The process of choosing which type of mortgage best fits your budget may seem mind-boggling because there are several different types of mortgages available in the market today. You can narrow your choices down by educating yourself on how to make the right decision.

One important factor to consider would be the kind of interest that would be applied on your loan. In this light, there are two basic interests you can choose from: the fixed-interest loans (where the schedule of payment remains the same for the life of the loan), and the adjustable-interest loans (where, subject to limits on ceilings pre-imposed by the government, payments increase or decrease on a regular schedule with changes in prevailing interest rates).

Among the hundreds of mortgage plans available, there are four more common ones most lenders offer, and each type can either have Fixed or Adjustable Rates. The four types of mortgage are:

1) Conventional: A "traditional" mortgage, mostly under $275,000 not directly insured by the Federal Government.

2) FHA: Designed for low to middle income borrowers and mostly first time buyers. This is under the Federal Housing Administration (FHA) a division of the U.S. Department of Housing and Urban Development (HUD).

3) VA: The Veterans Administration (VA) which insures (but does not fund) those qualified by military service. It offers lower down payment and lenient qualifications.

4) No-Document Loans: Also known as no-doc mortgages are usually offered to self-employed people, those who do not wish to have their income or credit history checked or those with no credit history. This type of mortgage has a shorter application process, since there is no requirement for financial documentation. On the downside, the no-doc mortgages are pegged at a slightly higher interest rates and are offered only by very fewer lenders because of the high risks involve.

Do not be overwhelmed by all these seemingly highly technical terms. It is really all so simple: if you want to procure a property of your own, you have to have money to purchase it with; if you don