Consumer Financial 

Protection Bureau Learn more at consumerfinance.gov 1 of 3

Shopping for a mortgage

Shopping around for a mortgage 

takes time and energy. But it can 

save you thousands of dollars. 

Make it your goal to compare at 

least three loan offers from 

different lenders. 

Get at least three preapprovals

The Internet and newspapers are a good place to 

start your search for mortgage lenders. Contact 

banks, credit unions, and organizations that might 

specialize in your situation—like first-time home 

buyers, veterans, public service workers, or others.

Ask at least three different lenders for “preapproval.” 

This means that the lender looks at your finances, 

including your credit report, and estimates how 

much you can borrow and what interest you’ll 

likely pay. 

Preapproval lets you try out each lender to see what 

kind of loans and prices it offers. When you get all 

three preapprovals within a short time, there should 

be no major impact on your credit score.

You’ll come back to these lenders when you’ve 

made some decisions, and ask them for loan offers.

Shop for loan terms, interest rate 

structures, and programs

Loan term: Longer or shorter

In general, a longer loan term costs more over the 

life of the loan. But your monthly payments are 

typically lower. 

30-year Most homebuyers choose a 30-year 

loan because payments can be low.

15-year

Payments are typically higher than for 

30-year loans, but your loan is paid 

off in 15 years and the total cost of the 

loan can be lower. 

You may be able to negotiate a different loan term 

with your lender, like 20 years, 7 years, or even 

longer than 30 years.

Loan interest rate structure: Fixed rate or 

adjustable rate

Fixed-rate loans are common. Your initial payment 

may be lower with an adjustable-rate loan, but if 

interest rates rise you might face sharply increased 

payments.

§ Fixed-rate mortgage: Your interest rate and 

monthly payment will stay the same for the life of 

your loan.

§ Adjustable-rate mortgage (ARM): Your interest 

rate typically is fixed for the first few years of 
Consumer Financial 

Protection Bureau Learn more at consumerfinance.gov 2 of 3

the loan. Once the fixed period expires, the rate 

adjusts at regular intervals based on an “index.” 

An index is a measure of interest rates generally, 

and it reflects trends in the overall economy. 

This means your payment amount can increase 

or decrease. Details are included in the Loan 

Estimate you receive from the lender.

Loan program: Conventional, FHA, 

VA, or special program

There are many loan programs, and some are set 

up to help make mortgages available to people in 

certain circumstances or groups.

Making a down payment of 5% or more? 

Ask about a Fannie Mae or Freddie Mac eligible 

loan, often called a “conventional” loan. 

Making only a small down payment? 

Ask about an FHA-insured loan. 

Servicemember or veteran? 

Ask about a VA guaranteed loan. 

Buying a home in a rural area? 

Ask about a USDA-sponsored loan. 

First-time homebuyer with low or 

moderate income? 

Ask about loans available through your state’s 

housing finance agency.

Compare loan offers

Now, it’s time to start the official application process. 

Ask your lenders for offers of loans that reflect your 

choices for loan type, program, and term. Then you’ll 

be able to make apples-to-apples comparisons.

First, compare the basic parts of the loan:

§ What is the term of the loan?

§ What is the interest rate?

§ What down payment amount is the loan 

based on?

§ How much is the monthly payment? 

§ For adjustable-rate mortgages, are the payment 

adjustments and the interest rate capped? 

Does the interest rate go down if market 

interest rates fall?

Next, compare the rest of the details that can affect 

your cost:

§ When will my payments pay off my principal?

§ Will the payments change over the life of the 

loan? How high can my payment go?

§ Does my payment include property taxes 

and insurance? If not, can I afford to pay 

those separately?

§ What costs and fees will be added to my initial 

payment? To my ongoing payment?

§ Do I need to pay points (upfront fees that reduce 

your interest rate)?

§ What fees and costs are included in the amount 

I’m borrowing (typical for a “no closing cost” loan)?

§ Does the written offer match what I was told 

about the loan?

§ Can I get a better deal on settlement services 

from different service providers?

§ Can I repay the loan early, or make larger than 

scheduled payments, without penalty?
Consumer Financial 

Protection Bureau Learn more at consumerfinance.gov 3 of 3

Ask for a better deal

Once you see the offers from several lenders, ask 

if they can do better. Negotiation is common, and 

there’s no harm in asking. The lender may be able 

to waive or reduce one or more of the fees, or lower 

the interest rate or points. 

Make sure the lender doesn’t lower one fee while 

raising another, or lower your interest rate but raise 

your points.

About us

The Consumer Financial Protection Bureau 

regulates the offering and provision of 

consumer financial products and services 

under the federal consumer financial laws, 

and educates and empowers consumers to 

make better informed financial decisions. 

Learn more at consumerfinance.gov

Connect with us

 Submit a complaint

 consumerfinance.gov/complaint

 Tell your story

 consumerfinance.gov/your-story

 Get answers to money questions

 consumerfinance.gov/askcfpb

 Share your thoughts

 facebook.com/cfpb

 twitter.com/cfpb

9/2020