types of mortgage loans
Types of mortgage loans - designed to match your unique goals, lifestyle, and financial needs.
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Mortgage Loan Types: Finding the Right Path to Homeownership
Choosing the right mortgage is a crucial step, it’s just as important as finding the perfect home itself. A well-selected loan type can save you thousands over the life of the loan, ensuring your monthly payments fit comfortably within your budget and financial goals.
Whether you’re a first-time homebuyer, a veteran, or a seasoned investor, we have a diverse range of loan options tailored to meet your unique needs.
Find the Best Loan Type for You: Our Full Loan Catalog
Conventional Loan
Who it’s for: Borrowers with good credit looking for flexible down payment options.
- What it is: A conventional mortgage loan is not insured or guaranteed by a government agency (like the FHA or VA).
- Key Features: Offers down payments as low as 3%. Typically requires good credit. If your down payment is less than 20%, you will need to pay Private Mortgage Insurance (PMI), which can be cancelled once you reach 20% equity.
VA Loan
Who it’s for: Active service members, veterans, and eligible spouses.
- What it is: A VA mortgage guaranteed by the U.S. Department of Veterans Affairs.
- Key Features: One of the most powerful loan types available, featuring no down payment (100% financing) and no private mortgage insurance (PMI). VA loans offer highly competitive interest rates and flexible qualification guidelines.
FHA Loan
Who it’s for: First-time buyers or those with lower credit scores and flexible qualification needs.
- What it is: A government-insured loan backed by the Federal Housing Administration.
- Key Features: Designed to make homeownership more accessible, FHA loans allow for down payments as low as 3.5% and have more lenient credit requirements than conventional loans. They require a Mortgage Insurance Premium (MIP).
USDA Loan
Who it’s for: Borrowers who wish to purchase a home in eligible rural or suburban areas.
- What it is: A government-guaranteed loan backed by the U.S. Department of Agriculture.
- Key Features: Offers 100% financing (no down payment) for low-to-moderate-income individuals purchasing a primary residence in an area deemed rural by the USDA.
Jumbo Loan
Who it’s for: Borrowers purchasing high-value properties that exceed conforming loan limits.
- What it is: A mortgage loan whose amount is higher than the maximum limit set by the Federal Housing Finance Agency (FHFA).
- Key Features: Designed for luxury or expensive homes. Due to the higher loan amount, Jumbo loans often require larger down payments and higher credit scores than conventional loans.
30-Year Fixed-Rate Mortgage
Who it’s for: Borrowers who want fixed monthly payments and maximum affordability.
- What it is: A loan repaid over 30 years with an interest rate that never changes.
- Key Features: Offers the lowest monthly payment of all fixed-rate options, providing long-term security and making it easier to budget regardless of market changes. It is the most popular mortgage product.
15-Year Fixed-Rate Mortgage
Who it’s for: Borrowers who want to save on interest and build equity quickly.
- What it is: A loan repaid over 15 years with an interest rate that never changes.
- Key Features: While monthly payments are higher than a 30-year loan, the total interest paid over the life of the loan is significantly lower. It allows you to pay off your mortgage faster and achieve financial freedom sooner.
ARM Loan (Adjustable-Rate Mortgage)
Who it’s for: Borrowers planning to sell or refinance before the fixed-rate period ends, or who expect their income to rise.
- What it is: A loan that starts with a fixed interest rate for an initial period (e.g., 5, 7, or 10 years), after which the rate adjusts periodically based on market indexes.
- Key Features: The initial fixed rate is often lower than a 30-year fixed rate, offering lower payments early on. However, payments can increase or decrease after the initial period.
Buydown Loan (Temporary Buydown)
Who it’s for: Buyers who need a lower mortgage payment during the first few years of homeownership.
- What it is: A loan where funds are paid upfront (often by the builder or seller) to “buy down” the interest rate for the initial one, two, or three years of the loan.
Key Features: A common example is the 2/1 Buydown, where the interest rate is 2% lower in the first year and 1% lower in the second year, before settling at the permanent rate in the third year.
FHA 203(k) Loan
Who it’s for: Buyers looking for a fixer-upper and who want cash for renovations wrapped into their mortgage.
- What it is: A single loan insured by the FHA that combines the cost of buying or refinancing a home with the funds needed for repairs, remodeling, or improvements.
- Key Features: Allows you to purchase a property that may not qualify for other financing and finance the necessary home improvements into one convenient payment.
Non-QM Loans (Non-Qualified Mortgage)
Who it’s for: Borrowers with unique income streams, complex finances, or non-traditional credit histories.
- What it is: Mortgage products that do not meet the Qualified Mortgage (QM) standards set by the Consumer Financial Protection Bureau.
- Key Features: Offers more flexible underwriting. Popular for self-employed individuals who may use Bank Statements instead of traditional tax returns to verify income.
Interest-Only Mortgage
Who it’s for: Sophisticated borrowers seeking to maximize cash flow or prioritize investments.
- What it is: A loan where you are only required to pay the interest on the principal balance for a set period (the “interest-only” term).
- Key Features: Provides significantly lower monthly payments during the interest-only period. After the term ends, payments increase to cover both principal and interest repayment.
Self-Employed Loan (Bank Statement Program)
Who it’s for: Entrepreneurs, business owners, and freelancers with unique income documentation challenges.
- Key Features: A flexible solution that allows self-employed individuals to qualify for a mortgage by using their business or personal bank statements (typically 12 or 24 months) to calculate their income, rather than relying on tax returns.
Cash-Out Refinance
Who it’s for: Existing homeowners who want to access their home’s equity in a lump sum.
- What it is: Replacing your current mortgage with a new, larger loan and taking the difference in cash at closing.
- Key Features: The cash proceeds can be used for any purpose, such as debt consolidation, home improvements, or financing a college education.
HELOC (Home Equity Line of Credit)
Who it’s for: Homeowners who need a flexible, revolving source of funds for ongoing expenses or unpredictable costs.
- What it is: A revolving line of credit secured by your home’s equity. It functions much like a credit card, but with much lower interest rates.
- Key Features: You are only charged interest on the amount you actually borrow, and you can draw funds, repay them, and draw them again during the draw period. It is ideal for multi-stage renovation projects.
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