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Mortgages have three elements: a loan type, a rate type and a term. Knowing how these pieces work together can help you pick the best mortgage for you.

A mortgage's type depends on if a government agency or private investors are involved, as well as the amount of the loan.

FHA loans 

An FHA mortgage is a home loan insured by the Federal Housing Administration. FHA loans are backed by the government and designed to help  borrowers with lower credit, FHA makes it possible to buy a house with a score of just 580 and only 3.5% down.  Note that FHA loans require mortgage insurance to protect lenders against losses that result from defaults on home mortgages. You’ll be able to finance the upfront mortgage insurance premium into your loan. You will also be responsible for paying an annual premium.    

Conventional loans

A conventional mortgage is a loan that's not backed by a government agency conventional loans are available with a down payment as low as 3%. They are a bit harder to qualify for, but they typically cost less over time than an FHA loan. You can avoid paying private mortgage insurance if your down payment is 20% or more. This can save you hundreds of dollars on your monthly mortgage payment. 

VA loans

VA loans are mortgages backed by the Department of Veterans Affairs and   are exclusively for veterans, eligible surviving spouses and active-duty service members. VA loans offer the opportunity to buy a home with no down payment or private mortgage insurance.

Jumbo loans

Jumbo home loans  are mortgages that exceed the conventional loan limit. This simply means that you'll need a jumbo mortgage if your loan amount is between $484,351 and $3 million.

There are two kinds of mortgage rates – fixed and adjustable – and you can pick the type of rate that matches your goals.  A fixed-rate mortgage will stay the same for the life of your loan. This option keeps your month-to-month mortgage payment consistent and predictable. This is a great option for homeowners who plan to stay in their new home for a long time and want a regular payment to budget around. An adjustable-rate mortgage will stay the same for the first 5, 7 or 10 years of the loan. Then, your rates will adjust up or down once per year depending on market conditions. An adjustable-rate mortgage offers the opportunity to get the lowest rate possible and is a good choice for homeowners who plan on moving or refinancing before the initial fixed-rate period ends.

A mortgage term is the number of years you have to pay off your mortgage. A 15-year term means you have 15 years to pay off your mortgage, and a 30-year term means you have 30 years. You have a payment due each month. A 30-year term normally has lower monthly payments than 15-year mortgages since your total mortgage balance is spread out over a longer period of time, resulting in smaller monthly payments. A shorter term means your balance is spread over a shorter period of time, making your monthly payments higher.

A pre-approval shows you’ve spoken to us, provided initial documentation, set your budget and considered the next steps. This can give you an advantage over other home shoppers in a competitive market. You and your real estate agent will understand what you can afford so you don't waste time looking at homes outside your budget. You'll be in the best position to make a strong offer on a house because the seller will know a lender already verified your finances. After your offer is accepted, you're less likely to run into surprises that could slow down closing the loan.  

Keep in mind an approval is just the start of getting a mortgage. Once you find a house and make an offer, the house will need to pass inspections and be appraised by a third-party. Your approval amount could also change if your financial situation changes.