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Learning centerBuying a home

Mortgage Basics for Beginners

If you’re new to buying a home, mortgage terms can feel like a foreign language. This guide covers the essentials in plain English, so you can start your search with confidence.

Reviewed by Patriot Home Mortgage compliance, October 2026 · 3 min read

What is a mortgage?

A mortgage is a loan used to buy a home, with the home itself as collateral. You repay it over a set term, often 15 or 30 years. If the loan isn’t repaid as agreed, the lender can take the home through foreclosure.

What makes up your monthly payment

Your payment usually includes four parts, often called PITI:

  • Principal: the part that pays down your loan balance
  • Interest: the cost of borrowing
  • Taxes: property taxes, often collected monthly into an escrow account
  • Insurance: homeowners insurance, plus mortgage insurance on some loans

HOA dues, if any, are usually paid separately but count toward what you can afford.

Key terms

  • Down payment: the part of the price you pay upfront
  • Interest rate and APR: the rate is the cost of borrowing; the APR also includes certain fees, so it’s useful for comparing offers
  • Fixed vs. adjustable rate: a fixed rate never changes; an adjustable rate can change after an initial period
  • Closing costs: fees for the appraisal, title, lender and more, paid at closing
  • Escrow: an account your servicer uses to pay taxes and insurance for you
  • Pre-approval: a lender’s review of your finances showing how much you can borrow

How you qualify

Lenders look at:

  • Credit: your scores and history
  • Income and employment: steady, documented income
  • Debt-to-income ratio: monthly debts compared with gross monthly income
  • Assets: savings for the down payment, closing costs and reserves
  • The property: an appraisal confirms its value

How much should you put down?

It depends on the loan and your goals:

Loan Minimum down payment
VA None in most cases, for eligible borrowers
USDA None in most cases, in eligible areas and within income limits
FHA 3.5% with a credit score of 580 or higher
Conventional As little as 3% for some buyers

A larger down payment lowers your loan amount and may remove mortgage insurance, but keep enough savings for emergencies.

The main loan types

  • Conventional: not government-backed; flexible for strong credit and many property types. Learn more.
  • FHA: insured by the FHA; more flexible credit and down payment rules. Learn more.
  • VA: for eligible veterans, active-duty service members, National Guard and Reserve members and certain surviving spouses. Learn more.
  • USDA: for eligible rural and suburban areas and income levels. Learn more.
  • Jumbo: for loan amounts above the conforming limit. Learn more.

Next steps

Read our step-by-step guide to how the mortgage process works, then talk to a loan officer about getting pre-approved.

Talk to a Patriot loan officer

Every situation is different, and a short conversation is the quickest way to know what fits yours.

Find a loan officerSee where we lend

This article is general information, not an offer to lend or a commitment to lend. All loans are subject to credit approval, underwriting and property valuation. Belem Servicing LLC, NMLS ID #715386 (NMLS Consumer Access).

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