🏡 Mortgage Basics: Buying a House in the USA
Your complete guide to understanding mortgages, loan types, down payments, and the home buying process. Learn how to finance your dream home with confidence.
📋 Types of Mortgage Loans
🏦 Conventional Loan
3% down minimumNot insured by government. Best for borrowers with good credit (620+).
- Credit score: 620+
- Down payment: 3%-20%
- PMI if down < 20%
- Loan limit: $766,550 (2024)
🏛️ FHA Loan
3.5% downInsured by Federal Housing Administration. Great for first-time buyers.
- Credit score: 580+ (3.5% down)
- 500-579 requires 10% down
- MIP (mortgage insurance) required
- Lower credit flexibility
🪖 VA Loan
0% downFor veterans, active-duty military, and eligible spouses. No down payment required.
- No down payment required
- No PMI
- Competitive rates
- Funding fee (can be rolled in)
🌾 USDA Loan
0% downFor rural and suburban homebuyers who meet income requirements.
- 0% down payment
- Income limits apply
- Property must be in eligible area
- Guarantee fee instead of PMI
🧮 Mortgage Affordability Calculator
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*Does not include PMI (private mortgage insurance) which may apply for conventional loans with less than 20% down.
📊 Mortgage Loan Comparison
| Loan Type | Min Down Payment | Min Credit Score | Mortgage Insurance | Best For |
|---|---|---|---|---|
| Conventional | 3% | 620 | PMI if <20% down | Good credit, stable income |
| FHA | 3.5% | 580 | MIP (upfront + annual) | First-time buyers, lower credit |
| VA | 0% | 620 (varies) | None (funding fee) | Veterans, military |
| USDA | 0% | 640+ | Guarantee fee | Rural areas, low-moderate income |
| Jumbo | 10-20% | 700+ | Varies | High-cost areas (loans > $766,550) |
🚀 7 Steps to Buying a House
1
Check Credit & FinancesReview credit score, save for down payment, get pre-qualified
2
Get Pre-ApprovedSubmit documents to lender for conditional approval letter
3
Find a Real Estate AgentWork with buyer's agent to find homes that fit your budget
4
House HuntingTour homes, make an offer with earnest money deposit
5
Underwriting & AppraisalLender verifies finances, orders appraisal, title search
6
Closing DisclosureReview final loan terms 3 days before closing
7
Closing DaySign documents, pay closing costs, get keys to your new home!
💰 Beyond the Mortgage: Hidden Costs
🏛️ Closing Costs
2-5% of home price (origination fees, title insurance, escrow)
2-5% of home price (origination fees, title insurance, escrow)
🔧 Home Maintenance
Budget 1% of home value annually for repairs
Budget 1% of home value annually for repairs
📦 Moving Costs
$500-$3,000 depending on distance
$500-$3,000 depending on distance
🛋️ Furniture & Appliances
First-time buyers often underestimate this
First-time buyers often underestimate this
🏘️ HOA Fees
$100-$500+/month for condos/planned communities
$100-$500+/month for condos/planned communities
❓ Mortgage FAQs
Q: How much house can I afford?
Q: What credit score do I need to buy a house?
Q: What is PMI and how can I avoid it?
Q: How long does it take to close on a house?
Q: Should I get pre-approved before house hunting?