United States Mortgage Guide 2026: FHA, Conventional, VA, USDA, Rates and Costs

Your maximum mortgage in the US depends on two ceilings: your income-based borrowing capacity and the loan program limit that applies to your purchase.

Income-based limit: the debt-to-income ratio (DTI)

Lenders calculate how much of your gross monthly income goes toward all debt payments, including your new mortgage payment, property taxes, insurance, and any existing debts. The standard threshold is:

Conventional loans: maximum 43% to 50% DTI

FHA loans: maximum 57% DTI (the most flexible)

VA loans: no hard DTI cap, but lenders want residual income after all expenses

Program-based limit: conforming loan limits

In 2026, the baseline conforming loan limit for a single-family home in most US counties is $832,750. In high-cost areas including parts of California, Hawaii, and the Northeast, the ceiling rises to $1,249,125. Loans above these limits are jumbo mortgages with stricter requirements and higher down payments.

Indicative borrowing figures for 2026:

Use the affordability calculator to run your specific income, debts, and target rate through the DTI test before you start viewing homes.

The US system offers four main government-backed and two main conventional structures. Each one targets a different buyer profile.

A conventional loan is any mortgage not insured by a federal government agency. Fannie Mae and Freddie Mac buy conventional loans from lenders, which keeps rates competitive. In 2026, the baseline conforming limit is $832,750.

Minimum down payment by program:

Conventional 97 / HomeReady (Fannie Mae) / Home Possible (Freddie Mac): 3% down for first-time or qualifying buyers. Credit score of at least 620 required. Income limits apply on HomeReady and Home Possible.

Standard conventional: 5% down for most buyers. 10% to 20% for multi-unit or second homes.

20% down: eliminates private mortgage insurance (PMI) entirely, producing the lowest monthly payment.

Credit score requirements:

620 minimum for approval

680 or above for competitive pricing

740 or above for best rates

FHA loans are insured by the Federal Housing Administration and are the most popular first-time buyer program in the US. In 2026:

3.5% down with a credit score of 580 or above

10% down with a credit score of 500 to 579

2026 FHA loan limit: $541,287 in standard counties, $1,249,125 in high-cost areas

Mortgage insurance: 1.75% upfront premium (added to the loan) plus 0.55% annually

DTI: up to 57%, the most permissive of any standard program

100% of the down payment can come from gift funds

FHA mortgage insurance stays for the life of the loan if you put down less than 10%. If you put down 10% or more, it drops off after 11 years.

VA loans are guaranteed by the Department of Veterans Affairs and are available to eligible veterans, active-duty service members, and surviving spouses.

0% down payment required

No monthly mortgage insurance (saving $100 to $300 per month versus FHA)

No minimum credit score set by VA, though most lenders require 620

One-time VA funding fee (typically 2.15% to 3.3% of the loan, waived for disabled veterans)

2026 rates: averaging 6.34% to 6.54% for 30-year VA loans, meaningfully below conventional

VA loans are the strongest mortgage product available in the US for eligible buyers.

USDA loans target buyers in designated rural and eligible suburban areas who meet income limits.

0% down payment required

Annual guarantee fee of 0.35% of the loan balance (lower than FHA annual mortgage insurance)

1% upfront guarantee fee (financed into the loan)

Income limits apply: typically 115% of the area median income

Property must be in an eligible geographic area (not all rural, many suburban locations qualify)

Loans above the conforming limit are called jumbo loans. They carry stricter requirements:

10% to 25% down payment depending on the lender and loan amount

Credit score of 700 or above typically required

Full income and asset documentation required

2026 rates: 6.87% to 6.94% for 30-year jumbo, slightly above conforming

All loan types at a glance:

Use the mortgage calculator and the lender compare tool to model your specific program, rate, and down payment combination.

As of September 11, 2026, current national average rates per Freddie Mac and Bankrate:

What determines your specific rate:

Credit score. A 740 or above score earns the best pricing. A score of 620 to 679 typically costs 0.25% to 0.50% more per year.

Down payment and LTV. Less than 20% down triggers PMI. More down equals a lower rate at most lenders.

Loan type. FHA and VA loans have specific rate tiers that often run below conventional rates despite the insurance cost.

Loan term. The 15-year fixed runs roughly 0.60% to 0.70% below the 30-year but requires substantially higher monthly payments.

Points. Paying discount points at closing (each point costs 1% of the loan amount) buys your rate down by approximately 0.25% per point. Use the mortgage calculator to see whether buying points saves money given your expected time in the home.

Federal Reserve context. The Fed target range sits at 3.50% to 3.75% as of September 2026. Mortgage rates track the 10-year Treasury yield, which moved from 4.2% in early 2026 to 3.35% to 3.40% by September. Strong labor market data (162,000 jobs added in the latest report, unemployment at 4.1%) reduced the probability of further near-term cuts and pushed rates slightly higher in September.

If you put down less than 20% on a conventional loan, lenders require PMI. It protects the lender, not you, and adds to your monthly payment.

PMI cost: typically 0.2% to 2% of the loan amount annually, depending on your credit score, LTV ratio, and lender.

On a $350,000 loan with 5% down at 0.55% PMI: approximately $160 per month.

When PMI drops off: at 20% equity (80% LTV) based on the original amortization schedule, or earlier if you request cancellation once your loan balance reaches 80% of the original appraised value. The lender must automatically cancel PMI at 22% equity.

FHA mortgage insurance works differently. If you put down less than 10%, it stays for the life of the loan. Many buyers refinance from FHA to conventional once they reach 20% equity to eliminate this cost.

Closing costs on a US mortgage run 2% to 5% of the loan amount and must be paid at the closing table. They fall into three categories:

Category 1: Lender fees

Category 2: Third-party and government fees

Category 3: Prepaids and escrow (not fees, but cash due at closing)

Full example: $400,000 purchase, $320,000 loan (20% down), mid-cost state:

Build your own global payment estimate using the budget calculator.

How to reduce closing costs:

Seller concessions. You negotiate for the seller to pay a portion of your closing costs. Limits vary by program: 3% to 6% for conventional depending on down payment, 6% for FHA, and up to 4% for VA.

Lender credits. You accept a slightly higher interest rate in exchange for the lender paying some or all of your closing costs. This is called a no-closing-cost mortgage. You pay nothing upfront but more over time.

Shop title insurance. Title insurance premiums vary significantly by provider. Getting quotes from multiple title companies is the highest-value comparison you can make among closing costs.

Yes, for borrowers who itemize deductions. The mortgage interest deduction lets you deduct interest paid on up to $750,000 of mortgage debt on a primary and secondary residence combined (reduced from $1 million for loans originated before December 2017).

Practical reality: In 2026, the standard deduction is $15,000 for single filers and $30,000 for married filing jointly. For most buyers, especially those with smaller loan balances, the standard deduction exceeds their total itemizable deductions including mortgage interest, so they take the standard deduction and receive no mortgage interest benefit.

Who actually benefits: High earners with large mortgage balances in high-tax states where property taxes and state income taxes add meaningfully to itemizable deductions.

Prepaid mortgage interest (points) paid at closing is fully deductible in the year of purchase if you meet IRS requirements.

Use the salary and tax calculator to model your net monthly cost after any applicable deduction.

Total timeline from accepted offer to closing: 30 to 45 days for most buyers.

Most US mortgages have no prepayment penalty. Any amount you pay above the minimum monthly payment reduces your principal directly and saves future interest.

On a $350,000 loan at 6.8% over 30 years: paying $200 extra per month saves approximately $88,000 in total interest and cuts the term by nearly 6 years. Use the loan calculator with extra payments to model your exact scenario.

Refinancing makes sense when market rates drop materially below your current rate or your financial profile improves enough to qualify for better terms. The general rule is to compare the monthly payment saving against the cost to refinance and calculate how many months it takes to break even. Use the refinance calculator to run that math for your specific situation.

At a 30-year rate of 6.8% and median home prices well above $400,000 in most major markets, owning is not automatically cheaper than renting in the short term. The math depends heavily on your local market, time horizon, and expected appreciation. Use the rent vs buy calculator to compare 5, 10, and 20-year total costs in your situation.

$832,750 for a single-family home in most US counties. High-cost areas cap at $1,249,125. Loans above these limits are jumbo mortgages.

0% for VA and USDA loans. 3% for Conventional 97, HomeReady, and Home Possible. 3.5% for FHA with a 580 or above credit score. 5% for standard conventional. 10% minimum for jumbo loans.

As of September 11, 2026, the 30-year fixed-rate mortgage averages 6.76% to 6.82% nationally per Freddie Mac and Bankrate. Your actual rate depends on credit score, down payment, loan type, and the lender.

Closing costs typically run 2% to 5% of the loan amount and include lender fees, title insurance, appraisal, recording fees, and prepaid items such as homeowners insurance and property tax escrow. Most costs must be paid at closing unless you negotiate seller concessions or lender credits.

PMI stands for private mortgage insurance. Lenders require it on conventional loans with less than 20% down. It typically costs 0.2% to 2% of the loan annually. It cancels automatically at 22% equity, or you can request cancellation at 20%.

If you itemize deductions, you can deduct interest on up to $750,000 of mortgage debt. Most buyers in 2026 take the standard deduction ($15,000 single, $30,000 married) and receive no benefit, unless their total itemizable deductions exceed those amounts.

A global payment estimate covers your down payment, all closing costs, and ongoing monthly payments including mortgage, PMI if applicable, property taxes, and homeowners insurance. Build yours with the budget calculator.