What credit score do I need to get a mortgage?

Conventional loans typically require a minimum credit score of 620, though better rates are available above 740. FHA loans allow scores as low as 580 with a 3.5% down payment, or as low as 500 with a 10% down payment. VA and USDA loans do not have a set minimum score, but most lenders require at least 620 to 640. Higher scores consistently result in better rates regardless of loan type.

What is an ARM and who should consider one?

An adjustable-rate mortgage (ARM) has a fixed rate for an initial period then adjusts periodically. A 5/1 ARM is fixed for five years then adjusts annually. ARMs typically start with a lower rate than fixed-rate mortgages. They are most suitable for buyers who are confident they will sell or refinance before the initial fixed period ends, limiting exposure to rate adjustments.

How to Choose the Right Mortgage for Your Financial Situation

Q: What are the main types of mortgage loans?

The main types are conventional loans (not government-backed, typically requiring 20% down), FHA loans (insured by the Federal Housing Administration, requiring as little as 3.5% down), VA loans (backed by the Department of Veterans Affairs for eligible veterans and service members with no down payment required), and USDA loans (for eligible rural and suburban buyers with no down payment required).

Q: What is the difference between a fixed-rate and an adjustable-rate mortgage?

A fixed-rate mortgage locks in your interest rate for the entire loan term, so your principal and interest payment never changes. An adjustable-rate mortgage (ARM) starts with a fixed rate for an initial period (typically 3, 5, 7, or 10 years) and then adjusts annually based on a market index. Fixed-rate mortgages offer certainty; ARMs can offer lower initial rates but carry the risk of payment increases after the initial fixed period ends.

Q: Should I choose a 15-year or 30-year mortgage?

A 30-year mortgage has lower monthly payments but higher total interest paid over the life of the loan. A 15-year mortgage has higher monthly payments but a lower interest rate and dramatically less total interest paid. Choose a 30-year if budget flexibility is the priority; choose a 15-year if you can afford the higher payment and want to build equity faster and pay less overall.

No single mortgage is right for every borrower. The loan that costs one buyer the least money over 30 years may be the wrong choice for another buyer with a different timeline, income, credit profile, or risk tolerance. Understanding the three dimensions of any mortgage — the loan term, the rate type, and the loan type — allows you to make an informed decision that genuinely fits your financial situation rather than simply accepting whatever a lender first offers you.

Loan Term: How Long You Have to Repay

The term of your mortgage determines how many years you have to repay it. The two most common options are 30 years and 15 years, though 10-year and 20-year options also exist at some lenders.

30-Year vs 15-Year Mortgage: Key Feature Comparison
Feature	30-Year Mortgage	15-Year Mortgage
Monthly Payment	Lower	Higher
Interest Rate	Higher	Lower
Total Interest Paid	Significantly more	Significantly less
Equity Build Speed	Slower	Faster
Budget Flexibility	More flexible	Less flexible
Best For	Lower monthly payment priority	Lower total cost priority

If you can afford the higher monthly payment of a 15-year mortgage, it will almost always cost less in total interest paid. But the lower payment of a 30-year mortgage preserves cash flow, which can be used for other investments or financial goals. Neither is universally better — the right choice depends on your budget and priorities.

Rate Type: Fixed vs. Adjustable

Fixed-Rate Mortgages

A fixed-rate mortgage locks your interest rate for the entire loan term. Your principal and interest payment is the same from month one to month 360 (or 180 on a 15-year). This predictability makes budgeting straightforward and protects you from future rate increases. Fixed-rate mortgages are ideal for borrowers who:

Plan to stay in the home for many years
Value payment certainty over potentially lower short-term costs
Are buying in a low-rate environment they want to lock in

Adjustable-Rate Mortgages (ARMs)

An adjustable-rate mortgage offers a fixed rate for an initial period — typically 3, 5, 7, or 10 years — and then adjusts annually based on a market index plus a margin. A 5/1 ARM is fixed for five years, then adjusts every year. ARMs typically start with a lower rate than equivalent fixed-rate loans, making them attractive for buyers who:

Plan to sell or refinance before the initial fixed period ends
Are confident rates will not rise substantially during their ownership
Want the lowest possible initial payment

ARM Rate Risk: After the initial fixed period, ARM payments can increase significantly — sometimes doubling — depending on market conditions. If you stay in the home longer than expected, an ARM can cost substantially more than a fixed-rate loan. Know your caps: most ARMs have periodic adjustment caps (how much the rate can change per adjustment) and lifetime caps (the maximum the rate can ever reach).

Loan Type: Conventional vs. Government-Backed

Conventional Loans

Conventional loans are not insured by a government agency. They typically require a credit score of at least 620, a down payment of at least 3% (though 20% avoids PMI), and a debt-to-income ratio below 45%. Borrowers with strong credit and a 20% down payment generally get the best rates on conventional loans.

FHA Loans

FHA loans are insured by the Federal Housing Administration and are popular with first-time buyers. They allow down payments as low as 3.5% with a credit score of 580 or above (10% down for scores between 500 and 579). The trade-off is mortgage insurance premium (MIP), which is required for the life of most FHA loans.

VA Loans

VA loans are backed by the U.S. Department of Veterans Affairs and are available to eligible veterans, active-duty service members, and surviving spouses. They require no down payment, no PMI, and often offer competitive rates. A Certificate of Eligibility (COE) is required to qualify.

USDA Loans

USDA loans are available for eligible rural and suburban properties and require no down payment. Income limits apply. They are an excellent option for buyers in qualifying areas who meet income requirements.

Frequently Asked Questions

What are the main types of mortgage loans? ▼

The main types are conventional (not government-backed, typically 20% down), FHA (Federal Housing Administration insured, as low as 3.5% down), VA (Department of Veterans Affairs backed, no down payment for eligible veterans), and USDA (for eligible rural buyers, no down payment). Each has different qualification requirements, down payment minimums, and insurance costs.

What is the difference between a fixed-rate and adjustable-rate mortgage? ▼

A fixed-rate mortgage locks your interest rate for the full loan term — your payment never changes. An ARM starts with a fixed rate for an initial period (3, 5, 7, or 10 years) then adjusts annually based on market rates. Fixed rates offer certainty; ARMs offer a lower initial rate with the risk of future payment increases.

Should I choose a 15-year or 30-year mortgage? ▼

A 30-year mortgage has lower monthly payments but more total interest paid. A 15-year mortgage has higher payments but a lower rate and dramatically less interest paid overall. Choose 30 years if budget flexibility matters most; choose 15 years if you can afford the higher payment and want to minimize total cost and build equity faster.

What credit score do I need to qualify for a mortgage? ▼

Conventional loans typically require a minimum of 620, with the best rates available at 740 and above. FHA loans allow scores as low as 580 with 3.5% down. VA and USDA loans have no official minimum, but most lenders require 620 to 640. The higher your credit score, the better the rate you will typically receive regardless of loan type.

Who should consider an ARM mortgage? ▼

ARMs are most suitable for buyers who are confident they will sell or refinance before the initial fixed period ends. A 5/1 ARM, for example, is fixed for five years then adjusts annually. If you plan to stay in the home longer than the initial period, the risk of rising payments needs to be weighed carefully against the initial rate savings.