Fixed-Rate Mortgage Types
A fixed rate mortgage essentially means that the interest rate you pay remains the same through the duration of the loan period. You can choose from 10, 15, 20, 30 and sometimes 40-year fixed-rate mortgages.

FHA Loans
FHA mortgage loan types are insured by the government through mortgage insurance that is funded into the loan. First-time home buyers are ideal candidates for an FHA loan because it offers low down payments, low closing costs and easy credit qualifying.

VA Loans
This type of government loan is available to veterans who have served in the U.S. Armed Services and, in certain cases, to spouses of deceased veterans. The requirements vary depending on the year of service and whether the discharge was honorable or dishonorable. The main benefit to a VA loan is the borrower does not need a down payment. The loan is guaranteed by the Veterans Administration, but funded by a conventional lender.

Interest-Only Mortgage Types
An interest-only loan is a loan in which for a set term the borrower pays only the interest on the principal balance, with the principal balance unchanged. At the end of the interest-only term the borrower may enter an interest-only mortgage, pay the principal, or (with some lenders) convert the loan to a principal and interest payment (or amortized) loan at his/her option.

Option ARM Mortgage Types
Option ARM loans are complicated. They are adjustable-rate mortgages, meaning the interest rate fluctuates periodically. Like the name implies, borrowers can choose from a variety of payment options and index rates. But beware of the minimum payment option, which can result in negative amortization.