Mortgage Guide

What is a mortgage?

A mortgage is a loan used to buy or refinance real estate. The property serves as collateral, which means the lender can foreclose if payments stop. Mortgages are typically repaid over 15 or 30 years, though other terms exist.

Fixed-rate vs. adjustable-rate mortgages

A fixed-rate mortgage keeps the same interest rate for the entire term, giving you predictable payments. An adjustable-rate mortgage (ARM) starts with a lower rate that changes periodically after an initial period. ARMs can save money if you move or refinance before the rate adjusts, but they add uncertainty.

Down payment and PMI

A 20% down payment is the traditional benchmark because it lets you avoid private mortgage insurance (PMI). However, many loans allow smaller down payments. FHA loans can require as little as 3.5%, and VA loans may require 0% down for qualifying veterans. Smaller down payments mean larger loans and more interest paid over time.

Closing costs

Closing costs include lender fees, appraisal, title insurance, taxes, and prepaid items. They usually range from 2% to 5% of the loan amount. Some lenders offer lender credits or no-closing-cost loans, but those often come with a higher interest rate.

How to compare mortgage offers

• Compare the APR, which includes both the rate and lender fees.
• Look at points: paying upfront points lowers your rate but raises closing costs.
• Compare the same loan term across lenders.
• Ask about rate locks if you are worried about rates rising before closing.

Preapproval vs. prequalification

Prequalification is an informal estimate of what you might borrow. Preapproval involves a hard credit check and a lender review of your finances, and it carries more weight with sellers.

Compare lenders

See our mortgage rate comparison for a side-by-side look at lenders and products.

Calculate your monthly mortgage payment

Use our free mortgage calculator to see your principal and interest payment, total interest, and amortization schedule.