View Mortgage Loan Types
finding the best loan option
Review the mortgage loan types available for home financing. Depending on your qualifying criteria, some of the loan types can be tailored to meet your financing objectives.
Page Topics :
- fixed rate mortgages
- adjustable rate mortgages - ARMs
- combo fixed ARMs
- interest only mortgages
- low monthly payment plans
- zero-down mortgages
- balloon mortgages
- government-backed mortgages
- all other mortgage plans
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Fixed Rate Mortgages
Fixed-Rate Conventional Mortgages are the easiest mortgage loans
for home buyers to understand. Commonly referred as the 30-Yr and 15-Yr mortgage loans, these loans have fixed interest rates and repayment amounts the amounts never change.
Adjustable Rate Mortgages
ARMs Have Significantly Lower Interest Rates
than conventional fixed rate loans. ARM's adjust their rates up or down during a given period. That means that your monthly payment may go up or down during your repayment period.
Fixed Combo ARMs
Fixed Combo Loans are a Combination of Fixed Rate and ARM.
These ARMs attach a delayed adjustment period during which the initial period is fixed. Adjustable Terms hybrids start out at fixed rates loans, adjusting to ARM after a set period of years
You Pay Interest-Only Payments on Your Mortgage Loan
for the first five or seven years of your 30-yr amortized loan. No principal payment is being made. The amount you payoff when you refinance is the amount you borrowed upon closing.
Low Monthly Payment Plans
Minimum Monthly Payment Plans are Designed
for homeowners who are looking to pay lower initial payments at the start with the expectation to refinance their mortgage later on. The minimum repayment plan usually expires after an initial period.
Zero Down Mortgages
Lending Institutions have several mortgage programs
to help first-time home buyers. Generally these loan programs require less than 20% down payment and in some case zero % down.
Many lenders offer 3- and 5- and 7-year balloon periods with attractive low interest rates.
A Balloon Mortgage means that your monthly payments are based on any fixed term up to 30 or 15 years amortization. At the end of the balloon period, your remaining mortgage loan amount will come due.
Balloon mortgages are popular with people whose income is prone to fluctuate or who are not planning to stay in their home for more than 3, 5 or 7 years. It offers the security of a Fixed Rate Mortgage but at a lower rate.
FHA, VA, and other specialized programs are mortgage loans backed by the Federal government made to home buyers that meet certain requirements.
Generally these loans require less than 20% down payment and in some with zero % down and the interest rate is typically lower than normal rates on conventional loans.
Other Mortgages Types
Other mortgage loan types that may be available upon request or applicant qualifications include:
Mortgages for Less-than-Good Credit:
Applicants with low credit scores that do not meet the credit requirements of Fannie Mae and Freddie Mac are referred to B, C and D mortgage loans. Sub-prime lenders underwrite B, C and D loans.
These loans are temporary loans until the applicant can qualify for conforming "A" loans. The interest rate on B/C loans varies, but are generally higher than conforming "A" loans.
Jumbo Loans have loan balances that are above the maximum loan amounts established by Fannie Mae and Freddie Mac thus jumbos are "non-conforming" loans.
Jumbo loans are used to buy large, expensive homes. The interest rates on jumbo loans are generally higher than rates on conforming loan
The fixed rate can range anywhere from 0.11 to 0.77 points higher, depending on the region.
Home Construction Loans:
Home construction lending is a little different than regular mortgage financing.
- First, you will be given a construction line that will used to pay subcontractors and suppliers who perform work and provide supplies during the construction.
- And then at the end of the construction project, you will use a residential mortgage to pay off the construction line.
These loans may be available through some lenders — be sure to ask if they fit your financing objectives:
- pledged asset mortgages:
targeted to buyers with sufficient income who want to pledge their investments as collateral instead of a making a cash down payment.
- buydown mortgages:
these loans are temporary buydowns that initially start off with a discounted rate that gradually increases to an agreed-upon fixed rate.
- graduated mortgage:
initial payments will be negatively amortized during the early years, then payments will rise as required to pay off the loan during the 15 or 30 year term. View "lower monthly payment" plans above
- 100+ home buying programs:
you can borrow more money than the appraised contractual purchase price and use the extra money to pay closing costs. Homeowners use these loans when they don't have enough money for the down payment and closing costs.
- 40- and 50-year fixed mortgage loans:
you can lower your monthly payment by extending your term to 40-50 years over the standard 30-year term. Homeowners use 40-50-year mortgages to buy a higher-priced home.
- reverse mortgages:
these instruments are gaining popularity with older homeowners who want to use the equity in the home to supplement their income.
The RAM is a special type of loan that works in reverse the lender makes monthly payments to you based on the equity of your home.
more information about these loans at our mortgage lending center
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