Last week, I discussed the most common mortgage programs, including conventional, FHA, and VA. I also discussed rehabilitation, or construction, loans. On Tuesday, I discussed the two most common financing options: fixed rate and adjustable rate mortgages (ARM). Today, I am going to put these two concepts together to discuss the most common types of mortgages.

I would say the most common mortgage type always has been, and will probably always be, the conventional fixed rate mortgage. This is the mortgage your parents and grandparents were raised on, and comes in the 15, 20, and 30 year varieties. When most people think of a mortgage, this is what they think of. It may not be the most sexy option, but it provides the peace of mind of a fixed rate with the lower costs of a conventional.

Another common mortgage type is the FHA ARM. The FHA ARM provides borrowers with the most lenient underwriting guidelines, the lowest down payment, and the lowest short term monthly payments. It is a great option for first time homebuyers and young professionals, who plan to increase their income and upgrade their homes within 10 years. They can buy the biggest house with the smallest income and cash reserves, and don’t have to worry about the long term ramifications of the adjusting rate, because they will not be in the house when the rate adjusts.

Finally, there is the conventional rehabilitation loan. These loans come in several variations, but all have conventional financing, meaning lower upfront costs, and a fixed rate. People buying a fixer upper are generally not first time homebuyers and plan to stay in the home for a longer period of time (forever homes) since they are customizing the space. For these reasons, I see more conventional than FHA rehab loans.

But just because these are the most common does not mean they are always the best lending options. To find out your best options, it is always important to speak with a qualified loan officer about your situation.

If you have any questions about these or other loan options, please contact me. If you want to add anything about your favorite type of mortgage, please leave a comment.