Mortgage Loans are of two types. They are: Conventional Loans and Government Loans.

Conventional Loans: These loans cannot be insured. There are four types of Conventional Loans. They are: Fixed Rate Mortgage Loans, Adjustable Rate Mortgage Loans, Balloon Mortgage Loans and Sub-prime Mortgage Loans.

Fixed Rate Mortgage loans provide a non-fluctuating, fixed interest rate over the entire loan period, which may be 15, 20 or 30 years. 15 years term loan is the least expensive.

Interest rates in Adjustable Rate Mortgage loans fluctuate according to economic trends. These Loans come with a maximum limit, known as 'cap', up to which interest rates can go. Interest rates in ARM loans are sometimes 'tied' by lending organizations, Bank Certificates, Federal Treasury Bills, London Inter-Bank Offer Rate (LIBOR), or any other financial index. Global economy changes cause these indices and consequently, the interest rates to change. Adjustable Rate Mortgage loans involve time periods of 1, 3, 5, 7, or 10 years. Usually, Interest rates on these loans are lower than that on Fixed Rate Mortgage loans.

Balloon Mortgage Loans involve a loan period of 5 to 7 years. These loans usually require the borrower to repay the balance as one final payment, known as "balloon" payment.

Sub-prime Mortgage Loans are suited to borrowers with poor or not-so-perfect credit.

Government Loans are of two types: Federal Housing Administration Loans and Veteran's Affair Loans. FHA Loans are designed for people who earn low to moderate income. These loans offer insurance to the lender, instead of to the borrower or his family, in the event of a default on a home loan.

VA Loans are meant for ex-military personnel who have had an honorable discharge.

As all mortgage loans are bilateral, the borrower and the lender share a common responsibility in identifying appropriate each other so that the lender is benefited financially and the borrower realized his dream come true.