Mortgage questions people actually ask

The interest rate is the cost of borrowing the principal, expressed as a yearly percentage. APR (annual percentage rate) adds in most upfront fees — like origination charges — and spreads them across the term, so it is usually the better number for comparing two mortgages that have different fee structures.

It depends on the loan type. Conventional loans can go as low as 3%, FHA loans typically require 3.5%, and VA and USDA loans can allow 0% down for eligible buyers. A down payment under 20% on a conventional loan usually means PMI applies until you build enough equity.

Private mortgage insurance protects the lender, not you, and is typically required on conventional loans when your down payment is below 20%. It usually costs 0.3% to 1.5% of the loan amount per year and can generally be removed once your loan balance drops to roughly 80% of the home's original value.

Almost always, yes. A 30-year term lowers the monthly payment but keeps the balance outstanding longer, so more of your total payments go to interest — often over a hundred thousand dollars more on a typical loan. Our guide on 15-year vs 30-year mortgages walks through the arithmetic with real numbers.

In the US, the core factors are credit history and score, income relative to existing debt (your debt-to-income ratio), your down payment and loan-to-value ratio, and the appraised value of the property itself. Employment stability also matters.

It depends on how long you plan to stay in the home and how much certainty you want. A fixed rate never changes, which makes budgeting predictable. An adjustable-rate mortgage (ARM) often starts lower but can rise after the initial fixed period, which suits someone who expects to sell or refinance before that period ends.

Prequalification is a quick, informal estimate usually based on a soft credit check that doesn't affect your score. Preapproval is a more thorough review, often with a hard credit pull and full income documentation, that gives sellers more confidence in your offer. Neither is a final underwriting decision.

Closing costs typically run 2% to 5% of the loan amount and include origination fees, appraisal fees, title insurance and prepaid escrow items for taxes and insurance. Our guide on closing costs people miss breaks down what most buyers overlook.

Refinancing usually makes sense when the new rate is meaningfully lower than your current one, you plan to stay in the home long enough to recover the closing costs, and you are not simply resetting the clock on a term you had already paid down significantly. Our refinancing arithmetic guide covers how to work out your break-even point.

It is your total monthly debt payments, including the new mortgage, divided by your gross monthly income, expressed as a percentage. US mortgage lenders use it to judge how much home you can reasonably afford. Many lenders look for a ratio comfortably under 36-43%, though this varies by loan type and lender.

A lender typically verifies your income and identity, orders an appraisal, runs a credit check, and reviews the file against their underwriting criteria. For most conventional mortgages this takes roughly two to four weeks. Our guide on what happens after you apply covers the process in more detail.

No. Everything here describes US mortgage lending — rates, terms, disclosure rules and typical lender criteria. Despite the .id domain, none of this describes Indonesian or any other country's mortgage system, and rules differ everywhere.