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:
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) 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
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.
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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. 
