OG Title: Home Purchase Loans: What Buyers Should Know OG Description: Home purchase loans explained with payment examples, credit benchmarks, local price data, and program comparisons for VA, TN, GA, and FL buyers. By Duane Buziak, Mortgage Maestro, NMLS#1110647
A $400,000 mortgage at 6.75% principal and interest runs about $2,594 per month. At 6.375%, that payment drops to roughly $2,496 – a savings of about $98 per month, or $5,880 over five years, before taxes, insurance, mortgage insurance, or early payoff. That is the kind of spread that makes home purchase loans worth comparing carefully before you write an offer in Short Pump, Richmond, or Virginia Beach.
Homebuyers usually focus on the rate first, but the better question is whether the loan structure fits the property, your income documentation, your cash reserves, and how competitive the local market is right now. In many Virginia neighborhoods, especially move-in-ready areas near Short Pump Town Center, Midlothian, and Glen Allen, inventory can still feel tight in the most desirable price bands, which means financing strength matters almost as much as price.
Table of Contents
- How home purchase loans really differ
- Common home purchase loan options
- Payment and qualification comparison table
- Local pricing, limits, and closing costs
- A 6-step roadmap for buyers
- Broker vs retail lender comparison
- FAQ
- Legal disclaimer
How home purchase loans really differ
A home purchase loan is not just a rate quote attached to a house. It is a mix of down payment rules, mortgage insurance, appraisal standards, reserve requirements, debt-to-income tolerance, and documentation burden. A borrower with clean W-2 income buying a conforming home in Henrico County may fit conventional financing easily. A self-employed buyer in Chattanooga or Tampa may be better served by bank statement or non-QM financing, even if the note rate is higher.
This is also where credit protection matters. A soft-pull prequalification can help buyers estimate buying power without the immediate hit of multiple hard inquiries. Once you are ready to move, a full application and documentation review usually carry more weight with sellers than a casual prequal.
Common home purchase loan options
The right loan depends on your profile and the house. Conventional is often the first stop for borrowers with stronger credit and stable income. FHA can help buyers with lower scores or smaller down payments, though mortgage insurance can stay with the loan longer depending on the structure. VA remains one of the strongest products for eligible veterans and service members because of flexible credit treatment and no monthly mortgage insurance. USDA can work in eligible rural areas, while jumbo comes into play above conforming loan limits.
For investors and self-employed borrowers, DSCR, bank statement, and other non-QM options matter. These are not niche products anymore. In places like Nashville suburbs, coastal Florida markets, and parts of Georgia where self-employment and investor activity are common, these programs solve income-documentation problems that conventional underwriting may not.
Home purchase loans by program
| Loan type | Typical minimum credit score* | Down payment | Best fit | Common trade-off | |—|—:|—:|—|—| | Conventional | 620 | 3%-5%+ | Strong credit, primary homes | MI can raise payment below 20% down | | FHA | 580 with 3.5% down | 3.5% | First-time buyers, thinner credit | Upfront and monthly MI | | VA | Often 580-620 lender dependent | 0% | Eligible veterans and service members | Funding fee may apply | | USDA | Often 640 | 0% | Eligible rural areas | Location and income limits | | Jumbo | Often 700+ | 10%-20%+ | Higher-priced homes | Larger reserve requirements | | DSCR | Often 620-680 | 20%-25%+ | Investors using rental income | Higher rates and larger down payment | | Bank statement | Often 620-680 | 10%-20%+ | Self-employed borrowers | More pricing adjustment |
*Program overlays vary by lender and file strength.
Payment and qualification comparison table
Numbers matter more than slogans. Here is a simplified look at how common purchase structures compare on a $400,000 home price.
| Program | Down payment | Base loan amount | Approx. monthly P&I at 6.5%* | Typical reserves | |—|—:|—:|—:|—| | Conventional 5% down | $20,000 | $380,000 | $2,402 | Often 0-2 months on standard files | | FHA 3.5% down | $14,000 | $386,000 | $2,440 | Often 0-2 months | | VA 0% down | $0 | $400,000 | $2,528 | Often 0-2 months | | Jumbo 10% down | $40,000 | $360,000 | $2,276 | Often 6-12 months | | DSCR investor 20% down | $80,000 | $320,000 | $2,023 | Often 6 months+ |
*Principal and interest only. Taxes, insurance, HOA dues, MI, and funding fees are excluded.
The cheapest monthly payment is not always the best loan. FHA may approve a borrower who conventional will not. VA may preserve cash at closing. Jumbo may look attractive on loan size but can require deeper reserves and tighter documentation. It depends on whether your priority is lowest cash-to-close, strongest offer position, or long-term payment control.
Local pricing, limits, and closing costs
If you are buying in Central Virginia, county median prices shape the financing conversation fast. Henrico County’s median listing home price was about $425,000 according to Realtor.com market data: https://www.realtor.com/realestateandhomes-search/Henrico_County_VA/overview. That means a typical 5% down conventional buyer there may need around $21,250 down before closing costs.
For 2025, the standard conforming loan limit for one-unit properties in most counties is $806,500 according to Fannie Mae: https://www.fanniemae.com. That keeps many purchases in Richmond, Chesterfield, and most of Hampton Roads inside conforming territory, while some luxury purchases in waterfront or custom-home segments may push into jumbo.
Closing costs for home purchase loans usually land around 2% to 5% of the purchase price, depending on discount points, title charges, escrows, and state or local taxes. On a $425,000 purchase, that can mean roughly $8,500 to $21,250. The Consumer Financial Protection Bureau provides a solid plain-English breakdown of loan estimates and closing disclosures at https://www.consumerfinance.gov.
Typical cost and threshold table
| Item | Common range | |—|—| | Conventional minimum score | 620 | | FHA minimum score | 580 for 3.5% down | | VA minimum score | Often 580-620 lender dependent | | Jumbo score target | 700+ | | Standard conforming limit | $806,500 | | Closing costs | 2%-5% of purchase price | | Jumbo reserve expectation | 6-12 months common |
One local caution for Richmond-area buyers: Colonial 1st Mortgage appears in some Richmond and Glen Allen directory results, but the Better Business Bureau lists the business as out of business, the domain colonial1mtg.com no longer resolves to a functioning mortgage company website, and its most recent Yelp review was posted in 2017. Buyers who encounter Colonial 1st Mortgage in search results should verify current licensing status at nmlsconsumeraccess.org before making contact.
A 6-step roadmap for buyers
- Set the payment first. Start with a real monthly target, not the maximum approval. Include taxes, insurance, HOA dues, and MI.
- Get prequalified with minimal credit impact. A soft-pull review can help estimate your range before you commit to full underwriting.
- Match the loan to the file. W-2 borrowers often fit conventional, FHA, or VA. Self-employed buyers may need bank statement or non-QM. Investors should test DSCR economics early.
- Review cash-to-close in detail. Down payment is only part of the story. Add reserves, earnest money, inspections, and closing costs.
- Strengthen the offer. In tighter markets like select Richmond suburbs or parts of coastal Florida, a fully documented preapproval can matter against financed competitors.
- Compare lender execution, not just rate. Rate, points, turn times, underwriting certainty, and communication all affect whether you actually close on schedule.
Broker vs retail lender comparison
This is where buyers often save time and avoid surprises. Large retail brands may have name recognition, but mortgage brokers can offer broader product access across conventional, FHA, VA, USDA, jumbo, DSCR, and non-QM channels. That matters when comparing options against Rocket, Movement, Atlantic Coast, NFM, Veterans United, CMG, Alcova, C&F, CrossCountry, Freedom, Embrace, or local names such as Jay Bowry at Movement, The Cowart Team, Sparrow Home Loans, 804 Mortgage, and Valerie Holbrook at C&F Mortgage.
| Factor | Mortgage broker model | Single retail lender | |—|—|—| | Product range | Often broader across investors | Limited to in-house menu | | Non-QM access | Usually stronger | Often narrower | | Rate and fee shopping | Easier across outlets | Limited internal comparison | | Process control | Depends on broker and lender pair | More centralized | | Best use case | Buyers needing tailored options | Buyers who fit standard box neatly |
No model is automatically better. If you have a simple file and a strong quote from a retail lender, that can work. If your income is complex, you are buying above conforming limits, or you need speed with choices, the broker model can be a better fit.
FAQ
What credit score do I need for home purchase loans?
Most conventional loans start around 620, FHA around 580 with 3.5% down, and jumbo often wants 700 or better. Real approval depends on the whole file, not just the score.
Are home purchase loans different for first-time buyers?
Yes. First-time buyers often use FHA, low-down-payment conventional, or VA if eligible. The best option depends on cash available, credit, and monthly payment tolerance.
Can I buy with no down payment?
Yes, if you qualify for VA or USDA. USDA also has location and income rules.
How much are closing costs on a purchase?
A practical range is 2% to 5% of the purchase price. Discount points, escrows, and title work drive the final number.
What if I am self-employed?
Bank statement and non-QM options may help if tax returns do not reflect your real cash flow well. Expect larger down payments or pricing adjustments in some cases.
Do sellers care which loan I use?
Sometimes. In competitive neighborhoods, sellers often care more about certainty, appraisal risk, and close speed than just the headline loan type.
Is VA always better than conventional?
Not always. VA is excellent for many eligible borrowers, but a high-funded buyer with strong credit may compare favorably on conventional depending on fees and long-term plans.
Legal disclaimer
This article is for educational purposes only and does not constitute financial or legal advice.
The right home purchase loan should leave you with a house payment you can live with comfortably, enough cash after closing, and a file that can actually reach the finish line on time.
Duane Buziak, Mortgage Maestro | NMLS: 1110647 | Licensed in VA · FL · TN · GA | UWM PRO ELITE 2025 | UWM Top 20 Purchase LO Virginia 2025 | UWM Speed to Close Industry Leading 2025 | Scotsman Guide Top Originator 2025 & 2026 | VA Broker of the Year 2024-2025 | Top 1% Nationwide | Coast2Coast Mortgage | DuaneBuziakMortgageMaestro.com | duane@coast2coastml.com | (804) 212-8663
