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What is a Mortgage?
A comprehensive guide to understanding mortgages and finding the best home loan for your needs
Mortgage Definition
A mortgage is a loan specifically designed for purchasing real estate, where the property itself serves as collateral for the loan. Mortgages allow homebuyers to purchase property without paying the full price upfront, instead making monthly payments over a set period (typically 15-30 years) that include both principal and interest.
When you take out a mortgage, the lender holds a lien on the property until the loan is fully repaid. Mortgages come in various types—from conventional loans and FHA loans to VA loans and jumbo mortgages—each with different requirements, interest rates, and down payment options suited to different financial situations and homebuying goals.
How Do Mortgages Work?
Mortgages follow a structured process from pre-approval to closing:
- Pre-Approval: Lenders review your credit, income, and assets to determine how much you can borrow and provide a pre-approval letter.
- Home Shopping: With pre-approval in hand, you can confidently shop for homes within your budget and make offers.
- Loan Application: Once your offer is accepted, you complete a full mortgage application with detailed financial documentation.
- Underwriting & Appraisal: The lender verifies all information and orders a home appraisal to confirm the property's value.
- Closing: You sign final documents, pay closing costs, and receive the keys to your new home. Your monthly mortgage payments begin shortly after.
Types of Mortgages Available
🏠 Conventional Loans
Best for: Buyers with good credit and stable income
Down Payment: 3% - 20%
Rates: 5.5% - 7.5% APR
Terms: 10, 15, 20, or 30 years
Not backed by government. Offers competitive rates for well-qualified borrowers. Requires PMI if down payment is less than 20%.
🏛️ FHA Loans
Best for: First-time buyers, lower credit scores
Down Payment: As low as 3.5%
Rates: 5.5% - 7% APR
Terms: 15 or 30 years
Government-insured loans with flexible credit requirements. Ideal for buyers with limited down payment funds or lower credit scores.
🎖️ VA Loans
Best for: Military members, veterans, eligible spouses
Down Payment: $0 - No down payment required
Rates: 5.25% - 6.75% APR
Terms: 15 or 30 years
Exclusive benefit for military service members. No down payment, no PMI, and competitive rates. Requires VA funding fee.
💎 Jumbo Loans
Best for: High-value properties, strong finances
Down Payment: 10% - 20%
Rates: 6% - 8% APR
Terms: 15 or 30 years
For loan amounts exceeding conforming loan limits ($766,550 in most areas). Requires excellent credit and substantial down payment.
Mortgage Interest Rates & Costs
Mortgage costs vary based on loan type, credit score, down payment, and market conditions:
APR: 5.5% - 6.5%
Best rates available for qualified buyersAPR: 6.5% - 7.5%
Competitive rates with good termsAPR: 7.5% - 9%
Higher rates but approval possibleCommon costs include: Down payment (3-20% of home price), closing costs (2-5% of loan amount), origination fees, appraisal fees ($300-$600), title insurance, homeowners insurance, property taxes, and potentially PMI (0.5-1% annually if down payment < 20%).
Which Mortgage is Right for You?
Choose the mortgage type that best fits your financial situation and homebuying goals
First-Time Buyer?
Get an FHA Loan
- Only 3.5% down payment
- Credit scores as low as 580
- Perfect for first-time buyers
Military or Veteran?
Get a VA Loan
- $0 down payment required
- No PMI ever
- Best rates for veterans
Good Credit Score?
Get a Conventional Loan
- As low as 3% down
- Lowest rates available
- Flexible loan amounts
High-Value Property?
Get a Jumbo Loan
- Loans above $766,550
- Luxury property financing
- Competitive jumbo rates
Get Your Mortgage in 4 Simple Steps
From rate comparison to closing in as little as 21 days
Get Pre-Qualified
Tell us your home value and what you're looking to do. Instantly see personalized rate estimates from 100+ lenders without affecting your credit.
Compare & Choose
Review mortgage offers side-by-side. Compare rates, monthly payments, closing costs, and lender reviews. Pick the best offer for your situation.
Complete Application
Submit your full mortgage application with required documents. Your lender will order an appraisal and begin the underwriting process.
Close & Move In
Sign your final documents at closing, get your keys, and move into your new home. Your first mortgage payment is typically due 30 days after closing.
Frequently Asked Questions
What credit score do I need for a mortgage?
Minimum credit scores vary by loan type: Conventional (620+), FHA (580+), VA (No minimum but typically 620+), USDA (640+). Higher credit scores qualify for better interest rates.
How much do I need for a down payment?
Down payments vary by loan type: VA loans require $0, FHA loans 3.5%, Conventional loans 3-20%, and Jumbo loans typically 10-20%. A 20% down payment avoids PMI on conventional loans.
Will checking rates affect my credit score?
No. Our initial rate comparison uses a soft credit check that doesn't impact your score. When you formally apply with a lender, they'll perform a hard credit check (typically 5-10 point temporary impact).
What is PMI and can I avoid it?
PMI (Private Mortgage Insurance) is required on conventional loans with less than 20% down, costing 0.5-1% of loan amount annually. You can avoid it by putting 20% down, choosing a VA loan, or using a piggyback loan.
How long does mortgage approval take?
Pre-approval takes 1-3 days. Full approval typically takes 30-45 days from application to closing, though some lenders offer expedited closings in as little as 21 days.
Should I get a 15-year or 30-year mortgage?
15-year mortgages have higher monthly payments but lower interest rates and less total interest paid. 30-year mortgages have lower monthly payments but cost more in total interest. Choose based on your budget and financial goals.
Can You Qualify? (Probably Yes!)
We work with lenders who approve homebuyers with various financial profiles
Don't Meet All Requirements?
Apply anyway! We have lenders who specialize in:
- First-time homebuyers with limited savings
- Lower credit scores (as low as 580)
- Self-employed or gig workers
- Previous foreclosures or bankruptcies
Our job is to find you a "YES" - even if traditional lenders said no.
Typical Requirements
These are guidelines - every lender is different:
- Credit Score: 620+ conventional, 580+ FHA
- Down Payment: 0-20% (varies by loan type)
- Debt-to-Income: Typically under 43-50%
- Documentation: Tax returns, pay stubs, bank statements
Won't hurt your credit • Takes 60 seconds
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