First time home buyer or not, you probably still have some common mortgage questions. After all, mortgages can be fairly complicated. No need to worry.
Here are answers to five of them to help make your home buying experience a positive one.
What’s your mortgage rate?
This is a loaded question because it’s not a simple answer. It can be hard for people to know exactly what their mortgage rate is. That’s because there isn’t just one single rate for every borrower. Also, mortgage rates change every day, and sometimes they change two or three times a day.
Rates also depend on someone’s credit score, how much they have for a downpayment and what type of loan they pick. The loan term they choose (the number of years for the loan) affects the rate, too.
Do I really need a 20 percent down payment?
There are many mortgage options available that require a downpayment of less than 20 percent.
FHA, VA, USDA and conventional loans can all require a smaller downpayment. Some options may not even require a downpayment at all.
A smaller downpayment of three or five percent may still be tough on your budget. Even so, there are plenty of programs available to help home buyers. These range depending on your neighborhood, city, county and state.
What will it cost me to buy a house?
This question can be tricky to answer because buying a home involves a lot of costs. Chances are that one of the bigger costs will be the downpayment. The exceptions are VA and USDA loans, which don’t require a down payment.
But what about all the other costs you’ll pay to purchase a home? Well, once you find that dream house, your real estate agent will tell you to write a check for an earnest money deposit. This lets the seller know you are truly “earnest” about buying the house.
You’ll also pay for an appraisal and a home inspection. Your lender will usually require the appraisal. The inspection is optional, but both can help you negotiate for a lower total home price.
Lastly, there are the closing costs. Title, settlement, recording and transfer tax costs averaged $4,528 in 2025, about 1.04% of the sale price (not counting agent commissions). They varied by state from 0.39% to 3.06%. For all closing costs, a common planning range is 2% to 5% of the home price, but it depends on your home price and your mortgage. See our guide to closing costs.
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Why is there so much paperwork?
It’s one of the most common mortgage questions, and a good one. Lenders want to make sure that they have all the information before they agree to give you a mortgage. Also, the rules lenders have to follow have gotten stricter since the mortgage crisis in 2007. The goal is to prevent home buyers from ending up in homes they can’t afford.
The paperwork is a pain, but it is there to protect not only the lender but you, the home buyer.
Why do I need mortgage insurance?
If you don’t put 20 percent down on a conventional loan, you will pay some kind of mortgage insurance, which protects the lender. You’ll also pay it if you choose an FHA mortgage.
For the conventional loan, you’ll be paying private mortgage insurance (PMI). Freddie Mac says it typically costs about $30 to $70 a month for every $100,000 borrowed, depending on your credit score and down payment.
With an FHA loan, you pay mortgage insurance premiums, or MIP, instead. Most 30-year FHA loans pay 0.55 percent a year (0.50 percent with 5 percent or more down). That’s about $46 a month per $100,000 borrowed.
