying a home is one of the biggest financial decisions you’ll ever make, and choosing the right mortgage is just as important as choosing the right house. With so many loan options available, understanding the key differences can save you tens of thousands of dollars over the life of your loan.
Conventional Loans
Conventional loans are the most common mortgage type and are not backed by a government agency. They’re ideal for buyers with strong credit and a solid down payment.
- Minimum down payment: 3-5% (PMI required under 20%)
- Credit score: Typically 620 minimum, 740+ for best rates
- Best for: Buyers with good credit who want flexibility in property type and loan terms
- Denver consideration: Loan limits for 2026 allow conventional financing up to $806,500 in most Denver metro counties
FHA Loans
FHA loans are backed by the Federal Housing Administration and are designed to make homeownership more accessible. They’re a popular choice for first-time buyers or those rebuilding credit.
- Minimum down payment: 3.5% with a 580+ credit score
- Mortgage insurance: Required for the life of the loan (or 11 years with 10%+ down)
- Best for: First-time buyers with lower credit scores or limited savings
- Tradeoff: MIP (mortgage insurance premium) adds to your monthly cost — refinancing to conventional later is common once you build equity
VA Loans
VA loans are available to eligible veterans, active-duty service members, and surviving spouses. They’re one of the best loan products available — period.
- Down payment: Zero required
- Mortgage insurance: None (a one-time funding fee applies in most cases)
- Interest rates: Typically lower than conventional loans
- Best for: Any eligible veteran — if you qualify, this is almost always the right choice
Pro Tip: As a veteran myself, I always encourage eligible buyers to explore VA financing first. The zero down payment and no PMI alone can save you thousands per year — and VA appraisals protect you from overpaying.
USDA Loans
USDA loans are backed by the U.S. Department of Agriculture and designed for buyers in eligible rural and suburban areas. Parts of the Denver metro fringe — including some areas near Brighton, Strasburg, and Elbert County — may qualify.
- Down payment: Zero required
- Income limits: Apply — typically capped at 115% of area median income
- Best for: Buyers open to suburban or rural areas who meet income requirements
Jumbo Loans
When a purchase price exceeds the conforming loan limit ($806,500 in most Denver counties for 2026), you’ll need a jumbo loan. These are held by the lender rather than sold to Fannie Mae or Freddie Mac, and they come with stricter qualification standards.
- Down payment: Typically 10-20% minimum
- Credit score: Usually 700+ required
- Reserves required: 6-12 months PITI in liquid assets
- Best for: Higher-price purchases in Cherry Hills Village, Greenwood Village, or other premium Denver submarkets
Quick Comparison
| Loan Type | Min. Down | Min. Credit | PMI/MIP | Best For |
|---|---|---|---|---|
| Conventional | 3-5% | 620 | Under 20% down | Strong credit, flexibility |
| FHA | 3.5% | 580 | Always required | Lower credit, first-timers |
| VA | 0% | None set | None | Eligible veterans — use it |
| USDA | 0% | 640 typical | Annual fee | Rural/suburban eligible areas |
| Jumbo | 10-20% | 700+ | Varies | Purchases above $806,500 |
Final Thoughts
The right loan is the one that fits your financial situation, your timeline, and your long-term goals — not just the one with the lowest rate today. A great local lender will walk you through all your options and help you understand the true cost of each. Your agent should be able to connect you with lenders who communicate clearly and close on time.
Questions About Financing Your Denver Home?
I can connect you with trusted local lenders and help you understand which loan type makes the most sense for your situation before you start shopping.