Plan your home purchase with confidence. Calculate monthly payments, compare loan options, and understand the true cost of homeownership.
Master the fundamentals of home financing with our comprehensive guide. From understanding interest rates to choosing the right loan type, we'll equip you with the knowledge to make confident decisions about your biggest investment.
The portion of your payment that directly reduces your loan balance. Early in your mortgage, this is a smaller portion, but it grows over time.
The cost of borrowing money, calculated as a percentage of your remaining balance. This is the lender's profit and your largest expense early in the loan.
Annual taxes assessed by your local government, typically 0.5-2% of home value. Often collected monthly and held in escrow by your lender.
Homeowners insurance protects your investment. PMI (if applicable) protects the lender when down payment is less than 20%.
Understanding how interest rates affect your mortgage is crucial. Even small rate differences have massive long-term financial implications.
Every 1% increase in rate costs approximately $60,000 more in interest
Shopping for the best rate is one of the most important financial decisions you'll make
Choosing the right mortgage type is crucial for your financial future. Each option has distinct advantages and considerations.
| Feature | Fixed-Rate | ARM | FHA | VA |
|---|---|---|---|---|
| Min. Down Payment | 5-20% | 5-20% | 3.5% | 0% |
| Credit Score | 620+ | 620+ | 580+ | No minimum |
| Rate Stability | ✓ Never Changes | ✗ Adjusts | ✓ Fixed Available | ✓ Fixed Available |
| PMI Required | If <20% down | If <20% down | Always (MIP) | Never |
| Loan Limits | Conforming limits | Conforming limits | FHA limits | No limit* |
*VA loans have no set maximum, but lenders may impose limits based on borrower qualifications
Understanding amortization helps you see how each payment builds equity and reduces interest over your loan's lifetime.
Goes to Interest
Goes to Interest
Goes to Interest
Making bi-weekly payments instead of monthly payments is one of the simplest ways to save thousands on interest and pay off your mortgage years early. By paying half your monthly payment every two weeks, you make 26 half-payments per year – equivalent to 13 full payments instead of 12.
*Based on a $400,000 loan at 6.5% for 30 years
Some lenders offer one-time rate reductions if rates drop after locking
30, 45, or 60-day locks are common. Longer locks may cost more
Watch Fed announcements and economic data for rate direction clues
Paying points upfront can lower your rate. One point (1% of loan amount) typically reduces rate by 0.25%.
Make a large principal payment and ask your lender to recalculate monthly payments based on the new balance.
Refinance when rates drop 0.75-1% below your current rate. Factor in closing costs to ensure savings.
| Loan Origination Fee | $1,000 - $3,000 |
| Appraisal | $500 - $800 |
| Title Insurance | $1,000 - $2,000 |
| Home Inspection | $400 - $600 |
| Credit Report | $50 - $100 |
| Survey | $400 - $800 |
| Recording Fees | $100 - $250 |
Closing costs typically range from 2-5% of the home's purchase price
Explore our complete suite of calculators to make informed decisions
Get answers to the most common mortgage questions from our team of experts