Mortgages and Home Loans

    Learn everything you need to secure the best home mortgage or refinance your existing mortgage. We'll cover the different types of mortgages, and prepare you for your mortgage transaction.

    Frequently Asked Questions

    • Is it better to get a home loan from a bank or lender?

      That depends. Every financial institution offers slightly different mortgage options and fees. Some banks may offer discounts and incentives for those who currently bank with them, while other lenders—particularly online ones—may be able to offer lower fees due to reduced overhead costs. Because of these differences, you should compare quotes from both before moving forward.

    • What do you need to qualify for a home?

      Lenders may have a suggested minimum credit score, debt-to-income ratio, and a required down payment, depending on the loan program. You may also need various documents when applying, such as recent pay stubs, tax returns, W-2s, bank statements, and verification of employment. You can typically increase your chances of qualifying by offering a larger down payment or improving your credit score.

    • How do I get preapproved for a home loan?

      You’ll have to fill out the lender’s preapproval form, usually found on its website. You typically need to provide a little information—your name, income, details on the house you’d like to buy —and submit to a hard credit check. The lender will then review your information, and you’ll get a preapproval letter offering a specific loan amount. The preapproval letter is typically good for 90 days.

    • Which loan is best for first-time homebuyers?

      The best loan depends on your credit score and how much you have saved for a down payment. Many first-time homebuyers use Federal Housing Association (FHA) loans because they require a 500 credit score (with a 10% down payment) or a 580 credit score (with 3.5% down). Conventional mortgages only require a minimum of 3% down, but come with much higher credit score requirements.

    • What is a good down payment on a house?

      It depends on what type of mortgage loan you’re using. If you’re getting an FHA loan, a down payment of at least 10% is ideal, as it ensures you can cancel mortgage insurance after 11 years. If you’re getting a conventional loan, shoot for 20%. This will let you avoid private mortgage insurance altogether.

    • What are the types of mortgages?

      FHA and conventional loans are most common. Federal Housing Administration (FHA) loans are insured, reducing the risk for lenders that loan funds to less creditworthy borrowers. Conventional loans are issued by private lenders and don’t have this insurance. There are also jumbo loans (for higher-priced properties), VA loans (for veterans and military members), and USDA loans (for rural buyers).

    • What are typical mortgage terms?

      The most common mortgage terms are 30 or 15 years. This means the loan balance is repaid over either 15 or 30 years. Adjustable-rate mortgages (ARM) come in 3/1, 5/1, 7/1, and 10/1 terms. This means your interest rate is fixed for three, five, seven, or 10 years, and after that, the rate resets annually based on current mortgage interest rates.

    • Do mortgage payments go down over time?

      Your mortgage payment may go down over time, but it depends on several factors. With an adjustable-rate loan, your interest rate can change and, thus, your mortgage payment, too. Refinancing your loan may also reduce your mortgage payment. If neither of these scenarios applies, your payment will remain roughly the same (excluding changes to property taxes, PMI, home insurance, or servicer fees).

    Key Terms

    A woman collects all the info she needs to apply for mortgage preapproval.
    Why You Might Not Be Getting Preapproved for a Mortgage
    Young couple in office signing documents with business executive
    Tips for Mortgage Shopping in a Hurry
     A young couple reviews a document while sitting on a couch in front of laptop
    How To Appeal Property Taxes (and Win)
    A woman greets a smiling man at her front door.
    Earnest Money
    Man looks over rental agreement
    Security Deposit
    Two mature women laughing sitting on countertop of bright lobby
    How to Get a Joint Mortgage With Friends and Family
    Woman in blue sweater reads through paperwork at a laptop as a young girl colors beside her at the table.
    Loss Mitigation Application
    A person looks over a neighbor's fence
    Adverse Possession
    A couple moves boxes in a home or apartment
    Lessor
    A woman carrying a cardboard box with books arranges them on a shelf.
    Lessee
    Home equity loan illustration
    What You Need to Know About Home Equity Loans
    Custom illustration with young family standing in front of home diagram with text explaining some basic points about construction loans
    Construction Loans: Funds To Buy Land and Build
    Couple in the kitchen with bills
    Mortgage Recast
    How leases work. A lease is a contract between two parties: the lessor and the lessee. After you apply for an apartment and are accepted, you're given a lease by your landlord. While the term of a lease may vary, it is commonly 12 months. The lease dictates how much you owe each month, the security deposit amount owed, if any, and any additional stipulations. The lease becomes legally binding once both parties have signed. A lease can be broken, but it may come with financial consequences and a hit to your credit score.
    Lease
    white, green, and orange illustration of houses, dollar bills, and a line graph
    Compare Current Mortgage Refinance Rates
    A young couple enjoys their first morning in their new HomePath home.
    What Is a Fannie Mae HomePath Property?
    Woman sits at a small table drinking coffee in a tiny home.
    How Much Does a Tiny House Cost?
    A woman holds a chicken that a toddler is petting.
    Deed Restrictions
     Couple talking to loan officer, reviewing documents on a laptop
    Loan Origination
    family playing outside in front of their home that has a solar panel system
    Are Solar Panels Worth the Cost?
     A real estate agent shows property to a couple.
    Pocket Listing
    A woman wears a facemask and goggles while sanding a wall with an electric sander
    How Much Does a Home Addition Cost?
    A couple review documents and information on a laptop.
    How To Write a Mortgage Letter of Explanation
    Children running toward an ice cream truck
    Home Mortgage Disclosure Act
    man pulls both side pockes of his pants out showing they are empty
    Are Your House Payments Making It Difficult to Cover Your Other Bills?
    A small two-story starter home
    The Average Price of a Starter Home Across the U.S.
    A doctor seated behind a desk, looking at computer screen while holding a clipboard and taking notes
    Physician Loans
    A couple shaking hands with real estate lawyer after closing on a home
    What Is Proof of Funds?
    Older couple looking at tile flooring amid a home renovation.
    How To Finance a $25,000 Home Renovation Project
    graphic showing two people on top of stack of books with a ruler and pencil.
    Using Price-to-Rent Ratio To Decide Between Buying and Renting
    A parent holds a baby as a toddler plays in a home’s living room.
    Appraisal Gap
    A couple sits across a coffee table from a man in a suit and they review a document.
    Guide to Seller Concessions by Loan Type
    Down Payments: How Much Should You Pay?
    Should You Make a Large or Small Down Payment?
    Workers install roof on rural home under construction
    How Much Does It Cost to Build a House in 2021?
     A woman sits on the floor amid moving boxes looking stressed.
    REO Foreclosure
    Real estate agent with couple closing a deal
    Escrow Agent
    Real estate agent showing empty home to buyers
    How You Can Pay Less on Home Loan Origination Fees
    Real estate agent greeting couple at house
    How To Apply for a Mortgage
    Couple going over paperwork for home appraisal
    What Is the Sales Comparison Approach to Appraisals?
    people building a home
    Repairing your property? A home improvement grant can help.
     A young couple unpacks boxes in a home.
    Starter Home
    Advisor helping a senior couple at a home table
    Is It Bad To Have a Lien on Your House?
    Real estate agent shows home to potential homebuyers
    Amenity
    how to get started calculating your mortgage: Compare the monthly payment for several different home loans. Figure out how much you pay in interest monthly, and over the life of loan. See how much you pay off over the life of the loan versus the principal borrowed to determine the extra amount paid
    How To Calculate Mortgage Payments Before You Buy or Refinance
     A man and a young boy move boxes into an empty home.
    How Much Should You Save Before Buying a House?
    A soldier and his family stand in front of a house
    VA Home Loan
    A young couple reviews documents at a table
    When Should You Get a No-Cash-Out Refinance?
    Real estate agent offering young couple title documents to sign in a meeting in an office.
    What Is a Title Company and What Does It Do for You?
    Man in suit sits on porch near for sale sign
    Right of Redemption
    A man and two women review a document while sitting at a table
    Maximum Loan Amount
    A couple reviews insurance information with a professional
    How Much Homeowners Insurance Coverage Do I Need?
    Person signing rental contract
    How Much Rent Can I Get for My House?
    A couple looks at a laptop
    Mortgagee
    Row of new townhouses
    Townhouse vs. House: Which Is Better for You?
    Two people stand in front of an apartment building
    Getting a HELOC on an Investment Property
    Young professional using digital tablet in bright office
    Cap
    ballpoint pen and a calculator on a loan agreement.
    Loan Modification: Lower Your Payments and Avoid Foreclosure
    House with hearts indicating love in the home
    What Happens to Your Mortgage When You Die?
     Discussion between young couple and banker with a calculator
    How To Choose a Mortgage Lender
    A couple reviews documents while sitting in front of a laptop
    FHA Cash-Out Refinance Guide