Which Type of Mortgage Is Right for You

Choosing Between Types of Mortgages

• There are two major mortgage categories: conventional (or conforming) and nonconforming loans.

Conventional or Conforming Loans

• These loans meet government-set requirements, including limits on how much you can borrow. For 2025, the conforming loan limit is $806,500 for most of the U.S. If you're staying within that range, a conventional loan could offer lower interest rates and flexible down payment options—as little as 5% in some cases.

Nonconforming Loans

These don’t meet those same guidelines and come in two main types:

• Jumbo Loans: If you need to borrow more than the conforming loan limit, you’ll likely need a jumbo loan. These usually require a strong credit score (700+), a larger down payment (around 20%), and a solid debt-to-income ratio.

• FHA Loans: Perfect for first-time buyers or those with lower credit scores, FHA loans require just a 3.5% down payment and a credit score of 580 or higher. They’re designed to make homeownership more accessible.

Fixed-Rate vs. Adjustable-Rate Mortgages (ARMs)

Once you've picked a loan type, your next decision is interest structure. Here's how they compare:

Fixed-Rate Mortgage

• Your interest rate stays the same for the life of the loan

• Monthly payments are predictable

• Great if you want long-term stability and peace of mind

Adjustable-Rate Mortgage (ARM)

• Starts with a lower, fixed interest rate for a set period

• After that, the rate adjusts based on the market

• Ideal if you plan to sell or refinance within a few years

Mortgage Term Lengths

The most common loan terms are 15 years and 30 years. Both have their pros and cons.

• 15-Year Mortgage:

  • Lower interest rate

  • Higher monthly payments

  • Less paid over the life of the loan

• 30-Year Mortgage:

  • Higher interest rate

  • Lower monthly payments

  • More paid in interest over time

So, Which Mortgage Is Best for You?

It depends on your finances, how long you plan to stay in the home, and how much risk you're comfortable taking. A lender or mortgage advisor can help you compare your options and run the numbers.

Thinking about buying a home and not sure which loan fits your budget? Let’s talk about your goals so we can help match you with the best mortgage option for your situation.