Choosing the right mortgage loan is as important as choosing the best lender. A good lender will explain options that fit your particular criteria; there is no one-size-fits all anymore. Some loans carry higher fees than other types of mortgage loans.

Fixed-rate Mortgages
Fixed-rate mortgages have been the mainstay of the home loan industry for decades. Over the years, loan-to-value ratios have fluctuated and interest rates have moved up and down, but the security that a fixed-rate mortgage offers has never lost its appeal.

Borrowers gravitate toward fixed-rate mortgages in-lieu-of other types because they like the security of knowing exactly how much they will pay per month for the principal and interest.

The interest rate is fixed, so if overall interest rates increase, it does not affect the fixed-rate borrower. Likewise, if overall interest rates decrease, the borrower's payment still remains the same unless the borrower chooses to refinance the mortgage into a lower rate.

 
A borrower can choose to make a larger monthly payment and direct the additional portion of the payment toward the principal, thereby decreasing the principal balance of the loan faster.

FHA Loans
FHA mortgage loans are insured by the government through mortgage insurance that is funded into the loan.

First-time home buyers are ideal candidates for an FHA loan because the down payment requirements are minimal and FICO scores do not matter.

VA Loans
This type of government loan is available to veterans who have served in the U.S. Armed Services and, in certain cases, to spouses of deceased veterans. The requirements vary depending on the years of service and whether the discharge was honorable or dishonorable. The main benefit to a VA loan is the borrower does not need a down payment. The loan is guaranteed by the Veterans Administration, but funded by a conventional lender.

Interest-Only Loans
In an interest-only loan or mortgage the borrower only pays the interest each month. This makes it cheaper than a conventional loan in which part of each month's payment goes towards the principal and part goes towards the interest.

Adjustable Rate Mortgage (ARM) 
The interest rate on the ARM is periodically adjusted based on a variety of indexes. As a result, the interest rate on your loan will rise and fall with increases and decreases in overall interest rates. If interest rates rise, you can expect to see an increase in what your monthly payment.