Buying a home usually means taking out a mortgage loan. But with so many loan options available — from conventional to government-backed programs — it can be overwhelming to know which one is right for you. In this guide, we’ll break down the most common types of mortgage loans, their benefits, and how you can qualify.
What is a Mortgage Loan?
A mortgage loan is money borrowed from a bank, credit union, or online mortgage lender to buy or refinance a home. You repay it in monthly installments that include principal, interest, taxes, and insurance.
Types of Mortgage Loans
- Conventional Loans – Standard loans not backed by the government.
- FHA Loans – Great for first-time buyers with lower credit scores.
- VA Loans – Exclusive benefits for veterans and military families.
- USDA Loans – Designed for rural homebuyers with low to no down payment.
- Jumbo Loans – For high-value properties above standard loan limits.
Fixed vs. Adjustable-Rate Mortgages
- Fixed-Rate Mortgages (like the 30-year fixed mortgage rate) offer stability with the same monthly payment.
- Adjustable-Rate Mortgages (ARMs) start with lower rates but may increase over time.
How to Qualify for a Mortgage Loan
Lenders look at:
- Credit Score – Higher scores mean lower interest rates.
- Debt-to-Income Ratio (DTI) – Most lenders prefer under 43%.
- Down Payment – Typically 3–20% depending on loan type.
- Employment History – Proof of steady income.
Benefits of Mortgage Loans
- Allows you to buy a home without full cash upfront.
- Builds equity over time.
- Some programs offer low down payments and flexible credit requirements.
Common Mistakes to Avoid
- Only checking rates with one mortgage lender.
- Ignoring fees like closing costs.
- Choosing the wrong loan term without understanding long-term costs.
How to Find the Best Mortgage Loan
- Compare rates from multiple lenders.
- Consider using a mortgage broker for access to more options.
- Watch mortgage rates today to lock in the best deal.
- Use online tools and calculators to estimate monthly payments.
Ready to explore your options? Visit our Rates Today page to see the latest mortgage rates and check our Resource Hub for calculators and guides to help you choose the right mortgage loan.