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Mortgage 101: What Every Homebuyer Should Know

A mortgage is likely the largest loan you'll ever take, so understanding how it works is essential. The two most common types are fixed-rate and adjustable-rate mortgages (ARMs). Fixed-rate mortgages have the same interest rate for the entire term, while ARMs have rates that change after an initial fixed period.

Your down payment significantly affects your mortgage. A standard down payment is 20%, but some loans allow as little as 3-5%. However, putting less than 20% down usually requires private mortgage insurance (PMI), which protects the lender if you default.

The loan term affects both your monthly payment and total interest paid. A 15-year mortgage has higher monthly payments but much less interest over time compared to a 30-year mortgage. Use our calculator to compare different scenarios.