Here are five major mortgage guides to help you find the right mortgage.
Types of mortgages
There are five main types of mortgages, each with its own benefits and features.
- Traditional loans: Perfect for borrowers with a good credit score
- Jumbo Loan: Perfect for good credit borrowers looking to buy a more expensive home
- Government-supported loans: Ideal for borrowers with low credit scores and minimal cash for down payments
- Fixed-rate mortgage: Perfect for borrowers planning to stay at home for a long time
- Adjustable mortgages: Perfect for borrowers planning to move or refinance within the first few years of the loan term
1. Traditional loans
Traditional loans, the most popular type of mortgage, come in two flavors: conforming and non-conforming.
- Applicable loan: Conforming loans “conform” to a set of Federal Housing Financial Institutions (FHFA) standards, including guidelines for credit, debt and loan size. If traditional loans meet these criteria, they are eligible to purchase by Fannie Mae and Freddie Mac, two government-sponsored companies (GSEs) that make up the majority of the mortgage market.
- Non-compliant loan: These loans do not meet one or more of the FHFA standards. One of the most common types of non-conforming loans is a jumbo loan, which is a mortgage that exceeds the limits of a conforming loan. Non-conforming loans cannot be purchased through GSES, making them a risky prospect for lenders.
Who is a traditional loan?
If you have a strong credit score and can afford to make a significant down payment, a traditional mortgage is the best option. They offer more flexibility than government-supported loans. For example, you can use a traditional loan to purchase another home or another non-primary residence.
2. Jumbo Loan
Jumbo mortgages are mortgages that exceed the FHFA conforming loan limit. In 2025, it means loans exceeding $806,500, or $1,209,750 in high-cost areas. These are bigger loans and cannot be purchased through GSE, allowing you to offer more risk than traditional loans and have more stringent eligibility criteria.
Who is the Jumbo Loan?
If you want to raise funds for your home at a purchase price that exceeds the current conforming loan limits, and if you can meet the lender’s requirements, a jumbo loan is the best route. It requires good credit, low income (DTI) ratios and substantial assets.
3. Government support loan
The US government is not a mortgage lender, but by supporting three major mortgages, it plays a role in ensuring more Americans have access to homeownership.
- FHA loan: Insured by the Federal Housing Administration (FHA), FHA loans can have a low credit score of 580 and a 3.5% down payment, or a 10% down score of 500. With an FHA loan, you will need to pay the mortgage insurance premium. These premiums help the FHA guarantee lenders to default borrowers. Additionally, the maximum amount you can borrow from an FHA loan is lower than the traditional conforming loan cap.
- VA loan: The VA loans guaranteed by the U.S. Veterans Affairs Office (VA) are targeted at active duty, veterans, National Guard and reserves who are eligible members of the U.S. military. VA loans typically do not require a down payment, no minimum credit score or mortgage insurance, but you will need to pay a funding fee of 1.25% to 3.3% of the loan amount at the time of closing.
- USDA loan: USDA loans guaranteed by the USDA (USDA) help moderate to low-income borrowers buy homes in rural USDA-qualified areas. These loans do not have a credit score or down payment requirement, but you will be charged a guaranteed fee.
Who is the government-supported loan?
If your credit or down payment savings prevent you from qualifying for a traditional loan, an FHA loan can be an attractive alternative. Similarly, if you buy a home in the rural area or qualify for a VA loan, these options may qualify more than traditional loans.
4. Fixed-rate mortgage
Fixed-rate mortgages maintain the same interest rate over the life of the loan. This means that some of your monthly mortgage payments covering principal and interest will always remain the same. Fixed-rate loans usually come from a 15- or 30-year perspective, but some lenders offer flexible durations.
Who is the fixed-rate mortgage?
If you’re staying home for a while and looking for predictable monthly payments – a fixed-rate mortgage is good despite the homeowner premiums and property tax hikes.
5. Adjustable Mortgage (ARM)
In contrast to fixed-rate loans, adjustable interest rate mortgages (arms) come with interest rates that change over time. Typically, you get a lower fixed adoption rate for a set period. After this period, the rate will rise or decrease at a given interval for the remainder of the loan period. For example, the 5/6 arm is a fixed interest rate for the first five years, and then every six months, the rate before repayment increases or decreases, based on your economic situation. When the fees go up, monthly mortgage payments are made the same way, and vice versa.
Who is the adjustable mortgage?
If you are not planning to stay at home for more than a few years, your arm can help you save on your interest payments. However, it is important to be satisfied with a certain level of risk that could increase your payments if you stay home and not refinance. If your job is stable and there is a high chance of income growth, the savings you gain in the first few years of your arm may be worth it.
Other types of mortgages
In addition to these common types of mortgages, there are other types you will encounter when shopping for a loan.
Construction loan
If you want to build a house, you cannot use a regular mortgage to raise funds. Because there’s nothing to support the loan yet. However, when you actually move to a residence, you can withdraw construction loans, particularly construction loans, which will be converted into traditional mortgages.
Best: A renter who builds his own home that can afford a higher down payment.
Interest-only mortgage
Using an interest-only mortgage, the borrower will pay interest only for a set period, typically five to seven years, for a period of five or seven years, followed by payments covering both principal and interest.
Best: Someone who knows that they can sell or refinance during the interest-only period, or who can reasonably expect to be able to afford a higher monthly payment.
Piggyback Loan
Also known as the 80/10/10 loan, piggyback loans include two loans. One is 80% of home prices and the other is 10%. The remaining 10% will have the down payment required. These loans include two sets of closure fees.
Best: Borrowers who try to avoid getting a jumbo loan or paying mortgage insurance.
Balloon Home Loan
Balloon mortgages require large amounts of payments at the end of the loan term. Generally, payments are made based on a 30-year term, but only for a short period, such as seven years. Once the loan term ends, you will make a large amount of payments on your outstanding balance. This may be unmanageable if you are not ready.
Best: Real estate investors and flippers.
Portfolio Loan
While most lenders sell mortgages they offer to investors, some choose to hold them in their loan portfolio. Because lenders hold these loans, they do not need to comply with FHFA or other standards, so there may be more generous eligibility requirements. However, there may be higher fees.
Best: A borrower struggling to qualify for a traditional or government-supported loan.
Home renovation loan
A home renovation loan combines the costs of purchasing and repairs into one mortgage.
Best: A renter who buys a home that requires major work.
Doctor loan
Physician loans allow doctors and other health professionals to qualify for a mortgage even with large amounts of medical school debt. If you are eligible for a physician loan, you usually don’t need to pay a down payment or PMI, but you will have to face more restrictions than traditional loans. For example, you usually need to purchase a major residence. Keep in mind that many physician loans are adjustable loans.
Best: A medical professional who purchases major housing.
Non-qualified loans
Nonqualified (non-QM) mortgages offer more generous credit and income requirements as they do not meet certain criteria set by federal law, but can also come with higher declines and interest rates.
Best: Borrowers with unique circumstances, including inconsistent income, foreign income, and bankruptcy declarations.
Reverse mortgage
Reverse mortgages allow homeowners over the age of 62 to borrow on their shares on the property and receive tax-free payments from lenders. No repayment is required until the property owner sells the house and moves forever or dies. At this point, you can use progress from home sales to repay your reverse mortgage loan.
Best: Elderly people want to supplement their retirement benefits.
How to choose the right type of mortgage
Depending on your credit and finances, multiple types of mortgages may make sense to you. Similarly, you may be able to quickly launch some loan types from the list. For example, if you or your spouse are not in the military, you cannot get a VA loan.
Consider what type of mortgage you will be taking, consider the following:
- Your Credit Score: Can I qualify for a traditional loan or is a government-supported loan better?
- Your down payment: Do you need a lower or non-down payment loan? How about down payment support? Do you use gift funds from family and friends? If you are a first-time home buyer or have limited funds for a down payment, consider the government-paid loan options first.
- Your debt and income: After paying your debt, is your monthly income sufficient to cover your mortgage? If your loan requires it, make sure to consider insurance, taxes and PMI.
- Your appetite for risk: Do you like stable monthly payments? Can you afford a higher monthly payment on your arm? Many borrowers opt for fixed-rate loans, so payments remain predictable.
- Your future plans: Are you planning to move in the short term? Want to pay off your mortgage for over 30 years? This may inform you if you’re going to get an arm, an interest-only mortgage, or other options.
Once you’ve weighed these questions, you’ll compare your mortgage lenders and start talking to your lender. They can identify the best fit and then how you can get that mortgage.
Additional Reports by Mia Taylor
