🔑 Key takeaways
- A mortgage allows you to buy a home now and pay for it over time, with interest, fees, and taxes added along the way.
- You usually need a down payment, a reliable source of income, strong credit, and proof of savings to qualify for a mortgage.
- Mortgages aren’t one-size-fits-all. You can choose from options like a 15- or 30-year conventional fixed-rate mortgage or less common options, like a jumbo loan or an adjustable-rate mortgage.
- Always talk with a loan officer to get the full picture on what your mortgage options are.
What is a mortgage?
A mortgage is a long-term installment loan for buying a home or other real estate. When you get a mortgage, you agree to repay the lender in predetermined monthly payments over an extended period (usually 15 or 30 years).[1] Your monthly payment includes a portion of the original principal amount you’ve borrowed plus interest, fees, and taxes if you’re using an escrow account.[2]
How do you get a mortgage?
You can get a mortgage from banks, credit unions, online lenders and direct mortgage companies. You must meet the lender’s mortgage qualifications, submit an application, and get approved for the loan. The property you’re buying also must meet certain requirements for you to qualify for the mortgage. A mortgage is among the largest debt consumers have, so lenders want to make sure you can make the payments before they give you one and that the home itself isn’t risky collateral.
One big qualifying factor is how much you have saved for your down payment, although certain homebuyer programs—like VA, USDA, or FHA loans—require little or no money down. Other areas a lender assesses are your savings balances, credit history and score, and whether you have steady and reliable income.
What are the most common types of mortgages?
For first-time homebuyers in 2025, conventional mortgages and government-backed mortgages (FHA, USDA, VA) were split about 50/50. The average credit score and debt-to-income ratio for conventional mortgages were 753 and 37.9% respectively, while government-backed mortgages averaged 698 and 44%.[3]
Usually as long as your debt-to-income ratio is low enough and your credit score is high enough, a conventional fixed-rate mortgage is the most common choice. Its fixed interest rate means the rate you pay will never change, which makes monthly payments more predictable and easier to budget your finances around. Conventional loans also usually offer better rates and lower fees.
| Mortgage type | Best for | Min. down payment | Rate stability |
|---|---|---|---|
| Conventional 30- or 15-year fixed | Most buyers | 3–5% (depending on which programs you qualify for) | Never changes |
| ARM (adjustable-rate mortgage) | Short-term owners | 3.5–5% | Changes over time |
| FHA loan | Low-credit buyers or buyers with low down payments | 3.5–10% | Fixed or adjustable |
| VA loan | Eligible veterans and family members | 0% | Fixed or adjustable |
There are also unconventional mortgage options to choose from, which might make sense depending on your situation:
- Jumbo loans: Jumbo loans let borrowers exceed the conforming loan limits for each county set by the Federal Housing Finance Agency. Jumbo loans are typically used for mortgages ranging from $766,550–$1,149,825, but the exact limit depends on which county you’re buying in.
- 40-year mortgages: This mortgage option spreads your mortgage debt over a longer period. Monthly payments can be significantly lower than a 15- or 30-year mortgage, but you’ll pay more in interest overall. Although these loans may come with higher rates because they are not purchased by Fannie Mae or Freddie Mac.[4]
What happens if I stop making my mortgage payments?
When you stop making payments toward your mortgage loan, the bank or lender can take your home back. This process is called foreclosure. It involves the lender taking the house, selling it, and using the sale proceeds to cover your unpaid mortgage balance.
Aside from the risk of losing your home, non-payment is reported to the national credit bureaus: Experian, Equifax, and TransUnion. A defaulted mortgage loan and missing payment history can pull your credit score down, and potentially affect whether you can get a mortgage in the future.
How to get help with your mortgage payments
Home foreclosure is a worst-case scenario, and there are opportunities to get temporary mortgage relief before the situation gets dire. Here are a few:
- Temporary relief programs: Ask your mortgage servicer about short-term relief options that you might qualify for. Some lenders offer forbearance, which pauses or lowers payments temporarily.
- Loan modification: See if your lender is willing to permanently alter the terms of your loan so that payments are more affordable.
- Mortgage refinance: Refinancing is when a new refinance lender pays off your original mortgage loan, and creates a new one in its place. The refinanced loan has a new rate and terms, and you’ll direct payments to the new lender.
Before buying a house, ensure you have a financial buffer to help you stay afloat during financial hardship. Avoid pouring your entire life savings into your down payment. Instead, retain some savings for unplanned income changes, and redirect some of your discretionary income to savings each month.
A general rule of thumb is to not get a mortgage payment that exceeds 28% of your gross monthly income, although there are always exceptions to this depending on your financial situation and long-term plans for the mortgage.
Usually sticking below 28% will protect you from taking on a mortgage payment that might make it difficult for you to meet your other financial obligations. You can read more about the reasoning and math behind the 28% recommendation from the Federal Deposit Insurance Corporation (FDIC).
How can I compare mortgages from different lenders?
If you ask them, each lender will provide you with a free loan estimate that won’t affect your credit score. This standardized document outlines the mortgage offer interest rate, annual percentage rate (APR), your monthly payment, repayment term, and closing costs.
If you want more concrete numbers, you can also get preapproved by multiple lenders to compare offers. Preapprovals require submitting more documentation, but the numbers will be more accurate.
While preapprovals involve a hard credit inquiry, credit scoring models generally group multiple mortgage inquiries into just one inquiry as long as they’re made within a 14- to 45-day shopping window (depending on which FICO scoring model your lender uses).[5]
How to get help choosing a mortgage
Working with a mortgage broker can streamline the process of choosing a mortgage. Mortgage brokers don’t lend money directly. Instead, they tap into their extensive mortgage lender network to find a loan that you qualify for. They can scour multiple mortgage loan products at once to help you compare offers in one sitting based on your credit, income, and long-term goals.
If you’re ready to start shopping, Best Interest Financial can help. Best Interest Financial is a mortgage broker with a team that has decades of experience closing over $1 billion in loans. They're experts at identifying solutions that large retail banks miss. Talk with a Best Interest loan officer to explore your mortgage options.
Disclaimer: The information provided in this article is for informational and educational purposes only. It is not intended as legal, financial, investment, or tax advice, and should not be relied upon as such. Mortgage rates, terms, products, and eligibility requirements are subject to change without notice and vary based on individual circumstances, credit profile, property type, loan amount, and other factors. All loans are subject to credit approval. This content does not constitute a commitment to lend or an offer of specific loan terms. For personalized mortgage advice and to discuss loan products that may be suitable for your situation, please contact one of our licensed loan officers.