Home Financing Options

Which Loan Type Should I Choose?

The type of loan you choose will affect your interest rate and your monthly payment, so it’s important to choose wisely. Here’s a look at the pros and cons of some common loan types.

Fixed Rate Loans

Adjustable Mortgages (ARMs)

FHA Loans

VA Loans

Best for

Borrowers who prefer stable payments that won't change

Borrowers who might sell after 5 years, or are comfortable knowing their payments can change

Borrowers with smaller down payments or lower credit scores

Borrowers who might sell after 5 years, or are comfortable knowing their payments can change

Length of term

Typically last for 10 - 40 years

Typically last for 30 years

Typically last for 10 - 40 years

Typically last for 10 - 40 years

Interest rate

Fixed rate for the life of a loan

Fixed rate for 3, 5, 7, or 10 years, then can change every year thereafter

Borrowers can choose a fixed or adjustable rate

Borrowers can choose a fixed or adjustable rate

Monthly payment

Amount never changes

Can change after the fixed period ends

Can change only for an adjustable rate mortgage

Can change only for an adjustable rate mortgage

Mortgage insurance

Typically required if down payment is less than 20%

Typically required if down payment is less than 20%

Mortgage insurance is required (upfront free and monthly insurance payment)

Not required

Additional details

30-year fixed is the most common mortgage type

After fixed period ends, interest rate changes annually based on the index value at that time

Insured by the Federal Housing Administration (FHA)

Insured by the US Department of Veterans Affairs (VA)

Do You Need Help Regarding Loans?

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