Mortgage Loan Types Summary: Which Loan Type is Best For You?

theresa rolen • March 19, 2025

Mortgage Loan Types & What They Mean

Wondering which loan type is best for you? To start, you need to understand that there are several mortgage loan options available. Here's a summary:


1️⃣ Conventional Loans


✅ Not backed by the government
✅ Requires good credit (typically 
620+)
✅ Minimum down payment: 
3% for first-time buyers
✅ Best for borrowers with 
stable income & strong credit


2️⃣ FHA Loans (Federal Housing Administration)


✅ Government-backed loan with lower credit score requirements (580+)
✅ Minimum down payment: 
3.5%
✅ More flexible approval guidelines
✅ Requires 
mortgage insurance (MIP)


3️⃣ VA Loans (For Veterans & Active Military)


✅ Backed by the Department of Veterans Affairs
✅ 
No down payment required
✅ 
No private mortgage insurance (PMI)
✅ Competitive interest rates for eligible veterans


4️⃣ USDA Loans (For Rural & Suburban Homebuyers)


✅ Backed by the U.S. Department of Agriculture
✅ 
No down payment required
✅ Income and location restrictions apply
✅ Great for 
low-to-moderate income buyers in rural areas


5️⃣ Jumbo Loans


✅ For loan amounts above conventional loan limits ($806,500+ in most areas for 2025)
✅ Requires 
higher credit scores (700+) and larger down payments
✅ Used for 
luxury or high-priced homes


6️⃣ Fixed-Rate Mortgages


✅ Interest rate stays the same for the entire loan term
✅ Predictable monthly payments
✅ Available in 
15, 20, or 30-year terms


7️⃣ Adjustable-Rate Mortgages (ARM)


✅ Interest rate starts lower but can adjust over time
✅ Good for 
short-term homeowners
✅ Rate adjustments depend on the market


8️⃣ Bridge Loans (Short-Term Financing)


✅ Temporary loan to “bridge” the gap between selling & buying a new home
✅ Allows you to 
purchase a new home before selling your current one
✅ Short repayment period (typically 
6 months to 3 years)


9️⃣ Reverse Mortgages (For Homeowners 62+)


✅ Converts home equity into tax-free cash for seniors
✅ 
No monthly mortgage payments (loan is repaid when home is sold)
✅ Best for 
retirement income planning


🔟 Construction Loans


✅ Short-term loan to build a new home
✅ Converts into a 
permanent mortgage after completion
✅ Requires 
detailed construction plans & lender approval


1️⃣1️⃣ Non-QM Loans (Non-Qualified Mortgages)


✅ Designed for self-employed, investors, or unique income situations
✅ Uses 
alternative income verification (bank statements, assets, etc.)
✅ More flexible than traditional loans but 
higher interest rates may apply


1️⃣2️⃣ HELOC (Home Equity Line of Credit) & Home Equity Loans


✅ Borrow against your home’s equity
✅ 
HELOC = Revolving credit line (like a credit card)
✅ 
Home Equity Loan = Lump sum loan with fixed payments


1️⃣3️⃣ Interest-Only Loans


✅ Pay only the interest for a set period, then start paying principal
✅ Lower initial payments, but higher payments later
✅ Best for 
short-term investors or those expecting increased future income


🏡 Loan Options for Special Property Types


🏢 Condo Loans


✅ Conventional & FHA loans available (but condo must be FHA-approved)
✅ Lenders check 
HOA financials, reserves & insurance
✅ Best for buyers wanting 
low-maintenance living

There may also be non-QM loan products available if not an FHA approved property.


🏠 Manufactured & Mobile Home Loans


✅ FHA, VA, USDA, and some Conventional loans available
✅ Home must be 
permanently attached to land (not on wheels)
✅ Typically 
higher interest rates & stricter lender requirements


🏡 Multi-Family Loans (2-4 Units)


✅ FHA, VA, & Conventional options available
✅ 
Live in one unit, rent out the others (FHA allows owner-occupied multifamily)
✅ Down payment varies—
3.5% (FHA), 15-25% (Conventional)


🏚️ Fixer-Upper & Renovation Loans


✅ FHA 203(k) & Fannie Mae Homestyle Loans available
✅ Covers 
home purchase + renovation costs
✅ Requires 
detailed contractor estimates & approval


🏠 Investment Property Loans


✅ Conventional & Non-QM loans available
✅ Requires 
higher down payments (15-25%)
✅ Best for buyers looking to 
rent out properties


🔹 Which Loan is Right for You?


There’s a perfect loan for every buyer! As a mortgage broker, I help match you with the best loan type & lender for your needs.


📞 Let’s Chat! Call or message me today to explore your options.

📧 Theresa@SummitLendingUSA.com
📞 (913) 705-0049
🌐
Apply Now


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