Fixed, ARM, FHA, VA or Jumbo: How to Choose the Right Loan

Picking a mortgage can feel a bit like ordering from a long menu in a language you only half know. The good news is that most buyers end up choosing between a handful of common options, and each one is designed for a particular kind of borrower. Once you understand the basics, the right fit usually becomes clear.

The Two Basic Rate Structures

Fixed-rate mortgages keep the same interest rate for the life of the loan, so your principal and interest payment never changes. Terms of 15 and 30 years are the most common. A shorter term typically means a higher monthly payment but less interest overall. Fixed loans are popular with buyers who value predictability and plan to stay put for a while.

Adjustable-rate mortgages (ARMs) start with a fixed rate for a set number of years, then adjust periodically based on the market. They can make sense if you expect to sell or refinance before the adjustment period begins, but you should understand how high the payment could go before you choose one.

Popular Loan Programs

• Conventional loans: Not backed by a government agency. Eligible buyers may put down as little as 3%, and private mortgage insurance can be removed once you reach 80% loan-to-value. Learn more on our conventional loan page.
• FHA loans: Backed by the Federal Housing Administration and popular with first-time buyers. With a credit score of 580 or higher, you may qualify with 3.5% down. There is an upfront mortgage insurance premium of 1.75% plus annual premiums.
• VA loans: For eligible veterans, service members and some surviving spouses. With full entitlement, there is no down payment requirement and no monthly mortgage insurance, though most borrowers pay a funding fee. See our VA loan page for details.
• Jumbo loans: For loan amounts above the conforming limit, which is $832,750 for a one-unit home in most areas and up to $1,249,125 in high-cost areas.

Questions That Point You to the Right Loan

1. How long do you plan to live in the home?
2. How much can you comfortably put down?
3. Do you have military service that may make you eligible for VA benefits?
4. How important is a steady, predictable payment to you?
5. Is the home price above the conforming limit in your area?

Prepare Before You Apply

Whatever loan you choose, a little preparation helps. Check your credit, gather recent pay stubs, tax returns and bank statements, and set a budget that leaves room for taxes, insurance and maintenance. Being organized can make the approval process faster and less stressful.

You can see all of our programs side by side on our loan comparison page. When you want a personal recommendation, a FLO Mortgage loan officer can walk through the options with you. Meet our team.

This article is for general education and is not a commitment to lend. All loans are subject to credit approval, underwriting guidelines and program availability. FLO Mortgage, Company NMLS #1835856. Equal Housing Opportunity.