Which types of mortgage loans are available?

Family reviewing mortgage options and types | Owning

Are you ready to move on from renting? If you think you’re ready to start owning a home, you’ll need to know more about the different types of mortgages available. There are a few options to consider, and we’ll walk your through the most common choices. Let’s take a look at the differences.

Are you ready to apply for a mortgage already? We can help! Get pre-approved today and start your journey into your new home.

What are the different types of mortgage loans?

Maybe you’ve even seen those mortgage names floating around during your home listing browsing sessions. Those monikers—FHA, ARM, USDA, etc.—are not just alphabet soup. They have different uses and meanings. Knowing more about the different mortgage options may help with choosing the right loan for your needs and getting you that house you’ve been dreaming about.

Conventional mortgages

A conventional mortgage is made by private lenders like a bank or a credit union directly. Conventional loans can be fixed or ARMs, they can be conforming, super-conforming or jumbo. However, they can also be sold to institutional investors or banks who have their own guidelines.

Key characteristics of conventional mortgages:

  • Loan terms: Typically are 30 years long but can be shortened
  • Interest rates: Your interest rates depend on multiple factors including credit health and remains the same throughout the life of the loan

Government backed mortgages (FHA, VA, USDA)

Government backed mortgages are insured by the federal government. These types of mortgages often make it easier for first-time home buyers to get a loan. Take a look at the detailed table below to better understand the differences between government-backed mortgages, and contact us to get additional information.

Government-backed mortgage typeCharacteristics
Federal Housing Administration (FHA)Fixed rate loan.
Minimum FICO scores apply. 3.5% down payment options availalable.
Assistance with closing costs available. Loan limits change annually.
Mortgage insurance is required.
Department of Veterans AffairsHome loans for those with military service and their spouse Minimum FICO score applies Must be either an active-duty service member with 90 days of service, have served 181 days during peacetime or have 6 years of service in the national guard. Additional requirements may apply.
United States Department of Agriculture (USDA)Higher credit and debt-to-income criterias than FHA loans, low interest rates, based on location of property and must be primary residence

Adjustable-rate mortgage

Adjustable-rate mortgages (ARM)  are perfect if you need a low fixed interest rate for the first few years of  homeownership,followed by adjustable rates for the remaining life of the loan. There are different variations of an ARM home loan, depending on the length of time of each period of the loan (the fixed period and the adjustable period), these loans are typically 30 year mortgages.

5-year5/6, 5/15 years with a fixed rate followed by 25 years of adjustable rates.
Rates can adjust every 6 months or every year after the initial period.
7-year7/6, 7/17 years with a fixed rate followed by 23 years in the adjustment period.
Rates can adjust every 6 months or every year after the initial period.
10-year10/6,10/110 years of a fixed rate followed by 20 years of adjustable rates.
Rates can adjust every 6 months or every year after the initial period.

How can I get started on my mortgage?

Whether you still have questions or are ready to apply, it’s a good idea to connect with a lender. Our mortgage experts can help you find a mortgage that makes sense for your budget and lifestyle. You can start today with a quick mortgage pre-approval. We got you on this.

Owning, Inc. is a private corporation organized under the laws of the State of Delaware. It has no affiliation with the US Department of Housing and Urban Development, the US Department of Veterans Affairs, the US Department of Agriculture, or any other government agency.

Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Restrictions may apply. 

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