5 Types of Mortgages You Should Know

When you begin to research home loans, you will come across numerous different mortgage products. Some of these products can save you money, while others may not be designed for people in your particular circumstances. For that reason, it helps to know a little bit about the various types of mortgages that will be available to you. That’s where Local Mortgage can help. In this article, we will go over the 5 most common types of mortgages so that you are better prepared when you start the home buying process.

Conforming Home Loans

Conforming home loans are some of the most common types of mortgages issued in the market today, which makes them an excellent place to start our discussion on mortgage products. Conforming loans are a type of conventional home loan and are called “conforming” because they conform to the lending guidelines outlined by Fannie Mae and Freddie Mac, which are two government-sponsored entities that were created to help stabilize mortgage markets.

Most of the conforming loans issued by Local Mortgage are 30 or 15 year fixed rate loans. This means that your payment will be fixed for the life of the loan. Your payment will include Principal, Interest, Taxes, and Insurance. The Principal and Interest portion of the payment will never change, but the tax and insurance portion will change over time as taxes and insurance typically change from year to year.

Conforming loans require a 5% down payment, unless you are a first time home buyer, in which case only 3% down payment is required. Mortgage Insurance will be required unless you are able to make a 20% down payment.

Check out our Conventional product page for more detailed information.

FHA Home Loans

Another popular type of mortgage is an FHA home loan. These loans are insured by The Federal Housing Administration (FHA), which allows lenders to make loans to home buyers without substantial down payments. FHA loans have slightly more lenient credit requirements than Conforming loans.

FHA loans require a 3.5% down payment. There is an upfront mortgage insurance premium required at closing, which may be financed into the loan, and a monthly mortgage insurance premium included in monthly payments.

Most FHA loans are 30 or 15 year fixed rate loans.

Check out our FHA product page for more detailed information.

VA Loans

Similar to FHA loans, VA loans are mortgages that are issued by an approved lender (such as Local Mortgage) and insured by a government entity. The U.S. Department of Veteran Affairs (VA) insures VA loans for veterans and qualified active-duty service members. Thanks to the financial backing of the VA, veterans can obtain mortgages with low interest rates and no required down payment.

Check out our VA product page for more detailed information.

USDA Home Loans

While many people who are familiar with mortgages probably know a bit about FHA and VA loans, they may not know much about USDA home loans. USDA home loans are mortgages guaranteed by the U.S. Department of Agriculture (USDA), and are designed to make rural housing more affordable. While there are generally no geographic restrictions for other loan types, USDA loans are made to home buyers purchasing homes in eligible USDA areas.

USDA home loans typically require no down payment. They are offered for 30 year fixed rate terms at very competitive rates.

Check out our USDA product page for more detailed information.

Jumbo Loans

The last type of mortgage you should be aware of is the jumbo home loan. Jumbo loans are mortgages for people that need to borrow more than the limit on conforming loans, which is currently $806,500 for 2025 in most areas. Like conforming loans, jumbo loans can come in 15 and 30 year terms, and they can feature either fixed rates or adjustable rates.

Since jumbo loans exceed the maximum limits set for conforming loans, they can be a little bit more difficult to qualify for, generally requiring great credit scores and larger down payments.

Check out our Jumbo product page for more detailed information.

How I Can Help You

When it comes time to purchase a home or refinance an existing loan, I want to help you! Hopefully articles like this give you good information and a better understanding of the mortgage world, but let me use my experience and expertise to help you with your particular situation.

I tell my clients and referral partners that a mortgage transaction starts with a simple conversation. Let’s talk about your financial situation, budget, and goals so that I can help you determine the best solution for you. During a 10-minute informal conversation, we can get you on the right path as it relates to a home purchase or mortgage refinance.