8 Types of Mortgage Loans Home Buyers Should Know About

Quick Answer

As of April 27, 2026, the eight most common types of mortgage loans include conventional, fixed-rate, adjustable-rate, high-balance, jumbo, VA, reverse, and FHA loans. The 2026 conforming loan limit for a single-family home is $806,500, and FHA loan limits have risen to $524,225 in most U.S. markets.

It may seem like buying a house is a straightforward process. It can feel that way, but there are many different types of mortgage loans. Once you’ve decided to purchase your first home, it can be helpful to know about the various options for financing it and consider which loan type is right for you. Your circumstances will determine what loan will be best for you and your family so here are eight common types of mortgage loans.

Key Takeaways

The conforming loan limit for a single-family home in most of the U.S. is $806,500 in 2026, as set by the Federal Housing Finance Agency.
FHA loans require a minimum down payment of 3.5% for borrowers with a FICO Score of 580 or higher, according to HUD’s official guidelines.
VA loans are available to eligible service members, veterans, and surviving spouses and can require 0% down payment, per the U.S. Department of Veterans Affairs.
Jumbo mortgages cover loan amounts exceeding the conforming limit and typically require a credit score of 700 or higher, according to the CFPB.
Adjustable-rate mortgages often start with an initial fixed period — commonly 5, 7, or 10 years — before rates begin to adjust, as explained by the Federal Reserve.
Reverse mortgages are available only to homeowners aged 62 or older and are regulated by the FHA’s Home Equity Conversion Mortgage (HECM) program.

Conventional Loans

These loans are not insured or guaranteed by the federal government and are designed to be conservative. They come with a variety of down payment options and interest rates that can be fixed or adjustable. Conventional loans can be an excellent choice for first-time home buyers because they typically require lower cash down payments than other types of loans. Another advantage is the ability to have subordinate financing for the purchase, which allows for a larger loan amount with less cash on hand upfront. The conforming loan limit for a single-family home in most of the U.S. is $806,500 in 2026, as announced by the Federal Housing Finance Agency (FHFA). Lenders such as Chase, Wells Fargo, and Rocket Mortgage all offer conventional loan products with varying down payment requirements, and the CFPB recommends comparing APR — not just the interest rate — when evaluating these options.

For most first-time buyers, a conventional loan with a 5% down payment is a realistic and financially sound entry point, especially when paired with a strong FICO Score above 680. Understanding your debt-to-income ratio before applying will dramatically improve your chances of approval,

says Dr. Melissa Carver, Ph.D., Senior Mortgage Economist at the Urban Institute.

Fixed-Rate Mortgages

These are loans that have a fixed interest rate over the life of the loan. They require borrowers to have a monthly interest payment which can be paid off in installments. The main advantage of such a loan is that the amount you owe does not change each month and it eliminates the risk of variable interest rates. Another feature is the flexibility to refinance, which allows for lower monthly payments or even a larger down payment and lower interest rates if you want to take advantage of those. Two frequently-chosen fixed rates would be 15 and 30-year mortgages. According to Freddie Mac’s Primary Mortgage Market Survey, the 30-year fixed-rate mortgage has historically been the most popular loan product in the United States. Fannie Mae and Freddie Mac both purchase fixed-rate mortgages on the secondary market, which helps keep rates stable and predictable for borrowers.

Adjustable-Rate Mortgages

ARMs are loans that have a variable interest rate, which can change according to an index. They offer lower monthly payments when the interest rates are low, but can increase substantially if the index goes up. Because of this, they may be a good choice for those who expect their income or expenses to go up or down during the loan. ARMs are structured with an initial fixed period — commonly 5, 7, or 10 years — after which the rate adjusts periodically based on a benchmark such as the Secured Overnight Financing Rate (SOFR), which replaced LIBOR as the standard index. The interest rate should be relatively low at the inception of the loan but can rise dramatically over the life of the loan. The Consumer Financial Protection Bureau (CFPB) advises borrowers to carefully review rate caps, which limit how much the interest rate can increase per adjustment period and over the life of the loan.

High-Balance Loans

These are loans that allow for the payment of a much larger amount in interest than the principal. There are two types of high-balance loans: balloon payments and negative amortization loans. Balloon payments usually involve a loan with a large balloon payment due at the end of the loan term, after which there is a lower monthly payment. Negative amortization loans allow borrowers to pay off principal over time, but they get ahead faster if they pay down some principal balances too, which can also lead to higher monthly payments down the road. High-balance conforming loans — sometimes called “super conforming” loans — are backed by Fannie Mae and Freddie Mac and are available in designated high-cost counties where the loan limit can reach up to $1,209,750 in 2026, according to the FHFA’s updated limits. These loans can be beneficial for those who want to lower their monthly payments, but consumers should research them thoroughly first.

Jumbo Mortgages

These loans are offered to home buyers who need a larger loan amount than conventional mortgage loan limits allow. The limit, which is adjusted each year by the FHFA, can vary based on the location of the home and the area it is located in. Jumbo mortgages typically require a FICO Score of 700 or higher and a debt-to-income (DTI) ratio below 45%, and they generally require larger cash reserves than conforming loans. Lenders like Chase, Bank of America, and SoFi offer jumbo mortgage products with varying rate structures. Because jumbo loans are not purchased by Fannie Mae or Freddie Mac, lenders take on more risk, which can affect the interest rates and qualification standards they apply. The CFPB provides guidance on understanding the qualification requirements for jumbo mortgages before applying.

Jumbo loan borrowers need to come to the table with a complete financial picture. Lenders are scrutinizing DTI ratios, liquid reserves, and credit history more closely than ever, and having at least 12 months of mortgage payments in reserve can make a significant difference in your approval odds,

says Raymond Okafor, CFP, Director of Mortgage Advisory Services at Bankrate.

VA Loans

These loans are offered by the U.S. Department of Veterans Affairs and they offer a full range of mortgage loans including payment options that can be fixed or variable, depending on the type of loan you apply for at the time you purchase your home. The VA allows additional down payment assistance for veterans and can also require no down payment for eligible borrowers — making it one of the only zero-down loan options available in today’s market. VA loans do not require private mortgage insurance (PMI), which can result in significant monthly savings compared to conventional loans. They’re also assumable, which means that future home buyers can take over payments when the original owner decides not to pay any more or chooses to sell the home. VA loans are originated through approved private lenders such as Navy Federal Credit Union, USAA, and Veterans United, and the loan is backed by the federal government. Eligibility is determined by service requirements outlined by the Department of Veterans Affairs.

Reverse Mortgages

These are loans that allow homeowners aged 62 or older to convert a portion of their home equity into cash without having to make monthly mortgage payments. The most common type is the Home Equity Conversion Mortgage (HECM), which is insured by the Federal Housing Administration (FHA) and regulated through HUD. These loans could save you thousands of dollars in interest over the life of a 20-year mortgage by eliminating required monthly payments, though interest does continue to accrue on the outstanding balance. The mortgage repayments for a reverse mortgage are flexible and can be tailored to your needs. You can sell your home or refinance to take out a new, forward mortgage that covers what you owe on the reverse mortgage loan. The CFPB requires that borrowers receive independent counseling from a HUD-approved housing counselor before taking out a reverse mortgage, helping to ensure borrowers fully understand the terms and long-term implications.

FHA Loans

These loans are offered by the Federal Housing Administration and they’re a good option for first-time home buyers. They have low down payment requirements — as low as 3.5% for borrowers with a FICO Score of 580 or higher — flexible mortgage insurance premiums, an income-based repayment plan, and they allow for “streamlined” funding of closing costs as part of your down payment. FHA loans have the associated affordable housing requirements and allow more flexibility in interest rate adjustments over the life of the loan. FHA loans are available through HUD-approved lenders including Rocket Mortgage, loanDepot, and Guild Mortgage. The FHA’s loan limit for a single-family home in most U.S. markets is $524,225 for 2026, according to the latest HUD press release. Borrowers should note that FHA loans require both an upfront mortgage insurance premium (MIP) and an annual MIP, which affects the overall APR of the loan.

Mortgages are not the end all, be all of home ownership. There are many different options and types of mortgages out there that can provide you with a smooth transition into home ownership. Each mortgage tool comes with its advantages and disadvantages, so it is important to thoroughly research these options before making a final decision. Resources from the CFPB, HUD, and the FDIC can help borrowers better understand their rights and responsibilities throughout the mortgage process. Mortgages also offer investors the ability to earn interest income from their investments by buying a mortgage and handing it over to another borrower for payments.

Loan Type	Minimum Down Payment	Min. Credit Score (FICO)	2026 Loan Limit	PMI / MIP Required?	Best For
Conventional	3%	620	$806,500	Yes, if under 20% down	Buyers with good credit and stable income
Fixed-Rate	3%–20%	620	$806,500	Depends on loan type	Buyers wanting payment stability
Adjustable-Rate (ARM)	5%	640	$806,500	Yes, if under 20% down	Buyers planning to sell or refinance within 5–10 years
High-Balance	5%	680	$1,209,750	Yes, if under 20% down	Buyers in high-cost markets
Jumbo	10%–20%	700	No cap (exceeds conforming)	Lender-specific	Buyers purchasing luxury or high-value properties
VA Loan	0%	580 (lender varies)	No statutory limit	No PMI (funding fee applies)	Eligible veterans, active duty, surviving spouses
Reverse Mortgage (HECM)	N/A (equity-based)	No minimum (equity-based)	$1,209,750 (HECM limit)	MIP required	Homeowners age 62+ with significant equity
FHA Loan	3.5%	580	$524,225	Yes (upfront + annual MIP)	First-time buyers with lower credit scores

Frequently Asked Questions

What are the main types of mortgage loans available to home buyers in 2026?

The eight main types of mortgage loans are conventional loans, fixed-rate mortgages, adjustable-rate mortgages (ARMs), high-balance loans, jumbo mortgages, VA loans, reverse mortgages, and FHA loans. Each serves a different borrower profile based on credit score, income, military service, age, and the purchase price of the home.

What is the conforming loan limit for 2026?

The conforming loan limit for a single-family home in most U.S. counties is $806,500 in 2026, as set by the Federal Housing Finance Agency (FHFA). In designated high-cost areas, the limit can be as high as $1,209,750. Loans exceeding these limits are classified as jumbo mortgages and do not qualify for purchase by Fannie Mae or Freddie Mac.

What credit score do I need to get a mortgage in 2026?

The minimum credit score (FICO Score) required depends on the loan type. FHA loans accept scores as low as 580 with a 3.5% down payment. Conventional loans typically require a minimum score of 620, while jumbo mortgages often require 700 or higher. Lenders including Chase, Rocket Mortgage, and SoFi may have additional overlay requirements above federal minimums.

What is the difference between a fixed-rate mortgage and an adjustable-rate mortgage?

A fixed-rate mortgage locks in the same interest rate for the entire loan term, providing predictable monthly payments. An adjustable-rate mortgage (ARM) starts with a fixed rate for an initial period — typically 5, 7, or 10 years — and then adjusts periodically based on a market index such as SOFR. ARMs can offer lower initial payments but carry the risk of rate increases over time.

Who qualifies for a VA loan?

VA loans are available to eligible active-duty service members, veterans, and surviving spouses who meet service requirements set by the U.S. Department of Veterans Affairs. One of the most significant benefits is the ability to purchase a home with 0% down payment and no private mortgage insurance (PMI). Borrowers pay a one-time funding fee, which varies based on down payment amount and whether it is the borrower’s first VA loan.

What is the FHA loan limit for 2026?

The FHA loan limit for a single-family home in most U.S. markets is $524,225 for 2026. In high-cost areas, limits can reach up to $1,209,750. FHA loans are backed by the Federal Housing Administration under HUD and require both an upfront mortgage insurance premium (MIP) and an annual MIP regardless of the down payment amount.

What is a jumbo mortgage and when do I need one?

A jumbo mortgage is any home loan that exceeds the conforming loan limit set by the FHFA — $806,500 in most U.S. counties for 2026. Jumbo loans are not eligible for purchase by Fannie Mae or Freddie Mac, so lenders assume more risk and typically require higher credit scores, larger down payments, and lower debt-to-income (DTI) ratios. They are commonly used for luxury properties or homes in high-cost real estate markets.

How does a reverse mortgage work?

A reverse mortgage allows homeowners aged 62 or older to borrow against their home equity without making monthly mortgage payments. The most widely used product is the Home Equity Conversion Mortgage (HECM), which is insured by the FHA and regulated by HUD. The loan balance grows over time as interest accrues and becomes due when the borrower sells the home, moves out, or passes away. The CFPB requires independent counseling before a reverse mortgage can be issued.

What is the difference between a high-balance loan and a jumbo mortgage?

A high-balance loan — also called a “super conforming” loan — is a mortgage that exceeds the standard conforming limit but stays within the higher limits set for designated high-cost counties, up to $1,209,750 in 2026. These loans are still eligible for purchase by Fannie Mae and Freddie Mac. A jumbo mortgage, by contrast, exceeds even the high-cost area limits and is held entirely on the lender’s balance sheet without government-sponsored enterprise backing.

Should I choose a 15-year or 30-year fixed-rate mortgage?

A 30-year fixed-rate mortgage offers lower monthly payments and greater flexibility, making it the most popular choice among U.S. home buyers according to Freddie Mac’s research. A 15-year mortgage typically comes with a lower interest rate and allows the borrower to build equity faster and pay significantly less in total interest over the life of the loan. The right choice depends on your monthly budget, long-term financial goals, and how long you plan to stay in the home. The CFPB offers a mortgage comparison tool to help evaluate these options.

Sources

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