The Most Common Mortgage Term in the U. S. is a 30-year mortgage. This type of loan gives the borrower 30 years to repay their loan, but the typical duration of the mortgage, or the average life of a mortgage, is less than 10 years.
Long-term fixed-rate mortgages are the staple of the U. mortgage market and offer the most stable and predictable cost of owning a home. This makes them very popular with homebuyers (and refinancers), especially at a time when interest rates are low. Shorter terms of 20, 15, and even 10 years are also available, but they come with a higher monthly payment but much lower general interest costs.
Hybrid ARMs are the most common form of ARM found on the market today and offer borrowers a lower initial interest rate and a fixed-rate mortgage that fits their intended term. These products carry risks, as a low fixed rate (for a few years) could come to an end amid a climate of higher rates, and monthly payments may increase. VA loans are mortgages guaranteed by the U. government and issued by private lenders to eligible service members and their families at lower rates and on more favorable terms.
If you have a strong credit score and can afford to make a sizeable down payment, a conventional mortgage is probably your best option. The conventional 30-year fixed-rate mortgage is the most popular option for homebuyers. Jumbo loans are best for borrowers who need to finance a larger sum of money than the latest compliant loan limits allow for, while FHA and USDA loans are excellent options for those who can't qualify for a conventional loan due to a lower credit score or limited down payment savings. For military service members, veterans, and eligible spouses, VA-backed loans are often better than a conventional loan.
Fixed-rate mortgages maintain the same interest rate for the life of your loan, which means that your monthly mortgage payment always stays the same. Fixed loans generally come in terms of 15 or 30 years, although some lenders allow borrowers to choose any term between eight and 30 years. When you buy a home, understanding the common types of mortgages and how they work is just as important as finding the right home.
