Mortgage Basics

A mortgage is a loan secured by real estate. Understanding a handful of core concepts — loan type, rate, term, down payment, and mortgage insurance — will help you pick the right program and avoid surprises at closing.

Loan Types

Most buyers choose from four core programs. Each has different credit, down-payment, and property requirements:

• Conventional loans — the most common option; as little as 3% down for qualified buyers.
• FHA loans — flexible credit requirements and 3.5% down.
• VA loans — 0% down and no PMI for eligible veterans and service members.
• USDA loans — 0% down in eligible rural and suburban areas.
• Jumbo loans — for loan amounts above the conforming limit.

Down Payments

Down payments range from 0% (VA, USDA) to 20%+ (jumbo). If saving a down payment is the barrier, explore Down payment assistance — many cover part or all of your down payment and closing costs.

Private Mortgage Insurance (PMI)

Conventional loans with less than 20% down typically require PMI, which drops off once you reach 20% equity. VA loans have no PMI; FHA loans use MIP instead. USDA loans use a guarantee fee.

Interest Rates & Terms

Fixed-rate mortgages keep the same rate for the life of the loan (usually 15 or 30 years). Your rate depends on credit score, loan type, down payment, and market conditions.

Special Situations

• Self-employed loans qualify borrowers with bank-statement or 1099 programs.
• Doctor loans waive student debt and offer low or no down payment for physicians.
• HELOC lets existing homeowners tap equity without refinancing.