Are you getting ready to make your first home purchase? This article offers some basic information about the types of loans available.


The interest rate on a fixed-rate mortgage stays the same throughout the life of the loan. The most common fixed-rate mortgages are 15 and 30 years in duration. Fixed-rate loans can either be conventional loans or loans guaranteed by the Federal Housing Authority or the Department of Veterans Affairs.


An adjustable-rate mortgage is a loan that bases its interest rate on an index. The index is typically the Libor rate, the fed funds rate, or the one-year Treasury bill. An adjustable-rate mortgage is also known as an adjustable-rate loan, a variable rate mortgage, or variable rate loan.


A conventional loan is one that is not formally backed by any government entity such as FHA, VA, and USDA. Rather, it is a loan that follows guidelines set by Fannie Mac and Freddie Mae, two agencies that help standardize mortgage lending in the U.S.


An FHA loan is a mortgage that’s insured by the Federal Housing Administration (FHA). They are especially popular among first time home buyers because they allow down payments of 3.5% for credit scores of 580+. However, borrowers must pay mortgage insurance premiums, which protects the lender if a borrower defaults.


VA Loans

A VA loan is a mortgage that is made by private lenders but partially backed by the Department of Veterans Affairs. There are no limits on how much you can borrow, but there are limits on how much the VA will guarantee.

USDA Loans

USDA loans are mortgages backed by the U.S. Department of Agriculture as part of its USDA Rural Development Guaranteed Housing Loan program. USDA loans are available to home buyers with low-to-average income for their area, offer 100% financing with reduced mortgage insurance premiums, and feature below-market mortgage rates.

Since this is likely a six-figure purchase, you’re probably already wondering if it’s really within your financial reach. A mortgage estimator can help you determine how much house you can afford. One of the easiest ways to find a mortgage is to use a mortgage broker. The mortgage broker will work with different lenders to find you the best terms for your loan. Additionally, the mortgage broker can help you weigh which options will be best for your current financial situation.