7 Most Popular Mortgage Types That Can Save You Money in 2025

The right mortgage type can make a huge difference to your wallet. Home prices have climbed over 5.5% each year since 1963, while inflation rose at 3.9% yearly during that time. This growing gap makes it crucial to know your financing options.

Your mortgage choice depends on three key elements: loan type, term length, and interest rate structure. These factors affect your monthly payments and total costs by a lot. Fixed-rate mortgages usually come with 15 or 30-year terms. Adjustable-rate mortgages might offer lower rates upfront but are less predictable down the road.

Mortgage options can seem overwhelming at first. You’ll find conventional loans and government-backed choices like FHA loans that accept credit scores as low as 580 with just 3.5% down. Let me walk you through seven popular mortgage loan types that could save you thousands in 2025. This will help you make smart choices based on your money situation and home-buying goals.

#1. Fixed-Rate Mortgage

Fixed-rate mortgages are the life-blood of home financing in America. About 89% of U.S. mortgages in 2021 were fixed-rate. People love these mortgages because they offer one simple promise – consistency throughout the loan term.

Fixed-Rate Mortgage key features

The name tells you exactly what you get—your interest rate stays the same for your entire loan. Your monthly principal and interest payment never changes, whatever happens in the market.

We used several term options for fixed-rate mortgages:

• 30-year terms (most common)
• 15-year terms
• 20-year terms
• 10-year terms (less common)

Many lenders now offer flexible terms from 8 to 40 years. The 30-year fixed-rate mortgage leads the market because it spreads lower monthly payments over a longer time.

There’s another reason to consider the amortization schedule. Your monthly payment stays the same, but the split between principal and interest changes over time. The original payment mostly goes toward interest, then gradually moves toward principal as you pay off the loan.

Fixed-Rate Mortgage pros and cons

Pros:

• Payment predictability: Your consistent payment makes budgeting simple and reliable.
• Protection from rate increases: The rate stays fixed whatever happens in the market, which helps during uncertain economic times.
• Prepayment flexibility: Most fixed-rate mortgages let you make extra principal payments without penalties. This helps you pay off the loan faster and save on interest.
• Simplicity: These loans are easy to understand, with no complex adjustments or changing rates.

Cons:

• Higher original rates: Fixed-rate mortgages usually start with higher interest rates than adjustable-rate options.
• Less beneficial when rates fall: You’ll need to refinance and pay costs to get lower rates if market rates drop by a lot.
• Higher long-term interest costs: You’ll pay more total interest with 30-year terms compared to shorter options.
• Qualification challenges: These loans can be harder to qualify for than adjustable-rate mortgages because of higher payments.

Fixed-Rate Mortgage pricing and interest rates

The average 30-year fixed mortgage rate sits between 6.5% and 7% as of July 2025. The national average 30-year fixed mortgage APR reaches 6.83% as of July 18, 2025, while 15-year fixed mortgage APR stands at 6.05%.

Freddie Mac data shows the 30-year fixed rate at 6.75% as of July 17, 2025. This shows a huge jump from January 2021’s record-low average of 2.65%.

Your specific rate depends on several factors:

• Credit profile (score and history)
• Property type (single-family homes usually get better rates)
• Loan-to-value (LTV) ratio
• Debt-to-income (DTI) ratio
• Loan type and purpose
• Discount points purchased
• Asset-based relationship discounts

The better your financial position, the better your rate. On top of that, 15-year fixed mortgages offer rates about 0.8% lower than 30-year options.

Fixed-Rate Mortgage best for

Fixed-rate mortgages work great for:

1. Long-term homeowners: The stability beats potential short-term savings from adjustable rates if you’ll stay in your home for many years (especially more than 5-10 years).
2. First-time homebuyers: These mortgages make sense for new homeowners because they’re predictable and straightforward.
3. Risk-averse borrowers: You’ll get peace of mind if you want to avoid payment changes and prefer financial security.
4. Current economic climate: Analysts expect rates to stay between 6% and 7% for the next two years. Locking in a rate now might help if you think rates could go higher.
5. Budget-conscious households: Fixed payments are great for households that need consistent housing costs for long-term planning.

Fixed-rate mortgages remain one of the most reliable options in today’s market if you value stability over lower initial payments.

#2. Adjustable-Rate Mortgage (ARM)

About 8% of borrowers choose adjustable-rate mortgages (ARMs) instead of fixed-rate options. These mortgages offer a flexible approach to home financing with interest rates that change over time. You might save money with ARMs under certain market conditions.

Adjustable-Rate Mortgage (ARM) key features

ARMs blend fixed and adjustable interest rate periods into one loan package. These loans start with a lower fixed interest rate that lasts through the original period. After that, the rate adjusts based on market conditions.

You can identify these mortgage options by their fraction notation:

• The first number shows the fixed-rate period (3, 5, 7, or 10 years)
• The second number tells you how often rates adjust afterward (every 6 or 12 months)

Let’s look at some examples. A 5/1 ARM keeps the same rate for five years and then adjusts yearly. A 5/6 ARM stays fixed for five years before changing every six months. Other popular options include 7/1, 7/6, 10/1, and 10/6 ARMs.

The Secured Overnight Financing Rate (SOFR) and other financial benchmarks determine rate adjustments. Your lender adds a margin to the benchmark index to set your specific rate. Rate caps protect you by limiting how much your interest rate can go up during the first adjustment, later adjustments, and throughout the loan term.

Adjustable-Rate Mortgage (ARM) pros and cons

Pros:

• Lower introductory rate – ARMs start with rates below similar fixed-rate mortgages
• Potential payment reduction – Your monthly payment might drop if market rates fall during reset
• Initial savings – You pay less during the fixed period thanks to the lower starting rate
• Rate increase protection – Caps shield you from extreme market changes by limiting rate increases
• Refinancing option – You can switch to a fixed-rate mortgage before adjustments begin

Cons:

• Payment uncertainty – Your rate and monthly payment might rise after the fixed period
• Budget challenges – Changing payments make it harder to plan your finances
• Potential refinancing penalties – Some lenders penalize early refinancing during the intro period
• Higher long-term costs – Rising rates could mean paying more interest than with fixed-rate mortgages
• Complex structure – ARMs have more rules and terms than fixed-rate mortgages

Adjustable-Rate Mortgage (ARM) pricing and interest rates

Zillow data shows 5-year ARMs averaging 7.91% as of July 18, 2025. This rate sits below the 30-year fixed-rate mortgages that average between 6.5% and 7%.

Lenders calculate your ARM rate by adding their margin to the index value. These margins usually range from 2% to 3.5%, based on your credit and the lender’s policies. Most ARMs include a rate floor that sets a minimum interest rate, whatever the market conditions.

ARM qualification differs from fixed-rate mortgages. You’ll need at least 5% down for conventional ARMs, while fixed-rate loans might only need 3%. The lower initial ARM payment could help you qualify for a bigger loan.

Adjustable-Rate Mortgage (ARM) best for

ARMs suit certain types of borrowers especially well:

1. Short-term homeowners – The lower intro rate benefits those planning to sell within 3-7 years, before adjustments kick in
2. Upward mobility professionals – People expecting higher future income can handle payment changes better
3. Market-savvy borrowers – You can benefit from falling rates without refinancing
4. Real estate investors – The lower initial rates help maximize cash flow for short-term property holds
5. Refinance strategists – You can save money initially if you plan to refinance before adjustments start

These mortgage types trade predictable payments for short-term savings. Your timeline plays a vital role – shorter loan terms usually make ARMs more beneficial.

#3. FHA Loan

FHA loans are among the most available mortgage types for buyers who face credit challenges or have limited savings. The government insures these loans, which creates a safety net for lenders and makes shared qualification standards possible.

FHA Loan key features

FHA loans’ life-blood is their relaxed credit requirements. Buyers can qualify with scores as low as 580 for a 3.5% down payment, or even 500-579 with a 10% down payment. This is a big deal as it means that FHA loans are more forgiving than conventional mortgages that need scores of 620 or higher.

FHA loans let borrowers have higher debt-to-income (DTI) ratios—usually up to 43%, but they can reach 50% or higher with factors like strong cash reserves. Borrowers can manage other financial obligations with their mortgage thanks to this flexibility.

Buyers need just 3.5% down payment with credit scores of 580 or above. Many first-time homebuyers use this feature to buy sooner. The FHA guidelines also let down payment funds come from many sources. Family members, employers, charitable organizations, or close friends can gift these funds.

These mortgages work only for primary residences. Investment properties don’t qualify unless the owner lives in one unit full-time. Properties must pass strict FHA appraisal standards that assess value, safety, construction quality, and code compliance.

FHA Loan pros and cons

Pros:

• Lower credit scores make homeownership possible for credit-challenged buyers
• Low down payments (as low as 3.5%) reduce barriers to entry
• More flexible down payment fund sources, including gift money
• Higher debt-to-income ratios work for borrowers with existing debts
• Interest rates can be lower than conventional loans for similar credit profiles

Cons:

• Mortgage insurance is mandatory whatever your down payment
• Loans with less than 10% down need lifetime mortgage insurance
• Strict property conditions may limit your housing choices
• Loan limits are lower than conventional mortgages
• Extra upfront insurance premium adds to closing costs

FHA Loan pricing and insurance costs

FHA loans have a unique two-part mortgage insurance structure. Borrowers pay an upfront mortgage insurance premium (UFMIP) of 1.75% of the loan amount. This can be paid at closing or added to the loan.

Annual mortgage insurance premiums (MIP) range from 0.15% to 0.75% of the loan amount. The rate depends on loan term, size, and down payment. Most borrowers with loans over 15 years and down payments under 5% pay 0.55% yearly.

Conventional loans typically drop private mortgage insurance at 20% equity. FHA mortgage insurance stays for the entire loan term if your down payment is under 10%. Down payments of 10% or more keep MIP for 11 years.

FHA loan limits for 2025 range from $524,225 in most areas to $1,209,750 in high-cost markets for single-family homes. These caps are about 35% lower than conventional conforming loan limits.

FHA Loan best for

FHA loans work best for:

1. First-time homebuyers with small savings for down payments
2. People with credit scores below 620 who can’t get conventional financing
3. Those bouncing back from bankruptcy or foreclosure
4. Buyers who need flexible debt-to-income standards
5. People with non-traditional or limited credit history

These mortgages help many buyers become homeowners when conventional financing seems out of reach. Lower credit requirements and modest down payments create paths to build equity despite past money troubles or limited savings.

#4. VA Loan

VA loans are better than other mortgage options for military service members, veterans, and eligible surviving spouses. These benefits often exceed what other financing alternatives offer. The U.S. Department of Veterans Affairs guarantees these government-backed mortgages. This guarantee helps private lenders offer terms that borrowers wouldn’t get elsewhere.

VA Loan key features

VA loans really shine because they’re available to more people. These mortgage loan types need no down payment whatsoever when borrowers have their full VA entitlement. This helps eligible individuals finance 100% of their home’s value.

VA loans are more flexible with credit requirements. The VA doesn’t set a minimum credit score requirement. Lenders look at the overall credit profile instead of just one number. Most VA lenders want to see scores of at least 620, though different institutions may vary.

These loans allow for higher debt-to-income (DTI) ratios—usually up to 41%. This makes them available to borrowers who have existing financial obligations. Veterans with full remaining entitlement don’t face any loan limits since 2020. These limits only affect those who’ve already used some of their entitlement.

VA Loan pros and cons

Pros:

• Zero down payment requirement with full entitlement
• No private mortgage insurance (PMI) requirement ever
• Competitive interest rates (averaging 0.244% lower than FHA loans in 2024)
• More lenient credit standards than conventional loans
• No prepayment penalties for early loan payoff
• Multiple refinance options including the Interest Rate Reduction Refinance Loan
• Foreclosure avoidance programs encouraged by the VA

Cons:

• VA funding fee required for most borrowers
• Higher funding fee for subsequent loan use
• Limited to primary residences only
• Property must meet Minimum Property Requirements
• Not all sellers or real estate agents understand VA loans

VA Loan funding fees and costs

VA loans need a one-time funding fee instead of monthly mortgage insurance. First-time users who make no down payment pay 2.15% of the loan amount. This fee goes up to 3.3% for subsequent uses without a down payment.

Making a down payment cuts this expense significantly. The funding fee drops to 1.5% with 5% down, whatever your prior usage. A 10% down payment brings it down further to 1.25%.

Some borrowers don’t have to pay the funding fee at all, including:

• Veterans receiving compensation for service-connected disabilities
• Purple Heart recipients on active duty
• Eligible surviving spouses

Borrowers can pay the fee upfront at closing or add it to the total loan amount. VA loans usually have closing costs between 1% and 6% of the loan amount. Sellers can pay up to 4% as concessions.

VA Loan best for

These mortgages work great for:

1. Active-duty military members, veterans, and qualifying spouses looking to buy homes without a down payment
2. Borrowers with credit scores below conventional loan thresholds
3. Those who want to avoid mortgage insurance payments completely
4. Borrowers with higher debt-to-income ratios who might not qualify for conventional financing
5. People planning to stay in their home long-term

The average 30-year VA loan rate sits at 6.61% as of March 2025. This makes these loans a smart choice for eligible borrowers on top of their other benefits.

#5. USDA Loan

USDA loans are powerful tools that help homebuyers find affordable options in rural and suburban communities. The U.S. Department of Agriculture backs these lesser-known mortgages, making them available through unique advantages you won’t find with other financing options.

USDA Loan key features

These loans give qualified borrowers 100% financing with no down payment. Many suburban areas within an hour’s commute of major cities qualify for these mortgages, despite what most people believe.

The program offers two main types:

• USDA Guaranteed Loans: Private lenders issue these with USDA backing
• USDA Direct Loans: The government provides these directly to very low-income applicants

Properties must be in USDA-eligible areas, which cover about 97% of U.S. land. These mortgages only finance primary residences, not investment properties or vacation homes.

Lenders keep credit requirements flexible. Most accept scores of 640 or higher for automated approval. Manual underwriting might work for scores between 600-640.

USDA Loan pros and cons

Pros:

• Zero down payment financing lets you buy a home without savings
• Competitive interest rates beat conventional loans
• Reduced insurance costs compared to FHA loans
• Flexible credit requirements help credit-challenged borrowers
• No cash reserves required unlike other mortgage options
• No prepayment penalties when paying off early

Cons:

• Income restrictions apply to moderate-income households
• Geographic limitations rule out major metropolitan areas
• Primary residences only – investment properties don’t qualify
• Lifetime guarantee fee stays unlike conventional PMI
• Longer processing times than conventional loans

USDA Loan pricing and eligibility

Households must earn no more than 115% of the area’s median income. This amount typically reached $112,450 for 1-4 member households in 2024.

Your debt-to-income ratio should stay at or below 41%. Some lenders might approve up to 50% with strong compensating factors.

Two fees fund the USDA loan program:

1. Upfront guarantee fee: 1% of the loan amount, which you can finance
2. Annual fee: 0.35% of the remaining loan balance, paid monthly

Areas with populations under 35,000 usually qualify for USDA loans. This includes many suburban communities.

USDA Loan best for

These mortgages work great for:

1. Low-to-moderate income families wanting affordable homeownership
2. First-time homebuyers without down payment savings
3. Buyers looking in rural or qualifying suburban areas
4. People with modest credit profiles (scores 600+)
5. Homebuyers who want low upfront costs and competitive rates

Yes, it is one of the most affordable paths to homeownership in today’s market for eligible borrowers.

#6. Conventional Loan

Conventional loans are the most common type of mortgage today. These loans make up most home financing options and private lenders issue them without government insurance or guarantees. Borrowers with strong financial backgrounds often choose these versatile financing tools.

Conventional Loan key features

Private lenders issue conventional loans without government backing. These loans come in two main types: conforming loans that follow Fannie Mae and Freddie Mac guidelines, and non-conforming (jumbo) loans that go beyond set limits. The conforming loan limit for single-family homes in 2025 is $806,500 in most areas. This limit goes up to $1,209,750 in expensive markets.

The credit requirements are tougher than government-backed loans, and most lenders want minimum scores of 620. First-time homebuyers can start with 3% down, while others usually need 5-10%. Your debt-to-income ratio should stay below 50%.

Conventional Loan pros and cons

Pros:

• PMI stops automatically at 22% equity and you can ask to remove it at 20%
• The loan process moves faster with fewer property restrictions
• Processing happens quicker than government-backed loans
• You can borrow more money for expensive properties

Cons:

• You need better credit scores (at least 620)
• Better loan terms require bigger down payments
• Less than 20% down means paying private mortgage insurance
• You must wait longer after bankruptcy (2-4 years) or foreclosure (3-7 years)

Conventional Loan pricing and PMI

Annual private mortgage insurance rates range from 0.46% to 1.5% of what you borrow. Your credit score and loan-to-value ratio affect PMI costs. Better credit scores mean lower rates.

You can remove PMI once you reach 20% equity by asking your lender, and it stops automatically at 22% equity. This is a big deal as it means that conventional loans work better than FHA loans, where mortgage insurance often stays throughout the loan term.

Conventional Loan best for

These mortgages work great if you have:

• Credit scores over 620 (660+ gets you better rates)
• Money saved for a 3-5% down payment
• No desire to pay lifetime mortgage insurance
• Need to borrow more or want faster processing
• Plans to build equity quickly to drop PMI

#7. Jumbo Loan

Jumbo loans open doors to premium properties for luxury home buyers and those in expensive housing markets. These specialized mortgages are bigger than the conforming loan limits that the Federal Housing Finance Agency (FHFA) has set.

Jumbo Loan key features

Jumbo loans help finance properties that cost more than standard limits. The 2025 limits are $806,500 in most U.S. counties and reach $1,209,750 in expensive areas. These non-conforming mortgages don’t qualify for purchase by Fannie Mae or Freddie Mac.

Lenders have tough qualification standards. You’ll need a credit score of at least 700, a down payment of 10-20%, and your debt-to-income ratio can’t go above 43%. You must also have enough cash saved to cover 6-12 months of mortgage payments.

Jumbo Loan pros and cons

Pros:

• Makes high-value property financing possible
• Works for primary homes, vacation properties, and investments
• Comes with fixed and adjustable rate options
• Interest rates can be just as good as conforming loans

Cons:

• Tougher to qualify for
• More expensive closing costs with multiple appraisals possible
• Bigger down payments needed
• Less protection for consumers than conforming loans

Jumbo Loan pricing and down payment

Down payments start at 10%, but most lenders want 20% or more. The final amount depends on your loan size, credit score, and property type.

Interest rates can match or beat conventional rates. You’ll pay more in closing costs because of extra qualification steps and possible multiple appraisals.

Jumbo Loan best for

These loans work best for:

• Buyers looking at luxury homes or properties in expensive markets
• People with high incomes and excellent credit
• Those buying in areas with high living costs
• Borrowers who have significant cash reserves
• People buying second or vacation homes

Conclusion

Your specific financial situation and homeownership goals will help you pick the right mortgage type. Fixed-rate mortgages give you stable, consistent payments. Adjustable-rate mortgages offer lower starting rates if you plan to own the home briefly.

FHA loans work great for buyers with credit challenges since they need just 3.5% down. Military members can benefit from VA loans that need no down payment or PMI. USDA loans give similar perks to rural and many suburban homebuyers. Buyers with stronger credit profiles often choose conventional mortgages, while jumbo loans fit those buying in expensive markets.

You should look at several things before picking a mortgage. The length of time you’ll stay in the home matters most. Your credit score and available down payment play crucial roles too. A careful look at your debt-to-income ratio shows what you can afford. Your comfort level with changing payments should also guide your choice.

The right mortgage can save you thousands over your loan’s lifetime. My research shows that borrowers who match their finances to the right mortgage type get better terms. They also feel less stressed about their finances throughout their homeownership.

Mortgage rates keep changing, so when you apply affects your total costs. Experts say you should get quotes from at least three lenders to find the best rates and terms for your chosen mortgage.

Mortgage types do more than just finance your home – they help make your homeownership dreams real. You might want low upfront costs, steady payments, or flexible qualifying rules. Understanding these seven mortgage types helps you make smart choices about this major investment.

Key Takeaways

Understanding the right mortgage type can save you thousands of dollars and make homeownership more accessible, regardless of your financial situation.

• Match your timeline to your mortgage type – Choose fixed-rate for long-term stays (5+ years) or ARMs for short-term ownership to maximize savings
• Government-backed loans offer powerful advantages – FHA (3.5% down, 580 credit), VA (0% down for military), and USDA (0% down for rural areas) provide accessible pathways
• Credit score directly impacts your options – Scores above 620 unlock conventional loans with removable PMI, while lower scores benefit from government programs
• Down payment flexibility varies dramatically – From 0% (VA/USDA) to 20% (jumbo loans), understanding requirements helps you choose the most affordable path
• Compare at least three lenders – Mortgage rates and terms vary significantly between lenders, potentially saving thousands over your loan’s lifetime

The key is aligning your mortgage choice with your specific financial profile, homeownership timeline, and long-term goals. Government-backed options provide excellent opportunities for first-time buyers or those with credit challenges, while conventional and jumbo loans serve borrowers with stronger financial positions seeking premium properties or faster equity building.

Mortgage Type Comparison for Real Estate Investment (2025)

Feature	Fixed-Rate Mortgage	Adjustable-Rate Mortgage (ARM)	FHA Loan	VA Loan	USDA Loan	Conventional Loan	Jumbo Loan
Primary Use	Primary residences, second homes, investment properties	Primary residences, second homes, investment properties	Primary residence only. Can be used for multi-unit (up to 4) if owner occupies one unit. Rarely for investment without owner occupancy exceptions (job relocation after 1 year, etc.)	Primary residence only. Can be used for multi-unit (up to 4) if owner occupies one unit. Cannot be solely for investment or rental.	Primary residence only. Cannot be used for investment properties or vacation homes.	Primary residences, second homes, investment properties	High-value primary residences, vacation properties, investment properties
Interest Rate Structure	Stays the same for the entire loan term	Fixed for initial period (3, 5, 7, 10 yrs), then adjusts periodically	Generally fixed, can be lower than conventional for similar credit profiles	Generally fixed, often competitive (average 0.244% lower than FHA in 2024)	Fixed, competitive rates (e.g., 5.00% for Direct Loans as of July 2025)	Fixed or adjustable. For investment properties, often fixed.	Fixed or adjustable. Can be on par with or even lower than conventional.
Typical Term Lengths	10, 15, 20, 30 years (30-year most common), some flexible 8-40 years	Varies based on fixed-rate period (e.g., 5/1, 7/6, 10/1)	Typically 15 or 30 years	Typically 15 or 30 years	30 years	15, 20, 30 years	Varies, fixed and adjustable options available
Down Payment	Varies (e.g., 3-20% for conventional)	Varies (e.g., 5% for conventional ARMs)	As low as 3.5% (credit score 580+) or 10% (credit score 500-579)	0% down payment (with full entitlement)	0% down payment (for qualified borrowers)	For investment properties: 15-25% (often 20-25%); for primary residence: 3-20%	10-20% (often 20% or more)
Credit Score Requirements	Varies (e.g., 620+ for conventional)	Varies (e.g., 620+ for conventional ARMs)	Lower credit scores accepted (as low as 580 for 3.5% down, 500-579 for 10% down)	No minimum set by VA, but most lenders want at least 620	Flexible (640+ for automated approval, 600-640 for manual underwriting)	For investment properties: 720+ recommended; for primary residence: 620+	At least 700
Debt-to-Income (DTI) Ratio	Varies	Varies	Up to 43% (can reach 50%+ with strong reserves)	Usually up to 41%	At or below 41% (some lenders up to 50% with compensating factors)	Below 50% (stricter for investment properties)	Can’t go above 43%
Mortgage Insurance	Private Mortgage Insurance (PMI) for less than 20% down. Automatically stops at 22% equity.	Private Mortgage Insurance (PMI) for less than 20% down.	Mandatory (Upfront Mortgage Insurance Premium (UFMIP) of 1.75% + Annual MIP 0.15-0.75%). Lifetime MIP if <10% down.	No Private Mortgage Insurance (PMI) ever	Upfront Guarantee Fee (1%) + Annual Fee (0.35%). Lifetime.	PMI for less than 20% down, stops automatically at 22% equity.	Not explicitly mentioned as a separate PMI, but higher costs overall.
Loan Limits (2025)	Conforming: $806,500 (most areas), $1,209,750 (high-cost)	Varies by conventional limits	$524,225 (most areas) to $1,209,750 (high-cost) for single-family homes	No loan limits with full remaining entitlement since 2020	No formal loan limit for Guaranteed Loans; Direct Loans have limits (e.g., $419,300 to $970,800)	Conforming: $806,500 (most areas), $1,209,750 (high-cost)	Exceeds conforming limits: $806,500 (most areas), $1,209,750 (high-cost)
Pros for Investment	Payment predictability, protection from rate increases, prepayment flexibility. Can be used for investment properties.	Lower introductory rate, potential payment reduction if rates fall, initial savings. Can be used for investment properties.	Low down payments and flexible credit for multi-unit owner-occupied.	No down payment, no PMI, competitive rates for multi-unit owner-occupied.	0% down payment, competitive rates, low insurance costs for owner-occupied in rural/suburban areas.	PMI stops, faster processing, allows borrowing more for expensive properties. Can be used for non-owner occupied investment properties.	Finances high-value properties, fixed/adjustable options, rates can be good. Can be used for investment properties.
Cons for Investment	Higher original rates than ARMs, less beneficial if rates fall significantly.	Payment uncertainty, budget challenges, higher long-term costs if rates rise.	Strictly for primary residence (with very few exceptions for multi-unit where owner occupies). Property standards.	Strictly for primary residence (with exceptions for multi-unit where owner occupies). Funding fee.	Strictly for primary residence. Income/geographic restrictions, lifetime guarantee fee, longer processing.	Higher credit scores and down payments needed for investment. Higher rates for investment properties. Limited to 10 financed properties (including primary).	Tougher qualification, higher closing costs, bigger down payments, less consumer protection. Requires significant cash reserves.
Best For	Long-term homeowners, first-time homebuyers, risk-averse borrowers, stable housing costs.	Short-term homeowners (3-7 years), those expecting higher future income, market-savvy borrowers, real estate investors for short-term holds/refinance strategies.	First-time homebuyers with small savings/credit challenges, those bouncing back from bankruptcy/foreclosure. Multi-unit owner-occupants.	Active-duty military, veterans, qualifying spouses, those wanting 0% down and no PMI. Multi-unit owner-occupants.	Low-to-moderate income families, first-time homebuyers without down payment savings in rural/suburban areas, modest credit profiles.	Borrowers with strong credit, savings for down payment, no desire for lifetime mortgage insurance, need to borrow more. Most common for non-owner occupied investment properties.	Luxury home buyers, those in expensive markets, high-income earners with excellent credit and significant cash reserves.

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