Adjustable-Rate Mortgage (ARM): Starts with a lower interest rate for a set period (e.g., 5 years in a 5/1 ARM), then adjusts yearly. Best for short-term savings.
FHA Loan: Backed by the government; allows lower down payments (as low as 3.5%) and is ideal for first-time or lower-credit buyers.
Conventional Loan: Not government-backed; typically requires higher credit and down payments, but can offer competitive rates.
VA Loan: For eligible veterans and military members; offers no down payment and favorable terms, backed by the Department of Veterans Affairs.
The standard recommendation is to put down 20% of a home's price, though some mortgage loans allow as little as 3.5%. A larger down payment lowers your total mortgage amount, which can reduce your monthly payments or help you afford a more expensive home.
Closing costs are the fees and expenses you pay when finalizing a home purchase. They typically range from 2% to 5% of the home's purchase price and may include:
Loan origination fees
Appraisal and inspection fees
Title insurance
Prepaid taxes and insurance
Recording fees
These costs are paid at the closing table before ownership is officially transferred. Some may be negotiable or covered by the seller, depending on the transaction.
The interest rate may differ based on factors like your credit score, down payment, and market conditions, since rates can fluctuate over time.
Property taxes are generally calculated at about 1.25% of the home's value annually.
Home insurance or homeowners insurance is typically required by lenders, depending on the loan program.
An HOA fee is a monthly payment required from owners in certain communities. These fees help cover the upkeep and enhancement of shared areas and property managed by the homeowners association.
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