Fixed vs. Adjustable (ARM)
Fixed-Rate
- Rate never changes over the term (e.g., 30-year).
- Predictable payment; easier budgeting.
- Often higher initial rate than ARMs.
Adjustable-Rate (ARM)
- Lower intro rate; adjusts after the fixed period (e.g., 5/6, 7/6).
- Can drop or rise with the market-watch caps!
- Fits shorter time horizons if you’ll move or refi.
Common Loan Programs
Conventional
As little as 3% down for qualified buyers. PMI required under 20% down, but can be removed when you build equity.
FHA
Minimum 3.5% down with flexible credit guidelines. Upfront and monthly mortgage insurance applies.
VA
For eligible veterans/servicemembers. Often 0% down and no monthly mortgage insurance. Funding fee may apply.
USDA
0% down for qualifying properties/areas and incomes. Great for rural/suburban buyers; geographic and income limits apply.
What Drives Your Payment
- APR vs. Rate: APR includes certain costs (points/fees) and helps compare lenders.
- Points: Optional prepaid interest to lower your rate. Worth it if you’ll keep the loan long enough to break even.
- DTI (Debt-to-Income): Lower is better; improve by paying down debt or increasing down payment.
- Loan Term: 30-year = lower payment, more total interest; 15-year = higher payment, less interest.
How to Pick the Best Fit
- Consider how long you’ll keep the home (or the loan).
- Compare total 5-year and 10-year costs, not just the payment.
- Ask lenders for quotes on multiple programs (with/without points).
- Work with an agent who aligns your offer timing with rate-lock strategy.
*Informational only; not legal, tax, or financial advice.