There are many options when it comes to mortgages. Luckily, there are several categories that can make mortgage products easier to understand. Think of each these categories almost as see-saws; loans are usually on one side of the see-saw or the other, but not both at once. (REDFIN)
With conventional loans, a private lender assumes the risk of losing money if you default on your mortgage. With a government loan, this risk is absorbed by a government agency. Read more about conventional and government-backed loans.
Conforming mortgages "conform" to the rules set out by Fannie Mae and Freddie Mac, which often buy mortgages from lenders as investments. Non-conforming loans do not follow these guidelines, meaning that lenders must find other investors with a higher tolerance for risk. Since it's harder to sell these loans, lenders offset their own risk by charging more for them. Jumbo loans are one well-known type of non-conforming loans. Read more about conforming and non-conforming loans.
Fixed-rate mortgages have the same interest rate for the entire life of the loan. Adjustable rate mortgages (ARMs) have interest rates that can change throughout the life of the loan. Read more about fixed and adjustable-rate mortgages.
