Best Home Purchase Loans to Buy Your Dream Home Today

Home Purchase Loans: Traditional and Non-QM Options for 2026

Home purchase loans are the financing options that make it possible to buy a home—whether you’re a first-time buyer, upgrading to a bigger place, or purchasing after a credit event. The right loan affects everything: how much house you can afford, how much cash you need upfront, your monthly payment, and even how competitive your offer looks to sellers.

In 2026, homebuyers have more choices than most people realize. Traditional programs like FHA, VA, USDA, and Conventional home purchase loans work great for borrowers with steady income and standard documentation. But if you’re self-employed, have uneven income, higher debt-to-income ratios, or you were turned down by a bank, non-QM home purchase loans can offer flexible alternatives—like bank statement, asset-based, DSCR, and other non-traditional qualification options.

This guide breaks down the most common home purchase loans, shows who each option is best for, and explains how to get pre-approved faster—especially if you’ve been denied elsewhere. By the end, you’ll know which loan path fits your situation and what steps to take next to move toward homeownership.

Quick Answer: What Are the Best Home Purchase Loans in 2026?

The best home purchase loans depend on your credit, income type, down payment, and how soon you need to close:

• FHA home purchase loans are often the easiest to qualify for (great for first-time buyers and lower credit scores).
• VA home purchase loans offer $0 down payment for eligible veterans and are very flexible with approval requirements.
• USDA home purchase loans are $0 down options for eligible rural/suburban areas with income limits.
• Conventional home purchase loans are best if you have stronger credit and want lower mortgage insurance.
• Non-QM home purchase loans are ideal if you’re self-employed, have irregular income, high DTI, or recent credit events—using options like bank statements, asset-based, DSCR, or alternative documentation.

If you’ve been denied by a bank or lender with overlays, a mortgage broker can compare multiple lenders to match you with the right home purchase loan program faster.

Traditional Home Purchase Loan Programs Explained

Traditional home purchase loans are often backed by Fannie Mae or Freddie Mac and have strict guidelines. The most common types include:

• Conventional loans (minimum credit score: 620)
• FHA loans (credit scores as low as 500 with 10% down or 580 with 3.5% down)
• VA loans (no down payment for eligible veterans)
• USDA loans (zero-down loans for rural properties)

These loans are best for borrowers with steady incomes, documented employment, and decent credit scores. Most require standard paperwork, such as tax returns, W-2s, and bank statements.

Why a Home Purchase Loan Can Make or Break Your Dream

Buying your first home— or any home— is a huge step. The kind of loan you pick shapes how much you can spend, what your monthly bills look like, and how safe your finances feel for years.

Discover the best home purchase loans for first-time buyers, borrowers with bad credit, high debt-to-income ratios, or past bankruptcy and foreclosure. Find flexible loan programs to buy your dream home today.

Whether you’re a first-time buyer, working with credit challenges, juggling high debt, or have a past bankruptcy or foreclosure, there’s a mortgage made for you. Knowing the right option puts the key to your dream home right in your hand.

Best Home Purchase Loans for First-Time Homebuyers

FHA Loans for Easy Qualification

If you buy your first home, FHA loans can make things easier. The Federal Housing Administration backs them, so you get some nice benefits:

• Low down payment (only 3.5% if your score is 580 or higher).
• Credit flexibility (some lenders take scores down to 500).
• Higher debt-to-income ratios than those of typical conventional loans.

Conventional Loans with 3% Down

A few conventional programs, such as Fannie Mae HomeReady® and Freddie Mac Home Possible®, let you buy with just 3% down. These loans are good for first-time buyers with solid credit but little cash to spare.

Best Home Purchase Loans for Borrowers with Bad Credit

FHA Loans for Credit Scores as Low as 500

FHA loans are still your best bet if your credit isn’t great. If your score is 500 to 579, you’ll need 10% down. If you hit 580 or higher, it’s just 3.5% down.

Non-QM and Alternative Mortgage Programs

When your financial picture doesn’t match standard mortgage rules, Non-QM loans give you the space to breathe and move forward:

• Bank statement loans take the total deposits on self-employed tax statements, showing income in a way other forms can’t capture.
• Asset-based loans let buyers lean on large savings, pension, or investment accounts instead of spotlighting past income.
• No-ratio loans let you sidestep detailed income reviews and lean on strong credit and home equity alone.

Best Home Purchase Loans for High Debt-to-Income Ratios

FHA Loans with Higher DTI Flexibility

FHA programs lead the pack for home buyers who are shouldering heavy ongoing bills. Lenders often approve debt-to-income (DTI) ratios as high as 56.9% if you also bring a strong credit score, steady part-time income, or large reserves.

VA Loans with No DTI Caps

Service members and veterans enjoy the freedom of VA loans. Guidelines let lenders assess the overall picture instead of firing torpedoes of a hard DTI limit, focusing on your budget beyond the mortgage with a residual income test.

Non-QM Loan Options for Complex Income

When DTI spikes because of student loans, income-based repayments, or sporadic other debts, non-QM loan programs can take a nontraditional approach, tailoring the ratios and reviewing the entire asset, debt, and cash flow profile.

Best Home Purchase Loans After Bankruptcy or Foreclosure

FHA Loan Waiting Periods

• Chapter 7 bankruptcy: Wait just 2 years after the discharge.
• Chapter 13 bankruptcy: If you’ve made 12 months of timely payments, you can apply with trustee approval.
• Foreclosure: 3 years after the final sale.

VA Loans After Bankruptcy or Foreclosure

VA Loans Offer More Leeway:

• Chapter 7 bankruptcy: Wait 2 years.
• Chapter 13 bankruptcy: 12 months into the repayment plan works.
• Foreclosure: Only 2 years from the date of sale.

Conventional Loan Waiting Periods

• Chapter 7 bankruptcy: 4 years wait.
• Foreclosure: 7 years from the sale.
• Deed-in-lieu or short sale: 4 years in those cases.

Non-QM Loans with No Waiting Periods

If you need to move faster, Non-QM mortgages can be approved immediately after bankruptcy or foreclosure, as long as you show you can repay the loan.

Tips for Getting the Best Home Loan Approval

• Boost your credit score by paying off credit cards and staying on schedule with bills.
• Set aside a down payment so your loan choices grow and your monthly costs drop.
• Contact a mortgage broker who can show you options like FHA, VA, Conventional, USDA, Jumbo, and Non-QM.
• Be open about your credit history so your lender can match you with the best loan.

Common Questions about Home Loans

Which Mortgage is Best For First-Time Buyers?

• FHA and Conventional loans with just 3% down are favorites for folks buying their first home.

Can I Get a Home Loan With Poor Credit?

• Absolutely!
• FHA and Non-QM loans target borrowers with lower credit scores.

I Have a High Debt-to-Income Ratio. What Can I Do?

• FHA, VA, and Non-QM loans are more forgiving about DTI than conventional options.

How Long After Bankruptcy Can I Buy Again?

• FHA and VA let you qualify for a new mortgage as soon as 1–2 years post-bankruptcy.

Can I Get a Home Loan After a Foreclosure?  

• Absolutely!
• Just know that the wait time varies by loan type.
• It can be as short as 2 years or as long as 7 years, but some non—QM loans can close even faster.

Will I Need a Big Down Payment to Buy a House?

• Not at all.
• FHA loans ask for only 3.5% down.
• Even better for some, VA loans come with zero down.

I’m Self-Employed and My Income Bounces Around. What Then?

• Bank statement loans in the Non-QM space are made just for self-employed folks.
• These let you show income without the usual paystubs or W-2s.

I Have Student Loans. Can I Still Qualify?

• Yes!
• FHA and many non-QM loans give you a higher DTI when you carry student debt, so your chances are still strong.

How Can I Close the Deal the Fastest?

• Partner with a mortgage broker who knows the program options well.
• They can quickly narrow down the best loan.

Which Loan Program is the Most Flexible?

• Most borrowers find FHA loans pretty forgiving, while eligible veterans get even better terms with VA loans.

Traditional Home Purchase Loans: What Lenders Look For

Traditional home purchase loans follow agency rules (Fannie Mae, Freddie Mac) or government guidelines (FHA, VA, USDA). These loans usually require:

• Complete income documentation: W-2s, paystubs, tax returns (if needed), and standard verification
• Standard underwriting rules: clear guidelines for income, debts, and credit
• More predictable pricing: often lower rates and lower fees than alternative loans
• Clear DTI framework: most borrowers fit within typical ratio ranges (some programs allow higher with strong factors)

Best for: borrowers with steady, documentable income and more standard credit profiles.

Income Verification: Traditional vs. Non-QM

Traditional Loans

• W-2s, paystubs, tax returns (as required)
• Standard verification of employment and income consistency

Non-QM Loans

• Bank statements (personal or business)
• Asset-based qualification (using liquid assets/investments)
• P&L/CPA letters (program-specific)
• DSCR/rental cash flow (investment-focused programs)

Credit Requirements: Traditional vs. Non-QM

Traditional Loans

• Typically 500–620+, depending on loan type and down payment
• Stricter rules after major credit events (bankruptcy/foreclosure waiting periods)

Non-QM Loans

• Can be more flexible depending on the program
• May allow approvals sooner after credit events (program/investor dependent)

Debt-to-Income Ratios: Traditional vs. Non-QM

Traditional Loans

• Often capped in a standard range (varies by program and AUS/underwriting results)
• Higher DTIs may be possible with compensating factors

Non-QM Loans

• Many programs offer more flexibility when income is complex
• May focus more on reserves, cash flow, or overall risk profile than on a hard DTI limit

Documentation Needed: Traditional vs. Non-QM

Traditional Loans

• Full documentation package
• More conditions and verification steps are common

Non-QM Loans

• Alternative documentation accepted
• Documentation depends on the program (bank statements, assets, DSCR, etc.)

How to Qualify for a Non-QM Home Loan in 2026

You might not qualify for a traditional loan if you’re self-employed, own multiple businesses, or have irregular income. Here’s how to qualify for a non-QM home loan:

• Show 12–24 months of bank statements (personal or business)
• Use rental income (DSCR loans)
• Show assets instead of income (asset-based)
• Work with a lender like Gustan Cho Associates, who specializes in alternative documentation mortgage options

Non-QM loan requirements for home buyers are usually more flexible, and you can still buy a home even if your income doesn’t show up clearly on paper.

No-Doc and Bank Statement Loans for Homebuyers

If you find it difficult to qualify for a home loan using traditional methods, consider no-doc non-QM home purchase loans or bank statement loans.

Discover the best home purchase loans for first-time buyers, borrowers with bad credit, high debt-to-income ratios, or past bankruptcy and foreclosure. Find flexible loan programs to buy your dream home today.

These alternatives can be particularly beneficial for entrepreneurs, realtors, freelancers, and investors who may not have the conventional income documentation needed for standard loans. These non-QM loans for self-employed borrowers rely on your bank deposits or assets rather than W-2s or tax returns. Gustan Cho Associates can help you use these documents to get approved.

At Gustan Cho Associates, we specialize in troubleshooting tough mortgage cases. Whether you’re a rookie buyer, dealing with low credit or a high DTI, or just came through a bankruptcy, we provide options in all 48 states without overlays. Call 800-900-8569 or tap “Apply Now” to get your pre-approval in minutes!

DSCR Loans for Owner-Occupied Home Purchase

Debt Service Coverage Ratio (DSCR) Loans are popular for investment properties, but some lenders now offer DSCR loans for owner-occupied home purchases if part of the home will generate rental income (like a duplex or triplex). These loans are underwritten based on the property’s income, not your job income.

Jumbo Non-QM Home Loans for High-Value Properties

Are you looking to buy a high-priced home that exceeds conforming limits? Jumbo non-QM home loans are designed for buyers needing larger loan amounts and more relaxed credit or income verification requirements. At Gustan Cho Associates, we work with wholesale investors who offer jumbo loan programs with flexible underwriting for non-traditional borrowers.

Non-QM Construction to Permanent Home Loan

Want to build your dream home? A non-QM construction to permanent home loan can help. These one-time close loans allow you to finance construction and your final mortgage with a single approval, even if you don’t meet traditional loan rules.

Perfect for borrowers with:

• No tax returns
• High asset reserves
• Unique income or credit profiles

Conventional Mortgage vs Non-QM Loan: Pros and Cons

Traditional Loans Pros and Cons

Traditional loans offer several advantages, including lower interest rates and the backing of Fannie Mae, Freddie Mac, or government agencies, which can provide borrowers with a sense of security. Additionally, they tend to be easier to refinance compared to other loan types.

However, these loans also have drawbacks; they are governed by strict guidelines and require full documentation, making the application process more cumbersome for some applicants.

Non-QM Loan Pros and Cons

Non-QM loans have several advantages, including flexible requirements that make it easier for borrowers to access financing. They allow for alternative income documentation, accommodating those who may not have traditional proof of income. Additionally, these loans provide opportunities for individuals with recent credit events to qualify.

At Gustan Cho Associates, we specialize in helping borrowers who were denied elsewhere. Whether you’re a first-time buyer, have bad credit, a high DTI, or a recent bankruptcy, we offer mortgage solutions in 48 states with no overlays. Call us at 800-900-8569 or click “Apply Now” to get pre-approved today!

However, there are downsides to consider, such as typically higher rates and fees associated with these loans, and the fact that not all lenders offer them, which can limit options for potential borrowers. If you don’t fit traditional guidelines, non-QM may be your best option.

Where to Get a Non-QM Mortgage Near Me

Not all lenders offer non-QM loans, and many banks will turn you away if you don’t meet traditional guidelines. At Gustan Cho Associates, we say yes when other lenders say no. Gustan Cho Associates is licensed in 48 states (MA and NY pending) including Washington, DC, Puerto Rico, and the U.S. Virgin Islands.

We have earned a national reputation for assisting buyers in securing approvals, regardless of their financial backgrounds.

Whether individuals have low or no credit scores, high debt-to-income ratios, recent bankruptcies or foreclosures, or derive income from self-employment, we are dedicated to helping them navigate homeownership. If you’re wondering where to get a non-QM mortgage near me, we’ve covered you in all 50 states.

Down Payment Requirements: Traditional vs Non-QM

The down payment requirements for traditional vs non-QM differ based on your loan type and profile.

• Traditional loans: 3%–20% down
• FHA loans: 3.5% with 580+ score
• VA/USDA loans: 0% down
• Non-QM loans: Usually 10%–20%, but some allow 5% with compensating factors

Your credit score, reserves, and property type affect how much you’ll need.

Get Pre-Approved for a Home Purchase Loan Today

Ready to buy your dream home? Whether using traditional home purchase loan programs or looking into non-QM home loans, we can help you get pre-approved fast. With Gustan Cho Associates, you’ll work with experienced mortgage experts who guide you every step of the way.

Borrowers who need a five-star national mortgage company licensed in 50 states with no overlays and who are experts on home purchase loans, please contact us at 800-900-8569, text us for a faster response, or email us at alex@gustancho.com. The team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays.

Loan Programs and Requirements Recap

Key Eligibility Requirements for Home Purchase Loans:

• Credit score requirements for non-QM loans may be flexible, but traditional loans often require 500–620+
• Steady employment or income documentation is required
• Debt-to-income ratio up to 50% or more in some cases
• Down payment from 0% to 20% based on loan type

Final Thoughts

Home purchase loans are options for you regardless of your income type or credit score. Traditional loans are great for those with steady jobs and clean credit. Non-QM loans are perfect for self-employed buyers, investors, or anyone with unique income situations.

If you’ve been turned down elsewhere, don’t give up. Contact Gustan Cho Associates today to help you turn your dream of owning a home into a reality.

FAQs: Home Purchase Loans | Traditional and Non-QM Loans

What are Home Purchase Loans?

Home purchase loans are mortgages used to buy a primary home, second home, or investment property. They can be traditional (Conventional, FHA, VA, USDA) or Non-QM options when standard documentation doesn’t fit your income situation.

What’s the Difference Between Mortgage Prequalification and Preapproval?

Prequalification is an early estimate of how much you may be able to borrow based on the information you provide. Preapproval is typically a stronger step that involves a deeper review and helps when making offers.

What Credit Score do I Need for Home Purchase Loans?

Minimum scores vary by program and lender, but typical ranges are: Conventional (often 620+) and FHA (usually 500–580+, depending on down payment). Lender overlays can be stricter.

How Much Down Payment do I Need to Buy a House?

The down payment you need really depends on the type of loan. Some options let you put down a low amount, and if you’re eligible for a VA loan, you might even get away with putting nothing down at all. If you can put down 20%, you can skip mortgage insurance on many conventional loans, which is a nice perk.

What are the Best Home Purchase Loans for First-Time Homebuyers?

Many first-time buyers choose FHA (more flexible credit/down payment requirements) or low-down-payment conventional programs—your best option depends on your credit, income stability, and cash to close.

What is a Non-QM Loan, and Who is it For?

A Non-QM loan is a mortgage that doesn’t conform to specific CFPB “qualified mortgage” standards. It’s often used by self-employed borrowers, gig workers, or buyers with non-traditional income who struggle to qualify for standard loans.

How do Bank Statement Home Purchase Loans Work?

With non-QM home purchase loans that use bank statements, lenders can look at your deposits for the past 12 to 24 months to figure out your income instead of needing W-2s or tax returns. Just keep in mind that different lenders and programs have their own rules!

Can I Get Approved with a High Debt-to-Income Ratio?

Possibly. Some traditional programs can allow higher DTIs with strong compensating factors, and Non-QM programs may offer more flexibility when income is complex—approval depends on the full file.

What Will Disqualify Me From Getting an FHA Loan?

Common deal-stoppers include credit issues, too much monthly debt, or insufficient funds for down payment/closing costs—but exact requirements vary by lender.

Are Non-QM home purchase loans risky? What should I watch for?

Non-QM loans can be a good option, but they usually require bigger down payments and come with higher interest rates. It’s important for borrowers to carefully review the terms and fees before making a decision.

You can make an informed decision by understanding the different types of home purchase loans, eligibility criteria, and comparing lenders. Whether you’re a first-time homebuyer or looking to invest in real estate, GCA Mortgage Group is here to guide you through the process and find the best loan for your needs.

If you have any questions about home purchase loans, please contact us at 800-900-8569, or text us for a faster response. You can also mail us at alex@gustancho.com. The team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays.

This blog about “Best Home Purchase Loans to Buy Your Dream Home Today” was updated on January 21st, 2026.

---

Home Purchase Loans Listed By Each Individual State:

Alabama | Arkansas | Alaska | Arizona | California | Colorado | Connecticut | Delaware | Florida | Georgia | Hawaii | Idaho | Illinois | Indiana | Iowa | Kansas | Kentucky | Louisiana | Maine | Maryland | Michigan | Minnesota | Mississippi | Missouri | Montana | Nebraska | New Hampshire | New Jersey | Nevada | New Mexico | North Carolina | North Dakota | Ohio | Oklahoma | Pennsylvania | Rhode Island | South Carolina | South Dakota | Tennessee | Texas | Washington | Utah | Oregon| Vermont | Virginia | Washington DC | Washington | West Virginia | Wisconsin | Wyoming | Puerto Rico | Massachusetts | New York