Loan Program Advantages Disadvantages Fixed-rate mortgages • Predictable monthly payments • Less risk if market conditions cause rates to rise • Rate does not change • You pay more in interest • Higher interest rate • Unable to take advantage of lower interest costs if market changes to lower rates Adjustable rate mortgages • Flexibility • Lower initial monthly payment • You pay less for short term ownership • May be easier to qualify for higher loan amounts • More risk • Inability to predict future housing costs • Potential higher payments (at max. interest rate) Stated income mortgages • Don't need to verify income • Higher rates • Need a low LTV to qualify Combination loans (such as an 80/10/10) • Avoid PMI • Potential tax advantages • Possibly higher monthly payments • Two monthly payments instead of one