Mortgage Loan Types
8 terms
Not all mortgages carry the same distress risk. The type of loan a borrower holds — FHA, VA, conventional, adjustable-rate — determines their insurance costs, foreclosure protections, and vulnerability to economic shocks. The American Distress Index tracks this through the FHA-to-bank-booked mortgage delinquency split: in 2026-Q1, Mortgage Bankers Association National Delinquency Survey data put FHA delinquency at 11.88% while Federal Reserve via FRED data put bank-booked single-family mortgage delinquency at 1.89%, a 6.3x gap that signals a two-tier mortgage market.
Understanding loan types matters because the protections and risks differ enormously. An FHA borrower has access to partial claims and mandatory forbearance. A VA borrower has a government advocate. A conventional borrower may have none of these. And a borrower in an adjustable-rate mortgage faces payment shock risk that fixed-rate borrowers never encounter.
Mortgage Type Comparison
| Feature | FHA | VA | Conventional |
|---|---|---|---|
| Min. down payment | 3.5% | 0% | 3-5% |
| Min. credit score | 580 | No VA minimum (lenders set ~620) | 620 |
| Mortgage insurance | 1.75% upfront + 0.55%/yr (life of loan) | None (funding fee 1.25-3.3% once) | PMI until 80% LTV, then cancels |
| Max DTI | 57% with compensating factors | No hard cap (residual income test) | 43-45% (QM limit) |
| Delinquency (2026-Q1) | 11.88% | MBA NDS category differs | 1.89% |
| Government advocate | HUD counselors | VA loan technicians | None (CFPB complaint only) |
See The FHA Signal for current delinquency tracking, or Housing Affordability Statistics for broader mortgage market data.