The most common types of mortgages include fixed-rate mortgage, adjustable-rate or ARM mortgages, FHA mortgages, VA loans and balloon mortgages, notes USA.gov. Each has its own unique benefits.
Fixed-rate mortgages offer the same steady interest rate for the life of the loan, according to USA.gov. However, if the interest rate goes down, homeowners are stuck with a higher rate. Adjustable-rate mortgages have low initial interest rates with rates that go up during the life of the loan, making payments unpredictable. FHA loans are available through the Federal Housing Administration, allowing more buyers access to home loans, but they limit the size of the loan available, making potential home inventories limited. A VA loan is guaranteed by the Veteran's Administration for eligible service personnel, but it also limits the purchase price of the home. A balloon mortgage has a fixed-rate of interest with low payments for a period of time, with the entire balance of the loan due when the loan matures.