The three types of mortgages are – fixed-rate mortgages, adjustable-rate mortgages, and alternative mortgages. In fixed-rate mortgages, a person knows how much he has to pay every month. In adjustable rate mortgages, the monthly mortgage payment rises and falls along with the interest rates. Alternative or combination mortgages, change with time. They usually offer a low-interest rate initially and then their interest rate depends on the current market conditions.