Types of mortgage loans, compared

#The four main loan programs

Every mortgage has two layers: the program that sets the rules — who backs the loan, how much you must put down, what insurance you pay — and the product, such as a 30-year fixed rate or a 5/6 adjustable rate. Start with the program, because it decides how much cash you need.

Lenders can set stricter rules than the program — called overlays — so it pays to ask more than one. Each program has its own guide: conventional loans, FHA loans, VA loans and USDA loans.

#Government-backed vs conventional

FHA, VA and USDA loans are made by private lenders but insured or guaranteed by a federal agency. If the borrower defaults, the agency covers part of the lender’s loss, which is why these programs accept small or zero down payments and more flexible credit. You pay for that protection: FHA through mortgage insurance premiums, VA through a funding fee, USDA through guarantee fees.

Conventional loans have no government backing. Most are “conforming” — they follow the rules of Fannie Mae and Freddie Mac, which buy them from lenders — and stay within the conforming loan limit. Below 20% down, a private mortgage insurer protects the lender instead. That insurance is priced on your credit score and, unlike most FHA insurance, it ends: you can ask to cancel it at 80% of the home’s original value, and it stops automatically at 78%.

#What each loan costs on the same home

The table hides two differences that matter over time. FHA’s mortgage insurance usually lasts for the life of the loan, while conventional PMI ends; and VA borrowers who receive VA disability compensation are exempt from the funding fee. Compare the cost over the years you expect to keep the loan, not just the first payment.

#Which loan fits your situation?

Many buyers qualify for more than one. Ask lenders for a Loan Estimate on two programs on the same day, then compare the payment, the cash to close and how long the mortgage insurance lasts. The affordability calculator shows what price each debt-to-income limit supports.

#Fixed rate or adjustable rate?

Any of the programs above can come as a fixed-rate loan, which keeps the same rate and principal-and-interest payment for the whole term, and most can come as an adjustable-rate mortgage (ARM). An ARM starts with a fixed rate for a set period, then resets to an index plus a margin. Fannie Mae’s ARMs use 30-day average SOFR, and caps limit each change: on a standard 5/6 ARM the caps are 2/1/5 — the most the rate can rise at the first reset, at each later reset and over the life of the loan, in percentage points.

An ARM can make sense if you are confident you will sell or refinance before the first reset and the starting rate is meaningfully lower. If you plan to stay, or a higher payment would strain your budget, a fixed rate removes the risk. Fixed vs adjustable-rate mortgages works through a worst-case reset in dollars.

Term matters too. The 30-year fixed averaged 7.24% and the 15-year 6.6% in Freddie Mac’s latest survey; the shorter term costs more each month but far less in total interest. The mortgage payment calculator compares both.

#Loan size: conforming, high-balance and jumbo

The Federal Housing Finance Agency sets the conforming loan limit each year. For 2026 it is $832,750 for a one-unit home in most counties, up from $806,500 in 2025, and up to $1,249,125 in high-cost areas. Loans between the baseline and the local high-cost limit are often called high-balance conforming loans; they follow the same rules but can price slightly differently.

Above your county’s limit, the loan is a jumbo loan. Fannie Mae and Freddie Mac can’t buy it, so each lender sets its own down payment, credit and cash-reserve requirements — usually stricter than for conforming loans. A larger down payment that brings the loan under the limit can open up conforming pricing and rules.

#Specialty loans

• Interest-only mortgages let you pay only interest for a set period, then the payment jumps when principal is added. They can’t be Qualified Mortgages under the CFPB’s ability-to-repay rule, so they are offered as non-QM loans.
• Reverse mortgages let homeowners aged 62 years and older borrow against their equity with no monthly loan payment. The FHA-insured HECM has a 2026 limit of $1,249,125, an initial mortgage insurance premium of 2% and required counseling.
• Construction loans fund a build in stages. A single-close loan converts to a permanent mortgage when the home is finished; Fannie Mae limits the construction period to 12 months at a time.
• DSCR investor loans qualify a rental property on its rent rather than your income. They are business-purpose, non-QM loans with lender-set terms; a conventional investment-property loan, by contrast, goes up to 85% of the price under Fannie Mae’s rules.

#How to choose, step by step

1. 1

   Check your eligibility

   Military service (VA), a rural address and moderate income (USDA) or a credit score below the conventional comfort zone (FHA) narrow the list quickly.

2. 2

   Count your cash

   Down payment plus closing costs of about 2%–5% of the price, according to the CFPB, plus reserves.

3. 3

   Decide fixed or adjustable

   Match the product to how long you expect to keep the loan.

4. 4

   Check the loan limit for your county

   It decides whether you need a jumbo loan and caps FHA borrowing.

5. 5

   Get Loan Estimates on two programs

   Request them on the same day so rates are comparable, and look at page 1 and the “Comparisons” section on page 3.

6. 6

   Compare total cost over your time horizon

   Include how long mortgage insurance lasts, not only the first payment.