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If you’re considering buying a home, you’re most likely planning on getting a mortgage. According to the National Association of REALTORS®, 74% of homebuyers financed their purchases in 2024. However, that 74% can be broken down further into the many types of mortgages available. Learn about the different types of mortgages to decide the best choice for you.
A conventional mortgage is a traditional option, with no special eligibility requirements or criteria needed to qualify beyond proof of income, a strong credit score, a good debt-to-income ratio, etc. Private lenders, such as banks and credit unions, back these mortgages.
While this is the standard option, the lending criteria is stricter than other options geared to assist specific groups of people, such as veterans, doctors or low-income individuals. Additionally, while conventional mortgages often only require a 3% down payment, you can expect to pay private mortgage insurance (PMI) for downpayments under 20%.
Federal Housing Administration (FHA) loans are government-backed loans that allow for significantly lower downpayments than a conventional mortgage. Compared to a traditional downpayment of 20%, an FHA loan only requires a 3.5% downpayment, provided you meet the credit score requirements. This makes FHA loans a great option for first-time homebuyers that might otherwise struggle to save up a full 20% down payment.
Veterans Administration loans are available to qualified veterans, active-duty military personnel and some surviving spouses. These mortgages are backed by the U.S. government and thus have lower risk for financial institutions. VA mortgages often have no down payment requirement, don’t require PMI and have lower rates than conventional mortgages.
Jumbo mortgages are like conventional mortgages, but for large loan amounts that exceed the local conventional maximum. This number shifts upwards over time due to inflation. In 2025, this amount is $806,500 in most counties but could be as high as $1,209,750, depending on where you’re looking to buy.
These loans are riskier for lenders but work similarly for the consumer taking on the loan. The main differences are that jumbo loans often require a larger downpayment (typically at least 10%), a high credit score and more extensive documentation proving your ability to pay the loan.
A doctor mortgage (sometimes known as a physician mortgage) is a special mortgage made to cater to the unique financial situation of doctors and similar healthcare professionals. While doctors can apply for other types of mortgages, they may struggle with the conventional criteria, such as having a massive amount of debt from medical school, a lack of credit history and a lack of liquid cash available for a downpayment. However, the high income doctors earn makes this financial situation often temporary.
A doctor mortgage helps bridge the gap while doctors begin their career. It often allows for down payments under 20% without PMI and may approve applicants without proof of income (a signed employment contract is typically still required).
The rate you pay on your mortgage is one of the biggest difference-makers in your monthly payment and how much you’ll ultimately pay over the life of the loan. There are two overarching types of rates: Fixed-rate and adjustable-rate mortgages. Most mortgage types offer both options.
Fixed-rate mortgages are the classic and most popular rate option. The most common terms are 15- and 30-fixed-rate mortgages, though others exist. This type of mortgage is relatively straightforward—after your downpayment, you pay off the remaining price of the home, plus interest, for the duration of the loan. Your interest rate won’t change, and you can expect consistent monthly payments.
Choosing a 15- vs a 30-year mortgage will depend on your budget and priorities. 30-year mortgages are the more popular option as the higher monthly payments of a 15-year mortgage are outside of many people’s budget. Still, the lower interest rate and having a paid off home in half the time is an attractive option. It’s worth noting that many lenders allow you to make extra payments on a 30-year mortgage without penalties, allowing you to save in interest and pay off the loan sooner.
Adjustable-rate mortgages (ARMs) are less common and more complex than fixed-rate mortgages but can make sense in certain circumstances. With an ARM, you have an initial fixed term, followed by a variable rate for the loan’s remaining life. For example, a 10/6 ARM has a 10-year initial fixed rate, followed by a variable rate that can change every six months (hence the name 10/6).
While the variable rate makes many prospective homebuyers uneasy, there are advantages. The initial fixed term is often lower than fixed-rate mortgages, meaning you’ll have a lower monthly payment for that period. For those who plan to sell their home before the fixed-rate period is up, an ARM can save you a significant amount.
Ultimately, there is no “best” type of mortgage, and the best choice for you will depend on your financial situation and the types of loans you have available. For example, VA and USDA mortgages have significant benefits, but only a small portion of prospective homebuyers are eligible.
When considering what mortgage you should get, think about the following factors:
After answering these questions, you can run the numbers and see which option will help you afford the home you want while maintaining a strong overall financial situation. You can also talk with a qualified mortgage loan officer to help walk you through your options.
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