Below is a table outlining various types of mortgage loan agreements and their typical uses. Keep in mind that specific terms and conditions can vary depending on the lender, the borrower’s creditworthiness, and the country’s financial regulations.
| Type of Mortgage Loan Agreement | Description | Typical Use |
|---|---|---|
| Fixed-Rate Mortgage | Interest rate remains constant throughout the term | Home purchases where borrower wants stable payments |
| Adjustable-Rate Mortgage (ARM) | Interest rate can change at specified times | Short-term home ownership, or expectation of future falling rates |
| Interest-Only Mortgage | Only interest payments are required initially | Short-term flexibility in payments, often for investment properties |
| Balloon Mortgage | Low initial payments, large lump-sum at end | Short-term financing with the intention of selling or refinancing |
| FHA Loan | Government-backed, lower down payment | First-time homebuyers, those with lower credit scores |
| VA Loan | Backed by the Dept. of Veterans Affairs | U.S. Veterans, active duty, or certain family members |
| Jumbo Loan | Exceeds federal loan limits | High-cost home purchases |
| Reverse Mortgage | Converts home equity into cash or line of credit | Seniors who own their home outright or have significant equity |
| Construction Loan | Short-term loan for home construction | Building a new home |
| Bridge Loan | Short-term loan until long-term financing is secured | Buying a new home before selling the old one |
| Home Equity Loan | Uses equity in home as collateral | Home improvements, debt consolidation |
| Home Equity Line of Credit (HELOC) | Revolving line of credit based on home equity | Ongoing expenses like education or renovations |
| Conventional Loan | Not government-insured | Borrowers with good credit, stable income, and a down payment |
| Subprime Mortgage | Higher interest rates for those with poor credit | Borrowers with poor credit history |
| USDA Loan | Rural development loan backed by the U.S. government | Rural property purchases, often with no down payment required |