While there are only two main mortgage types, each has numerous variations. The two overarching types are:¹

Each of these two main mortgage categories has many variations depending on who’s backing the loan – bank or government agency – how big it is, whether it’s for a first-time homebuyer, whether it’s in an urban or rural area, and other factors. The variety of interest and down payment options adds up to a wide array of mortgage types with sometimes hard-to-understand terms and acronyms. For example, there are:

And in addition to loans backed by private banks and quasi-governmental organizations like Fannie Mae and Freddie Mac, depending on your circumstances you may qualify for mortgages backed by the:

But wait – there’s more: Another whole category of mortgages is for generating cash instead of buying a house, including refinancings, second mortgages, and reverse mortgages.
 
Below is a deeper dive into these various types of mortgages

Source: Consumer Financial Protection Bureau

Homebuyers choose one or the other fixed-rate mortgage term for specific reasons. A 30-year loan may help them afford a larger home than a 15-year loan, for example, by spreading the cost out more. Or, the lower monthly payments on a 30-year loan might fit their budget better. Borrowers have some flexibility, even within a 30-year mortgage. You can always choose to accelerate your payments on your own. And, in the end, you may not even remain in the home you’ve bought for 30 years, so that the total cost of the loan becomes less of a concern.

On the other hand, a 15-year mortgage’s lower interest rate may save you thousands of dollars over time. And, by helping you to pay off your house in half the time, it wipes what is usually one of the biggest recurring bills off your household budget much sooner. Mortgage calculators are available online to help you compare loan terms and their monthly payments, total costs, and more.

Keep in mind that some loans require a 20% down payment. Otherwise, you’ll likely have to take out private mortgage insurance (PMI), driving up your financing costs.⁴ In practice, however, most buyers put down less: The median down payment in 2024 was just 13% for people ages 34 to 43, according to the National Association of Realtors.⁵ For more, read "How Much of a Down Payment Do You Need to Buy a House?”

Although many borrowers prefer the predictability of fixed-rate mortgages, traditionally, some 25% to 30% choose ARMs.³ ARMs may carry a fixed interest rate for a specified number of years after which your rate can go up or down depending on economic conditions – and your monthly payment with it.⁶ For example:⁷

As overall interest rates change with the market, ARMs’ introductory interest rates are not always lower than fixed-rate loans. Still, they often have less stringent requirements to qualify, such as lower credit scores. Additionally, Buyers who take out ARMs may avoid the risks of future rate adjustments if they resell their homes before their loan resets.

Loans similar to ARMs include two-step loans, which reset only one time, and balloon loans, which have relatively low monthly payments leading up to a large lump-sum payment at the end of the loan.

Beyond the basic fixed-rate or ARMs, you can find a host of other mortgage types in the market. These include:
 
FHA, VA, and USDA loans: FHA loans are ideal for first-time homebuyers. They require lower credit scores than other types of mortgages and down payments as low as 3.5%.⁸ Mortgage insurance is an added cost because of the low down payment.⁹ Certain FHA loans offer first-time homebuyers graduated monthly payment options that start small and grow as their income grows.¹⁰ VA loans provide similarly favorable terms to veterans and USDA loans do so for rural homebuyers.^11,12
 
Jumbo loans: These are loans above the conforming loan limit or higher, depending on the county where the home is located. Because of the large amount, they are subject to stricter requirements and reviews.¹³
 
Piggyback loans: A piggyback loan is taken out at the same time as your main mortgage to make a down payment and qualify without paying PMI.¹⁴
 
Bridge loans: A bridge loan might help you purchase a new home while you’re still waiting to sell the one you’re in.¹⁵