Types of Mortgage Loans

Find the Right Home Loan for Your Situation

Choosing the right mortgage loan is one of the biggest financial decisions you'll make.

Whether you're buying your first home, building a custom home, refinancing, investing in real estate, or purchasing your forever home, Plains Commerce Bank offers mortgage solutions designed to fit your goals. Our experienced mortgage bankers will help you compare loan options, understand qualification requirements, and choose the financing solution that makes the most sense for your budget and future plans.

Understanding Your Mortgage Options

There are many different types of home loans, and each serves a different purpose. Some loans help first-time buyers purchase with less money down. Others are designed for veterans, rural homebuyers, medical professionals, self-employed borrowers, or homeowners looking to refinance or tap into their home's equity.

Understanding the differences between mortgage types can help you choose a loan that saves money, improves flexibility, and supports your long-term financial goals.

Conventional Loan

A conventional mortgage loan is one of the most popular home financing options available because it offers flexibility and competitive terms for qualified borrowers. Unlike government-backed loans, conventional loans are not insured by a federal agency and may be ideal for buyers with established credit and a strong financial profile. This loan is great for homebuyers with good credit and stable income who are looking for flexible financing options with competitive rates. Conventional loans are a great choice for first-time homebuyers, repeat buyers, and those purchasing a primary residence, second home, or investment property.

Benefits

• Competitive fixed and adjustable interest rate options
• Flexible loan terms to fit your financial goals
• Available for primary residences, second homes, and investment properties
• Various down payment options for qualified borrowers
• May offer lower overall borrowing costs for qualified applicants

Talk to a Mortgage Banker to compare your financing options and find the mortgage that best supports your homeownership goals.

First-Time Homebuyer Loan

This is a great mortgage loan program that offers low down payment options and reduced interest rates to help people buy their first home. A first-time homebuyer loan is designed to make homeownership more accessible by offering financing options with lower upfront costs and flexible qualification requirements. Many first-time buyers are surprised to learn that they may not need a 20% down payment to purchase a home.

Depending on your situation, you may qualify for programs that offer:

• Low down payment options
• Competitive interest rates
• Down payment and closing cost assistance
• Flexible qualification requirements
• Education and guidance throughout the homebuying process

South Dakota First-Time Homebuyer Program

If you're purchasing a home in South Dakota, you may qualify for the South Dakota First-Time Homebuyer Program. Eligible borrowers may benefit from low down payment options, competitive interest rates, and additional assistance programs designed to help make homeownership more affordable. Qualification requirements, including income limits and eligibility guidelines, vary by program and county.

Fixed Rate Mortgage

The first choice of most mortgage customers, fixed-rate mortgages offer security and peace of mind by locking your mortgage interest rate for the entire term of your loan. Some benefits of a Fixed Rate Mortgage include:

• Fixed interest rate for the life of the loan
• Predictable monthly principal and interest payments
• Great for budgeting

While monthly payments never change because of interest rate fluctuations, shorter loan terms often result in higher monthly payments but significantly lower total interest over the life of the loan. 

Adjustable Rate Mortgage

Adjustable Rate Mortgages (ARMs) often offer lower interest rates in exchange for an adjustable rate feature. ARMs come with a variety of options, including some that have a fixed period for 5, 7, or 10 years before the rate starts to adjust. While they are not right for every borrower, the interest saved with an ARM is attractive for borrowers who do not intend to keep their loan for a long period of time.

 Click here for ARM loan disclosures containing rates, fees, and other cost information along with the Consumer Handbook on ARMs. (PDF)

Jumbo Loan

When you're purchasing a home that exceeds conventional loan limits, a jumbo mortgage loan can provide the financing you need. Jumbo loans are designed for higher-value properties and may offer competitive financing solutions for qualified borrowers with strong credit and financial profiles.

If you're considering financing a higher-priced home, our experienced mortgage team can help determine whether a jumbo mortgage is the right solution for your unique situation.

Rural Development Loan

This program may be one of the best-kept mortgage secrets out there. A USDA Rural Development Loan helps make homeownership more affordable for eligible buyers purchasing a home in qualifying rural and suburban areas. Backed by the U.S. Department of Agriculture, this loan program offers qualified borrowers the opportunity to purchase a home with no down payment, competitive interest rates, and affordable monthly payments.

Many buyers are surprised to learn that a wide range of communities qualify as "rural" under USDA guidelines (not just farmland or remote locations). If you're purchasing a home outside of a major metropolitan area, a USDA loan may be worth exploring.

A USDA Rural Development Loan may be a great fit if you:

• Are purchasing a home in an eligible rural or suburban area
• Meet USDA income eligibility requirements
• Want to buy a home with no down payment
• Are a first-time or repeat homebuyer
• Are looking for an affordable path to homeownership

USDA loans are available only for homes located in USDA-designated eligible areas, and borrowers must meet household income limits established by the program. The property must also be used as your primary residence and meet USDA eligibility guidelines.

If you're unsure whether a property qualifies or if your income meets program requirements, a Plains Commerce Bank mortgage banker can help determine your eligibility and compare USDA financing with other mortgage options.

Medical Professional Loan

Traditional mortgage programs don’t always account for student loan debt or delayed earning timelines. Doctor Loans are structured to reflect the realities of your profession, helping you qualify more easily while preserving cash for the things that matter most. It includes benefits such as no mortgage insurance, up to 100% financing, and flexible options to fit your career path.

Medical Professional Loan programs have specific eligibility requirements and are generally available only to qualifying healthcare professionals. Loan terms, down payment requirements, and available benefits vary based on your profession, employment status, and financial qualifications.

If you're beginning your medical career, relocating for a new position, or purchasing your next home, a Plains Commerce Bank mortgage banker can help you compare your options and determine whether a Medical Professional Loan is the best fit for your situation.

Veterans Affairs (VA) Insured Loan

This type of loan is a mortgage program backed by the U.S. Department of Veterans Affairs that helps eligible veterans, active-duty service members, National Guard members, Reservists, and certain surviving spouses achieve homeownership with flexible financing options.

As a thank you for your service, VA loans offer valuable benefits that can make buying a home more affordable, including no down payment for qualified borrowers and competitive interest rates. 

A VA Loan may be a great fit if you:

• Are an eligible veteran, active-duty service member, or qualifying surviving spouse
• Want to purchase a primary residence
• Are looking for a mortgage with no down payment for qualified borrowers
• Want to take advantage of competitive interest rates and flexible qualification requirements
• Are interested in refinancing an existing mortgage through a VA loan program

VA Loans are available only to eligible borrowers who meet the Department of Veterans Affairs service requirements. Most borrowers will need to obtain a Certificate of Eligibility (COE) to verify eligibility, and the home must be used as a primary residence.

While many VA borrowers can purchase a home with no down payment, closing costs, funding fees, and other loan requirements may still apply. Certain borrowers may qualify for a reduced or waived VA funding fee based on their service-connected disability status.

A Plains Commerce Bank mortgage banker can help you understand your eligibility, obtain your Certificate of Eligibility, and compare a VA Loan with other mortgage options to determine the best fit for your financial goals.

Non-QM Loans (Self-Employed and Investment Properties) 

If your income does not fit neatly into a box, you still deserve home financing options that work for you. Not every qualified homebuyer fits the traditional mortgage mold. If you're self-employed, own a business, have multiple income streams, or your income is difficult to document using conventional guidelines, a Non-QM (Non-Qualified Mortgage) Loan may provide the flexibility you need.

Non-QM loans are designed for creditworthy borrowers whose financial situation doesn't fit standard agency lending requirements. Rather than relying solely on traditional income documentation, these programs may use alternative methods to verify your ability to repay the loan.

A Non-QM Loan may be a great fit if you:

• Are self-employed or own a business
• Have variable, seasonal, or commission-based income
• Are a real estate investor
• Have significant assets but limited traditional income documentation
• Have recently experienced a major life or career change
• Don't qualify for a conventional mortgage but have strong overall financials

Non-QM loans are not one-size-fits-all. Qualification requirements, interest rates, down payment requirements, and documentation vary based on the loan program and your financial situation. Because these loans provide additional flexibility, they may have different terms than conventional or government-backed mortgages. Our home loan experts can review your income, assets, and homeownership goals to determine whether a Non-QM loan or another mortgage program is the best fit for your needs.

Federal Housing Administration (FHA) Insured Loan

An FHA Loan is a government-backed mortgage insured by the Federal Housing Administration (FHA). It's designed to make homeownership more accessible for qualified buyers by offering flexible credit requirements and lower down payment options than many conventional loans.

Whether you're buying your first home or purchasing again, an FHA loan can be an excellent choice if you're looking for a more affordable path to homeownership. An FHA Loan may be a great fit if you:

• Are a first-time or repeat homebuyer
• Have limited savings for a down payment
• Are looking for more flexible credit qualification requirements
• Want a competitive fixed-rate mortgage
• Are purchasing a primary residence

FHA loans require both an upfront mortgage insurance premium and ongoing annual mortgage insurance premiums, which are typically included in your monthly mortgage payment. Loan limits also vary by county, and the home must meet FHA property standards and be used as your primary residence.

While FHA loans are a great option for many buyers, they aren't the right fit for everyone. Depending on your credit profile, down payment, and financial goals, a conventional, VA, or USDA loan may provide additional advantages.

We can help you compare your mortgage options and determine whether an FHA loan is the best choice for your home purchase.

Bridge Loan

Buying a new home while trying to sell your current one can be challenging. A Bridge Loan is a type of mortgage loan that lets you borrow against the equity of your current home to cover the down payment of a new home you'd like to purchase, bridging the "gap" between them. 

Instead of waiting for your current home to close, a Bridge Loan provides short-term financing that can be used toward your down payment, helping you move forward with confidence and avoid missing out on the home you want. A Bridge Loan may be a great fit if you:

• Have significant equity in your current home
• Want to buy a new home before selling your existing one
• Need funds for a down payment on your next home
• Want to avoid making a contingent offer based on selling your current home
• Are relocating for work or moving into your forever home

A Bridge Loan is intended as a short-term financing solution and is typically repaid once your current home is sold. During the transition, you may be responsible for payments on both your existing mortgage and your Bridge Loan, so it's important to understand how the financing fits within your overall budget.

Bridge Loans are best suited for homeowners with sufficient equity in their current home and a clear plan for selling their property. Every situation is different, and qualification requirements vary based on your financial profile, available equity, and the terms of your mortgage.

Streamline Refinance

If you have a Rural Development (RD), Veterans Administration (VA), or Federal Housing Authority (FHA) insured loan, a streamline refinance may be just what your mortgage situation is longing for. Our Streamline Refinance option offers the ability to remove some of the costs and pain points associated with the typical refinance process. While avoiding quite a bit of paperwork, often no appraisal is needed, and you may also benefit from lower closings costs. Bottom line-we’ll work to get you on the fast track to what could be a reduction in your interest rate and possibly lower monthly payments. Reach out today to one of our mortgage experts to see if a Streamline Refinance would be a good fit for your mortgage situation.

Home Equity Line of Credit (HELOC)

If you own your home, you have buying power. Use the equity you’ve established to help pay for unexpected expenses or short-term financial needs with a home equity line of credit (also called a “HELOC”).

This flexible financing tool is a revolving line of credit, so it works like a credit card. The interest rate will adjust with the prime lending rate, but the monthly payments often only require accrued interest to be paid. And since the loan is tied to the equity you have in your home, the interest you pay may be tax deductible². Be sure to consult with your tax advisor for eligibility.
 

To apply for a home equity line of credit, please call your nearest Plains Commerce location or call us toll-free at 1-866-635-2467. 

Home Equity Loan

You can use the equity on your home to borrow money to pay for home improvements, medical expenses, vehicles and other financial needs.

A home equity loan, also called a “second mortgage” since it’s secured against the value of your home, is different from a HELOC in that you will receive the full amount of the loan in a one-time lump sum at closing.

Both home equity loans and HELOCs use the equity in your home as collateral, but Home Equity Loans are fixed-rate loans with a fixed payment schedule, similar to a car loan or a first mortgage.

To apply for a home equity loan, please call your nearest Plains Commerce location or call us toll-free at 1-866-635-2467.