Mortgage Types

Melanie 

Ortiz Reyes

Content Specialist

If you’re looking to buy a home, you’re probably wondering what type of mortgage would benefit you and your family the most. It’s important to research these loans at the beginning of your home-buying journey. A good real estate agent will be knowledgeable in these and provide you with all the information necessary to make a decision.  

Here are some of the most common mortgages for you to consider when buying your home:

VA Loan - A VA loan is a mortgage available to veterans, active-duty service members, and their spouses. The Department of Veterans Affairs guarantees these loans and offers no down payment, lower interest rates, and more lenient credit requirements.

FHA Loan - An FHA loan is a mortgage insured by the Federal Housing Administration. These loans do require a lower down payment than a traditional mortgage and are available to borrowers with lower credit scores. However, they may also come with higher fees and interest rates.

USDA Loan - A USDA loan is a mortgage that is available to borrowers in rural and suburban areas. The United States Department of Agriculture guarantees these loans and offers no down payment and lower interest rates, but they are only available to those who meet specific income requirements.

Jumbo Loan - A jumbo loan is a mortgage that exceeds the maximum loan limit set by Fannie Mae and Freddie Mac. These loans are typically used for high-end properties and require a higher down payment and stricter credit requirements.

Adjustable Rate Mortgage - An adjustable-rate mortgage has an interest rate that can change over time based on market conditions. This can result in lower initial payments, but the rate can increase over time, potentially leading to higher payments in the future.

Fixed Rate Mortgage - A fixed-rate mortgage is a loan with a fixed interest rate and a set repayment term. The most common term for a fixed-rate mortgage is 30 years, but shorter terms, such as 15 or 20 years, are also available. This type of mortgage provides predictable monthly payments and can be a good alternative for those who plan to stay in their home for a long time.

Now that you’ve read up on different mortgages, you can begin planning your finances effectively. By knowing the estimated monthly payments, down payment requirements, and other costs associated with a mortgage, you can assess your budget, evaluate your affordability, and determine how much house you can comfortably afford. This helps you avoid overextending yourself financially and ensures you select a mortgage that fits your long-term financial goals.