Buying a home is one of the biggest financial decisions you’ll ever make. The good news? There isn’t just one type of mortgage.
Understanding your options can help you find a loan that fits your budget, goals, and future plans.
Whether you’re purchasing your first home, refinancing an existing mortgage, or tapping into your home’s equity, here’s a look at some of the most common mortgage types available today.
Fixed-Rate Mortgages
A fixed-rate mortgage keeps the same interest rate and principal-and-interest payment for the life of the loan.
Best For:
- Homebuyers who plan to stay in their home long-term
- Borrowers who prefer predictable monthly payments
- Anyone wanting protection from future interest-rate increases
Because the rate stays the same, fixed-rate mortgages offer stability and can make budgeting easier.
Adjustable-Rate Mortgages (ARMs)
An adjustable-rate mortgage typically starts with a lower introductory rate before adjusting periodically based on market conditions.
Best For:
- Borrowers planning to move within a few years
- Those expecting future income growth
- Buyers comfortable with some payment variability
ARMs often provide lower initial payments, but rates may rise or fall after the introductory period ends.
Conventional Loans
Conventional mortgages are among the most common home loans and are not backed by a government agency.
These loans typically offer competitive rates and flexible property options for qualified borrowers with strong credit and stable income.
Government-Backed Mortgage Options
FHA Loans
FHA loans are backed by the Federal Housing Administration and are designed to make homeownership more accessible.
These loans often allow lower down payments and more flexible credit requirements than conventional loans.
Best for: First-time homebuyers, borrowers with limited savings, and buyers rebuilding credit.
VA Loans
VA loans are available to eligible veterans, active-duty service members, and certain surviving spouses.
Backed by the Department of Veterans Affairs, these loans often feature no down payment requirement and competitive interest rates.
Best for: Eligible military members and veterans, borrowers seeking low upfront costs, and those wanting to avoid private mortgage insurance.
USDA Loans
USDA loans are designed to help eligible borrowers purchase homes in qualifying rural communities.
Depending on eligibility, these loans may offer low or no down payment options.
Refinancing
Refinancing replaces your current mortgage with a new loan.
Homeowners refinance for many reasons, including:
- Lowering their interest rate
- Reducing monthly payments
- Changing loan terms
- Accessing home equity
Refinancing can be a valuable tool when market conditions or financial goals change.
Home Equity Loans and HELOCs
If you’ve built equity in your home, you may be able to use it to fund major expenses such as home improvements, education costs, or debt consolidation.
Home Equity Loan
Provides a lump sum with fixed payments over a set period.
Home Equity Line of Credit (HELOC)
Provides a revolving line of credit that you can draw from as needed, similar to a credit card.
How Do You Choose the Right Mortgage?
The best mortgage depends on your financial situation, goals, and how long you expect to stay in the home.
Consider a fixed-rate mortgage.
FHA, VA, or USDA loans may help.
An adjustable-rate mortgage could be worth exploring.
Refinancing or a HELOC may provide additional flexibility.
Every borrower is different, which is why talking with an experienced mortgage professional can help you understand your options and make a confident decision.
Let’s Talk About Your Mortgage Options
Whether you’re buying your first home, refinancing, or using your home’s equity, AGCU is here to help you find the mortgage that fits your needs.
Call Member Care: 866-508-AGCU (2428)
Email: info@agcu.org
AGCU is an Equal Housing Lender. Loan programs, terms, rates, and eligibility requirements are subject to change and approval.