The five main types of mortgage loans are conventional loans, FHA loans, VA loans, USDA loans, and jumbo loans. Each one has different down payment requirements, credit score minimums, and cost structures. The right choice depends on your financial situation, the home you are buying, and where it is located.
If you are shopping for a home in Burlington County or anywhere in South Jersey, one of the first questions you will face is what kind of mortgage to get. With so many options, it can be hard to know where to start. I have helped hundreds of buyers navigate this decision, and the most common reaction I hear is: "I wish I had known about this loan option sooner."
This guide breaks down each mortgage type in plain language, with the specific numbers and requirements that matter to South Jersey buyers. By the end, you will know which loan types to explore and which questions to ask your lender.
Conventional Loans: The Most Common Option
A conventional loan is a mortgage that is not insured or guaranteed by the federal government. It follows guidelines set by Fannie Mae and Freddie Mac, the government-sponsored enterprises that buy most conventional mortgages from lenders.
Key features of conventional loans:
- Minimum down payment: 3% (Fannie Mae HomeReady or Freddie Mac HomeOne)
- Minimum credit score: 620 (most lenders prefer 660+)
- Private Mortgage Insurance (PMI) required with less than 20% down
- PMI can be cancelled once you reach 20% equity
- Conforming loan limit in Burlington County for 2026: $766,550
- Available as fixed-rate or adjustable-rate mortgages
- No upfront mortgage insurance premium
Conventional loans are the most popular mortgage type in the United States. They work well for buyers with good credit and a solid down payment. In South Jersey, conventional loans are commonly used for homes in the $300,000 to $700,000 range, which covers most of the market in towns like Moorestown, Mount Laurel, Marlton, and Medford.
One of the biggest advantages of a conventional loan is that PMI drops off automatically once your loan balance reaches 80% of the home's value. This can save you hundreds of dollars per month compared to an FHA loan, where mortgage insurance may last for the life of the loan.
FHA Loans: Flexible for First-Time Buyers
FHA loans are insured by the Federal Housing Administration, which allows lenders to offer more flexible terms to borrowers who might not qualify for a conventional mortgage. They are especially popular among first-time home buyers.
Key features of FHA loans:
- Minimum down payment: 3.5% (with credit score of 580 or higher)
- Minimum credit score: 580 for 3.5% down; 500 for 10% down
- Upfront Mortgage Insurance Premium (UFMIP): 1.75% of the loan amount
- Annual Mortgage Insurance Premium (MIP): 0.55% to 0.85%
- FHA loan limit in Burlington County for 2026: approximately $498,257
- Debt-to-income ratio allowed: up to 43% (sometimes 50%)
- Stricter property standards required (FHA appraisal)
FHA loans are a great option for buyers who have a smaller down payment saved or a credit score below 660. In South Jersey, many first-time buyers use FHA loans to purchase homes in the $250,000 to $450,000 range, which covers a significant portion of the market in towns like Delran, Cinnaminson, Burlington Township, and Lumberton.
The main drawback of FHA loans is the mortgage insurance. With less than 10% down, MIP stays on the loan for its entire term. The only way to remove it is to refinance into a conventional loan once you have built enough equity and your credit score has improved.
VA Loans: Zero Down Payment for Eligible Borrowers
VA loans are guaranteed by the U.S. Department of Veterans Affairs and are available to active-duty military members, veterans, and surviving spouses. They are one of the most powerful home buying benefits available, yet many eligible borrowers do not take full advantage of them.
Key features of VA loans:
- Zero down payment required (in most cases)
- No monthly mortgage insurance
- Competitive interest rates, often lower than conventional
- No official minimum credit score (most lenders look for 620+)
- Funding fee: 1.25% to 3.3% (can be rolled into the loan)
- Funding fee waived for veterans with service-connected disabilities
- No loan limit for borrowers with full entitlement (2026)
- Can be used for primary residences only
VA loans are available to eligible borrowers buying homes anywhere in South Jersey, including Burlington County. If you are a veteran or active-duty service member, a VA loan is almost always the best option available. The combination of zero down payment and no monthly mortgage insurance is hard to beat.
Many buyers do not realize that VA loans are reusable. Once you have paid off a previous VA loan, you can get your entitlement restored and use it again. You can also have multiple VA loans simultaneously if you have enough remaining entitlement.
USDA Loans: Zero Down for Rural and Suburban Areas
USDA loans are backed by the U.S. Department of Agriculture and are designed to promote homeownership in eligible rural and suburban areas. Despite the "rural" name, many suburban communities in South Jersey qualify.
Key features of USDA loans:
- Zero down payment required
- Minimum credit score: typically 640
- Upfront guarantee fee: 1% of the loan amount
- Annual fee: 0.35% of the loan amount (effectively mortgage insurance)
- Income limits apply (varies by county and household size)
- Property must be in an eligible area
- For primary residences only
In Burlington County, eligible USDA areas include parts of Lumberton, Southampton, Shamong, Tabernacle, Medford (western sections), Pemberton, and many other communities. If you are looking at homes in these areas, a USDA loan could save you thousands by eliminating the down payment requirement.
The income limits for USDA loans in Burlington County are approximately $110,650 for a 1-4 person household and $146,050 for a 5-8 person household (2026 figures). These limits adjust annually, so check with your lender for current numbers.
Jumbo Loans: For Higher-Priced Homes
A jumbo loan is a conventional loan that exceeds the conforming loan limit set by Fannie Mae and Freddie Mac. In Burlington County, the 2026 conforming limit is $766,550. Any loan amount above that is considered a jumbo loan.
Key features of jumbo loans:
- Loan amounts above $766,550 (Burlington County 2026)
- Minimum down payment: typically 10% to 20%
- Higher credit score requirements: typically 700+
- Lower debt-to-income ratios required: typically below 43%
- Interest rates are often slightly higher than conforming loans
- Larger cash reserves may be required (6-12 months of payments)
- May require a second appraisal or additional documentation
Jumbo loans are common in South Jersey's higher-end markets, including Moorestown, Medford (equestrian estates), Chesterfield, and parts of Mount Laurel. If you are buying a home above $766,550, you will need a jumbo loan. The requirements are stricter, but jumbo loans are readily available from most lenders.
How to Choose the Right Loan for Your Situation
With so many options, deciding which mortgage is right for you comes down to a few key factors:
Your credit score. If your score is below 620, an FHA loan is likely your best option. If it is above 660, you have more choices, including conventional and potentially USDA or VA.
Your down payment savings. If you have less than 3% saved, look at VA (if eligible), USDA (if eligible area), or FHA. With 3% to 5% down, conventional low-down-payment programs become available. With 20% down, you can avoid PMI entirely.
Your target home price. If you are looking at homes above $766,550 in Burlington County, you will need a jumbo loan. If you are looking under $498,257, FHA is an option. If you are looking in a USDA-eligible area, that zero-down option is worth exploring.
Your long-term plans. If you plan to stay in the home for 5-7 years or less, FHA's lifetime MIP may not matter as much. If you plan to stay for 10+ years, a conventional loan with cancellable PMI is usually more cost-effective.
Frequently Asked Questions
What is the easiest mortgage loan to qualify for?
FHA loans are generally the easiest to qualify for because they allow lower credit scores (as low as 580) and higher debt-to-income ratios (up to 43% or 50%). VA loans also have flexible qualification standards but are only available to eligible military borrowers.
What is the best mortgage loan for first-time home buyers?
For most first-time buyers, FHA loans are the most accessible option because of the 3.5% down payment and flexible credit requirements. However, if you have good credit (660+) and can put 3% down, a conventional loan with a low-down-payment program like HomeReady or HomeOne may be better long-term because PMI can be cancelled.
Can I use a VA loan more than once?
Yes. VA loan benefits are reusable. Once you pay off a previous VA loan, you can have your entitlement restored and use it again. You can also have multiple VA loans at the same time if you have enough remaining entitlement. Many veterans use VA loans multiple times throughout their lives.
What areas in Burlington County qualify for USDA loans?
Eligible areas include parts of Lumberton, Southampton, Shamong, Tabernacle, Medford (western sections), Pemberton, New Hanover, Springfield Township, and other less densely developed areas. Many suburban communities near the Pine Barrens qualify. Your lender can check the USDA eligibility map for a specific address.
How much do I need for a down payment on a jumbo loan?
Most jumbo loans require at least 10% to 20% down. Some lenders offer jumbo loans with as little as 10% down for borrowers with excellent credit (740+) and strong reserves. The higher the down payment, the better your interest rate and terms will be.
Not Sure Which Loan Is Right for You?
Choosing the right mortgage is one of the most important decisions you will make as a home buyer. I work with trusted local lenders who can walk you through your specific options, run your numbers, and help you find the loan that fits your situation best.
Reach out anytime. I am happy to answer your questions and connect you with lenders who know the South Jersey market inside and out.
Bob Millaway
Redfin Senior Agent · AI Certified Agent · 636+ homes sold across Burlington County and South Jersey. Licensed NJ Salesperson #791082.