So you’re considering buying a home? Congratulations, and welcome to the world of home-ownership. By now you’ve likely seen that there’s a lot of confusing and conflicting information floating around the web that can make it quite difficult to know what steps to take, and how to select the mortgage loan that is best for you. This page will serve as a short introduction to get you on track and provide you with the next step to take as well.

First, let’s explore the 3 key choices that you’ll need to make when selecting a home loan: the loan term, or length of the loan, the interest rate type, and the loan type. This page serves as a mini-guide to understand how these choices affect your monthly payment, your overall costs both upfront and over time, as well as your level of risk. Knowing what kind of loan is most appropriate for your situation prepares you for talking to lenders and getting the home loan that is best for you.

A loan “option” is always made up of three different things:

  • Loan Term
  • Interest Rate
  • Loan Type
Let’s begin by looking at the first on the list.


The term of your loan is a reference to how long you have to repay the loan. The most common loan terms are:
  • 30 years
  • 20 years
  • 15 years

Your decision of loan term will impact:

  • Your monthly principal and interest payment
  • Your interest rate
  • Interest paid over the life of the loan
As a general rule, the longer your selected loan term, the higher your interest rate. Loans with shorter terms generally have lower interest rates but higher monthly payments than loans with longer terms. (There are other specifics that can impact rate/payment of course) – exactly how much lower the interest rate, and how much higher the monthly payments depends on the loan terms you select in addition to other qualifying factors.


Interest rates are generally offered in two basic types: fixed or adjustable.

Your decision of interest rate type will impact:

  • Whether your interest rate remains static or can change
  • Whether your monthly payment is static or can change
  • The amount of interest you will pay over the life of the loan


Mortgage loans are offered in a wide range of varieties and programs. These loan types can be organized into categories based on the size of the loan and whether they are part of a government program.
  • Conventional
  • FHA
  • Specialized programs

Your decision of loan type will impact:

  • How much money you will need for a down payment
  • What interest rates are available
  • The overall cost of your loan
  • How much you can borrow, and the house price range you qualify for


Each loan type is designed for different scenarios and situations. Since more than one loan type may fit your current needs, it is best to speak to a loan professional and have an analysis performed before making any decisions. This will allow you to narrow down which loan types are available, and how each type will impact your overall costs and qualifications. To speak with a mortgage loan adviser and get answers to these questions and more, simply CLICK HERE NOW!