Frequently Asked Questions — Mortgage Loans

A mortgage loan is a type of loan used to purchase a home or real estate property. The property serves as collateral, and the borrower agrees to repay the loan with interest over a specified period.

Common types include:

• Fixed-rate mortgage: A loan with a constant interest rate for the entire term
• Adjustable-rate mortgage (ARM): A loan with an interest rate that may change periodically
• FHA loan: A government-backed loan designed for first-time buyers or those with lower credit scores
• VA loan: A mortgage available to eligible veterans and active military personnel
• Jumbo loan: A mortgage for amounts exceeding conventional loan limits

For a deeper look, see our Fixed vs. Adjustable Rate guide.

Lenders evaluate various factors, including your credit score, income, employment history, debt-to-income (DTI) ratio, and the size of your down payment. Strong financial health increases the likelihood of approval and better interest rates.

The required down payment depends on the loan type and lender requirements:

• Conventional loans typically require 3%–20% down
• FHA loans require as little as 3.5% down
• VA and USDA loans may offer 0% down options for qualified borrowers

• Pre-qualification: A preliminary assessment based on self-reported financial information
• Pre-approval: A more detailed process where the lender reviews financial documents and credit history to provide a conditional loan commitment

See our full pre-qualification guide for more detail.

Closing costs include fees for the loan, appraisal, title insurance, and other services related to finalizing a mortgage. These typically range from 2%–5% of the home's purchase price.

Your credit score influences your interest rate and loan approval chances. A higher credit score generally results in better loan terms. Scores above 740 often receive the best rates, while lower scores may require higher down payments or come with higher interest rates. See our full breakdown of credit score impact.

Yes, but options may be limited. FHA and VA loans are more lenient on credit requirements. Additionally, improving your credit score before applying can help you secure better loan terms.

PMI is required for conventional loans when the down payment is less than 20%. It protects lenders in case of default. Borrowers can usually cancel PMI once they reach 20% equity in the home — sometimes years earlier than expected. See how to remove PMI for the full process.

The timeline varies, but most mortgage approvals take 30–45 days from application to closing. Factors such as loan type, lender processing times, and document submission can affect this timeline.

A 15-year mortgage offers higher monthly payments but lower interest costs over time. A 30-year mortgage has lower monthly payments but results in more interest paid over the loan's life. The right choice depends on your financial goals and budget. Use our amortization calculator to compare scenarios.

Missing a payment can result in late fees, impact your credit score, and eventually lead to foreclosure if payments continue to be missed. Contact your lender as soon as possible to discuss options if you're facing financial difficulties.

Yes, most mortgages allow early repayment without penalty. Even small extra payments can save significant interest over time. See our guide on whether paying off your mortgage early makes sense for your situation.

Refinancing involves replacing your existing mortgage with a new loan, typically to obtain a lower interest rate, reduce monthly payments, or access home equity. It's a good option when interest rates drop or your financial situation improves. See our complete refinancing guide.

Start by reviewing your credit score, determining your budget, and getting pre-approved by a lender. Working with a mortgage loan officer can help you navigate the process smoothly. Check out our step-by-step guide to getting a home loan to get started.