Buying a home costs more than the down payment alone — closing costs, a separate set of upfront fees, typically add another 2% to 5% of the loan amount on top. Understanding both pieces before you shop for a mortgage helps you compare offers accurately.
Common components include the loan origination fee, appraisal fee, title insurance, attorney or escrow fees, recording fees, and prepaid items like property tax and homeowners insurance escrow — the exact mix and amount vary by lender, state, and loan type, so treat 2–5% as a planning range, not a fixed number, and get a Loan Estimate from your lender for the real figures.
Use the Home Affordability and Down Payment Calculators on this site to plan for the down payment side, and budget separately for closing costs on top of that — they're easy to underestimate if you only plan around the down payment.
A fixed-rate mortgage keeps the same interest rate for the life of the loan, giving you predictable payments; an adjustable-rate mortgage (ARM) typically starts with a lower rate for an initial period, then adjusts based on market rates afterward. ARMs can make sense if you're confident you'll sell or refinance before the adjustable period begins, but they carry real payment-increase risk if you end up staying in the loan longer than planned.
The Annual Percentage Rate (APR) — required by the Truth in Lending Act to be disclosed on every mortgage offer — combines the interest rate with certain fees into one comparable annual figure, unlike the interest rate alone, which can look lower on an offer that actually has higher fees baked in. Use the Mortgage Calculator on this site to compare total interest cost across different loan terms, not just the monthly payment.
Informational content, not financial, tax, or legal advice. Verify amounts, limits, and current conditions directly with official sources (IRS, FDIC, SEC, CFPB) before making a decision.
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