|Fixed Rate Loans||Adjustable mortgages (ARMs)||FHA loans||VA loans|
|Best for||Borrowers who prefer stable payments that won't change||Borrowers who might sell after 5 years, or are comfortable knowing their payments can change||Borrowers with smaller down payments or lower credit scores||Only available for qualifying Veterans, active military, and military families|
|Length of term||Typically last for 10 - 40 years||Typically last for 30 years||Typically last for 10 - 40 years||Typically last for 10 - 40 years|
|Interest rate||Fixed rate for the life of a loan||Fixed rate for 3, 5, 7, or 10 years, then can change every year thereafter||Borrowers can choose a fixed or adjustable rate||Borrowers can choose a fixed or adjustable rate|
|Monthly payment||Amount never changes||Can change after the fixed period ends||Can change only for an adjustable rate mortgage||Can change only for an adjustable rate mortgage|
|Mortgage insurance||Typically required if down payment is less than 20%||Typically required if down payment is less than 20%||Mortgage insurance is required (upfront free and monthly insurance payment)||Not required|
|Additional details||30-year fixed is the most common mortgage type||After fixed period ends, interest rate changes annually based on the index value at that time||Insured by the Federal Housing Administration (FHA)||Insured by the US Department of Veterans Affairs (VA)|
If a low credit score is contributing to your high payments, you can take steps to increase it. First, review your credit report and address any red flags or errors. Then, stop applying for new credit, work to reduce your debt, and be sure to make all of your payments on time.
A higher down payment will reduce the amount of money you borrow, leading to lower monthly payments. It can help you qualify for a lower interest rate, which can also lower your monthly payments. In some cases, it can help you avoid paying costly PMI.
A longer loan term will spread the cost over a longer period of time, which will lower your monthly mortgage payments. This will lead to more interest paid over the life of your loan, but it’s a good strategy to help make homeownership more affordable.