Mortgages in the United States: 2026 Guide

What is a mortgage in the United States?

A mortgage is a loan provided by a bank for the purpose of purchasing a home. Repayment of this amount is spread out over monthly installments that can range from 10 to 30 years. The borrower is not only contractually obligated to pay the principal amount of the mortgage but must also pay the interest rate set by the bank. This interest may vary periodically and is added to the principal balance of the loan. The property remains the property of the financial institution until the debt is fully paid off. 

Keep in mind that you must make a down payment, which is typically between 10% and 20% of the property’s value. In the United States, this is the most common way to buy a home. 

If you're interested in buying a home in this country, we recommend that you keep reading to learn about the eligibility criteria and application requirements.

Types 

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

Conventional fixed-rate mortgages: 

These are loans with a fixed interest rate that is agreed upon at the start of the contract and remains the same until the loan is paid off in full. This is useful for planning to pay a fixed amount each month and avoiding surprises as the fiscal year changes. 

Adjustable-rate mortgages (ARMs):

With this type of mortgage, the interest rate may vary over the term of the loan; therefore, on a monthly, quarterly, or even semi-annual basis (depending on the terms agreed upon with the lender), the payment amounts may or may not change, depending on the financial indicators tied to the loan. This type of loan often has the advantage of a slightly lower initial monthly payment. 

FHA Loans:

Administered by the Federal Housing Administration (FHA), this program is designed for people with low or moderate incomes. Rather than a loan, it is a form of insurance applied to a mortgage; if the borrower is unable to make payments, the FHA is required to cover them. Valid only for a first home, these loans generally require a lower credit score, and the initial payments are also lower (20% lower than those of other lenders), with a down payment of 3.5% of the property’s value. Not all lenders offer this insurance; you should check with your financial institution to see if it is on the list of institutions that provide it.

VA Loans:

The VA loan is administered by the Department of Veterans Affairs, although the loan itself is not issued by the department but rather by a financial institution. As the name suggests, it is intended solely for members of the U.S. military, veterans, and their families to purchase a new home, a used home, or to renovate a home they already own. In some cases, it is possible to purchase the property without a down payment and without paying additional insurance premiums. 

USDA Loans: 

With the primary goal of providing homeownership opportunities for low- and very low-income families, the USDA loan is offered by the U.S. Department of Agriculture. It generally does not require a down payment, and the property must be located in a rural area and meet the criteria for decent, sanitary, and safe housing.

You might be interested in: Requirements for buying a home in the United States as a foreigner.

Application requirements

Each bank will have its own specific requirements, but in general, to apply for a mortgage in the United States, you should make sure you meet the following criteria: 

• Having a credit score, even if it is low, is important because it allows banks to assess the applicant's creditworthiness. 
• To provide proof of stable income—with the exception of loans intended for low- and very low-income families—borrowers must submit documentation certifying that they have the monthly capacity to meet their obligations to the banks. 
• Submit your tax returns for the past two years.
• Please present a photo ID and your Social Security number.
• Submit certificates of deposit and other assets.
• Provide details about the property you wish to purchase, including its price and features. 
• Fill out the forms or templates requested by the specific financial institution. 

How do I get a mortgage in the U.S.?

Getting a mortgage in the United States involves a series of steps that you should keep in mind if you plan to apply. These steps are outlined below: 

• Check your credit history: Before you begin the loan application process, it’s best to have a credit report that demonstrates your good payment history as a borrower; this will likely be one of the specific requirements of the bank you choose to apply to.
• Have savings that cover at least 20% of the home's price, to be used as a down payment.
• Choosing the right type of mortgage is crucial for managing your monthly payments, so you should carefully review your options and decide which type of loan best suits your needs and financial situation. Ultimately, it’s important to always keep in mind the terms, interest rates, and projected rate increases, since you’ll be making these payments for approximately 15 to 30 years.
• Obtain pre-approval for a mortgage from a bank: this is done after submitting the forms requested by the bank and providing all the necessary documentation. 
• With pre-approval, you can start looking for your dream home that fits both your budget and your needs.
• Once you’ve decided on a specific property, you’ll need to submit a formal offer, followed by a purchase agreement if the offer is accepted.
• The bank will conduct a detailed assessment, taking into account your pre-approval and your financial situation, in order to calculate the rates based on the type of mortgage you have chosen.
• Closing refers to the signing of the final documents and the transfer of ownership to your name. Closing may also include obtaining property insurance, a title insurance policy, a closing disclosure, and the corresponding check for payment. 

How long does the approval process take?

In general, 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, whether the documentation is submitted without errors, and whether the bank returns any documents due to inconsistencies. 

What are the additional costs involved in 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’ve listed them below: 

• Origination and lender fees: These are essentially the fees the bank charges for issuing the loan.
• Points: This payment is optional; these are points you can pay to lower the loan’s interest rate. The bank calculates them, and you decide how beneficial they might be for you in the medium or long term. 
• Title closing costs: Fees charged by third parties, such as title insurance and additional fees. 
• Government fees: Percentages charged by the local government as a real estate transaction fee.
• Expenses and deposits: such as closing costs and home insurance.

Tips for successfully obtaining a mortgage.

Successfully obtaining a mortgage in the United States is not impossible; you simply need to follow these steps and keep the following requirements in mind:

• Credit History: We recommend maintaining a good credit score by paying your regular bills on time, as this is crucial for obtaining pre-approval for a loan. 
• Reduce your debt: The more debt you have, the less money banks are willing to lend you. Get rid of unnecessary debt so you can make the most of your credit potential and fulfill your dream of buying a home. 
• Research loan options and financial institutions: Look into each option and check which ones you qualify for based on their requirements. Don’t forget to factor in annual interest rate increases and additional insurance costs. Always ask what other fees the bank or even the government might charge so you don’t face any surprises.
• Save for the down payment: Keep in mind that most mortgages require you to pay a certain percentage of the home’s value upfront. In the United States, this percentage varies by financial institution and loan type, but it’s typically around 20%. 
• Be sure to submit the documentation required by the bank without any errors and fully completed. This will help you avoid delays in the process and speed up your review, increasing your chances of getting approved for the loan.

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

Failure to make mortgage payments can lead to the bank taking possession of the home. In this case, the bank may initiate a process called “foreclosure,” through which it takes ownership of the property to resell it. To prevent this scenario, it’s best to plan ahead, save money, and have an emergency fund. There are also insurance policies designed to cover debts in the event of unemployment or other unforeseen circumstances. If your income decreases, it is advisable to contact your lender to request a loan modification or refinancing. 

There are various ways to avoid foreclosure. Ideally, you should contact your bank as soon as possible to find out what options are available, since each bank offers different solutions. 

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

Yes, it is possible. Refinancing a mortgage means replacing the original terms of the home loan in order to obtain benefits that make it easier to pay off the debt. This is done by taking out a new loan to replace the original one. As a result, the first mortgage is paid off, the bank settles the debt, and the new mortgage begins under the new terms. These benefits may include reducing monthly payments, paying off the loan faster, securing a lower interest rate, switching from a variable to a fixed rate, or even changing the type of loan. 

The bank will provide you with the rates and percentages when you’re negotiating, but let’s say you have a $200,000 mortgage with a 6% interest rate and you refinance; the bank offers you a 4% monthly interest rate (this is an estimate—always check with the bank, as rates may vary). The original loan is paid off, and you continue making payments at that new rate. 

Keep in mind that refinancing may involve additional costs, such as closing costs or administrative fees. 

Can I get a mortgage without being a U.S. citizen?

The answer is yes. It is possible to get a mortgage without being a U.S. citizen; the only thing you need to keep in mind is to have a valid U.S. visa and follow the financial institution’s instructions. 

The required documentation is not much different from what natural-born citizens must submit: 

• Bank certifications.
• Proof of financial solvency or monthly income.
• Copy of the U.S. visa.
• Proof of address (such as a copy of a utility bill), to verify the address where you live. 
• Credit application form.

You might be interested in: U.S. investor visa.

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Conclusion 

Securing a mortgage in the United States requires planning ahead to build a strong credit profile, establish a solid financial foundation, and gain the knowledge needed to choose a loan that fits your budget and offers a range of benefits. By negotiating with different banks and seeking assistance programs and professional advice—such as that offered by Domoblock—you can make a difference and ensure success, allowing you to secure a mortgage on favorable terms and make the dream of owning your own home a reality.