Fixed Rate Mortgage
The traditional fixed-rate mortgage with terms between 10 and 40 years has a constant interest rate and monthly payments that never change. This may be a good choice if you plan to stay in your home for a long period of time. If you plan to move within five to seven years, then a ballon mortgage or an adjustable-rate loan may provide you with a lower interest rate. When interest rates are low, fixed-rate loans are generally not that much more expensive than adjustable-rate mortgages and may be a better deal in the long run, because you can lock in the rate for the life of your loan.  10 and 15 year loans offer a lower interest rate and you'll own your home twice as fast as with a 30 or 40  year loan.  The disadvantage is that, with a 15-year loan, you commit to a higher monthly payment. Many borrowers opt for a 30-year fixed-rate loan and voluntarily make larger payments that will pay off their loan in 15 years. This approach is often safer than committing to a higher monthly payment, since the difference in interest rates isn't that significant.

FHA (Federal Housing Administration)

 FHA loans provide more flexible qualification guidelines for borrowers with little or no down payment and have  little or no credit history.  These loans are insured by the federal government which is a benefit to the lender who can then pass along savings to the borrower in the form of lower interest rates than  many conventional loans and very competitive fees.  The program provides flexibility in the source of funds to be used for down payment and closing costs and the borrowers investment in the project can be as little as 3.5% of the lesser of purchase price or appraised value.  There are no prepayment penalties associated with FHA loans.

VA (Veterans Administration)

VA loans have no down payment requirements so a qualifed veteran can obtain a 100% loan.  Combine that with flexible sources of funds for closing costs, no prepayment penalties, competitive rates and fees and a loan insured by the federal government and you have a win-win for both the veteran borrower and the lender.

Hybrid ARM (3/1 ARM, 5/1 ARM, 7/1 ARM)
These increasingly popular ARMS—also called 3/1, 5/1 or 7/1—can offer the best of both worlds: lower interest rates (like ARMs) and a fixed payment for a longer period of time than most adjustable rate loans. For example, a "5/1 loan" has a fixed monthly payment and interest for the first five years and then turns into a traditional adjustable-rate loan, based on then-current rates for the remaining 25 years. It's a good choice for people who expect to move (or refinance) before or shortly after the adjustment occurs.

Annual ARM
This loan has a rate that is recalculated once a year based on the current principal balance, specific interest rate factors (index and margin) and the remaining amortization term of the loan.

2/1 Buy Down Mortgage
The 2/1 Buy-Down Mortgage allows the borrower to make a lower paymetn for the first two years of the mortgage.   The initial starting interest rate increases by 1% at the end of the first year and adjusts again by another 1% at the end of the second year. It then remains at a fixed interest rate for the remainder of the loan term. Borrowers often refinance at the end of the second year to obtain the best long-term rates. However, keeping the loan in place even for three full years or more will keep their average interest rate in line with the original market conditions.