MORTGAGE LOAN TYPES

With various mortgage types available, it’s essential to understand the differences and benefits of each to determine which option best suits your needs. Whether you’re a first-time homebuyer, a military veteran, or looking to invest in a high-value property, there’s a mortgage loan tailored to your unique circumstances. Below is a guide to the most common mortgage loan types to help you make an informed decision.

CONVENTIONAL LOAN

Not backed by the government and typically requires a higher credit score.
Can be conforming (meets Fannie Mae and Freddie Mac guidelines) or non-conforming (jumbo loans).

FHA LOAN (Federal Housing Administration Loan)

Government-backed, popular for first-time homebuyers.
Allows lower down payments and credit scores.

VA LOAN (Veterans Affairs Loan)

Available to military veterans and active service members.
No down payment or mortgage insurance required.

USDA LOAN (U.S. Department of Agriculture Loan)

For rural homebuyers.
No down payment is required, and offers low-interest rates for eligible properties and buyers.

JUMBO LOAN

A non-conforming loan for expensive homes that exceed conforming loan limits.
Typically requires a higher down payment and credit score.

FIXED-RATE MORTGAGE

Interest rate remains the same throughout the loan term.
Common terms are 15, 20, or 30 years.

ADJUSTABLE-RATE MORTGAGE (ARM)

Interest rate can change periodically based on market conditions.
Usually starts with a fixed rate for a set period (e.g., 5/1 ARM).

INTEREST-ONLY MORTGAGE

Initially, you only pay interest for a specific period, with principal payments deferred.

BALLOON MORTGAGE

Lower payments initially but requires a large lump sum payment at the end of the term.

REVERSE MORTGAGE

Available to homeowners aged 62 and older.
Allows homeowners to borrow against their home’s equity without monthly payments.

By understanding the different types of loans available, from conventional to government-backed options, you can select the loan that aligns with your financial situation and long-term goals.

Want to see which loan types you may qualify for? Visit our Financing Page and get in touch with an experienced local Lender today!