The most common type of loan option, the traditional fixed-rate mortgage includes monthly principal and interest payments which never change during the loan’s lifetime. Down payment requirements start at 5%. This loan requires PMI if you do not put down 20%.
Adjustable-rate mortgages include interest payments which shift during the loan’s term, depending on current market conditions. Typically, these loans carry a fixed-interest rate for a set period of time before adjusting.
Hybrid ARM mortgages combine features of both fixed-rate and adjustable rate mortgages and are also known as fixed-period ARMs. The loan is fixed for the first 3 / 5/ 7 / or 10 year period depending on which term you go with. Once the fixed term ends, then the rate can adjust every year up to a maximum cap. The cap is disclosed with the rate.