Types of Mortgages, Compared

There is no 'best' mortgage — only the best fit for your credit, cash, timeline and risk tolerance. Here is every major type, what it costs, and who it is really for.

Conventional loans

The default choice, backed by Fannie Mae/Freddie Mac guidelines but not government-insured. Down payments from 3%, PMI required below 20% down (cancellable at 80% LTV), best pricing at 740+ credit. Suits most buyers with decent credit. → Payment calculator

FHA loans

Government-insured, forgiving on credit (580+ for 3.5% down), with upfront + annual mortgage insurance that usually lasts the loan's life. Suits first-time and lower-credit buyers who plan to refinance into conventional later. → FHA calculator

VA loans

For veterans, service members and eligible spouses: 0% down, no monthly mortgage insurance, a one-time funding fee (waived for disability compensation), and typically the lowest rates of any program. → VA calculator

USDA loans

Zero down for moderate-income buyers in eligible rural and suburban areas, with a modest 1% upfront and 0.35% annual guarantee fee. Income and location limits apply. → USDA calculator

Jumbo loans

Above the conforming limit ($806,500 in most counties for 2025): stricter credit, 20% down typical, 6–12 months of reserves — but rates are often surprisingly competitive. → Jumbo calculator

Fixed-rate vs adjustable-rate (ARM)

Fixed: the rate and P&I payment never change — certainty at a slightly higher start. ARM: fixed for 3–10 years, then adjusts with an index plus margin, bounded by caps — cheaper start, real risk later. → ARM calculator and the 15 vs 30 comparison

Interest-only and balloon loans

Niche structures: interest-only delays principal entirely (payment shock later); balloon loans demand a large final payment — standard in commercial lending, rare and risky in residential. → Interest-only calculator

Reverse mortgages (HECM)

For homeowners 62+: borrow against equity with no required monthly payment; the balance grows and is settled when the home is sold or vacated. Powerful and expensive — counseling is mandatory. → Reverse mortgage calculator

How to choose, in four questions

1. How much cash do I have? (Drives VA/USDA/FHA vs conventional.)
2. What is my credit score? (Under 680 tilts toward FHA; 740+ unlocks conventional pricing.)
3. How long will I keep this loan? (Short horizons favor ARMs and low-fee offers; forever homes favor fixed and points.)
4. How much payment risk can I carry? (If a worst-case ARM payment breaks you, it is the wrong loan.)

Whatever you choose, verify the full monthly cost in the calculator for that type and check it against your income in the affordability calculator.