Understanding Mortgages and How to Get One

On February 25, 2026 By newsroom Topic: Buying A House

What is a Mortgage?

A loan for real estate purchases, such as homes.
Lender Types: Banks, credit unions, or mortgage companies.
Collateral: The property itself secures the loan, repossessable if payments are missed.
Repayment: Typically spans decades, combining principal and interest.

Types of Mortgages

Conventional Mortgages

Private lender loans without government backing.
Conforming: Meets Fannie Mae and Freddie Mac standards; 2023 limit is $726,200.
Nonconforming: Does not meet Fannie/Freddie standards.
Jumbo Loans: Higher than conforming limits, requiring good credit and large down payments.
Fixed-rate: Stable interest rates throughout the loan term.
Adjustable-rate (ARM): Initial fixed rate, adjusts with market conditions.

Government-Backed Mortgages

Supported by federal programs, offering lower risk for lenders and greater flexibility for borrowers:
FHA: Low down payments; ideal for less-than-perfect credit.
VA: No or low down payments for veterans and military families.
USDA: Supports rural buyers with zero down payments.

Other Options

Home Renovation Loans: For remodeling projects.
HELOC: Borrow against your home's equity.

How to Compare Mortgage Lenders

Type of Loan: Decide between fixed-rate, adjustable, conventional, or government-backed options.
Down Payment: Some require 20%, while others may offer as low as 3.5%.
Fees: Check for closing costs, origination fees, and PMI if the down payment is under 20%.
Points: Determine if you can lower interest rates by paying for mortgage points.
Application Process: Choose between fully online or in-person assistance.
Approval Time: Ensure the lender can meet your time frame for approval and closing.
Customer Reviews: Learn about user experiences through reviews or referrals.

Steps to Apply for a Mortgage

Assess Your Financial Health
Check your credit score and resolve potential issues.
Search for Lenders
Compare rates, terms, and fees.
Get Prequalified
Understand your borrowing potential without a hard credit check.
Review Loan Options
Compare interest rates and repayment scenarios.
Get Preapproved
Obtain a formal letter specifying the loan amount and interest rate.
Find and Offer
Use preapproval to strengthen offers on desired properties.
Finalize Approval
Submit all required documents for underwriting.
Close the Loan
Sign final papers, make your down payment, and secure the property.

Frequently Asked Questions (FAQs)

1. What's the difference between a lender and broker?
- Lender: Provides the loan directly.
- Broker: Helps compare multiple lenders to find the best fit.

2. Can I get a loan to build a house?
- Yes, through construction loans, though they have higher interest rates and stricter terms.

3. Which is better: a bank or private lender?
- Banks: Competitive rates, strict requirements, and longer processes.
- Private Lenders: Flexible loans but may charge higher interest.

4. How long does it take to get a mortgage?
- Typical timeline: 30 to 60 days, depending on underwriting and appraisal.

5. How much down payment is needed?
- Varies by loan type:
- VA loans: Often zero down.
- FHA loans: Minimum 3.5%.
- Conventional loans: 20% to avoid PMI.

Pro Tips for Mortgage Success

Shop Around: Compare multiple lenders to secure the best deal.
Plan Your Budget: Include all costs - down payment, fees, and taxes.
Prepare Documents: Have income proof, tax returns, and credit reports ready for faster approval.

Ready to start your home-buying journeyThe right mortgage lender can make all the difference!