Mortgage Types

When it comes to mortgages, one size (or style!) definitely doesn't fit all. Learn more about what mortgage types are available to you, and what you need to know to qualify.

Adjustable Rate Mortgages (ARM)

An adjustable rate mortgage, also known as an ARM mortgage or ARM loan, has an interest rate that changes periodically based on market conditions. Most ARM loans will have a limit to how much the interest rate can increase. This type of loan can be tricky for a first-time home buyer because it's difficult to predict what your rate will be when your loan adjusts, making it more difficult to budget for. 

Conventional Mortgages

A conventional mortgage is a traditional home loan that isn't a VA loan, FHA loan, or jumbo loan. This type of loan is a good option for anyone who doesn't qualify for a special type of loan. 

FHA Loans

A Federal Housing Administration (FHA) loan is a mortgage loan that’s insured or guaranteed by the federal government. Many people who are buying their first home choose this loan type because it requires a smaller down payment than a conventional mortgage. 

Fixed Rate Mortgages

Unlike an adjustable rate mortgage, a fixed rate mortgage has an interest rate that remains the same regardless of changes in market conditions. This is a good option for a first-time buyer because the terms of the loan never change, which makes it easy to understand. 

Home Equity Line of Credit (HELOC)

A home equity line of credit (HELOC), sometimes called a second mortgage, is a loan that is granted based on the equity that you've already built in your home. Many people use this loan to pay for things like education or home renovations. 

Jumbo Mortgages

This is a loan for borrowers that need more than the limits on a conventional loan allow. The exact dollar amount varies by location, but generally starts at a loan over $417,00. This type of loan became less popular after the housing bubble burst, but is still used in areas where the average home cost if very high. 

Reverse Mortgages

In a reverse mortgage allows a homeowner to borrow money based on the value of his home while he continues to live in it. This type of loan is reserved for older homeowners, usually 62 or older and, when used correctly, can be a great addition to a retirement strategy. 

VA Loans

This mortgage is a home loan made to eligible US veterans and their spouses and guaranteed by the US Department of Veterans Affairs. To qualify for a VA loan, you'll have to prove your military service, pay a VA loan funding fee, and meet a few other conditions. VA loans require no downpayment and typically comes with a lower interest rate than a traditional loan.