While there are hundreds of loan programs to choose from, they all fit within these financing types.
- Adjustable-rate (ARM)
An adjustable-rate mortgage is a loan with an interest rate that can change periodically. An ARM starts with an introductory fixed interest rate for 7 or 10 years, then adjusts after the introductory fixed interest rate period ends. Your monthly payments will go up or down when interest rates fluctuate.
A fixed-rate mortgage is a loan where the interest rate remains the same for the entire term, resulting in a fixed payment amount that will not change. Interest rates are locked up-front, allowing borrowers to predict their future payments accurately. Find out if a fixed-rate versus an ARM mortgage is right for you.
When looking for an affordable lending program, you may choose a loan backed by the government, such as an FHA, USDA or VA loan. Designed for low-to-moderate income borrowers with less-than-perfect credit, FHA loans offer low down payment options, while USDA and VA loans offer 100% financing to eligible borrowers.
Homebuyers with good credit and a qualifying debt-to-income ratio may also select a conventional loan that “conforms” or meets the Federal Housing Finance Agency (FHFA) requirements and the funding criteria of Freddie Mac and Fannie Mae.
Jumbo loans are non-government loans typically used by borrowers looking for larger loan amounts. They’re great options if you’re looking to buy a more expensive home but have a higher credit score and a strong financial situation.