Fixed rate and adjustable rate mortgages are the two main types of mortgages, but there is a wide variety of other mortgage products available. Below are pros and cons of just a few of the mortgage products you may want to consider.

Type of Mortgage Pros Cons
Fixed-rate mortgage No surprises The interest rate stays the same over the entire term, usually 15, 20 or 30 years. If interest rates fall, you could be stuck paying a higher rate.
Adjustable-rate (ARM) or variable- rate mortgage Usually offers a lower initial rate of interest than fixed-rate loans. After an initial period, rates fluctu - ate over the life of the loan When interest rates rise, generally so do your loan payments.
FHA (Federal Housing Administra - tion) loan Allows buyers who may not qualify for a home loan to obtain one Low down payment. The size of your loan may be limited.
VA loan Guaranteed loans for eligible veterans, active duty person - nel and surviving spouses Offers competitive rates, low or no down payments. The size of your loan may be limited.
Balloon mortgage Usually a fixed rate loan with relatively low payments for a fixed period. After an initial period, the entire balance of the loan is due imme - diately This type of loan may be risky for some borrowers.
Interest-only Borrower pays only the interest on the loan, in monthly payments, for a fixed term. After an initial period, the balance of the loan is due. This could mean much higher payments, paying a lump sum or refinancing.
Reverse mortgage Allows seniors to convert equity in their homes to cash; you don’t have to pay back the loan and interest as long as you live in the house. Subject to aggressive lending prac - tices and false advertising prom - ises, particularly by lenders that prey on seniors. Check to make sure the loan is Federally insured.