FHA vs. Conventional vs. Jumbo Loans: What’s the Difference?

When you’re exploring your mortgage options—whether you're buying a home or refinancing your current one—understanding the differences between FHA, Conventional, and Jumbo loans is essential. Each loan type offers unique advantages depending on your financial situation, property type, and goals.

At Swardstrom Mortgage, we believe clarity leads to confidence. Here’s a breakdown of these popular mortgage products and how they compare.

What Is an FHA Loan?

An FHA loan is backed by the Federal Housing Administration and is designed to make homeownership more accessible, particularly for first-time buyers, individuals with lower credit scores, or those with limited savings for a down payment. FHA loans can also be used to refinance an existing mortgage.

Benefits of an FHA Loan:

• Down payments as low as 3.5%

• More flexible credit and income requirements

• Refinancing options available, including streamline refinance for lower rates with less documentation

• Assumable mortgage option, allowing buyers to take over your loan terms when you sell

Considerations:

• Mortgage Insurance Premium (MIP) is required, typically for the life of the loan

• FHA loan limits vary by county and may not be suitable for higher-priced homes

What Is a Conventional Loan?

A conventional loan is not insured by a government agency and typically follows lending standards set by Fannie Mae and Freddie Mac. It is the most Basic Mortgage 101 type of mortgage in the U.S. and is available for both purchasing and refinancing a home.

Benefits of a Conventional Loan:

• Down payments as low as 3% for qualified buyers

• No upfront mortgage insurance; private mortgage insurance (PMI) can be removed when you reach 20% equity

• Broad refinancing options, including rate-and-term and cash-out refinances

• Lower total costs for borrowers with strong credit and income

Considerations:

• Requires higher credit scores (typically 620+)

• More stringent income and asset documentation

• PMI applies for down payments under 20%

What Is a Jumbo Loan?

A jumbo loan is used to finance properties that exceed conforming loan limits, which are $766,550 in most counties for

2025 (higher in designated high-cost areas). These loans are available for both home purchases and refinances.

Benefits of a Jumbo Loan:

• Enables financing for high-value or luxury homes beyond conventional limits

• Competitive interest rates for qualified, high-income borrowers

• Available for refinancing large existing loans, including cash-out options in some cases

Considerations:

• Requires excellent credit (typically 700+)

• Higher down payments are usually needed (10%–20% or more)

• More thorough underwriting and documentation process

• Higher closing costs may apply

Which Loan Is Right for You?

Loan Type	Ideal For	Available For
FHA	First-time buyers, lower credit, smaller down payments	Purchase & Refinance
Conventional	Buyers with solid credit and income, avoiding long-term PMI	Purchase & Refinance
Jumbo	High-income buyers, luxury properties, large loan amounts	Purchase & Refinance

Let’s Find the Right Fit for You

Choosing the right loan type isn’t just about qualification—it’s about your long-term financial goals. Whether you’re purchasing your first home, upgrading to your dream home, or refinancing to save money, Swardstrom Mortgage is here to guide you through every step of the process.

Have questions or ready to get started? Reach out today for personalized mortgage guidance you can trust.