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Option ARMs allow borrowers to make minimum payments below accrued interest, leading to negative amortization. This makes balances grow rather than shrink, creating future payment shocks.

USDA loans provide 100% financing for eligible low- to moderate-income rural and suburban borrowers. FHA loans require small down payments, VA loans are for veterans, and jumbo loans finance luxury properties.

FHA loans insure lenders against default, allowing borrowers with lower credit scores or small down payments to access mortgages. VA loans target veterans, USDA targets rural borrowers, and jumbo loans finance high-value homes.

USDA loans provide 100% financing for eligible rural and suburban borrowers. They expand homeownership access for low- to moderate-income families.

Option ARMs permit minimum payments that don’t cover interest, resulting in negative amortization. This increases loan balances and creates payment shock risk when loans recast.