The first thing you need to think about when buying a new home is the type of mortgage that will work best for you and your family. Below are a few of the most common loans and how they work. Take a look at our Mortgage Calculator and punch your numbers in to get an estimate of your monthly homeownership bills.

Fixed Rate

The most popular type of mortgage is the Fixed Rate Mortgage. With this type of mortgage, the interest rate will remain the same for as long as you have your loan. If you expect to live in your home for many years, having the same interest rate may be your main concern. If you decide that you like the stable, predictable payments of a fixed rate loan, you may choose from several different terms. Typically, the longer the term of the loan, the more interest you pay over the life of your loan.
This loan type provides the security of knowing that your rate will never change through the entire term of the loan. There are varying terms (IE 15, 25, and 30 year loans) and the longer the term of your loan the more interest you end up paying, however, you’ll have a lower monthly payment compared to a shorter term loan which comes with a higher monthly payment.

USDA Rural/HUD Loans

This is another government backed loan distributed by The United States Department of Agriculture Rural House Program. These loans are available to potential home owners that buy an area designated by the USDA. Rates are traditionally very competitive for this type of loan and can be up to 100% of the value, not exceeding it, with no PMI, closing costs included, title services, and legal fees in the loan amount. The USDA does not have a cap on the borrowing amount.


This type of mortgage usually comes with a higher interest rate and exceeds the amount permitted by Fannie Mae or Freddie Mac.
The interest rates in this particular type of loan can either be fixed or adjustable. The current limit for a conventional loan is $417,000. Anything greater than this amount would fall into the Jumbo Loan or Nonconforming category.

Adjustable Rate (ARM)

ARM loans are a great way to save early on in your loan with the potential to refinance at a lower rate down the road. These loans have a variable interest rate that, in most cases, is tied to an index yet is still at the discretion of the lender. When the index goes up, so in turn does your interest rate, making your payments increase in that given period of time. The federal government places cap rates to limit the high & low end of the interest rate.

VA Loans

As a way to help our Veterans get into the housing market or improve their current homes, the VA has created a loan that in most cases is lower than conventional rates and also doesn’t require a down payment. VA loans allow Veterans and their families to purchase a home with a 0% down payment. The Department of Veterans Affairs establishes the qualification rules, sets the terms of mortgages, and insures these loans against default, but they do not originate the loans.