Mortgages in the United States: Guide 2026

What is a mortgage loan in the United States?

A mortgage loan refers to a loan granted by a banking institution for the purpose of acquiring a home. The payment of this amount is deferred into monthly installments that can extend between 10 and 30 years. The debtor is not only contractually obligated to pay the mortgage amount but must also pay the interest rate set by the bank. This interest can vary periodically and is added to the loan principal. The property remains owned by the financial institution until the debt is fully settled. 

It should be noted that an initial down payment must be made, which can be at least 10-20% of the property's value. In the United States, this is the most common way to obtain housing. 

If you are interested in buying a home in this country, we recommend you keep reading to learn about the classification and requirements for applying.

Types 

There are several types of mortgage loans in the United States, each with differences in interest rates: 

Conventional Fixed-Rate Mortgages: 

These are loans where the interest rate is agreed upon as a fixed rate from the start of the contract and remains at the same percentage until the loan is fully repaid. This is useful for planning to pay a fixed amount each month and avoiding surprises as the fiscal year changes. 

Adjustable-Rate Mortgages (ARM):

With this type of mortgage, the interest rate can vary throughout the contract's duration, so monthly, quarterly, or even semi-annually (depending on what has been established with the institution), variations in the amounts to be paid can be expected or not, influenced by the financial indicators tied to that loan. Often, this type of loan has the advantage that the initial monthly payment is a bit lower. 

FHA Loans:

Granted by the Federal Housing Administration (FHA), these are designed for individuals with moderate or low incomes. More than a loan, it is an insurance applied to a housing loan, which the FHA must cover if the debtor is unable to make payments. Valid only for a first home, they generally require a lower credit score, and the initial installments are also typically lower (20% below other institutions) with a down payment of 3.5% of the property's value. Not all institutions provide this insurance; you should check with the financial institution to see if it is on the list of institutions that can offer it.

VA Loans:

The VA loan refers to the Department of Veterans Affairs, although it is not the one that issues it, but rather a financial institution that grants it. As its name indicates, it is aimed solely at members of the U.S. military forces, veterans, and their families for the purpose of acquiring a new home, an existing home, or renovating one they already own. In some cases, it is possible to purchase the property without a down payment and without additional insurance payments. 

USDA Loans: 

With the primary goal of providing homeownership opportunities for low and very low-income families, the USDA loan is offered by the United States Department of Agriculture. It generally does not require a down payment, and the property must be located in a rural area while aligning with the premise of being a decent, sanitary, and safe home.

You might also be interested in: requirements for buying a house in the United States as a foreigner.

Requirements to apply

Each bank will require specific criteria, but generally, to apply for a mortgage loan in the United States, you should keep the following requirements in mind: 

• Have a credit score, even if it's low, as it allows banks to determine the applicant's creditworthiness. 
• Provide proof of stable income. With the exception of loans for low and very low-income families, it is necessary to present proof that the borrower has the monthly capacity to cover their obligations with the banks. 
• Submit tax returns for the last two years.
• Submit photo identification and Social Security number.
• Submit account statements and proof of other assets.
• Provide information about the property you wish to purchase, including its value and characteristics. 
• Complete the forms requested by the specific financial institution. 

How to get a mortgage loan in the U.S.?

Obtaining a mortgage loan in the United States involves a series of steps you should consider if you wish to apply. Here are the steps: 

• Review your credit history: Before starting a loan application process, it's ideal to have a credit report that demonstrates good payment behavior as a debtor. This will surely be one of the specific requirements of the bank you choose for the application.
• Have savings that can cover at least 20% of the home's price, which would be used as a down payment.
• Choosing the type of mortgage is vital so you can plan for your monthly payments. Therefore, you must review and decide which type of loan suits your needs and possibilities. Ultimately, it's best to always keep in mind the terms, rates, and projected fee increases, as you'll be making these payments for approximately 15-30 years.
• Obtain pre-approval for a mortgage loan from a banking institution: this is achieved after submitting the forms requested by the entity and providing all necessary documentation. 
• With pre-approval, you can begin searching for your dream home that fits your budget and needs.
• Once you decide on a particular property, you must submit a formal offer, followed by a purchase agreement if it is accepted.
• The bank will conduct a detailed evaluation, considering the pre-approval and your financial situation, to calculate the rates according to the type of mortgage you have chosen.
• Property closing refers to the signing of final documents and the transfer of the property into your name. This closing may also include acquiring property insurance, title insurance, closing disclosures, and the corresponding payment check. 

How long does the approval process take?

Generally, the mortgage approval process in the United States can take between 30 and 90 days. The duration also depends on the type of mortgage, the risk assessment, ensuring there are no errors when submitting documentation, and that the bank does not return any documents due to inconsistencies. 

What are the additional costs when applying for a mortgage in the U.S.?

According to the Consumer Financial Protection Bureau (CFPB), there are several costs and fees in addition to the down payment. We detail them below: 

• Origination and Lender Fees: These are essentially the fees the bank requires you to pay to process your loan.
• Points: This payment is optional; these are points you can pay to reduce the loan's interest rate. The bank calculates them, and you choose how beneficial they might be for you in the medium or long term. 
• Title Closing Costs: Charges made by third parties such as title insurance and additional fees. 
• Government Fees: Percentages required by the local government as real estate transaction fees.
• Expenses and Deposits: such as closing costs and home insurance.

Tips for Successfully Obtaining a Mortgage.

Successfully getting approved for a mortgage in the United States is not impossible; you simply need to consider the following requirements:

• Credit History: We advise you to maintain a good credit score by paying your regular debts on time, as this is crucial for achieving pre-approval for the loan. 
• Reduce Your Debts: The more debt you have, the less money banks can lend. Get rid of unnecessary debts so you can leverage your credit potential to achieve your dream of homeownership. 
• Research Loan Options and Banks: Investigate each option and check which ones you qualify for based on the requirements. Don't forget to calculate annual interest rate increases and additional insurance. Always ask what other charges might be levied by the bank or even the state to avoid surprises.
• Save for the Down Payment: Keep in mind that most mortgages require a percentage of the home's value to be paid upfront. In the United States, the percentage varies by financial institution and loan type, but it is typically around 20%. 
• Make sure to submit all required documentation to the bank without inconsistencies and fully completed. This will help you avoid delays in the process and expedite your evaluation, increasing the likelihood of loan approval.

What happens if I can't pay my mortgage at some point?

The inability to pay a mortgage can lead to the bank taking possession of the home. In this case, the bank may initiate a process called "foreclosure," through which the property becomes its responsibility to resell. To prevent this scenario, it's ideal to plan ahead, save, and have an emergency fund. Additionally, there are insurance policies designed to cover debts in case of unemployment or other unforeseen circumstances. If your income decreases, it's advisable to contact your financial institution to request a loan modification or refinancing. 

There are various mechanisms to avoid foreclosure. It's best to contact your bank promptly to learn about the available options, as each institution offers different alternatives. 

Is it possible to refinance a mortgage to get better terms?

Yes, it is. Refinancing a mortgage means replacing the original terms of your home loan to obtain benefits that make debt repayment easier. This is done by acquiring a new loan that replaces the initial one. Consequently, the first mortgage is canceled, the bank settles the debt, and the new mortgage begins with the new terms. These can include reducing monthly payments, paying off the loan faster, securing a lower interest rate, changing from a variable to a fixed rate, or even modifying the loan type. 

The bank will inform you of the rates and percentages during the negotiation. However, let's say you have a USD 200K mortgage at 6% interest and you refinance. If the bank offers you 4% monthly interest (this is an estimated value; always check with the bank as it may vary), the initial loan is canceled, and you will pay at that new percentage. 

Keep in mind that refinancing may include additional costs such as closing expenses or administrative fees. 

Can I get a mortgage loan without being a US citizen?

The answer is Yes. It is possible to obtain a mortgage loan without being an American citizen; you just need to have a valid US visa and follow the financial institution's instructions. 

The required documentation does not differ much from what citizens must submit: 

• Bank certifications.
• Proof of financial solvency or monthly income.
• Copy of your US visa.
• Proof of address (which can be a copy of a utility bill) to verify your residential address. 
• Credit application form.

You might be interested in: US investor visa.

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Conclusion 

Securing a mortgage in the United States requires foresight to build a suitable credit profile, structure a solid financial situation, and gain the knowledge to choose the loan that fits your possibilities and offers various benefits. By negotiating with different banking institutions, seeking assistance programs, and professional advice like Domoblock's, you can make a difference and ensure success in accessing a mortgage under favorable conditions and making your dream of homeownership a reality.