Part of the American Dream is owning your own home. The Government has created multiple types of loans to work with any homeowner. Loan Officers work with variable types of loans, but not always every type of loan. To help you decipher the right loan, the following is a list of man loan types and their general description.

Finding the Right Mortgage

Standard Fixed Rate Loan

A standard fixed rate loan is just that; upon approval for a home loan, the interest rate at that time is locked down for the term of your loan. The interest rate never fluctuates. The advantage of this type of loan is that when interest rates go up, yours does not. Anyone with proper credit approval qualifies for this loan with terms typically for either 10 years, 15 years or 30 years.

ARM Loan

ARM or Adjustable Rate Mortgage is a loan in which the interest adjusts depending on the agreement between you and the lender. The most common ARM terms are 3 year, 5 year and 7/1 year. With a 3 year ARM, your interest rate adjusts every three years, 5 year ARM adjusts every 5 years and 7/1 year ARM adjusts the first time in 7 years and then every year following. Interest rates for this loan are generally much lower than fixed rate loans, but with the risk of a much higher interest rate in future years.

FHA Loan

FHA loans are loans backed by the Federal Housing Administration. These loans provide lower income families and individuals the ability to purchase a home with very little or no money down. Homeowners who apply for FHA loans must pay a 1% Mortgage Insurance which is usually added into the loan. FHA loans are also a fixed rate loan.


The United States Department of Agriculture offers a loan programs for qualified borrowers in specific areas. This is a 100% financed home loan. To qualify you must live in a designated rural area which typically has a population of 20,000 or less. Underwriters for the USDA will review your income, credit report and payment history just as your financial did. The biggest pro to a USDA loan is it is one of the last true loans that require no money down.

203K FHA Rehab Loan

This loan is for borrowers who are interested in a home that requires repairs to build back up to livable conditions. The Federal Housing Administration, backed by the Government, allows for the loan to be generated up to 110% of the appraised value of the home. To qualify, you will need 3.5% down payment on the total loan amount plus your lender’s qualifications.

There are other loan options for homeowners not included. Many states also provide First Time Homebuyer grants and/or loans. Check with your loan officer to discuss these and other loans that may provide a better fit.