Unless you can buy a home entirely for cash, finding the right property is only half the battle. The other half is choosing the appropriate type of mortgage and the best lender. You'll likely be paying back your loan over a long period of time, so it's important to find one that meets your needs and budget. We'll walk you through the characteristics of the most common mortgages♏.

What Is a Mortgage?

A mortgage is a loan to purchase a home. As a borrow🦂er, you enter a legal contract t𝄹o repay your loan, with interest, over a set amount of time.

There are two components to your mortgage payment: principal and interest. Principal refers to the loan amount. Interest is an additional amount (calculated as a percentage of the principal) that lenders charge you for borrowing money you can repay over time. In comparing loans, you'll want to focus on the 澳洲幸运5官方开奖结果体彩网:annual percentage rate (APR), which represents the total cost of a loan, including both🐎 the interest rate and other loan fees.

During the mortgage term, you will pay the lender in monthly installments based on the loan's 澳洲幸运5官方开奖结果体彩网:amortization schedule.

6 Main Types of Mortgages

As you'll see from the descriptions below, some mortgage programs and lenders have more stringent guidelines than others. For example, some might require a 20% 澳洲幸运5官方开奖结果体彩网:down payment, while others will accept as l♈ittꦛle as 3% (or even 0%) down.

To qualify for certain types of loans, you will need to have pristine credit. Others are geared toward borrowers with less-than-stellar credit scores or other financial issues. Government-guaranteed loans tend to have the most relaxed credit and down payment requirements.

Here's a rundown of the most common types of mortgages. Note that there is some overlap between categories.

1. Conventional Mortgages

A conventional loan one that is not backed by the federal government. Borrowers with very good credit, stable employment and income histories, and the ability to make the lender's required down payment can usually qualify for one.

To avoid paying for 澳洲幸运5官方开奖结果体彩网:private mortgage insurance (PMI), however, borrowers generally need to make at least a 20% down payment.

2. Conforming Mortgage Loans

Conforming loans are bound by maximum loan limits set by the federal government. These limits vary by geographic area. For 2025, the Federal Housing Finance Agency (FHFA) set the baseline 澳洲幸运5官方开奖结果体彩网:conforming loan limit (CLL) at $806,500 for one-unit properties.

The FHFA allows a higher maximum loan limit in certain parts of the country (for example, in New York City and San Francisco) to reflect the price of housing there. Higher loan limits also apply in Alaska, Hawaii, Guam, and the U.S. Virgin Islands.

Mortgages that meet the requirements for conforming loans are eligible for repurchase by 澳洲幸运5官方开奖结果体彩网:Fannie Mae and Freddie Mac, two government-sponsored enterprises regulated by the FHFA that buy most of the mortgages issued by private lenders and sell them to investors.

3. Non-Conforming Mortgage Loans

澳洲幸运5官方开奖结果体彩网:Non-conforming loans generally can't be bought or sold by Fannie Mae and Freddie Mac due to the loan amount and underwriting guidelines. 澳洲幸运5官方开奖结果体彩网:Jumbo loans are the most common type of non-conforming loans. They're called jumbo because the loan amounts typically exceed conforming loan limits.

These loans are riskier to a lender, so borrowers typically must show larger cash reserves, make a larger down payment, and have strong credit. They may also pa🌱y a somewhat higher interest rate.

4. Government-Insured Federal Housing Administratio🍸n (FHA) Loans

澳洲幸运5官方开奖结果体彩网:Federal Hou꧑sing Administration (FHA) loans have more relaxed credit score requirements than conventional loans. The FHA doesn't lend the money but instead guarantees loans made by FHA-approved lenders, reducing the lenders' risk.

One drawback to FHA loans is that borrowers must pay both upfront and monthly 澳洲幸运5官方开奖结果体彩网:mortgage insurance premiums (MIPs) for either 11 years or the entire life of the loan.

FHA loans are best for low- to moderate-income borrowers who can't qualify for a conventional loan product or anyone who cannot afford a significant down payment. Borrowers with a 澳洲幸运5官方开奖结果体彩网:FICO score as l🐼ow as 500 can qualify for a 10% down payment and those with scores of 580 or above may qualify for a 3.5% down payment.

Many people mistakenly believe that FHA loans are available only to first-time buyers. But repeat borrowers can qualify for FHA loans as long as they're buying a primary residence, not an investment property and meet the other requirements.

👍5. Government-Insured Veterans Aff꧂airs (VA) Loans

The U.S. Department of Veterans Affairs (VA) guarantees mortgages for qualified military service members, veterans, and their spouses. Borrowers can finance 10🙈0% of the loan amount, with no required down payment.

Other benefits include 澳洲幸运5官方开奖结果体彩网:fewer closing costs (which the seller may pay), better interest rates, and no need for PMI or MIP.

VA loans charge some borrowers a funding fe🤡e, a percentage of the loan amount that helps offset the cost to taxpayers. The funding fee varies depending on your military service category and loan amount.

The following borrowers do not have to pay the funding fee:

• Veterans receiving VA benefits for a service-related disability
• Veterans who would be entitled to VA compensation for a service-related disability if they didn't receive retirement or active duty pay
• Surviving spouses of veterans who died in service or from a service-related disability
• A service member with a proposed or memorandum rating stating eligibility for compensation due to a pre-discharge claim
• A service member who received the Purple Heart

VA loans can be best for eligible active military personnel 🦹or veterans and their spouses who want highly competitive terms and would prefer not to make a down payment.

6. Government-Insuredꦓ U.S. Department of Agriculture (USDA) Loans

The 澳洲幸运5官方开奖结果体彩网✅:U.S. Dꦚepartment of Agriculture (USDA) guarantees loans to help make homeownership possible for low-income buyers in rural areas nationwide. These loans require little to no money down for qualified borrowers as long as properties meet the USDA's eligibility rules.

澳洲幸运5官方开奖结果体彩网:USDA loans are best for homebuyers in eligible rural areas who have lower 澳洲幸运5官方开奖结果体彩网:household incomes, little money saved for a down p꧋ayment, and who couldn't otherwise qualify for a convꦐentional loan product.

Fixed-Rate Mortgages

Many of the loan types listed above come in the form of fixed-rate mortgages.

Fixed-rate mortgages have a set interest rate for the life of the loan, usually from 10 to 3൩0 year🍰s.

If you want to pay off your home faster and can afford a higher monthly payment, a shorter-term fixed-rate loan (say, 15 or 20 years) will save you interest over the long term. You'll also build equity in your home faster.

Opting for a shorter fixed-rate mortgage means your monthly payments will be higher than with a longer-term loan. So crunch the numbers to ensure your budget can handle the higher payments. You may also want to factor in other financial goals, such as retirement savings or building an emerge꧑ncy fund.

Adjustable-Rate Mortgages

Adjustable-rate mortgages (ARMs) have a fixed interest rate for an initial period, such as three, five, seven, or 10 years. Once that period ends, their rate will fluctuate with market conditions. These loans can be risky if you're unable to handle a higher monthly mortgage payment after the rate resets, although ARMs often have caps on how high and how fast your interest rate can rise.

ARMs can be a solid option if you don't plan to stay in the home beyond the initial fixed-rate period or if you intend to 澳洲幸运5官方开奖结果体彩网:refinance before the loan resets. Thatܫ's because the interest rates on ARMs tend to be lower than those on fixed-rate mortgages in the early years of repayment.

However, it can be dangerous to count on being able to sell your home or refinance your mortgage before y🦹our ARM resets because market 🤪conditions—and your finances—could change.

First-Time Buyer Assistance Programs

Special programs sponsored by some states or local housing authorities help first-time buyers. Many are available based on the buyers' income or financial need.

These programs, which usually take the form of down payment grants, can also save first-time borrowers significant money on 澳洲幸运5官方开奖结果体彩网:closing costs.

T𝓡he U.S. Department of Housing and Urban Development (HUD) lists first-time homebuyer programs .

Some of the mortgage types described above also have 澳洲幸运5官方开奖结果体彩网:specia🧜l programs to aid first-time homebuyers.

The Bottom Line

You may be eligible for one or more types of mortgages, depending on your income, credit history and score, and employment. Mortgage lenders can help you analyze your finances and determine the most suitable loan products. They can also help you bet🍬ter understand the qualification requirements, which can sometimes be complex.

Also, note that it can be advantageous to pursue financing before you start looking at homes and making offers. If you have a 澳洲幸运5官方开奖结果体彩网:pre-approval lett𒁃e😼r in hand, you'll be able to act more quickly and may be taken more seriously by sellers.