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Conventional Loans

There are three types of conventional mortgages that you can select amoung when purchasing or refinancing a home.

  
Fixed Rate Mortgages

This is the type of loan that most people think of when considering a mortgage. You will owe a certain percentage of the loan as interest to the lender. This amount never changes, and your monthly payment will remain the same over the life of your loan. Fixed rate mortgages are usually for 10,15,20 or 30 years.
Adjustable Rate Mortgages
With an adjustable-rate mortgage (ARM), the interest rate you pay is adjusted from time to time to keep it in line with changing index rates. This means that when interest rates go up, your monthly mortgage payments may go up as well. The rates on an ARM usually change once or twice a year, and there is typically a lifetime rate cap (or limit) on both the amount of each individual rate adjustment and the total amount the rate can change over the term of the loan.
Balloon Loans
Balloon loans are short-term fixed rate loans that have fixed monthly payments based usually upon a 30-year fully amortizing schedule and a lump sum payment at the end of its term. Usually they have terms of 3, 5, and 7 years.
The advantage of this type of loan is that the interest rate on balloon loans is generally lower than 30- and 15- year fixed mortgages resulting in lower monthly payments. The disadvantage is that at the end of the term you will have to come up with a lump sum to pay it off, either through a refinance or from your own savings.

 
Government Loans
VA Loans
Veterans Administration loans are available to veterans and service personnel who have met the required service time in the military. They're guaranteed by the Department of Veterans Affairs and, in most cases, require no down payment. In addition, it is easier to qualify for a VA loan than a conventional loan. Lenders generally limit the maximum VA loan to $203,000. The U.S. Department of Veterans Affairs does not make loans, it guarantees loans made by lenders. VA determines your eligibility and, if you are qualified, VA will issue you a certificate of eligibility to be used in applying for a VA loan. VA-guaranteed loans are obtained through an application process with a private lending institution.
FHA Loans
The Federal Housing Authority (FHA) which is part of the U.S. Dept. of Housing and Urban Developmen (HUD) plays a major role in supporting homeownership by underwriting loans for lower and moderate income families. FHA assists first-time home buyers and others who might not be able to meet down payment requirements for conventional loans by providing mortgage insurance to private lenders. FHA loans are insured by the Federal Housing Administration. These loans require lower down payments and accept higher debt ratios than a conventional mortgage so they're good for some buyers who might not otherwise qualify.