## Types of Mortgages
A mortgage is a loan taken out to purchase or refinance a home. The loan is secured by the property, which means that the lender can take possession of the property if the borrower defaults on the loan. There are many different types of mortgages available, each with its own unique features and benefits.
### Conventional Mortgages
Conventional mortgages are the most common type of mortgage. They are offered by banks and credit unions and are not backed by the government. Conventional mortgages typically have lower interest rates than government-backed loans, but they also require a higher down payment and a higher credit score.
### Government-Backed Mortgages
Government-backed mortgages are insured by the federal government. This makes them less risky for lenders, which allows them to offer lower interest rates and more flexible terms. There are two main types of government-backed mortgages: FHA loans and VA loans.
**FHA loans** are insured by the Federal Housing Administration (FHA). They are available to borrowers with a credit score of 580 or higher and a down payment of as little as 3.5%. FHA loans are a good option for first-time homebuyers and borrowers with less-than-perfect credit.
**VA loans** are insured by the Department of Veterans Affairs (VA). They are available to active-duty military members, veterans, and their spouses. VA loans do not require a down payment and have no mortgage insurance premiums. VA loans are a great option for military members and veterans who want to buy a home.
### Jumbo Mortgages
Jumbo mortgages are loans that exceed the conforming loan limit set by Fannie Mae and Freddie Mac. The conforming loan limit for 2023 is $726,200 in most areas and $1,089,300 in high-cost areas. Jumbo mortgages are typically more expensive than conforming loans, because they are not backed by the government.
### Subprime Mortgages
Subprime mortgages are loans that are made to borrowers with poor credit scores. These loans typically have higher interest rates and fees than other types of mortgages. Subprime mortgages are often considered to be risky, and they should only be considered by borrowers who are unable to qualify for a conventional or government-backed loan.
## Choosing the Right Mortgage
The best mortgage for you will depend on your individual circumstances. Consider your credit score, down payment amount, and income when choosing a mortgage. You should also compare the interest rates and fees of different loans to find the best deal.
If you are not sure which mortgage is right for you, talk to a mortgage lender. A mortgage lender can help you compare different loans and find the best one for your needs.
### Mortgage Glossary
Here is a glossary of some of the most common mortgage terms:
* **Amortization:** The process of paying off a loan over time.
* **Closing costs:** The fees associated with getting a mortgage, such as the loan origination fee, the appraisal fee, and the title insurance fee.
* **Down payment:** The amount of money you pay upfront towards the purchase price of a home.
* **Equity:** The difference between the value of your home and the amount you owe on your mortgage.
* **Interest rate:** The percentage of the loan amount that you pay in interest each year.
* **Loan term:** The length of time you have to repay the loan.
* **Mortgage insurance:** Insurance that protects the lender in the event that you default on your loan.
* **Principal:** The amount of money you borrowed.
* **Property taxes:** Taxes that are levied on your home.
* **Title insurance:** Insurance that protects you from financial loss if there is a problem with the title to your home.