Homebuyers have access to multiple financing options; this guide helps choose the best one for your financial situation and goals.

One of the most significant decisions when buying a home is choosing a financing option. If you’re new to mortgages or it’s been a long time since you initiated one, here’s a guide to the different types of home loans. There’s an option for just about every financial situation and homebuyer goal.

Conventional mortgages

Conventional home loans have a fixed interest rate for the life of the loan. The rate you start out with will remain the same, whether you have a 15-, 20- or 30-year mortgage.

While payments with fixed-rate loans remain the same, how the funds are applied changes over time. Early on, you’ll likely pay more in interest than towards the principal. As your home equity grows, the portion of the payment applied to interest will decrease and more will go toward principal. Try out our mortgage calculators to see how it works.

Conventional mortgages are ideal for homebuyers who plan to stay in their home a long time and like knowing their mortgage payment amount won’t change.

Adjustable rate mortgages (ARMs)

ARMs, also called variable-rate mortgages, are just what they sound like. Over the life of the loan the rate varies. In the early phase of the loan, rates are lower than a conventional mortgage. At pre-determined times, the rate is adjusted up or down in relation to an index rate.

ARMs are structured in a variety of ways. For example, a 5/1 ARM is a 30-year mortgage with a fixed rate for the first five years. For years 6 through 30, the rate is adjusted once per year within predefined limits in the loan terms. You might also see ARMs with a fixed rate period of 3, 7 or 10 years followed by rate adjustments. Discover more about how adjustable rate mortgages work here.

ARMs are attractive to people who plan on moving before the lower rate expires, paying off their mortgage quickly or having a higher income when the rate adjusts.

FHA Loans

Federal Housing Administration (FHA) loans administered through local banks and credit unions help many people, including those who have lower credit scores or relatively little cash for a down payment, become homeowners.

VA Loans

Another federal program provides VA Loans for active military members and veterans, even when they have no cash for a down payment. These loans are attractive to many service members because they offer a fixed rate, no prepayment penalties and require no PMI. Plus, the program has generous rules concerning gift funds and cash-out refinancing.

Specialty loans from Consumers

No two homebuyers or home purchases are alike and that’s why we offer numerous specialty mortgage products. These include:

• First-time Homebuyer Loans: Get a home loan with low or no PMI—learn about the mortgage process here
• Advance Medical Mortgages: Home loans for members who work in the medical field
• At Your Service Mortgages: Home loans for members who work in public service
• Portfolio loans/investment property loans: Get a loan on single-family homes and housing with 2-4 units
• Construction Loans: With just one closing fee and extended lock period

• Vacant Land/Lot Loans: for up to 100 acres

Additionally, we offer flexible mortgage loans for self-employed borrowers, jumbo financing and unique credit profiles.

 

All loans subject to approval. Rates, terms, and conditions are subject to change and may vary based on credit worthiness, qualifications, and collateral conditions.