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Mortgage Basics Guide
Introduction to mortgages for first-time buyers. Learn mortgage terminology, types of loans, and how to get the best mortgage for your situation.
Key figures
- Average mortgage term: 30 years (most common) or 15 years (builds equity faster)
- Current mortgage rates: 3.5% - 8.5% depending on market and credit score
- Down payment requirements: 3% (FHA), 5% (conventional), 10-20% (conventional preferred)
- Debt-to-income limit: typically 36-43% for qualification
Frequently asked questions
What's the difference between a 15-year and 30-year mortgage?
15-year builds equity faster and costs less interest, but has higher monthly payments. 30-year is more affordable monthly but costs more total interest.
What credit score do I need for a mortgage?
FHA loans accept scores as low as 580; conventional typically require 620+. Better scores get better rates.
What are points on a mortgage?
Points are prepaid interest. 1 point = 1% of loan amount. Paying points upfront lowers your interest rate.
Fixed vs adjustable rate: which is better?
Fixed is predictable and protects against rate increases. Adjustable starts lower but can increase. Fixed is safer for most.
How long does the mortgage process take?
Typically 30-45 days from application to closing.
Tax outcomes depend on whether you itemize, your filing status, and local rules. These are estimates, not tax advice. A tax professional or lender can confirm the details for your situation.