Mortgages and Home Buying
A mortgage is the largest loan most people ever take, and small differences in rate translate into tens of thousands of dollars over its life. Here is how to approach it.
Typical APR (30-yr fixed)
6% to 7.5%
Common terms
15 or 30 years
Typical down payment
3% to 20%
Collateral
The home
Figures above are typical ranges for general guidance only. Your actual rate and terms depend on your credit, income, and lender, and change over time. Confirm current numbers directly with a lender.
A mortgage is a long-term loan secured by the home you are buying. Most borrowers choose a 30-year fixed-rate loan for its predictable payment, though a 15-year loan carries a lower rate and builds equity far faster at the cost of a higher monthly payment. Your rate depends on your credit score, your down payment, the loan type, and the broader rate environment.
The biggest money-saving move in the whole process is to compare offers from several lenders on the same day. Rates and fees vary more than people expect, and federal data consistently shows that borrowers who get just a few quotes save meaningfully over those who take the first offer. Get a Loan Estimate from each lender, then compare the APR and the total closing costs side by side, not just the headline rate.
Loan type matters too. Conventional loans suit buyers with solid credit and some down payment. FHA loans allow lower scores and down payments as small as 3.5%. VA loans, for eligible service members and veterans, can require no down payment at all. Each has tradeoffs in cost and mortgage insurance, so the right one depends on your situation.
When it makes sense
- You are buying a home and want to understand your real monthly cost first.
- You are refinancing and want to know whether the rate savings beat the closing costs.
- You want to compare loan types like conventional, FHA, and VA.
What to watch for
- The lowest rate is not the best deal if it comes with high closing costs; compare APR.
- Putting less than 20% down usually means paying mortgage insurance until you build equity.
- Stretching to the top of your approval amount leaves no room for life's surprises.
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Guides on mortgages
Understanding Closing Costs: What You'll Really Pay
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6 min readFrequently asked questions
How much should I put down on a house?
Twenty percent lets you avoid private mortgage insurance, but it is not required. FHA loans allow as little as 3.5% down, and some conventional programs allow 3%. A smaller down payment gets you in sooner but adds insurance cost until you reach 20% equity.
Should I get a 15-year or 30-year mortgage?
A 30-year loan has a lower, more flexible payment. A 15-year loan has a lower rate and builds equity much faster, but the payment is higher. If you can comfortably afford the 15-year payment, you will pay far less interest over the life of the loan.
How many mortgage lenders should I compare?
At least three. Request a Loan Estimate from each on the same day and compare the APR and total closing costs, not just the rate. The savings from shopping around are among the largest in personal finance.