13 Types of Mortgages

Buying a home is a big step, and choosing the right mortgage can make a huge difference in your budget and long-term financial goals. With so many types of mortgages out there, understanding your options helps you find a loan that fits your needs.

In this guide, we’ll break down the most common mortgage types and offer tips on choosing the one that’s best for you.

13 types of mortgages

These are the types of mortgages you might be eligible for:

1. Conventional mortgage
2. FHA loan
3. Jumbo loan
4. VA loan
5. USDA loan
6. Physician mortgage loan
7. No-income-verification mortgage
8. Shared appreciation mortgage
9. Investment property loan
10. Low down payment mortgage
11. Adjustable-rate mortgage
12. Fixed-rate mortgage
13. Bridge loan

1. Conventional mortgage

Conventional mortgages aren’t part of specific government programs but are often backed by government-sponsored companies Fannie Mae and Freddie Mac.

• Conforming mortgages meet Fannie Mae and Freddie Mac’s standards. These loans are sold to these agencies after closing, which helps protect lenders against losses if you miss payments. Conforming loans generally have stricter criteria but can cost less overall. 
• Non-conforming mortgages don’t meet Fannie Mae or Freddie Mac’s requirements and stay with the original lender. The terms vary widely, so it’s essential to compare options if you’re considering this type.

Qualifying for a conforming loan typically requires a solid credit score, a low debt-to-income (DTI) ratio, and a sufficient down payment. Here are the basic requirements:

Basic criteria	Range
Max. conforming loan limit*	$766,550 – $1,149,825
Min. down payment or equity	3% – 25%
Min. credit score	620 – 720
Max. DTI	36% – 45%

If you don’t meet these requirements, you might explore a non-conforming loan (e.g., a jumbo loan) or government-backed options, such as an FHA loan for those with lower credit.

No matter the loan type, take your time to assess affordability. Using a mortgage calculator and comparing lenders can help you secure the best rates and terms.

2. FHA loan

FHA loans are government-backed mortgages designed to make homebuying more accessible, especially for those with lower credit or smaller down payments. With down payments starting as low as 3.5% and flexible qualification criteria, FHA loans can be a solid option if you’re looking for a more affordable path to homeownership.

These loans are offered by approved lenders, and the FHA guarantees to cover part of the loan if you can’t pay, making it easier to qualify. Here’s a look at basic FHA loan requirements:

Basic criteria	Range
Max. FHA loan limit*	$498,257 – $1,149,825
Min. down payment or equity	3.5% – 10%
Min. credit score	500 – 580
Max. DTI	40% – 50%

Because FHA loans are riskier for lenders, they may come with slightly higher costs. If you have good credit and can put down at least 10%, a conventional loan might save you more in the long run.

When you’re ready to shop for a mortgage, compare different loan types and lenders to find the best rates and terms for your needs.

3. Jumbo loan

A jumbo loan is a mortgage that exceeds the standard loan limits set by the Federal Housing Finance Agency (FHFA) for conventional loans and by HUD for FHA loans. Because these loans are larger, they’re seen as riskier, so qualifying usually requires a bigger down payment, higher credit score, and lower debt-to-income ratio.

For reference, the 2024 conforming loan limits for one-unit properties are:

• Conventional loans: $766,550 – $1,149,825
• FHA loans: $498,257 – $1,149,825

These are the typical jumbo loan requirements:

Basic criteria	Range
Min. down payment or equity	10% – 20%
Min. credit score	680 – 720
Max. DTI	36% – 43%

Because each lender sets its own criteria for jumbo loans, it’s essential to shop around to find the best rates and terms. Comparing options can help you secure a loan that aligns with your financial profile and homeownership goals.

4. VA loan

VA loans are government-backed mortgages available to military members, veterans, and eligible surviving spouses. Offered by private lenders, these loans require a Certificate of Eligibility (COE) to confirm military service status.

VA loans typically don’t require a down payment or private mortgage insurance (PMI), making them more accessible and affordable. Although VA loans generally have flexible requirements, it’s essential to compare lenders to find the best rates and terms.

Description	Requirement	Note
Max. loan amount	None	Set by lender
Min. down payment	0%	Lender discretion
Min. credit score	None	Lenders may set their own minimums
Max. DTI	None	Compensating factors needed if >41%

5. USDA loan

USDA loans are designed for low- to moderate-income borrowers in rural areas, providing affordable home financing without a down payment requirement. The USDA offers two main programs: the Direct Loan for low-income borrowers and the Guaranteed Loan for moderate incomes. Qualifying relies on overall credit history, and alternative credit sources may be considered for those without traditional credit.

	Direct Loan Program	Guaranteed Loan Program
Down payment	0%	0%
Income requirements	Low to very low	Moderate
Minimum credit score	No specific score	No specific score
Maximum repayment term	33 years	30 years
How to apply	Directly with the USDA	With an approved lender

6. Physician mortgage loan

Physician mortgage loans cater to doctors with high student loan balances, offering more flexible qualifying criteria. These loans often exclude student loans from debt calculations, allowing doctors to qualify with only a job offer. Requirements vary by lender, so it’s essential to shop around.

Criteria	Requirement
Employment	Proof of employment or job offer
Credit score	700+
DTI	Minimal, aside from student loans

7. No-income-verification mortgage

No-income-verification mortgages are rare and primarily for self-employed borrowers with substantial assets. Although these mortgages don’t require standard income documentation, applicants need excellent credit, low debt, and significant liquid assets. Providing accurate information is essential to avoid legal risks.

Criteria	Requirement
Credit score	700+
DTI	No more than 43%
Assets	Verified liquid assets

8. Shared appreciation mortgage

A shared appreciation mortgage allows the lender to share in your home’s future appreciation, often available as a mortgage modification to avoid foreclosure or through certain government programs. By sharing future appreciation, you may secure a lower interest rate and monthly payment.

Type	Description
Mortgage modification	Lender reduces rate in exchange for future value
Local government programs	May offer shared appreciation with down payment assistance

9. Investment property loan

Investment property loans are for mortgages on non-primary residences, with lenders assessing both your income and the rental income potential. These loans generally require a larger down payment, good credit, and a low DTI. For those with extensive portfolios, financing may resemble commercial loans.

Criteria	Requirement
Down payment	At least 20%
Credit score	Good
DTI	Low to moderate

10. Low down payment mortgage

Low down payment mortgages allow borrowers to buy a home with less than 20% down. Options include conventional, jumbo, FHA, VA, and USDA loans. Private mortgage insurance (PMI) is often required with down payments under 20%, but some programs, including VA loans, do not require PMI.

11. Adjustable-rate mortgage

Adjustable-rate mortgages (ARMs) have interest rates that change periodically after an initial fixed-rate period. ARMs often start with lower rates, but payments can increase if interest rates rise. An ARM may be suitable if you plan to sell the home before the rate adjusts or expect rates to drop.

12. Fixed-rate mortgage

A fixed-rate mortgage has a constant interest rate, providing predictable monthly payments for the life of the loan. This stability protects against rising rates, but if market rates decrease, refinancing may be necessary to lower your rate.

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13. Bridge loan

A bridge loan is a short-term mortgage that helps “bridge the gap” until you can secure long-term financing. It’s often used when buying a new home while waiting to sell your current one. Bridge loans generally require good credit and may come with higher rates due to their short duration.

Criteria	Requirement
LTV	80% or less
Credit score	Good to excellent
Income	Must show affordability for future loan

Why are there so many types of mortgages?

People, properties, and financial needs vary widely, so having multiple mortgage options allows lenders to meet different borrower needs. Lenders often sell mortgages to investors as “bundled” loans with similar characteristics, such as conforming loans that meet Fannie Mae and Freddie Mac’s standards.

Government-backed loans, including FHA, VA, and USDA, also help make homeownership accessible by offering options with lower down payments or credit requirements. These programs reduce lender risk, enabling loans that might otherwise be too risky.

What is the best type of mortgage?

The best mortgage type depends on your unique financial situation, property, and goals. Here are a few important considerations:

• Financial situation: Good credit and a sizable down payment open up more loan options. If you have credit challenges or a small down payment, an FHA or other government-backed loan may be more suitable.
• Location and personal criteria: Some mortgages are designed for specific groups, such as military members (VA loans) or low-income rural residents (USDA loans). Specialized loans, like physician mortgages, may offer favorable terms to eligible professionals.
• Risk tolerance: A fixed-rate mortgage is ideal if you prefer predictable payments. For those open to changing rates, an ARM might offer savings if rates drop.
• Short-term needs: If you plan to sell your home soon, an ARM could help you take advantage of lower initial rates.

Choosing the right mortgage is personal, so it’s essential to compare lenders and loan types. The best mortgage lenders can guide you toward options that match your needs and goals.