Home Financing Options

The type of loan you choose will affect your interest rate and your monthly payment, so it’s important to choose wisely. Here’s a look at the pros and cons of some common loan types.

	Fixed Rate Loans	Adjustable Mortgages (ARMs)	FHA Loans	VA Loans
Best for	Borrowers who prefer stable payments that won't change	Borrowers who might sell after 5 years, or are comfortable knowing their payments can change	Borrowers with smaller down payments or lower credit scores	Borrowers who might sell after 5 years, or are comfortable knowing their payments can change
Length of terms	Typically last for 10 - 40 years	Typically last for 30 years	Typically last for 10 - 40 years	Typically last for 10 - 40 years
Interest rate	Fixed rate for the life of a loan	Fixed rate for 3, 5, 7, or 10 years, then can change every year thereafter	Borrowers can choose a fixed or adjustable rate	Borrowers can choose a fixed or adjustable rate
Monthly payment	Amount never changes	Can change after the fixed period ends	Can change only for an adjustable rate mortgage	Can change only for an adjustable rate mortgage
Mortgage insurance	Typically required if down payment is less than 20%	Typically required if down payment is less than 20%	Mortgage insurance is required (upfront free and monthly insurance payment)	Not required
Additional details	30-year fixed is the most common mortgage type	After fixed period ends, interest rate changes annually based on the index value at that time	Insured by the Federal Housing Administration (FHA)	Insured by the US Department of Veterans Affairs (VA)