Loan Types

Loan types explain how a mortgage is structured and which borrower or property situations it is designed to fit. Some differences are about rate behavior, such as a Fixed-Rate Mortgage versus an Adjustable-Rate Mortgage (ARM). Others are about program rules, such as a Conventional Loan versus a Government-Backed Mortgage through FHA, VA, or USDA.

Start Here by Borrower Goal

Start here after you understand the core borrowing terms in Mortgage Basics. Loan-type pages make more sense once principal, interest, payment, amortization, and lender roles are already clear.

Compare Alternative Qualification Paths

These labels can overlap because they answer different questions. For example, a foreign national investment-property program may also apply a DSCR test, and an asset qualifier mortgage may be held by a portfolio lender. The current written program determines the actual underwriting method.

The first high-value comparisons for most readers are fixed versus adjustable, Conventional Loan versus Government-Backed Mortgage, and standard conforming borrowing versus High-Balance Loan or Jumbo Loan situations. For fixed-rate choices, 30-Year Fixed Mortgage, 20-Year Fixed Mortgage, 15-Year Fixed Mortgage, and 10-Year Fixed Mortgage explain the common payment-versus-payoff tradeoff.

For many borrowers, the first real decision is not one exotic product versus another. It is whether the loan should be Fixed-Rate Mortgage or adjustable, and whether the program path should be conventional or government-backed through FHA Loan, VA Loan, or USDA Loan. Government-backed comparisons should include program costs such as FHA mortgage insurance, the VA Funding Fee, and the USDA Guarantee Fee, not only the note rate. For adjustable choices, start with Hybrid ARM, then compare 3/1 ARM, 5/1 ARM, 5/6 ARM, 7/1 ARM, 7/6 ARM, 10/1 ARM, and 10/6 ARM. Those pages work best as one comparison set rather than as isolated definitions.

This section also covers special structures such as Assumable Mortgage, Loan Assumption, FHA Loan Assumption, VA Loan Assumption, Substitution of VA Entitlement, 80-10-10 Loan, 80-15-5 Loan, Silent Second Mortgage, Community Second Mortgage, Affordable Mortgage Program, HomeReady Mortgage, Home Possible Mortgage, Government-Backed Mortgage, Land Loan, Construction Loan, Construction-Only Loan, Construction-to-Permanent Loan, Bridge Loan, Piggyback Loan, Blanket Mortgage, Hard Money Loan, Business-Purpose Mortgage, Portfolio Loan, Non-QM Loan, Bank Statement Mortgage, Asset Qualifier Mortgage, DSCR Loan, Physician Mortgage Loan, ITIN Mortgage, Foreign National Mortgage, Manufactured Home Loan, Chattel Loan, Renovation Loan, FHA 203(k) Loan, Purchase-Money Mortgage, Seller Financing, and Wraparound Mortgage, where the borrower may step into an existing loan, finance land or a build, pair two liens, use specialized underwriting, qualify through verified assets or rental-property cash flow, navigate cross-border documentation, fund a manufactured home, fold approved repairs into the mortgage structure, or use seller-held financing.

For older homeowners evaluating equity access, reverse mortgages deserve their own comparison path. Start with Reverse Mortgage and Home Equity Conversion Mortgage (HECM), then review the Reverse Mortgage Principal Limit, Reverse Mortgage Counseling, Reverse Mortgage Payment Options, and the obligations that can make a Reverse Mortgage Due and Payable.

For build-versus-repair scenarios, the first high-value distinction is whether the borrower is buying land, creating a home that does not yet exist, improving an existing property, or trying to combine the construction phase and the permanent mortgage into one path. That is where Land Loan, Construction Loan, Construction-Only Loan, Construction-to-Permanent Loan, Renovation Loan, and FHA 203(k) Loan work best as one comparison set rather than as isolated pages. Once the structure is clear, use Construction Draw, Construction Draw Schedule, Construction Draw Inspection, Construction Interest Reserve, and Construction Contingency Reserve to understand how the project is funded and controlled after closing.

In this section

• 10-Year Fixed Mortgage
  Fixed-rate mortgage with principal and interest scheduled for repayment over 10 years.
• 10/1 ARM
  Hybrid mortgage with a ten-year fixed rate followed by annual adjustment opportunities.
• 10/6 ARM
  Hybrid mortgage with a ten-year fixed rate followed by six-month adjustment opportunities.
• 15-Year Fixed Mortgage
  Fixed-rate mortgage with principal and interest scheduled for repayment over 15 years.
• 20-Year Fixed Mortgage
  Fixed-rate mortgage with principal and interest scheduled for repayment over 20 years.
• 3/1 ARM
  Hybrid mortgage with a three-year fixed rate followed by annual adjustment opportunities.
• 30-Year Fixed Mortgage
  Fixed-rate mortgage with principal and interest scheduled for repayment over 30 years.
• 5/1 ARM
  Hybrid mortgage with a five-year fixed rate followed by annual adjustment opportunities.
• 5/6 ARM
  Hybrid mortgage with a five-year fixed rate followed by six-month adjustment opportunities.
• 7/1 ARM
  Hybrid mortgage with a seven-year fixed rate followed by annual adjustment opportunities.
• 7/6 ARM
  Hybrid mortgage with a seven-year fixed rate followed by six-month adjustment opportunities.
• 80-10-10 Loan
  A piggyback purchase structure using an 80% first mortgage, 10% second mortgage, and 10% down payment.
• 80-15-5 Loan
  A piggyback purchase structure using an 80% first mortgage, 15% second mortgage, and 5% down payment.
• Adjustable-Rate Mortgage
  Mortgage with a rate that can reset after an initial fixed period.
• Affordable Mortgage Program
  Mortgage or assistance program that reduces specific barriers for eligible buyers through targeted financing features.
• Asset Qualifier Mortgage
  Lender-specific mortgage that relies primarily on verified eligible assets rather than ordinary employment-income qualification.
• Assumable Mortgage
  An assumable mortgage may let an approved new borrower take over the loan's unpaid balance, rate, and remaining repayment schedule.
• Assumption Agreement
  Document in which an approved new borrower accepts responsibility for an existing mortgage obligation.
• Assumption Application
  A proposed borrower's request for approval to take over a specific existing mortgage and its remaining terms.
• Balloon Mortgage
  Mortgage requiring a large final payment before the balance would be fully repaid through regular installments.
• Bank Statement Mortgage
  Alternative-documentation mortgage that derives qualifying income from eligible bank-statement cash flow.
• Blanket Mortgage
  Mortgage secured by more than one property or parcel under a single loan structure.
• Bridge Loan
  Short-term financing used to buy a new home before sale proceeds from the current home are available.
• Business-Purpose Mortgage
  Real-estate-secured credit extended primarily for business or commercial use rather than personal household purposes.
• Chattel Loan for a Manufactured Home
  Personal-property financing secured by a manufactured home rather than a mortgage on the home and land as real estate.
• Community Second Mortgage
  Disclosed subordinate affordable-housing loan used with an eligible first mortgage for approved purchase costs.
• Conforming Loan
  Conventional mortgage meeting applicable Fannie Mae or Freddie Mac eligibility and loan-size requirements.
• Construction Contingency Reserve
  Budget amount reserved for eligible unforeseen construction or renovation costs that arise after closing.
• Construction Draw
  Staged release of construction-loan funds after approved work and supporting documents satisfy lender requirements.
• Construction Draw Inspection
  Progress review used to help a construction lender decide whether completed work supports a requested draw.
• Construction Draw Schedule
  Milestone-based plan showing when construction costs may be requested, reviewed, and released from the loan.
• Construction Interest Reserve
  Designated construction-loan funds used to pay interest as staged advances increase the outstanding balance.
• Construction Loan
  Financing that releases funds in stages to build a home before or alongside permanent mortgage financing.
• Construction-Only Loan
  Short-term construction financing that does not automatically become the permanent mortgage.
• Construction-to-Permanent Loan
  Financing path that connects staged home-construction advances with the completed property's long-term mortgage.
• Conventional Loan
  Mortgage that is not insured or guaranteed through an FHA, VA, or USDA housing program.
• Credit-Qualifying Assumption
  Mortgage assumption requiring the proposed borrower to pass the applicable credit and repayment review.
• Debt Service Coverage Ratio (DSCR) Loan
  Rental-property loan that bases a major part of qualification on property income relative to its debt obligation.
• Eligible Non-Borrowing Spouse
  HECM borrower's spouse who is not on the loan note but may qualify for limited occupancy protections under HUD rules.
• FHA 203(k) Loan
  FHA-insured mortgage that combines an eligible property purchase or refinance with approved rehabilitation funds.
• FHA Loan
  Mortgage made by an approved lender and insured through the Federal Housing Administration.
• FHA Loan Assumption
  Approved transfer in which a qualified buyer takes over an existing FHA-insured mortgage and its remaining terms.
• Fixed-Rate Mortgage
  Mortgage whose note rate remains unchanged for the full scheduled loan term.
• Foreign National Mortgage
  Lender-specific U.S. property mortgage for an eligible non-U.S. borrower using specialized residency, income, asset, or credit documentation.
• Fully Amortizing Mortgage
  Mortgage whose scheduled principal-and-interest payments are designed to reduce the balance to zero by maturity.
• Government-Backed Mortgage
  Mortgage insured, guaranteed, or funded through a federal housing program such as FHA, VA, or USDA.
• Hard Money Loan
  Short-term real-estate-secured loan emphasizing collateral value, project feasibility, and a credible repayment exit.
• High-Balance Conforming Loan
  Conforming mortgage above the national baseline limit but within the higher limit for an eligible high-cost area.
• Home Equity Conversion Mortgage (HECM)
  FHA-insured reverse mortgage for eligible homeowners age 62 or older who use an eligible home as a principal residence.
• Home Possible Mortgage
  Freddie Mac affordable conventional mortgage with income limits, low-down-payment options, and flexible eligible funding sources.
• HomeReady Mortgage
  Fannie Mae affordable conventional mortgage with income limits, low-down-payment options, and flexible eligible funding sources.
• Hybrid ARM
  Adjustable-rate mortgage with an opening fixed-rate phase followed by scheduled rate adjustments.
• Interest-Only Mortgage
  Mortgage permitting scheduled payments that cover interest but no principal for a defined period.
• ITIN Mortgage
  Lender-specific mortgage path for a borrower using an IRS Individual Taxpayer Identification Number instead of an SSN.
• Jumbo Loan
  Mortgage whose original balance exceeds the conforming loan limit applicable to the property's location and unit count.
• Land Loan
  Financing used to buy land before a completed home or permanent mortgage is in place.
• Life Expectancy Set-Aside (LESA)
  Portion of a HECM principal limit reserved to help pay designated property taxes and insurance charges.
• Loan Assumption
  A loan assumption is the approved process for a new borrower to take responsibility for an existing mortgage and its remaining terms.
• Manufactured Home Loan
  Financing for a manufactured home, structured either as a real-property mortgage or a personal-property loan.
• Mortgage Assumption Fee
  Charge for reviewing, processing, and documenting a request to take over an existing mortgage.
• Non-Conforming Loan
  Conventional mortgage that falls outside Fannie Mae or Freddie Mac purchase standards because of size or another eligibility issue.
• Non-Qualified Mortgage (Non-QM)
  Consumer mortgage outside the Qualified Mortgage framework, often using specialized terms or income documentation.
• Physician Mortgage Loan
  Lender-specific mortgage for eligible medical professionals with specialized employment, debt, down-payment, or mortgage-insurance rules.
• Piggyback Loan
  A second mortgage originated with the first mortgage to help finance the same home purchase.
• Portfolio Loan
  Mortgage originated for a lender to retain on its own balance sheet rather than sell promptly through a standard channel.
• Purchase-Money Mortgage
  Mortgage or seller-held financing used to help the buyer acquire the property being purchased.
• Release of Mortgage Liability
  Formal removal of an existing borrower from personal responsibility for a continuing mortgage debt.
• Renovation Loan
  Mortgage that combines property financing with lender-controlled funds for approved repairs or improvements.
• Reverse Mortgage
  Home-secured loan that lets an eligible older homeowner access equity while deferring ordinary monthly loan repayment.
• Reverse Mortgage Counseling
  Required independent session that helps a prospective HECM borrower review costs, obligations, alternatives, and loan consequences.
• Reverse Mortgage Due and Payable
  Loan status requiring a reverse mortgage balance to be resolved after a maturity event or uncured borrower default.
• Reverse Mortgage Payment Options
  HECM methods for receiving proceeds through a credit line, monthly advances, a lump sum, or an available combination.
• Reverse Mortgage Principal Limit
  HECM borrowing ceiling calculated before payoffs, set-asides, closing costs, and prior advances reduce available proceeds.
• Seller Financing
  Home-purchase financing where the seller extends credit to the buyer instead of relying only on a traditional mortgage lender.
• Silent Second Mortgage
  Undisclosed subordinate mortgage or repayment agreement that conceals the true purchase financing from the first lender.
• Subject-To Mortgage
  Property transfer in which the buyer takes title while the seller's existing mortgage remains without an approved substitution of borrowers.
• Substitution of VA Entitlement
  VA assumption process replacing the seller's used home-loan entitlement with sufficient entitlement from an eligible assuming buyer.
• USDA Loan
  Rural housing mortgage requiring an eligible property, household income, and primary-residence use.
• VA Loan
  Mortgage for an eligible borrower that uses a Department of Veterans Affairs guaranty.
• VA Loan Assumption
  Approved transfer in which a qualified buyer takes over an existing VA-backed mortgage and its remaining terms.
• Wraparound Mortgage
  Seller-financing structure where a new obligation wraps around an existing underlying mortgage.