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What Are the Different Types of Mortgages?
Conventional Mortgages: These are not backed by a government agency, such as the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA). Conventional mortgages are typically offered by private and online lenders and are available in various terms and interest rates. They generally require a higher credit score and a larger down payment than government-backed mortgages.
The lenders will review the borrower’s credit score, income, and assets to determine their ability to repay the loan. If the borrower is approved, the lender will provide them with a loan for the amount of the home’s purchase price minus the down payment. The borrower will then make monthly payments to the lender, including interest and principal until the loan is fully repaid.
Jumbo Loans: These mortgages exceed the maximum loan limits set by government-backed agencies, such as the FHA or VA. They are typically offered by private and online lenders and are designed for borrowers looking to purchase higher-priced homes. Jumbo loans often have stricter credit and income requirements and may require a larger down payment.
Portfolio Mortgages: These are mortgages held by the lender and not sold to other investors, unlike conventional and government-backed mortgages. Portfolio mortgages may have more flexible terms and credit requirements, but they are not as widely available as other types of home loans.
The private or online lender will review the borrower’s credit score, income, and assets to determine their ability to repay the loan. If the borrower is approved, the lender will provide them with a loan for the amount of the home’s purchase price minus the down payment. The borrower will then make monthly payments to the lender, including interest and principal until the loan is fully repaid. The lender will keep the loan in their portfolio instead of selling it to investors.
Non-QM Mortgages: These are mortgages that do not fit into the traditional Qualified Mortgage (QM) category and may have more flexible credit and income requirements. Non-QM mortgages are typically offered by private and online lenders and can include options such as interest-only payments or longer loan terms.
Today's Mortgage Interest Rates
| Mortgage | Interest Rate |
| 30-year fixed-rate | 5.703% |
| 20-year fixed-rate | 5.349% |
| 15-year fixed-rate | 4.885% |
| 10-year fixed-rate | 4.949% |
| 7-year ARM | 5.655% |
| 5-year ARM | 5.508% |
Last update: 03/02/23
How to Get a Mortgage
When applying for a mortgage, it is important to prepare in the following ways:
- Know and Build Credit Score
- Choose the Appropriate Mortgage Type
- Compare Multiple Lenders
- Get Pre-Approved
- Prepare Documents and any Other Necessary Paperwork
After the necessary preparations, the following steps can be taken to finalize a mortgage:
- Fill out a home loan Application
- Evaluate the Loan Estimates
- Choose a Lender and Commit
- Loan Processing
- Underwriting
- The Loan is Cleared to Close
There are numerous factors that one would probably want to consider before applying for a mortgage, such as their financial well-being, consequences of a potential default on a real estate loan, and macroeconomic factors. Many people find it important to educate themselves on the step-by-step process of learning how to apply for a mortgage by continuing to research the preliminary obligations and expectations involved in mortgage loans so as to avoid becoming overwhelmed.
How Much Money Do You Need for a Mortgage Down Payment?
The amount of money needed for a mortgage down payment can vary depending on the type of loan and the lender. For conventional loans, a minimum of 3% to 5% of the total purchase price is typically required. For government-backed loans, such as FHA and VA loans, a smaller down payment may be required. In some cases, it’s possible to qualify for a mortgage with a down payme