When you’re buying a home, it’s important to understand the different types of mortgages available to you. Here we’ll break down five of the most common types of mortgage loans. Keep in mind that each type has its own benefits and drawbacks, so be sure to do your research before deciding on a mortgage.
5 Common Mortgages, Explained
The most common mortgage types include:
- Fixed-rate mortgages
- Adjustable-rate mortgages
- VA loans
- FHA loans
- USDA loans
Here’s a closer look at each.
Fixed-Rate Mortgages
Fixed-rate mortgages are the most popular type of home loan. As the name suggests, the interest rate on a fixed-rate mortgage is fixed for the life of the loan. That means your monthly payment will stay the same, even if interest rates rise over time.
One benefit of a fixed-rate mortgage is that you can predict your monthly payments for the life of the loan. That can make budgeting and long-term financial planning easier.
On the downside, fixed-rate mortgages typically have higher interest rates than other types of loans, so your monthly payments may be higher than with other types of loans. And if interest rates fall, you won’t be able to take advantage of it unless you refinance.
Adjustable-Rate Mortgages
Adjustable-rate mortgages (ARMs) have interest rates that adjust over time. The initial interest rate is usually lower than a fixed-rate mortgage, but it can go up or down as time goes on.
The benefit of an ARM is that you may be able to get a lower interest rate than you would with a fixed-rate mortgage. That can save you money on your monthly payments.
The downside is that your interest rate could go up over time, which means your monthly payments could go up as well. And if interest rates rise sharply, you could end up owing more than your home is worth.
Related: ARMs vs. fixed-rate loans
VA Loans
VA loans are available to eligible veterans and their spouses. They’re backed by the U.S. Department of Veterans Affairs and offer competitive interest rates and terms.
One benefit of a VA loan is that you may be able to get a lower interest rate than you would with a conventional loan. You also don’t have to worry about making a down payment, and there’s no private mortgage insurance (PMI) required.
On the downside, VA loans are only available to eligible veterans and their spouses, as well as a small number of other people.
Related: Can you buy a FSBO with a real estate agent?
FHA Loans
FHA loans are backed by the Federal Housing Administration and offer competitive interest rates and terms. They’re often used by first-time homebuyers because they require as little as 3.5% down.
One benefit of an FHA loan is that it’s easier to qualify for than a conventional loan. That’s because you can qualify with a lower credit score and down payment.
On the downside, FHA loans require mortgage insurance, which can add to your monthly payment. And if you stop making your payments, the FHA could foreclose on your home.
USDA Loans
USDA loans are available to eligible rural and suburban homeowners. They’re backed by the U.S. Department of Agriculture and offer competitive interest rates and terms.
One benefit of a USDA loan is that you may be able to get a lower interest rate than you would with a conventional loan. You also don’t have to worry about making a down payment, and there’s no PMI required.
On the downside, USDA loans are only available to eligible rural and suburban homeowners.
Choosing the right mortgage is an important decision, so be sure to do your research before deciding on a loan type.
Related: Why does a home appraisal matter so much?
- 4 Bedrooms
- 6 Bathrooms
- 6,861 Sq Ft
- 22.830 Acres
445 3rd Avenue Jasper, Indiana
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Listing courtesy of Steve Lukemeyer from F.C. TUCKER EMGE.
- 4 Bedrooms
- 5 Bathrooms
- 5,388 Sq Ft
- 1.064 Acres
1987 Grandview Drive Jasper, Indiana
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Listing courtesy of Steve Lukemeyer from F.C. TUCKER EMGE.
- 3 Bedrooms
- 3 Bathrooms
- 1,776 Sq Ft
- 6.260 Acres
1928 South A Street Jasper, Indiana
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Listing courtesy of Arlet Jackle from RE/MAX Local.
- 3 Bedrooms
- 3 Bathrooms
- 2,940 Sq Ft
- 2.530 Acres
634 E Wright Road Jasper, Indiana
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Listing courtesy of Stacey Hurst from RE/MAX REVOLUTION.
- 4 Bedrooms
- 2 Bathrooms
- 3,490 Sq Ft
- 0.371 Acres
307 Newton Street Jasper, Indiana
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Listing courtesy of Tama Stemle from RE/MAX Local.
- 3 Bedrooms
- 2 Bathrooms
- 1,502 Sq Ft
- 0.344 Acres
900 Juniper Court Jasper, Indiana
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Listing courtesy of Dara O'Neil from F.C. TUCKER EMGE.
- 3 Bedrooms
- 4 Bathrooms
- 1,568 Sq Ft
- 1.100 Acres
4667 W Ireland Church Avenue Jasper, Indiana
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Listing courtesy of Marissa Goodness from Carpenter Realty LLC.
- 3 Bedrooms
- 3 Bathrooms
- 2,734 Sq Ft
- 0.580 Acres
980 S Crestwood Dr. Jasper, Indiana
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Listing courtesy of Larry Carpenter III from Carpenter Realty LLC.
- 3 Bedrooms
- 3 Bathrooms
- 2,548 Sq Ft
- 0.259 Acres
920 Brandon Avenue Jasper, Indiana
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Listing courtesy of Sandra Cave from RE/MAX Local.
- 4 Bedrooms
- 3 Bathrooms
- 2,549 Sq Ft
- 0.124 Acres
612 W 8th Street Jasper, Indiana
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Listing courtesy of Dara O'Neil from F.C. TUCKER EMGE.
- 2 Bedrooms
- 2 Bathrooms
- 1,800 Sq Ft
- 0.208 Acres
891 Giesler Road Jasper, Indiana
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Listing courtesy of Kevin Bayer from RE/MAX Local.
- 3 Bedrooms
- 1 Bathrooms
- 1,086 Sq Ft
- 0.360 Acres
4862 N US 231 Highway Jasper, Indiana
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Listing courtesy of Kevin Bayer from RE/MAX Local.
- 4 Bedrooms
- 2 Bathrooms
- 1,963 Sq Ft
- 0.101 Acres
1312 Mill Street Jasper, Indiana
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Listing courtesy of Felicia Drew from Carpenter Realty LLC.
- 5 Bedrooms
- 5 Bathrooms
- 4,353 Sq Ft
- 1.115 Acres
470 Charlene Drive Jasper, Indiana
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Listing courtesy of Brenda Welsh from SELL4FREE-WELSH REALTY CORPORATION.
- 1 Bedrooms
- 2 Bathrooms
- 662 Sq Ft
- 27 Acres
6272 N Kellerville Road Jasper, Indiana
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Listing courtesy of Gary Schnell from SELL4FREE-WELSH REALTY CORPORATION.
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View the newest homes listed in Dubois County in the last 10 days:
445 3rd Avenue Jasper, Indiana
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Listing courtesy of Steve Lukemeyer from F.C. TUCKER EMGE.
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Listing courtesy of Gary Schnell from SELL4FREE-WELSH REALTY CORPORATION.