Most Popular Loan Programs
Many types of mortgage loans exist, and they are designed to appeal to a wide range of borrowers’ needs.
For each type of mortgage listed below, you’ll see its advantages and the kind of borrower it’s best for. This page concludes with a glossary of terms describing different types of mortgage loans.
1. 30-year fixed-rate mortgage
The 30-year fixed-rate mortgage is a home loan with an interest rate that’s set for the entire 30-year term.
- Most popular home loan.
- Your interest rate never changes.
- Lower monthly payment than with shorter-term loans.
Best for: Home buyers who want the lower monthly payment that comes from stretching out repayment over a long time. The fixed rate makes the payment predictable. A 30-year fixed offers flexibility to repay the loan faster by adding to monthly payments.
2. 15-year fixed-rate mortgage
The 15-year fixed-rate mortgage has an interest rate that remains the same over its 15-year term.
- Often used for refinancing.
- Interest rate is set for the life of the loan.
- Lower interest rate than with longer-term loans.
- Higher monthly payment than with 30-year loans, with less total interest paid.
Best for: Refinancers and home buyers who want to build equity and pay off the loan faster. Payments are predictable because the interest rate doesn’t change. Because the borrower pays interest for fewer years, total interest payments are less.
3. FHA mortgage
An FHA mortgage is a home loan insured by the Federal Housing Administration. FHA loans are backed by the government and designed to help borrowers of more modest means buy a home.
- Allows down payments as low as 3.5%.
- Credit scores as low as 500 can qualify.
- Mortgage insurance premium payments are required.
Best for: Borrowers with lower credit scores and a down payment less than 20%.
