Choosing a mortgage can feel like choosing from a menu in a language you do not speak. The good news is that most buyers end up with one of a handful of common loan types. Understanding how they differ will help you have a more productive conversation with your loan officer and choose the one that fits your goals.
Conventional loans are not backed by a government agency, and they are the most widely used type of mortgage. They generally work well for buyers with solid credit and manageable debt.
Learn more about conventional loans.
FHA loans are insured by the Federal Housing Administration and are designed to make homeownership more accessible, especially for buyers with smaller savings or credit that is still being built.
VA loans are a benefit for eligible veterans, active-duty service members, certain National Guard and Reserve members, and some surviving spouses.
See our VA home loan page for details.
Backed by the U.S. Department of Agriculture, these loans help buyers in eligible rural and some suburban areas.
An adjustable-rate mortgage, or ARM, starts with a fixed rate for an initial period, such as five, seven or ten years. After that, the rate adjusts periodically based on a market index, so your payment can go up or down. ARMs may appeal to buyers who expect to sell or refinance before the fixed period ends. Make sure you understand the caps that limit how much the rate can change and that you could handle a higher payment.
When the loan amount exceeds the conforming limit for your area, you will need a jumbo loan. These loans typically call for stronger credit, larger down payments and more cash reserves, since they cannot be sold to Fannie Mae or Freddie Mac.
Most of the loan types above can come with a fixed rate, and some also offer adjustable options. A fixed rate gives you the same principal and interest payment for the entire term, which many buyers value for budgeting. An adjustable rate may start lower but carries the possibility of higher payments later. Think about how long you plan to keep the loan and how much payment change you could comfortably absorb.
A 30-year term spreads payments out and keeps them lower, while a 15-year term means higher monthly payments but much less total interest and faster equity. Some lenders offer terms in between.
The right loan depends on your credit, savings, income, military service, property location and how long you plan to stay. A loan officer can compare options side by side using your real numbers. You can also start with our loan program comparison.
Have questions about which loan is right for you? Talk with FLO Mortgage and we will help you sort through your options.
A FLO Mortgage loan officer can walk through your options, run real numbers and help you choose a loan that fits.
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.
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