The Most Popular Mortgage Loan: A Comprehensive Ranking

Choose the mortgage loan you think is the most popular!

Author: Gregor Krambs
Updated on Apr 22, 2024 07:21
Welcome to StrawPoll, where your opinion matters! Today, we're diving into the vast world of mortgage loans to rank the most popular ones, and we need your input. With thousands of polls and rankings under our belt, we're excited to explore this essential aspect of homebuying. So, whether you're a first-time homebuyer, a refinancing veteran, or just curious about the market, join us in this interactive ranking of "What is the most popular mortgage loan?" Cast your vote, share your insights, and even suggest a missing option. Your input will help shape our understanding of the diverse loan options available and guide future homebuyers on their path to homeownership. Don't miss this opportunity to make your voice heard - let's get ranking!

What Is the Most Popular Mortgage Loan?

  1. 1
    53
    votes
    It is the most widely used mortgage loan and is not guaranteed or insured by the government.
    A conventional mortgage loan is a type of home loan that is not insured or guaranteed by a government agency. It is offered by private lenders such as banks, credit unions, or mortgage companies. The terms and requirements of a conventional loan are set by the lender.
    • Down Payment: Typically requires a minimum down payment of 5% to 20% of the home's purchase price.
    • Interest Rates: The interest rates can be fixed or adjustable, and are influenced by factors such as credit score, loan term, and market conditions.
    • Loan Limits: The loan amount can vary based on location, with higher limits in areas with higher housing costs.
    • Private Mortgage Insurance (PMI): Borrowers who put less than 20% down are usually required to pay for PMI to protect the lender in case of default.
    • Credit Score: Lenders typically require a minimum credit score of around 620, although higher scores may qualify for better terms.
  2. 2
    37
    votes
    It is insured by the Federal Housing Administration and allows for a lower down payment and credit score requirements.
    The FHA loan, which stands for Federal Housing Administration loan, is a mortgage loan that is insured by the Federal Housing Administration. It is designed to make homeownership more accessible and affordable for first-time homebuyers and low-income individuals by offering lower down payment requirements and more flexible lending guidelines.
    • Minimum down payment: 3.5%
    • Credit score requirement: 580 or higher (with a 3.5% down payment)
    • Mortgage insurance: Required for the life of the loan
    • Debt-to-income ratio: Up to 50% (varies based on lender)
    • Loan limits: Varies by location
  3. 3
    12
    votes
    It is guaranteed by the Department of Veterans Affairs and is available to eligible veterans, service members, and their spouses.
    A VA loan is a type of mortgage loan that is backed by the U.S. Department of Veterans Affairs (VA) and designed to help veterans, active-duty servicemembers, and eligible surviving spouses become homeowners. It offers several benefits to veterans and military personnel.
    • Eligibility: Available to veterans, active-duty servicemembers, National Guard members, Reservists, and eligible surviving spouses.
    • No Down Payment: Allows borrowers to purchase a home without making a down payment.
    • No Mortgage Insurance: Does not require private mortgage insurance (PMI) even with zero down payment.
    • Lower Interest Rates: Typically offers lower interest rates compared to conventional loans.
    • Flexible Credit Requirements: Allows for more lenient credit criteria and may be easier to qualify for.
  4. 4
    24
    votes
    It is guaranteed by the United States Department of Agriculture and is available to eligible rural and suburban homebuyers.
    The USDA loan, also known as the USDA Rural Development Guaranteed Housing Loan Program, is a mortgage loan program offered by the United States Department of Agriculture (USDA) for eligible homebuyers in rural areas. It aims to support low-to-moderate-income borrowers in purchasing affordable housing with more favorable terms and conditions.
    • Income Eligibility: Borrowers must meet specific income requirements depending on the location and size of the household.
    • Rural Property Eligibility: The property being financed must be located in an eligible rural area as defined by the USDA.
    • No Down Payment: Borrowers are not required to make a down payment, making it a suitable option for those with limited savings.
    • Competitive Interest Rates: USDA loans offer competitive interest rates to eligible borrowers.
    • No Maximum Loan Limit: There is no maximum loan limit, but the borrower's debt-to-income ratio must meet the USDA guidelines.
  5. 5
    15
    votes
    It is used for higher-priced properties and exceeds the conforming loan limit set by Fannie Mae and Freddie Mac.
    A jumbo loan is a type of mortgage loan that exceeds the conforming loan limits set by government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac. It is designed to help borrowers finance high-priced properties that exceed the loan limits for conventional loans.
    • Loan Amount: Usually starts at $548,250 (as of 2021) and can go up to several million dollars.
    • Down Payment: Typically requires a higher down payment compared to conforming loans, often around 20%.
    • Credit Score: Generally requires a higher credit score, with a minimum score often above 700.
    • Interest Rates: May have higher interest rates compared to conforming loans.
    • Debt-to-Income Ratio: Lenders often require a lower debt-to-income ratio (DTI) to qualify for a jumbo loan.
  6. 6
    14
    votes
    It has an interest rate that fluctuates based on market conditions and is typically lower than a fixed-rate mortgage initially.
    An adjustable-rate mortgage (ARM) is a type of mortgage loan where the interest rate periodically adjusts based on a specified index. This means that the interest rate and monthly payment can increase or decrease over the life of the loan, depending on market conditions.
    • Interest Rate Adjustment Period: Typically, the interest rate adjusts annually, but it can also adjust more frequently or less frequently depending on the loan terms.
    • Initial Fixed Rate Period: ARMs often have an initial fixed rate period, during which the interest rate remains constant before the adjustments begin.
    • Index: The interest rate adjustments are tied to a specific index, such as the U.S. Treasury bill rate.
    • Margin: The lender adds a margin to the index value to determine the new interest rate.
    • Rate Cap: ARMs usually have rate caps, which limit how much the interest rate can change over a specific period (e.g., annually or over the life of the loan).
  7. 7
    12
    votes
    It has an interest rate that remains the same throughout the life of the loan and offers stability and predictability.
    A fixed-rate mortgage is a type of mortgage loan where the interest rate remains constant throughout the entire loan term.
    • Interest Rate Stability: The interest rate remains fixed for the entire loan term, providing predictability for borrowers.
    • Loan Term: Typically available in 15-year or 30-year terms.
    • Monthly Payment: Monthly mortgage payments remain the same for the entire loan term.
    • Principal and Interest: Payments cover both the principal amount and interest.
    • Predictability: Borrowers know exactly what their mortgage payment will be each month.
  8. 8
    9
    votes
    It has lower monthly payments initially and a large payment due at the end of the loan term, which is typically 5-7 years.
    A balloon mortgage is a type of mortgage loan that offers lower monthly payments for an initial period, followed by a large lump sum payment at the end of the loan term. The term 'balloon' refers to the large payment due at the end. This type of mortgage is typically shorter-term, with the payment structure designed to resemble a balloon where the initial period represents inflation, and the final payment represents the burst.
    • Loan Term: Usually 5 to 7 years
    • Payment Structure: Lower monthly payments initially, followed by a large lump sum payment at the end
    • Interest Rate: Fixed or adjustable
    • Loan Amount: Varies based on borrower qualifications and property value
    • Balloon Payment: Usually represents a significant portion of the loan principal
  9. 9
    1
    votes
    It allows for lower monthly payments initially, with the borrower only paying interest on the loan for a set period of time, typically 5-10 years.
    An interest-only mortgage is a type of mortgage loan where the borrower is only required to pay off the interest on the loan for a specific period, typically ranging from 5 to 10 years. During this period, the borrower does not need to make any principal repayments. After the interest-only period ends, the borrower must begin making principal repayments for the remaining loan term.
    • Loan Term: Usually 30 years, but interest-only period typically lasts 5-10 years
    • Initial Payment: Borrower pays only the interest of the loan during the interest-only period
    • Principal Repayments: Starts after the interest-only period and includes both principal and interest
    • Flexibility: Gives borrowers flexibility during the interest-only period by offering lower monthly payments
    • Higher Loan Amount: Allows borrowers to potentially qualify for higher loan amounts
  10. 10
    3
    votes
    It allows older homeowners to convert their home equity into cash and does not require monthly mortgage payments.
    A reverse mortgage is a type of loan that allows homeowners, typically elderly individuals, to convert a portion of their home's equity into cash. Unlike traditional mortgages where borrowers make monthly payments to the lender, reverse mortgages provide homeowners with funds that do not have to be repaid until the borrower permanently leaves the home or passes away. The loan is typically repaid by selling the home and using the sale proceeds to settle the debt.
    • Eligibility: Homeowners aged 62 or older are eligible for a reverse mortgage.
    • Loan Types: There are different types of reverse mortgages, including Home Equity Conversion Mortgages (HECM), proprietary reverse mortgages, and single-purpose reverse mortgages.
    • Loan Amount: The loan amount is based on factors such as the borrower's age, home value, interest rates, and the chosen payment plan.
    • Repayment: Repayment is deferred until the borrower no longer lives in the home or passes away, with the loan typically repaid from the sale of the property.
    • Interest: Interest accrues on the outstanding loan balance over time, increasing the debt.

Missing your favorite mortgage loan?

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Ranking factors for popular mortgage loan

  1. Loan term
    The term of a mortgage loan can impact its popularity. Typically, loans with a shorter term will have higher monthly payments but lower interest costs over the life of the loan. Longer terms, on the other hand, will have lower monthly payments but higher interest costs.
  2. Loan type
    The type of mortgage loan (fixed-rate, adjustable-rate, etc.) can play a role in its popularity. Fixed-rate mortgages tend to be more popular when interest rates are low and borrowers want to lock in that rate for the term of their loan.
  3. Down payment requirements
    Mortgage loans with lower down payment requirements are often more popular because they make homeownership more accessible. However, loans with low down payments may have higher interest rates or mortgage insurance requirements.
  4. Credit score requirements
    Loans with more lenient credit score requirements are generally more popular, as they are more accessible to borrowers with less-than-perfect credit.
  5. Fees and closing costs
    Mortgage loans with lower fees and closing costs will generally be more popular because they result in lower upfront costs for the borrower.
  6. Prepayment penalties
    Loans without prepayment penalties are typically more popular because borrowers can make extra payments or refinance their mortgage without incurring additional costs.
  7. Government-backed loans
    Government-backed loans, such as FHA, VA, and USDA loans, often offer more attractive terms, lower down payment requirements, and easier qualification standards, making them more popular among eligible borrowers.
  8. Lender reputation
    The reputation and customer satisfaction ratings of the lending institution can have a significant impact on the popularity of mortgage loans. A lender with a strong reputation for providing excellent customer service and responding quickly to borrower inquiries is more likely to attract borrowers.
  9. Loan accessibility
    Mortgage loans that are more widely available, either through local banks, credit unions, or online lenders, may be more popular due to their accessibility and greater variety of options.

About this ranking

This is a community-based ranking of the most popular mortgage loan. We do our best to provide fair voting, but it is not intended to be exhaustive. So if you notice something or mortgage is missing, feel free to help improve the ranking!

Statistics

  • 1407 views
  • 180 votes
  • 10 ranked items

Voting Rules

A participant may cast an up or down vote for each mortgage once every 24 hours. The rank of each mortgage is then calculated from the weighted sum of all up and down votes.

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More information on most popular mortgage loan

Mortgage loans are a popular financing option for homebuyers. They allow borrowers to purchase a property without having to pay the full amount upfront. Mortgage loans come in various types, each with its own terms and conditions. The most popular types of mortgage loans include fixed-rate mortgages, adjustable-rate mortgages, FHA loans, VA loans, and jumbo loans. Fixed-rate mortgages offer a stable interest rate for the entire loan term, while adjustable-rate mortgages have a fluctuating interest rate. FHA loans are backed by the Federal Housing Administration and are designed for first-time homebuyers, while VA loans are offered to veterans and their families. Jumbo loans are for high-value properties and typically have stricter eligibility requirements. Understanding the differences between these types of mortgage loans is essential for choosing the right one that suits your financial situation and needs.

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