7 Types of Mortgage Loans You Should Know

When you’re buying a home, there’s a variety of types of mortgage loans from which to choose.

When you’re buying a home, there’s a variety of types of mortgage loans from which to choose. Paying attention to your monthly budget, down payment amount, and credit score offers the clearest picture of the loan that would work most for you.

Deciding the type of mortgage to fit your needs is much easier if you have a breakdown of features and how each works. Read below for details on some of the most common types of mortgages, how to qualify for each and why it could be the best choice.


Choose conventional mortgage loans if you have a strong credit history, stable employment history, minimal debt, and enough funds to put down at least 5% – 20%.

At Baton Rouge Telco, this type of mortgage loan can be used to finance new home purchases, land purchases, 1st and 2nd mortgage refinancing with cash-out options, and home equity lines of credit (HELOC). We do not offer loans for mobile homes, condominiums (townhomes are acceptable), or investment properties.

Conventional fixed-rate mortgages are among the most common types of mortgage loans. These allow you to secure a fixed rate for 15, 20, and 30-year loan programs. There are often fewer closing costs, flexible monthly payment terms, and no mortgage insurance with a 20% down payment or more.


Jumbo loans are conventional types of mortgages that have non-conforming loan limits. This means the home price exceeds federal loan limits.

Choosing a jumbo loan with Baton Rouge Telco enables you to expect savings at closing with capped origination fees since most jumbo loans exceed $400,000. These loans are more common in higher-cost areas and usually require more in-depth documentation to qualify.

Securing a jumbo loan makes the most sense if you’re looking to finance a high-end home. You’ll want to have excellent credit, a high income, and a significant down payment. As a reminder, a jumbo loan is determined solely by how much financing you need, not by the purchase price of the property.

Adjustable-Rate (ARMs) vs. Fixed-Rate

Fixed-rate mortgages keep the same interest rate over the life of your loan. This means your monthly mortgage payment always stays the same. Consider this a major benefit if you’re sticking to a strict budget and planning to stay in your home longer than 10 years.

ARMs have variable interest rates. These loans come with a lower, introductory rate at the beginning of the loan term. Once that expires, the rates adjust according to current market rates. You should be comfortable with a certain level of risk when choosing this type of loan.

If you don’t plan to stay in your home beyond a few years, an ARM can save you a good amount of money on interest payments.


The U.S. government isn’t a mortgage lender, but it does play a role in helping more Americans become homeowners. These loans are protected by mortgage insurance making it easier to offer more flexibility for qualifying.

Baton Rouge Telco offers two types of government-backed loans: the Federal Housing Administration (FHA loans) and the U.S. Department of Veterans Affairs (VA loans).


FHA loans are backed by the Federal Housing Administration. They’re a great option if you prefer a smaller down payment and have a lower credit score. FHA loans are indeed ideal for someone purchasing their first home. However, FHA loans are available to any buyer seeking a government-backed mortgage whether or not you’re a first-timer.

Homebuyers seeking this type of mortgage loan typically have an easier time with flexibility in qualifying as well. Advantages of FHA loans include lower down payments, flexible eligibility requirements, and lower monthly payments.


VA loans provide flexible, low-interest mortgages if you’re a member of the U.S. military (active duty or veteran) and include your family. They don’t require a down payment and closing costs may be paid by the seller. A funding fee is charged on VA loans as a percentage of the loan amount to help offset the program’s cost to taxpayers.

This fee, as well as other closing costs, can be rolled into most VA loans or paid upfront at closing. No mortgage insurance is required with VA loans and gifts are accepted toward closing costs. This type of mortgage loan tends to offer the best terms and most flexibility compared to other loan types if you’re qualified.

Home Loans for Heroes and Experts Program

Our Home Loans for Heroes & Experts Program is just our way of saying thanks for the good you do for our country and local communities. Our Community Heroes’ professions include teachers, fire department, law enforcement, nurses, EMTs, and active or former military. Additionally, this program includes low down payment options and up to 99% financing.

Baton Rouge Telco members with select professional designations including CPAs, CFAs, PhDs, Architects, and Actuaries can qualify for this program as well. No down-payment is required and we provide 100% financing.

Both programs offer fixed-rate for 30 years and no prepayment penalty. You must meet all employment eligibility requirements to take advantage of these programs.

Choosing the Best Type of Mortgage Loan with Help from Baton Rouge Telco!

Our team is ready to guide you throughout every phase of the home buying process. We handle everything locally — meaning fast approvals and even faster closings for you!

Qualifying for a mortgage is a unique process as it looks different for everyone. Click below for first-time home buyer tips as you start your search.

7 First-Time Home Buyer Tips

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