Which Mortgage Fits Your Life? A Friendly Guide to 6 Common Home Loans

Hey  All, Todd Martin here with the AMPED PROPERTY GROUP of CIC Realty, and I’ve been helping folks buy and sell homes for over 20 years. One of the biggest questions I hear is: “Which home loan should I choose?” Well, there’s no one-size-fits-all answer. Your best fit depends on your budget, lifestyle, and how long you plan to stay in the home. Let’s walk through the main types of loans and see which might work best for you.

1. Fixed-Rate Mortgage

What it is:
A fixed-rate mortgage has an interest rate (and monthly payment) that stays the same for the whole loan. Typical lengths (known as “terms”) are 15 or 30 years.

Why choose it:

• You like predictability. Your payment stays the same each month—no surprises!
• You plan to stay in your home for many years. The longer you stay, the more you benefit from locking in a steady rate.

Things to keep in mind:

• Usually requires a solid down payment (often 20%, though some lenders accept less with extra fees).
• If interest rates drop a lot in the future, you’d have to refinance to get a lower rate.

2. Adjustable-Rate Mortgage (ARM)

What it is:
An adjustable-rate mortgage starts with a fixed interest rate for a certain period (like five or ten years). After that, the rate can change every year based on current market rates. This means your monthly payment can go up or down.

Why choose it:

• You can often get a lower starting interest rate compared to a fixed-rate mortgage.
• You might not plan to stay in the home for very long. If you sell before the rate starts changing, you could save money.

Things to keep in mind:

• Payments can become higher if interest rates rise.
• Good for folks who may not qualify for the best fixed rates due to credit score or finances.

3. FHA Loan (Federal Housing Administration)

What it is:
Backed by the government, an FHA loan lets you put down as little as 3.5% of the home’s price. That’s great if you’re a bit short on savings for a traditional down payment.

Why choose it:

• Perfect for buyers who don’t have a lot of money saved.
• Easier credit requirements than many other loans.

Things to keep in mind:

• There’s a limit on how big your loan can be (the amount changes from place to place).
• You’ll need to pay mortgage insurance, which adds to your monthly cost.

4. VA Loan (Veterans Affairs)

What it is:
A VA loan is available to people who’ve served in the U.S. military (or certain members of the National Guard and Reserves). You can often buy a home with no down payment and no mortgage insurance.

Why choose it:

• Huge savings if you qualify. Not having to pay mortgage insurance can help reduce your monthly payment.
• Often comes with competitive interest rates.

Things to keep in mind:

• The home must be your main residence.
• The property must meet the VA’s condition guidelines, so major fixer-uppers usually aren’t allowed.

5. USDA Loan (U.S. Department of Agriculture)

What it is:
This loan helps people in rural (and some suburban) areas buy homes without a big down payment—even 0% down in some cases.

Why choose it:

• If you live or are moving to an approved rural area, it can make homeownership more affordable.
• Interest rates can be lower than some other loans.

Things to keep in mind:

• There are income limits. You need to show you don’t earn more than a certain amount.
• You’ll likely pay mortgage insurance, which increases your monthly payment.

6. Bridge Loan

What it is:
A bridge loan, also called a “gap loan,” is for when you’re buying a new home before selling your old one. It temporarily covers the cost of the new home by combining both mortgages into one loan until your old home sells.

Why choose it:

• It can help you snag your dream home without waiting to sell your current place.
• Once your old home sells, you pay off that part of the loan and refinance the rest if needed.

Things to keep in mind:

• You usually need a great credit score and low debt compared to your income.
• You shouldn’t need to borrow more than 80% of the combined value of both homes.

Extra Tips for First-Time Buyers

1. Check Your Credit Score
• The higher your score, the better the interest rate you can usually get.
• Simple fixes, like paying down credit cards or correcting credit report errors, can often raise your score.
2. Know Your Budget
• The monthly payment isn’t just the loan—it can include homeowners insurance, mortgage insurance, and property taxes.
• Don’t forget about closing costs and any future repairs or maintenance.
3. Compare Lenders
• Shopping around for mortgage lenders can help you find the best deal.
• Ask about closing costs, fees, and interest rates.
4. Get Pre-Approved
• A pre-approval letter shows sellers that you’re serious and can help you stand out in a competitive market.
5. Ask Questions
• Your real estate agent and mortgage lender are there to help. No question is too small!

Final Thoughts

With over two decades in real estate, I’ve seen buyers pick the right loan—and I’ve seen them pick the wrong one, too. The key is understanding your goals and financial situation. Do you need a stable payment for the long haul? Or do you plan to move in a few years and want a lower initial rate?

No matter your situation, there’s a loan type that can make owning your own home a reality. Feel free to reach out, and I’ll be happy to guide you every step of the way!