Types of Mortgages & Home Loans
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Adjustable-Rate Mortgages (ARM)
Annual ARM
An Annual Adjustable Rate Mortgage is a home loan where the interest rate adjusts once per year based on market conditions after an initial fixed rate period. Compared to Monthly ARMs, annual adjustments provide greater payment stability, while still offering lower starting rates than traditional fixed rate mortgages. Annual ARMs are ideal for borrowers who want some protection from frequent rate changes, but still want to take advantage of lower initial interest rates. This loan option can work well for homeowners who plan to sell, refinance, or upgrade within a few years, while accepting the possibility of gradual rate increases over time.
Hybrid 3/1, 5/1 or 7/1 ARM
A Hybrid Adjustable Rate Mortgage, such as a 3/1 ARM, 5/1 ARM, or 7/1 ARM, combines an initial fixed interest rate period with adjustable rates afterward. The first number represents how many years the rate stays fixed, while the second number indicates how often the rate adjusts after that period. For example, a 5/1 ARM offers a fixed interest rate for the first five years, followed by annual rate adjustments. These loans typically offer lower starting rates than 30 year fixed mortgages, making them attractive to borrowers who plan to move, refinance, or pay down their mortgage before the adjustable period begins.
Monthly ARM
A Monthly Adjustable Rate Mortgage features an interest rate that can adjust every month after an initial fixed period. These loans typically start with a lower introductory rate than fixed-rate mortgages, making them appealing for borrowers who want lower initial payments or expect to move or refinance in the near future. Monthly ARMs can be a good fit for buyers who are comfortable with frequent rate adjustments and who anticipate short term homeownership. While this loan type offers potential savings early on, monthly rate changes mean payments can rise if market rates increase.
15-Year Fixed-Rate Mortgages
A 15-year fixed-rate mortgage is a fully amortized home loan with consistent monthly payments over a 15-year term. Because the loan is paid off in half the time of a traditional 30-year mortgage, borrowers typically benefit from a lower interest rate, faster equity growth, and significant long-term interest savings. With a 15-year mortgage, you will own your home twice as fast and pay substantially less interest over the life of the loan, making it an excellent option for buyers who want to build wealth more quickly or eliminate debt sooner.
30-Year Fixed-Rate Mortgages
A 30-year fixed-rate mortgage is the most popular and traditional home loan option, offering a stable interest rate and consistent monthly payments for the full 30-year term. Because the payment is spread over a longer period, this loan typically provides lower monthly payments, making homeownership more affordable and budget friendly for many buyers. This mortgage is often a strong choice for homeowners who plan to stay in their home long term, want predictable housing costs, or prefer to keep more cash available for savings, investments, or other financial goals.
50-Year Fixed-Rate Mortgages
As discussions around home affordability intensify, the 50-year mortgage has emerged as a novel financing concept designed to stretch a traditional home loan over half a century. Offering lower monthly payments and improved cash-flow flexibility compared with standard 30-year mortgages. By amortizing payments across 600 months, this extended term could help aspiring homeowners, especially first-time buyers, qualify for loans they might otherwise struggle to secure, potentially unlocking access to larger or more competitive properties. However, authoritative analyses warn that this longer timeline comes with meaningful trade-offs: significantly higher total interest costs, a much slower pace of equity building, and the likelihood of carrying mortgage debt well into later life stages, which can diminish long-term wealth accumulation and financial flexibility. While no 50-year mortgages are widely available yet and regulatory changes would be needed to support them, the concept reflects growing innovation in loan products aimed at addressing today’s housing market challenges.
2-1 Buy Down Mortgages
A 2/1 buydown mortgage is a loan structure that offers reduced interest rates for the first two years, helping lower initial monthly payments and improve affordability early in the loan term. In year one, the interest rate is typically 2 percent lower than the note rate, and in year two it is 1 percent lower, before returning to the full rate for the remainder of the loan. This option is especially attractive for buyers who expect their income to increase, plan to refinance, or want short term payment relief when purchasing a home. A 2/1 buydown can be funded by the seller, builder, or buyer, making it a useful negotiation tool in competitive or soft housing markets. While it provides meaningful early savings, borrowers should be prepared for higher payments once the buydown period ends.
Government-Backed Loans
FHA Loans
An FHA loan is a government backed mortgage insured by the Federal Housing Administration and designed to make homeownership more accessible and affordable, especially for first time buyers and borrowers with limited savings or lower credit scores. FHA loans typically require lower down payments and more flexible qualification standards than conventional mortgages. This loan type is popular among buyers who want easier approval, competitive interest rates, and manageable upfront costs. FHA loans can be used for home purchases, refinances, and certain renovation programs, making them a versatile option for a wide range of homebuyers.
USDA Loans
A USDA loan is a mortgage backed by the United States Department of Agriculture and designed to help eligible buyers purchase homes in qualifying rural and suburban areas. One of the biggest benefits of a USDA loan is the ability to finance a home with zero down payment, making it an excellent option for buyers looking to minimize upfront costs. USDA loans also offer competitive interest rates and reduced mortgage insurance costs, along with flexible credit requirements. These loans are ideal for moderate income households seeking affordable homeownership outside major metropolitan areas, while still benefiting from strong government backed financing.
VA Loans
A VA loan is a mortgage guaranteed by the US Department of Veterans Affairs and available to eligible military service members, veterans, and surviving spouses. VA loans are known for offering zero down payment options, no private mortgage insurance (PMI), and highly competitive interest rates, making them one of the most valuable home loan programs available. In addition to lower upfront costs, VA loans feature more flexible credit standards and limited closing expenses, helping qualified borrowers secure homeownership with strong long term financial benefits. VA loans can be used for home purchases, refinances, and certain renovation scenarios, providing exceptional value to those who have served.
Debt Service Coverage Ratio Loans (DSCR)
DSCR loans are designed for real estate investors, with qualification based primarily on the income generated by the property rather than the borrower’s personal income. They can be used for short-term rentals, long-term rentals, and other investment properties, offering an alternative to traditional income documentation.
Individual Taxpayer Identification Number Loans (ITIN)
ITIN loans are designed for borrowers who do not have a Social Security Number but use an Individual Taxpayer Identification Number to file taxes. These loans offer alternative income verification options and can provide financing for homeownership or investment properties when conventional mortgage programs may not be available.
Non-Warrantable Condo Loans
Non-warrantable condo loans are designed for condominiums that do not meet conventional lending requirements due to factors involving the property, development, or condominium association. Non-QM financing can provide alternative qualification options for buyers purchasing or refinancing investment condos and other unique condominium properties.
Self Employed Bank Statement
Bank statement loans are designed for self-employed borrowers whose income may not be accurately represented by traditional tax returns. Instead, lenders can use personal or business bank statements to evaluate income, making these loans an alternative for business owners, freelancers, entrepreneurs, and other borrowers with non-traditional income.
One-Time Close Loan Programs
Conventional One-Time Close Loans
Conventional One-Time Close loans from Fannie Mae and Freddie Mac provide a flexible financing solution that bundles construction and permanent mortgage financing into a single loan without government mortgage insurance when eligible. Designed for borrowers with stronger credit profiles and sufficient down payment funds, these programs support new construction or major renovation projects and offer attractive interest rates and terms. By avoiding separate closings and reducing loan costs, Conventional One-Time Close loans make project financing easier and more efficient.
FHA One-Time Close Loans
An FHA One-Time Close loan combines your construction financing and permanent mortgage into one streamlined loan with one closing and one monthly payment. Backed by the Federal Housing Administration, this program is ideal for borrowers with moderate credit scores and smaller down payments who want to build a new home or renovate an existing property. With built-in flexibility for materials and labor costs and predictable FHA underwriting guidelines, FHA One-Time Close loans simplify the financing process while making homeownership or major remodel projects more accessible.
USDA One-Time Close Loans
USDA One-Time Close loans are offered through the United States Department of Agriculture to support the financing of new construction or renovation in eligible rural and suburban areas. These loans allow qualified borrowers to combine the cost of building or improving a home with a long-term mortgage into one loan and one closing, often with no down payment requirement. USDA One-Time Close loans feature competitive interest rates and income eligibility guidelines that help make affordable housing more attainable in designated rural communities.
VA One-Time Close Loans
VA One-Time Close loans allow eligible veterans, active duty service members, and qualified spouses to finance both construction and long-term mortgage needs with a single loan and closing process. This option uses the Department of Veterans Affairs loan guarantee to offer competitive interest rates, no required down payment, and relaxed qualifying criteria in many cases. A VA One-Time Close loan can help military borrowers build a custom home or complete significant renovations without juggling separate construction and permanent loans or paying additional closing costs.
Renovation Loan Programs
203(k) Renovation Loans
Have you stumbled across a home that you would like to buy, but needs a little (or a lot) of work? Are you looking to build an addition or remodel part of your current home? If this is the case, then our FHA 203(k) loan program may be the ideal option for you. An FHA 203(k) Renovation Loan allows homebuyers and homeowners to finance both the purchase or refinance of a home and the cost of renovations in a single mortgage. This loan is ideal for properties that need repairs, upgrades, or modernization, letting borrowers roll improvement costs into one affordable monthly payment. Because it is backed by the Federal Housing Administration, the FHA 203(k) loan often features lower down payment requirements and more flexible credit guidelines than conventional renovation loans. It is a strong option for buyers who want to purchase a fixer upper, customize a home, or increase property value through renovations, while keeping financing streamlined under one loan.
Fannie Mae (FMA) HomeStyle Renovation Loans
A Fannie Mae HomeStyle Renovation loan is a powerful financing solution for homebuyers and current homeowners who want to purchase or refinance a property and fund renovations with a single mortgage payment. Instead of taking out separate loans for the mortgage and the remodel, HomeStyle allows you to roll repair and improvement costs into your principal balance based on the completed value of the home. This can increase purchasing power while simplifying the financing process. These conventional renovation loans cover a wide range of improvements, including kitchen and bathroom remodels, roofing, structural repairs, energy efficiency upgrades, and room additions, as long as the updates are permanently attached to the property. With competitive interest rates similar to traditional conventional loans and flexible eligibility for one to four unit primary residences, second homes, and investment properties, a HomeStyle Renovation loan can help turn a fixer upper into a customized home without draining savings or managing multiple loans.
Freddie Mac CHOICE Renovation Loans
A Freddie Mac CHOICE Renovation loan gives homebuyers and current homeowners a smart way to finance both a mortgage and renovation costs in one loan with a single monthly payment. With the CHOICE Renovation program, you can purchase or refinance a property and include the cost of repairs and improvements in your loan amount based on the projected value of the home after renovations are completed. This loan supports a wide variety of upgrade projects including structural repairs, roof replacement, kitchen and bathroom updates, energy efficiency improvements, accessibility enhancements, and more, as long as the work adds permanent value to the property. CHOICE Renovation loans offer competitive interest rates like traditional conventional mortgages and flexible eligibility for single family homes, townhomes, and other property types allowed by Freddie Mac. By combining construction and mortgage financing, a CHOICE Renovation loan helps you modernize or customize your home without needing separate financing or tapping into savings.
Reverse Mortgage Loan Options
Home Equity Conversion Mortgages (HECMs)
A Home Equity Conversion Mortgage, commonly known as a HECM, is the most widely used type of reverse mortgage and is insured by the Federal Housing Administration. Available to homeowners age 62 and older, a HECM allows borrowers to convert a portion of their home equity into tax free funds while continuing to live in the property. There are no required monthly principal and interest payments as long as the homeowner maintains the home, pays property taxes and homeowners insurance, and meets occupancy requirements. HECM loans offer flexible payout options including lump sum, monthly payments, or a line of credit, making them a popular solution for supplementing retirement income, paying off an existing mortgage, or covering major expenses.
Proprietary Reverse Mortgages
Proprietary reverse mortgages are private loans offered by lenders and are not backed by the federal government. These programs are typically designed for homeowners with higher value properties who may need access to a larger portion of their equity than a HECM allows. Because they are lender specific products, qualification guidelines, loan limits, and payout structures can vary. Proprietary reverse mortgages can provide expanded borrowing potential while still allowing qualified homeowners to eliminate required monthly mortgage payments and remain in their homes.
Single Purpose Reverse Mortgages
Single purpose reverse mortgages are more limited in scope and are often offered by state or local government agencies or nonprofit organizations. These loans are designed for a specific approved use such as home repairs, property taxes, or necessary home improvements. While they typically provide smaller loan amounts, single purpose reverse mortgages can be a lower cost option for eligible homeowners who need targeted financial assistance and want to tap into their home equity for a clearly defined purpose.
Specialty Loan Programs
Assumable Mortgages
An assumable mortgage allows a qualified buyer to take over the seller’s existing home loan, including the current interest rate, remaining balance, and repayment terms. This can be especially valuable when market interest rates are higher than the rate on the original loan, potentially offering significant monthly savings and long-term interest benefits. Assumable loans are most commonly available through government-backed mortgages such as FHA and VA, and they can be a powerful option for buyers looking to lower borrowing costs, reduce closing expenses, and simplify the financing process. For sellers, an assumable mortgage can also make a home more attractive to buyers by offering access to a below-market interest rate.
Jumbo Loans
A bigger home needs a bigger loan. When you need a large mortgage, conforming home loans are sometimes not enough. A Jumbo Loan, also known as a Non-Conforming Mortgage, is a home loan designed for purchases that exceed conventional conforming loan limits set by Fannie Mae and Freddie Mac. These loans are commonly used to finance higher priced or luxury homes, especially in competitive or high cost real estate markets. Because jumbo loans fall outside standard lending guidelines, they typically require strong credit, stable income, larger cash reserves, and higher down payments. However, many jumbo loan programs offer competitive interest rates, flexible term options, and both fixed and adjustable-rate structures for well qualified borrowers. A jumbo mortgage is an excellent choice for buyers seeking greater purchasing power, premium property financing, and tailored loan solutions.
Portable Mortgages
A portable mortgage allows a borrower to transfer their existing home loan to a new property, keeping the same interest rate, loan terms, and remaining balance. This can be a major advantage when current market rates are higher than your original rate, helping you maintain lower monthly payments and reduce long term interest costs. Portable mortgages are ideal for homeowners who plan to move but want to preserve their favorable loan terms, offering added flexibility and potential savings. Availability and eligibility depend on the loan type, but for qualified borrowers, portability can make relocating more affordable and financially efficient.
The Benefits of Home Refinancing Services
When you refinance your home, you are essentially taking out a brand new loan, usually for the remainder that you owe. Ideally, this loan will come with better terms than the old one. There are many reasons to potentially refinance your home; the team at Primary Residential Mortgage Inc. can help you determine whether this will be the right option for you. Here are some potential benefits that you could enjoy when you take advantage of our home refinancing services:
- Save Money: Refinancing your home could save you some money, usually by lowering your interest rate. The amount of money you could save with a reduced interest rate could allow you to pay off other high-interest debt, grow your savings, or simply have a little extra breathing room.
- Lock in Your Interest Rate: Borrowers with adjustable-rate mortgages can take advantage of home refinancing services to replace their loans with new ones with a fixed interest rate. This helps control your payments and can actually reduce the amount you pay over time.
- Pay Off Your Loan Sooner: Some borrowers use home refinancing services to reduce the term of their loans, allowing them to pay off their mortgage sooner.
- Remove PMI: Most borrowers pay private mortgage insurance when they finance more than 80% of their home’s value. In this situation, home refinancing services could give you the chance to avoid this expense.
- Free Up Funds: As you make mortgage payments or invest in improvements, you build equity in your home. As a borrower, you can strategically use certain types of home refinancing services to access the equity you’ve built up. This money can be used for a variety of things, such as further improvements, medical expenses, and other costs.
The experienced team at Primary Residential Mortgage Inc. can help you determine whether home refinancing is right for you. We have worked with homeowners throughout the greater New Haven, CT area, giving us unique insight into what local residents need. Reach out to our office today to get started!