Choosing among the different types of home loans in Washington State usually gets easier once you separate two decisions. First, compare the main loan programs used to buy homes—such as conventional, FHA, VA, and USDA—to see which ones fit your eligibility, down payment, and occupancy plans. Second, decide how you want the interest rate to work, usually with a fixed-rate mortgage or an adjustable-rate mortgage. This guide walks through the main loan categories, when borrowers commonly use them, and which options are more specialized for self-employed borrowers, second homes, or real estate investors.
Homebuyers often feel overwhelmed by the many choices they have to make regarding their mortgage loans. In practice, most of the options on this page fall into four groups:
Using that framework can help you narrow your choices faster and avoid mixing mainstream homebuyer programs with more specialized products.
| FHA Loans | Government‑backed mortgages designed to help home buyers with smaller down payments or lower credit scores. |
| VA Loans | Home loans offered to eligible veterans and active military members with no down payment required. |
| USDA Home Loans | Mortgages for rural and suburban buyers that feature low interest rates and no down payment. |
| Fixed-Rate Mortgages | Loans with an interest rate that stays the same throughout the repayment term. Common options include 15-year and 30-year mortgages. |
| Adjustable-Rate Mortgages (ARMs) | Mortgages with interest rates that change periodically after an initial fixed period. |
| Conforming Loans | Loans that meet Fannie Mae and Freddie Mac guidelines for size and standards. |
| Jumbo Mortgage Loans | Mortgages that exceed conforming loan limits, often used for high‑value properties. |
| Bridge Loans | Short‑term financing that covers costs between buying a new home and selling the old one. |
| Self-Employed Mortgages | Loans tailored for borrowers who prove income through business records instead of pay stubs. |
| 1099-Only Mortgage Loans | Mortgages for independent contractors who qualify using 1099 forms as proof of income. |
| Non-QM Investor Loans | Flexible mortgages for real estate investors that don’t follow qualified mortgage rules. |
| DSCR Loans | Investor loans approved based on a property’s debt service coverage ratio rather than personal income. |
| Long- and Short-Term Rental Loans | Financing options for properties intended as vacation rentals or long‑term leases. |
| Bank Statement Loans | Mortgages where income is verified using bank statements instead of tax returns. |
| ITIN Loans | Mortgages allowing applicants to qualify with an Individual Taxpayer Identification Number instead of an SSN. |
| Asset-Based Loans | Loans approved based on the value of assets rather than traditional income documentation. |
| Interest-Only Loans | Mortgages where borrowers pay only interest for a set period before repaying principal. |
| Second Home Loans | Mortgages used to purchase an additional property beyond the primary residence. |
There are three main types of government-backed mortgage loans available in Washington State — FHA, VA, and USDA. Conventional loans round out the main group of purchase options. These are usually the first categories borrowers compare when buying a primary residence.
FHA loans are provided by a mortgage lender but are insured by the federal government. This government insurance makes them unique from conventional or “regular” home loans.
There are two primary advantages to this program:
VA loans are available to military service members and their families. If you’re a military member in Washington State, it’s hard to beat this type of loan. This program allows eligible borrowers to purchase a home with no money down, and sometimes without mortgage insurance. Read our related article about VA loan limits in Washington State.
Are available to residents of rural areas who meet certain income guidelines. They are also referred to as Rural Development (RD) loans. The USDA Home Loans program is primarily intended for borrowers with low to moderate incomes. To learn more about this type of mortgage, visit USDA.gov.
Conventional loans are not insured or guaranteed by the federal government. This distinguishes them from the three types of Washington State home loans above (FHA, VA, and USDA). Conventional financing is often a strong fit for borrowers with solid credit profiles, and this type of mortgage can have either a fixed or an adjustable rate of interest, as discussed below.
When selecting a type of home loan in Washington State, you’ll also be able to choose between a fixed and adjustable mortgage rate. This is a separate decision from whether you use a conventional, FHA, VA, or USDA loan.
The fixed-rate mortgage carries the same interest rate for the entire term or “life” of the loan. Predictability and stability are the primary advantages with this type of loan. Because the rate stays the same, the monthly payments will remain fixed as well.
Fixed-rate mortgage loans are available in different lengths, with 15-year fixed-rate mortgages and 30-year fixed-rate mortgages being the most common. The 30-year FRM is by far the most popular type of home loan in Washington State.
The adjustable-rate mortgage has an interest rate that can change over time after an initial fixed period. For an ARM, the index is a market interest rate that fluctuates periodically, and the lender adds a margin to help determine future rate changes. Current agency ARM products are commonly tied to the Secured Overnight Financing Rate (SOFR) rather than older index references.
Most ARM loans today are hybrids that begin with a fixed rate for an initial period, often 3, 5, or 7 years. During that introductory phase, the rate does not change. Afterward, the rate can adjust at a predetermined interval, often once per year, subject to the terms of the loan.
The main advantage of an ARM is that the starting rate can be lower than a comparable fixed-rate mortgage. The tradeoff is payment uncertainty later on. If the index rises, the interest rate and monthly payment can increase when the loan adjusts. Borrowers considering an ARM should pay close attention to the initial fixed period, how often adjustments can occur, and the caps that limit how much the rate can change at each adjustment and over the life of the loan.
| Loan family | Typical borrower or use case | Occupancy type | Down payment flexibility | Mortgage insurance or guarantee-fee expectations | Documentation style |
| Conventional | Borrowers with solid credit profiles seeking a mainstream purchase loan | Commonly used for primary residences and other occupancy types depending on the program | Can include low-down-payment options | May require PMI with less than 20% down | Traditional income and asset documentation |
| FHA | Buyers needing a smaller down payment or more flexible qualification criteria | Primarily owner-occupied home purchases | Down payment can be as low as 3.5% | Government-insured loan with mortgage insurance costs | Standard documentation with more flexible qualification than many conventional loans |
| VA | Eligible military service members and families | Primarily owner-occupied home purchases | No down payment required for eligible borrowers | Sometimes without mortgage insurance | Standard documentation plus VA eligibility requirements |
| USDA | Eligible rural-area buyers meeting program income guidelines | Primary residence in an eligible rural area | No down payment required for eligible borrowers | Government-backed program with fees that differ from conventional PMI | Standard documentation with location and income eligibility rules |
| Jumbo | Buyers financing above conforming loan limits | Often used for higher-priced homes | Often less flexible than mainstream conforming options | Varies by loan structure and lender | Typically stricter documentation and qualification standards |
| Non-QM / alternative-documentation | Self-employed borrowers, ITIN borrowers, or others who do not fit standard documentation rules | Varies by program | Varies by program and borrower profile | Varies by program | Bank statements, 1099s, assets, ITIN, or other alternative documentation |
| Investor-focused loans | Real estate investors using rental income or property cash flow | Investment properties | Varies by property and program | Varies by program | Often emphasizes rental income, DSCR, or property performance |
If you are trying to narrow your options, start with the borrower scenario that sounds most like you:
Size is another important consideration when choosing a type of home loan in Washington State. All loan programs have limits associated with them. When you exceed these limits, you end up in “jumbo” mortgage territory, where you might encounter stricter eligibility requirements.
Here’s the difference between jumbo and conforming loans:
Conforming loans meet the guidelines set forth by Fannie Mae and Freddie Mac, the government-sponsored enterprises (GSEs) that buy and sell home loans. A conforming loan is one that meets the size restrictions used by the two GSEs.
The single-family conforming loan limit for most counties in Washington State for 2026 is $832,750. In the Seattle metro area, it is set at $1,063,750.
Jumbo loans exceed the conforming loan limits mentioned above. Jumbo mortgage products often require larger down payments and higher credit scores, due to the higher level of risk they bring.
The loan options below can be useful, but they are not usually the first stop for a typical homebuyer comparing FHA, VA, USDA, or conventional financing. These products are better viewed as specialty solutions for short-term transitions, alternative documentation, second homes, or investment-property use.
A bridge loan is a type of short-term financing that provides temporary funds while you transition between buying a new home and selling your current one. It is typically repaid once long‑term financing is secured or the existing property is sold, making it a useful tool for covering gaps in cash flow.
Sammamish Mortgage offers self-employed loan solutions that consider alternative income verification methods to help entrepreneurs and freelancers secure home financing. These are generally most relevant when standard conventional or government-loan documentation does not reflect a borrower’s income clearly. If you can qualify through traditional documentation, a mainstream conventional or government-backed loan may still be the simpler option.
A 1099-only loan is designed for independent contractors and gig workers who receive income through IRS Form 1099 rather than traditional W-2 wages. Instead of requiring tax returns or pay stubs, lenders use recent 1099 forms to verify income. This makes the program most relevant for borrowers whose income is easier to document through contractor earnings than through standard underwriting methods.
Non-QM investor loans are designed for real estate investors who may not qualify for traditional mortgages due to unconventional income documentation or credit profiles. These loans often rely on property cash flow—such as rental income—rather than personal income, making them an alternative to mainstream owner-occupied loan programs rather than a default homebuyer choice.
Debt-Service Coverage Ratio (DSCR) loans focus on the income-generating potential of a property rather than the borrower’s personal finances. They are primarily designed for real estate investors, not for most owner-occupied purchase scenarios. If you are buying a primary residence and can document income traditionally, a conventional or government-backed loan may be preferable.
Short-term rental loans and long-term rental loans are tailored for buyers interested in short-term vacation rentals or long-term income properties. These are occupancy- and use-specific products for investment strategy, rather than standard purchase loans for a primary residence.
Bank statement loans allow borrowers to qualify using 12–24 months of personal or business bank statements instead of tax returns. This option is especially useful for self-employed individuals with strong cash flow but limited traditional documentation. If tax returns and standard income calculations already support qualification, a mainstream conventional or government-backed loan may still be the more straightforward route.
ITIN loans are a type of non‑qualified mortgage (non‑QM) that let applicants use an Individual Taxpayer Identification Number in place of a Social Security Number. While these loans fall outside the Consumer Financial Protection Bureau’s standards for qualified mortgages, borrowers must still prove their financial ability to repay through income and credit documentation. They are best understood as a specialty qualification path rather than a mainstream default option.
Asset-based loans use a borrower’s liquid assets—such as savings, investments, or retirement accounts—as the basis for qualification. This program is most relevant for high-net-worth borrowers who prefer not to rely on income documentation. When a borrower can qualify through standard income underwriting, conventional or government-backed options may still be preferable.
An interest‑only loan allows borrowers to pay just the interest for a fixed period, typically between 5 and 10 years. After this stage, the loan converts to a traditional repayment plan, requiring payments that cover both principal and interest for the rest of the term.
During the interest‑only stage, monthly payments are much lower than standard loans, though no equity is accumulated in the property. The loan balance does not decrease unless additional payments are made.
When the interest‑only period ends, principal repayment begins, often causing a significant jump in monthly costs. The size of this increase depends on the interest rate and the remaining loan duration.
A second home loan is a mortgage taken out to purchase an additional property, separate from your primary residence, often used as a vacation home or investment. You can use conventional loans, jumbo loans, or the equity from your primary residence to finance a second home purchase. For borrowers buying a primary residence, standard conventional or government-backed programs are usually the more relevant starting point.
Sammamish Mortgage can help. We serve clients across Washington, Idaho, Colorado, Oregon, and California. Since 1992, we’ve been providing several mortgage programs and products with flexible qualification criteria to borrowers across the Pacific Northwest. Visit our website to get an instant rate quote or to use our online mortgage calculator. Or, reach out to us if you are ready to get pre-approved for a mortgage.
Start with eligibility and occupancy. VA and USDA loans depend on borrower and property eligibility, while FHA and conventional loans are more broadly available. Then compare down payment needs, qualification flexibility, and ongoing mortgage insurance or program-fee costs.
Conventional loans may require PMI with less than 20% down. FHA loans include mortgage insurance costs, USDA uses program fees that differ from conventional PMI, and VA loans may be available without mortgage insurance for eligible borrowers.
Yes. Many first-time buyers compare FHA with low-down-payment conventional financing. FHA can help when qualification is tighter, while conventional may appeal to borrowers with stronger credit profiles.
The biggest differences are how the property will be occupied and how the loan is underwritten. Primary-residence loans are the mainstream homebuyer category, second-home loans apply to an additional personal-use property, and investment-property loans are typically underwritten more conservatively and may rely more heavily on rental-income analysis.
A jumbo loan becomes relevant when the amount you need to borrow exceeds the conforming loan limit for the property area. If your loan amount stays within conforming limits, conforming financing is usually the first category to compare.
It depends on the program. Bank statement and 1099-only loans are often aimed at self-employed or contract-income homebuyers, while DSCR and many non-QM investor loans are designed primarily for investment properties.
No. Many self-employed borrowers still qualify for conventional or government-backed loans. Alternative-documentation options are usually most helpful when standard tax-return-based underwriting does not reflect income well.
A fixed-rate mortgage keeps the same rate for the life of the loan, while an ARM starts with a fixed period and then can adjust based on market conditions and the loan terms. Fixed rates offer payment stability, while ARMs may offer a lower initial rate with more future payment risk.
Most options fall into four groups: government-backed and conventional purchase loans, rate structures such as fixed-rate mortgages and ARMs, loan-size categories such as conforming and jumbo loans, and specialty or alternative-documentation programs for self-employed borrowers, second homes, or investors.
Neither is universally better. FHA may fit borrowers who need a smaller down payment or more flexible qualification criteria, while conventional may be a strong fit for borrowers with solid credit profiles and can include low-down-payment options as well.
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