Conventional
Not backed by a government agency. Flexible terms and competitive rates for buyers with solid credit. As little as 3% down; avoid PMI at 20%.
Explore Conventional →Learning Center
Buying a home shouldn't require a finance degree. This is the plain-English guide to how mortgages work — the loan types, the costs, the process, and every term you'll hear along the way.
The Big Picture
A mortgage is a loan used to buy a home, where the home itself is the collateral. You put down a portion of the price up front (your down payment) and borrow the rest, then repay it over time — usually 15 or 30 years — in monthly installments that cover four things, often remembered as PITI.
The amount you borrowed. Each payment chips away at this balance.
The cost of borrowing, charged as a percentage of your remaining balance.
Property taxes, usually collected monthly and held in escrow until they're due.
Homeowners insurance — plus mortgage insurance if your down payment is under 20%.
New to all of this? You don't have to memorize anything. Skim the sections below, and use the searchable glossary any time a word trips you up.
Choosing a Loan
There's no single "best" mortgage — the right one depends on your down payment, credit, income, and goals. Here are the most common options.
Not backed by a government agency. Flexible terms and competitive rates for buyers with solid credit. As little as 3% down; avoid PMI at 20%.
Explore Conventional →Insured by the Federal Housing Administration. Lower credit and down-payment requirements (as little as 3.5%) — popular with first-time buyers.
Explore FHA →For eligible veterans, service members, and surviving spouses. Often zero down payment and no monthly mortgage insurance.
Explore VA →For loan amounts above conforming limits. Used for higher-priced homes; typically requires stronger credit and reserves.
Explore Jumbo →For self-employed buyers, investors, and others whose income doesn't fit traditional guidelines. Alternative documentation like bank statements.
Explore Non-QM →A fixed-rate loan keeps the same rate for the whole term. An adjustable-rate (ARM) starts lower, then can change after an intro period.
See all programs →The Number Everyone Asks About
Your interest rate drives your monthly payment, but a few related ideas decide what rate you actually get — and what it really costs.
What It Costs to Buy
The price of the home is just the headline number. Here's what else factors into buying and owning.
Your upfront share of the purchase price. How much you need depends on the loan program — some require little or nothing down. A larger down payment lowers your monthly payment and can remove mortgage insurance.
One-time fees to finalize the loan — appraisal, title, origination, and more, all due at closing. The total varies by loan type, lender, and location, and is itemized for you on your official Loan Estimate.
PMI (conventional) or MIP (FHA) protects the lender when you put down less than 20%. It's added to your monthly payment and can often be removed later.
An account your lender uses to collect and pay your property taxes and homeowners insurance, spreading those big bills across the year.
Start to Keys
Every loan moves through the same milestones. Knowing them ahead of time makes the whole thing feel a lot less mysterious.
A lender reviews your credit, income, and assets and tells you how much you can borrow — so you shop with confidence and a real budget.
You find a home and make an offer. Your pre-approval letter shows sellers you're serious and ready to close.
You formally apply and receive a Loan Estimate detailing your rate, payment, and costs. Lock your rate when the time is right.
Your documents are verified and an independent appraisal confirms the home's value matches the loan.
An underwriter reviews everything and issues the final approval, sometimes requesting a few last conditions.
You review your Closing Disclosure, sign the final paperwork, fund your down payment and costs — and get the keys.
Speak the Language
The vocabulary you'll run into, in plain English. Start typing to filter the list.
A loan whose interest rate is fixed for an intro period, then adjusts periodically based on a market index.
The schedule by which your loan is paid off over time — early payments are mostly interest, later ones mostly principal.
The yearly cost of a loan including the interest rate plus most fees — the best apples-to-apples way to compare offers.
An independent professional's estimate of a home's market value, required by the lender before closing.
The final step where you sign documents, pay your costs, and ownership of the home transfers to you.
One-time fees due at closing — appraisal, title, origination, taxes, and more. The amount varies and is itemized on your Loan Estimate and Closing Disclosure.
A five-page form detailing your final loan terms and costs, provided at least three business days before closing.
A loan that meets the dollar limits and guidelines set by Fannie Mae and Freddie Mac.
A mortgage not insured or guaranteed by a government agency.
A number summarizing your credit history that helps determine your eligibility and interest rate.
Your monthly debt payments divided by your gross monthly income — a key measure lenders use to assess affordability.
The upfront portion of the purchase price you pay yourself, with the rest financed by your mortgage.
A good-faith deposit you make with an offer, showing the seller you're serious; it's later applied to your costs.
The portion of your home you actually own — its value minus what you still owe.
An account that holds funds for property taxes and insurance, or a neutral third party that holds funds during a transaction.
A mortgage insured by the Federal Housing Administration, with flexible credit and down-payment requirements.
A loan with an interest rate that stays the same for the entire term.
A temporary pause or reduction of mortgage payments granted during financial hardship.
Money from a family member or eligible source that can help cover your down payment or closing costs.
An independent review of a home's condition, separate from the appraisal, to identify needed repairs.
A policy that protects your home against damage and liability — required by lenders.
The percentage a lender charges to borrow money, applied to your remaining loan balance.
A mortgage that exceeds conforming loan limits, used for higher-priced properties.
A standardized three-page form showing your estimated rate, payment, and closing costs after you apply.
The loan amount divided by the home's value. A lower LTV often means better terms and no mortgage insurance.
Protects the lender when your down payment is under 20%. PMI is for conventional loans; MIP is for FHA loans.
The legal document in which you promise to repay the loan under its specific terms.
A loan that uses alternative qualification methods (like bank statements) for borrowers outside standard guidelines.
A charge from the lender for processing and creating your loan.
Optional upfront payments to lower your interest rate; one point equals 1% of the loan amount.
A lender's conditional commitment, based on verified information, stating how much you can borrow.
An informal early estimate of how much you might borrow, based on information you provide.
The amount of money you borrowed, not counting interest.
A lender's guarantee to hold your interest rate for a set period while your loan is processed.
Replacing your current mortgage with a new one — often to lower your rate, change your term, or tap equity.
A policy protecting you and the lender against problems with the home's ownership history.
The lender's process of evaluating your application and the property to decide whether to approve the loan.
A government-backed loan for eligible rural and suburban buyers, often with no down payment.
A loan guaranteed by the Department of Veterans Affairs for eligible service members and veterans, often with no down payment.
No terms match your search. Try a different word.
Common Questions
Less than most people think. Many conventional loans start at 3% down, FHA at 3.5%, and VA and USDA loans can require nothing down for eligible buyers. A larger down payment lowers your monthly payment and can remove mortgage insurance.
It varies by loan type. Government-backed loans like FHA are designed to be more flexible, while conventional and jumbo loans generally reward higher scores with better rates. The best move is to get pre-approved so you know exactly where you stand.
Pre-qualification is a quick, informal estimate based on what you tell a lender. Pre-approval is stronger — the lender verifies your credit, income, and assets, giving you a concrete budget and a letter that carries weight with sellers.
Timelines vary with your situation, but a typical purchase moves from application to closing in a matter of weeks. Being responsive with documents is the single biggest thing you can do to keep it fast.
A fixed rate offers predictable payments for the life of the loan and suits buyers planning to stay put. An adjustable rate (ARM) can start lower and may fit buyers who expect to move or refinance before the rate adjusts. Your advisor can model both.
Mortgage insurance protects the lender when you put down less than 20%. On conventional loans it's PMI, which can often be removed once you build enough equity. VA loans skip monthly mortgage insurance entirely for eligible borrowers.
Ready When You Are
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