Why is the 30-year fixed mortgage so common in the US?

The 30-year fixed-rate mortgage is the American default because it keeps the monthly payment low and locks the rate for the life of the loan, so it never changes even if market rates rise. It is supported by a deep secondary market (Fannie Mae and Freddie Mac) that makes long fixed terms widely available. A 15-year fixed is the main alternative — a higher payment but far less total interest and usually a lower rate.

When do I have to pay PMI?

On a conventional loan, private mortgage insurance (PMI) is required when your down payment is under 20% (loan-to-value above 80%). You can request cancellation once the balance reaches 80% of the original value and, by law, it is automatically removed at 78%, provided you are current. FHA and other government-backed loans have their own mortgage insurance rules that can differ.

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US Mortgage Calculators & Home Loan Guide

Q: What is PITI and escrow?

PITI stands for Principal, Interest, Taxes and Insurance — the four parts of a typical US monthly housing payment. Lenders usually collect the property tax and homeowners insurance portions into an escrow account and pay those bills on your behalf, so your monthly payment is higher than principal and interest alone. Budget for the full PITI, not just the loan payment.

Q: What DTI do US mortgage lenders use?

Many lenders follow the 28/36 guideline — up to 28% of gross income on housing and 36% on total debt — while a conforming qualified mortgage generally allows a back-end DTI up to 43%, and some programs go higher with strong compensating factors. Use the affordability calculator to see what a given DTI implies for your loan size.

Everything you need to plan a home purchase in the United States — how American mortgages actually work, and free calculators for each decision, from the payment to the payoff.

Buying a home in the US runs on a handful of conventions that shape every number on your loan estimate: the dominance of the long fixed-rate mortgage, a monthly payment that bundles taxes and insurance, and mortgage insurance that kicks in below a 20% down payment. Understanding these before you shop means the figures a lender quotes will make sense — and you will know which levers actually move your payment. Start with the mortgage calculator and the affordability calculator, and use the sections below to see how the US-specific pieces fit together.

The 30-year fixed is the American default

Most US buyers choose a 30-year fixed-rate mortgage. The appeal is a low, predictable payment that never changes for three decades, even if interest rates climb. It is made widely available by a deep secondary mortgage market that few other countries have. The main alternative is the 15-year fixed: a noticeably higher monthly payment, but a lower rate and far less total interest, with the home paid off in half the time. Which one suits you is a genuine trade-off — see the guide on 15-year vs 30-year mortgages and compare both terms on the mortgage calculator.

Your payment is more than principal and interest: PITI and escrow

The American monthly payment is usually described as PITI — Principal, Interest, Taxes and Insurance. Lenders typically collect the property-tax and homeowners-insurance portions into an escrow account and pay those bills for you, which is why your monthly payment is higher than the loan's principal and interest alone. Property taxes vary widely by state and county, so two identical loans can carry very different total payments. When you size a purchase, budget for the full PITI, not just the loan — the affordability calculator is built around that idea.

PMI and the 20% down payment

If your down payment is under 20% of the price, a conventional lender adds private mortgage insurance (PMI) — coverage that protects the lender, paid by you, until you build enough equity. It typically runs a few tenths of a percent to well over one percent of the loan per year. The good news: you can request cancellation once your balance reaches 80% of the original value, and it is removed automatically at 78%. Our PMI guide covers how to avoid it, what it costs, and how to shed it as fast as possible.

Fixed vs adjustable (ARM)

Beyond the fixed-rate loans, lenders offer adjustable-rate mortgages (ARMs), which start with a lower fixed "teaser" rate for a set period — a 5/1 ARM is fixed for five years — then adjust with the market. An ARM can save money if you will move or refinance before it adjusts, but it carries the risk of a higher payment later. The guide on fixed vs adjustable-rate mortgages walks through when each makes sense and the caps that limit how far an ARM can jump.

Refinancing and paying off early

Because US rates move and most loans have no prepayment penalty, two more tools matter. Refinancing replaces your loan with a new one — worth it when the rate drop clears your closing costs within a reasonable break-even, as the refinance calculator and its guide show. And paying a little extra toward principal, or switching to biweekly payments, can shave years off a 30-year loan — the biweekly payoff calculator puts a number on it.

How much can you borrow? DTI and the 28/36 rule

US lenders size your loan against your debt-to-income ratio. The classic 28/36 rule caps housing at 28% of gross income and total debt at 36%, though a conforming qualified mortgage generally allows a back-end DTI up to 43%, and some programs stretch further. Qualifying for a number is not the same as comfortably affording it, though — the guide on how much house you can really afford covers the costs a DTI ignores. Estimate your own ceiling on the affordability calculator.

Closing costs and cash to close

Beyond the down payment, US buyers pay closing costs — commonly around 2% to 5% of the purchase price — covering the appraisal, title insurance, lender fees, and prepaid taxes and insurance. Together with the down payment, this is your "cash to close," and it is easy to underestimate. Ask any lender for a Loan Estimate early: it itemises these costs in a standard format, so you can compare competing offers on total cost rather than the headline rate alone.

US calculators & guides

Start planning your US home purchase:
Mortgage Calculator Affordability Calculator

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