What type of mortgage is a VA-guaranteed loan considered to be?

A VA-guaranteed loan is considered an unconventional mortgage primarily because it is backed by the U.S. Department of Veterans Affairs and is designed specifically to assist eligible veterans, active-duty service members, and certain members of the National Guard and Reserves in obtaining financing.

Unconventional mortgages, such as VA and FHA loans, differ from conventional mortgages that typically adhere to stricter credit and down payment requirements. The VA loan program offers unique benefits, such as no down payment requirement, competitive interest rates, and no private mortgage insurance (PMI) requirement, making it accessible for those who qualify. This government backing helps guarantee a lending option that is distinct from conventional loans, which do not have such guarantees and are largely dependent on the borrower's creditworthiness and down payment capability.

While the other options—conventional, private, and subprime mortgages—refer to different categories of loans, the features and support features associated with VA loans firmly place them in the unconventional category.