Types of Mortgages Explained: How to Choose in 2026

Picking the wrong mortgage can cost you tens of thousands of dollars. Picking the right one can save just as much. But with so many loan types out there, it’s easy to get lost in the options.

There are six main types of mortgages: fixed-rate, adjustable-rate (ARM), FHA, VA, USDA, and jumbo loans. Each is built for a different financial situation, timeline, and credit profile. 

Here’s a plain-language breakdown of the major mortgage types, who they’re designed for, and how to figure out which one fits your life.

The Six Main Types of Mortgages

1. Fixed-Rate Mortgages

Your rate stays the same for the life of the loan, whether that’s 15 or 30 years. Your monthly payment for principal and interest never changes.

Good fit if: You’re planning to stay in the home long-term and want predictability in your budget.

The catch: Fixed rates are usually a little higher than the starting rate on an adjustable loan. You’re paying for the stability.

Common terms: 10, 15, 20, or 30 years. The 30-year gives you the lowest monthly payment. The 15-year costs less in total interest over time.

2. Adjustable-Rate Mortgages (ARMs)

An ARM starts with a fixed rate for a set period, usually 5, 7, or 10 years, then adjusts annually based on market conditions. A 5/1 ARM, for example, holds steady for five years, then adjusts once a year after that.

Good fit if: You plan to sell or refinance before the fixed period ends, or you think rates will drop.

The catch: Once the fixed period ends, your payment can go up, sometimes significantly. If your timeline changes, you’re exposed to rate risk.

3. FHA Loans

FHA loans are backed by the federal government and built for buyers who don’t have a large down payment or a perfect credit score. You can put down as little as 3.5% with a credit score of 580 or higher.

Good fit if: You’re a first-time buyer, your credit score is below 680, or you don’t have a lot saved for a down payment.

The catch: FHA loans require mortgage insurance, both upfront and annually. That adds to your total loan cost. And, the mortgage insurance doesn’t expire, meaning it is for the life of the loan.

4. VA Loans

VA loans are available to eligible veterans, active-duty service members, and qualifying surviving spouses. They typically require no down payment and no private mortgage insurance.

Good fit if: You’ve served. If you qualify, this is one of the best loan products available, full stop.

The catch: Eligibility is limited, and there’s a one-time VA funding fee. But it can usually be rolled into the loan.

5. USDA Loans

USDA loans offer zero down payment for buyers in eligible rural and suburban areas. Income limits apply, and you can check your address on the USDA’s online map.

Good fit if: You’re buying in a qualifying area, and your income is within the program limits. Free down payment money is hard to beat.

The catch: There are geographic and income restrictions, plus upfront and annual guarantee fees similar to FHA.

6. Jumbo Loans

A Jumbo Loan is any mortgage above the conforming loan limit, which is $832,750 in most U.S. markets in 2026. Because these loans can’t be sold to Fannie Mae or Freddie Mac, lenders hold more risk and set stricter requirements.

Good fit if: You’re buying a higher-priced home and need financing above the standard limit.

The catch: You’ll typically need a credit score of 700 or higher, a down payment of 10–20%, and meaningful cash reserves.

How to Figure Out Which Loan Is Right for You

There’s no single “best” mortgage. The right one depends on your credit, your savings, how long you’re staying, and what your monthly budget looks like. Here’s how to think through it:

How long will you stay? If you’re planning 10-plus years in the home, a fixed rate gives you stability. If you’re likely moving in under seven years, an ARM’s lower initial rate might actually save you more.

What’s your credit and down payment situation? Credit under 680 or less than 10% down? FHA is probably your most accessible path. Strong credit and 20% down? A conventional fixed-rate loan likely costs you the least, with no mortgage insurance.

What can you afford monthly? A 15-year mortgage builds equity faster and saves on interest, but the monthly payment is noticeably higher. A 30-year keeps payments lower and frees up cash for other things.

Don’t just look at the interest rate. Look at the APR. It factors in fees, points, and mortgage insurance. The lowest rate on paper isn’t always the cheapest loan in practice.

Know your eligibility. If you’ve served in the military, check VA loan options first. If you’re buying in a rural or suburban area, check USDA eligibility. Both offer zero down payment and are worth exploring before assuming you need to save more.

Frequently Asked Questions About Mortgage Types 

What’s the most common mortgage?

The 30-year fixed-rate mortgage. Most homebuyers choose it because the payments are predictable and manageable.

What’s best for first-time buyers to buy a home?

FHA loans are popular because the credit and down payment requirements are lower. But if you qualify for VA or USDA, those are even better deals.

Fixed or adjustable, which is better?

Depends on your timeline. Fixed is better if you’re staying long-term. An ARM can work in your favor if you’re planning to move or refinance within a few years.

Can I switch home loan types later?

Yes. Refinancing lets you move from one loan type to another, for example, from an FHA loan to a conventional loan to drop mortgage insurance, or from an ARM to a fixed rate for stability. 

Ready to Take the Next Step?

Before you commit to anything, compare offers from at least three lenders. Small differences in rate or fees add up fast over the life of a loan.

And if any of this still feels overwhelming, that’s what we’re here for. Our loan officers will walk you through your options without the pressure, just a straight conversation about what makes sense for where you are right now. Find a loan officer or apply online. 

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At Gershman Mortgage, communities, families, and homes are at the heart of what we do. Built on the core values of honesty, integrity, entrepreneurial spirit, and customer-first service, we’re committed to providing an exceptional homebuying experience. Our goal is simple: to exceed expectations and build lifelong relationships.

NMLS #138063 16253 Swingley Ridge Road Suite 200 Chesterfield, MO 63017 (800) 457-2357 Equal Housing Lender. Serving borrowers in: Alabama, Arkansas, Colorado, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Nebraska, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, Tennessee, Texas, Wisconsin

Written by Kaylee Larson for Gershman Mortgage