When buying or refinancing a home in the United States, one of the most important decisions you’ll make is choosing the right type of mortgage.
What Are the Different Types of Mortgages?
The U.S. mortgage market offers many loan options—each designed for different financial situations, property types, and long-term goals. Understanding these options helps you avoid costly mistakes and choose a mortgage that fits your life, not just today—but years from now.
This guide explains all major types of mortgages in the U.S., with clear explanations, real-life examples, and a comparison table to help you decide.
→ Learn more: What is a mortgage?
I. Mortgages by Interest Rate Structure
1. Fixed-Rate Mortgages
A fixed-rate mortgage has an interest rate that stays the same for the entire loan term.
Common options:
- 30-year fixed
- 20-year fixed
- 15-year fixed
Why borrowers choose it:
- Stable, predictable payments
- Easier long-term budgeting
- Protection if interest rates rise
Example:
If you choose a 30-year fixed mortgage, your interest rate will not change—even if market rates increase 10 years later.
Best for: Borrowers planning to stay in their home long-term or who value payment stability.
2. Adjustable-Rate Mortgages (ARM)
An ARM starts with a fixed interest rate for a set period, then adjusts over time.
Common ARM types:
How it works:
After the initial fixed period, the rate can increase or decrease based on market conditions, subject to adjustment limits.
Example: A 5/1 ARM has a fixed rate for 5 years, then adjusts annually.
Best for:
Borrowers who expect to move or refinance before the adjustment period begins.
II. Mortgages by Loan Program
3. Conventional Mortgages
A conventional loan is not insured by the government.
Includes:
- Conforming loans (within Fannie Mae & Freddie Mac limits)
- Jumbo loans (above conforming limits)
Key points:
- Flexible loan terms
- Mortgage insurance may apply with lower down payments
- Often preferred by borrowers with strong credit profiles
4. FHA Loans
An FHA loan is insured by the Federal Housing Administration.
Why borrowers choose FHA:
- More flexible credit guidelines
- Lower down payment options (if eligible)
- Popular with first-time homebuyers
Important: FHA loans include Mortgage Insurance Premium (MIP).
→ Read more: FHA Loans: What Homebuyers Worry About Most
5. VA Loans
A VA loan is available to eligible veterans, active-duty service members, and certain surviving spouses.
Key benefits:
- No required down payment (if eligible)
- No monthly mortgage insurance
- Competitive interest rates
Eligibility depends on military service guidelines.
6. USDA Loans
A USDA loan is designed to support homeownership in eligible rural and suburban areas.
Key features:
- No down payment for qualified borrowers
- Income and location limits apply
Some suburban areas may qualify, even if they don’t feel “rural.”
III. Mortgages by Loan Purpose
7. Purchase Mortgages
Used to buy a home.
8. Refinance Mortgages
Used to replace an existing mortgage to:
- Lower the interest rate
- Change the loan term
- Switch loan types
Allows homeowners to refinance and take cash from their home equity.
Example: Cash-out funds are often used for renovations, debt consolidation, or major expenses.
→ Read more: What are the pros and cons of refinancing my mortgage?
IV. Mortgages by Loan Size
- Within federal loan limits
- Widely available with competitive pricing
11. Jumbo Mortgages
- Exceeds conforming loan limits
- Used for higher-priced homes
- Often requires stronger financial profiles
→ Read more: What Is a Jumbo Home Loan?
V. Mortgages by Payment Structure
12. Interest-Only Mortgages
Borrowers pay only interest for a set period before principal payments begin.
Best for: Borrowers with strong income or short-term financial strategies.
13. Balloon Mortgages
Lower payments initially, followed by a large lump-sum payment at the end.
These require careful planning and are not common for most buyers.
VI. Special & Niche Mortgage Programs
14. Construction Loans
Used to build a home and often convert to a long-term mortgage.
15. Renovation Loans
Include funds for repairs or upgrades (example: FHA 203(k)).
16. Reverse Mortgages
Designed for eligible older homeowners to convert home equity into cash without monthly payments.
17. Non-QM Mortgages
Do not follow standard Qualified Mortgage rules and are used for complex income situations.
Use bank statements instead of W-2s—popular with self-employed borrowers.
Based on rental income rather than personal income, common for real estate investors.
VII. Mortgages by Property Type
20. Primary Residence Loans
For your main home.
21. Second Home Loans
For vacation or seasonal properties.
22. Investment Property Loans
For rental or income-producing homes.
VIII. Legal Structure (State-Specific)
.jpg "What Are the Different Types of Mortgages in the U.S.?")
23. Mortgage (Lien)
Used in many states.
24. Deed of Trust
Common in states like California and Texas and involves a third-party trustee.
Mortgage Types Comparison Table (U.S.)
Mortgage Type | Rate Type | Down Payment | Mortgage Insurance | Best For |
| 30-Year Fixed | Fixed | Varies | May apply | Long-term homeowners |
| 15-Year Fixed | Fixed | Varies | May apply | Faster payoff |
| ARM (5/1, 7/1, 10/1) | Adjustable | Varies | May apply | Short-term ownership |
| Conventional Loan | Fixed / ARM | Varies | PMI may apply | Strong credit borrowers |
| Jumbo Loan | Fixed / ARM | Typically higher | May apply | High-price homes |
| FHA Loan | Fixed / ARM | Lower option available | MIP required | First-time buyers |
| VA Loan | Fixed / ARM | None (if eligible) | None monthly | Veterans & service members |
| USDA Loan | Fixed | None (if eligible) | Required | Rural/suburban buyers |
| Interest-Only Loan | Fixed / ARM | Varies | May apply | Advanced borrowers |
| Balloon Mortgage | Fixed | Varies | May apply | Short-term strategies |
| Cash-Out Refinance | Fixed / ARM | N/A | May apply | Homeowners with equity |
| Non-QM Loan | Fixed / ARM | Varies | Varies | Self-employed borrowers |
| Bank Statement Loan | Fixed / ARM | Varies | Varies | Business owners |
| DSCR Loan | Fixed / ARM | Varies | Varies | Real estate investors |
| Construction Loan | Variable → Fixed | Varies | Varies | New home builds |
| Renovation Loan | Fixed | Varies | Required | Fixer-upper homes |
| Reverse Mortgage | Variable | None | Required | Older homeowners |
The U.S. mortgage market offers a wide range of loan options, each designed for different borrower needs, financial profiles, and housing goals.
In general:
- Fixed-rate mortgages provide long-term payment stability
- Adjustable-rate mortgages (ARMs) offer lower initial rates for short-term plans
- Conventional loans are flexible and common for borrowers with strong credit
- FHA, VA, and USDA loans help expand homeownership access for eligible buyers
- Jumbo, Non-QM, and investor loans serve higher-priced homes and complex income situations
There is no “best” mortgage for everyone—the right choice depends on:
- How long you plan to stay in the home
- Your income, credit, and savings
- The property type (primary home, second home, or investment)
- Your tolerance for payment changes over time
Understanding the different types of mortgages helps you ask better questions, compare options more confidently, and choose a loan that supports both your current budget and long-term financial goals.
Loan Factory helps U.S. homebuyers navigate every mortgage type with transparency and technology:
.jpg "What Are the Different Types of Mortgages in the U.S.?")
- Best Price Guarantee: Bring any competitor’s official offer—if Loan Factory can’t beat it, you may receive $1,000. Terms & Conditions apply.
- Compare 240+ wholesale lenders side by side
- No application or junk fees
- AI-powered MOSO platform for faster pricing and approvals
- Local loan advisors for personal guidance
- Led by Thuan Nguyen, #1 Loan Officer in the U.S.
Apply online: www.LoanFactory.com/apply
Check mortgage rates: www.LoanFactory.com/quote
Talk to a loan advisor: (660) 333-3333
This content is for informational purposes only and not a commitment to lend. Loan approval depends on credit, underwriting, and investor guidelines.
FAQ: Different Types of Mortgages in the U.S.
