HOME BUYER'S GUIDE

Understanding Your Mortgage Options

When reviewing mortgage options, here are some key factors to consider: the type of loan, the type of interest rate and the loan term. Let's find out what makes sense for you.

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Finding the right type of mortgage loan

While conventional loans are the most common mortgage type, there are other options to consider. Government-backed options like Federal Housing Administration (FHA) and Veterans Affairs (VA) loans might make sense if you qualify for them, while a jumbo loan is common if you're shopping for a home in a higher-priced real estate market. Which one is right for you?

Conventional loans

A popular option for home buyers with good credit and a down payment of 20% or more.

FHA loans

Designed for first-time home buyers, FHA loans are a government-backed program with more flexible qualification requirements.

Jumbo loans

Commonly used for more expensive homes and properties in higher-priced real estate markets.

VA loans

Affordable mortgages for servicemembers, veterans and surviving military spouses that are guaranteed by the Department of Veterans Affairs.

Choosing an interest rate

There are two kinds of rates: fixed and adjustable. Fixed rates don't change, which means your monthly payments will stay the same over the life of your loan. Adjustable rate mortgages (ARMs) typically start at a lower rate, but change over time based on financial market conditions.

Learn more about fixed and adjustable rates

Fixed rate mortgages

  • Rate doesn't change
  • Steady, predictable monthly payments
  • May work well if you're staying in the home long term

Adjustable rate mortgages (ARMs)

  • Rate could go up or down
  • Monthly payments can change
  • May work well if you're moving or selling in the short term

Deciding on a loan term

The term is the length of the loan, typically between 10 and 30 years. Depending on the loan term you choose, it will affect how much your monthly payments are, the interest rate and the amount of interest you pay overall.

Shorter term

  • Higher monthly payments let you build equity faster
  • Lower interest rate
  • Pay less in interest overall
  • Makes sense if you're trying to be mortgage-free sooner

Longer term

  • Lower monthly payments may give you more financial flexibility
  • Higher interest rate
  • Pay more in interest overall
  • Makes sense for homes on the higher end of your price range

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