# MortgageMath US — full-text digest > Mortgage calculators, sourced numbers and step-by-step guides for buying, refinancing and borrowing against a home in all 50 states and DC. Generated 2026-10-30. Each section below is the Markdown version of one page. --- # Buying a home with a mortgage, step by step > How buying a home with a mortgage works: pre-approval, down payment, PMI, closing costs, credit score and debt-to-income, with sourced 2026 numbers. URL: https://mortgage-math-us.com/buying/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer Buying a home with a mortgage means getting pre-approved, saving a down payment of 3% to 20% (or nothing with VA and USDA loans), and budgeting $2–$5 per $100 of price for closing costs. On the US median home value of $360,600 with 10% down at the 7.24% weekly average rate, the full monthly payment comes to about **$2,789** including taxes, insurance and PMI. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | 30-year fixed average (Freddie Mac) | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | Lowest conventional down payment | 3% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | | Lowest FHA down payment (580+ score) | 3.5% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | | Highest DTI Fannie Mae’s system accepts | 50% | [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) | Apr 2, 2025 | | PMI ends automatically at this loan-to-value | 78% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) | Oct 28, 2026 | | 2026 FHA limit in lower-cost counties | $541,287 | [HUD](https://www.hud.gov/news/hud-no-25-145) | 2026 limit | | US median home value | $360,600 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) | 2024 ACS 1-year | | Closing Disclosure arrives before closing | 3 business days | [CFPB](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) | Oct 28, 2026 | ## The home-buying process in eight steps Most purchases follow the same order. Lenders, agents and title companies each handle a slice, but the decisions are yours, and the numbers you lock in early — credit score, down payment, rate — shape everything after. **How to buy a home with a mortgage** 1. **Check your budget and credit** — Pull your credit reports, list every monthly debt and work out how much of your gross income a housing payment would take. Our [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/) shows the full monthly cost, not just principal and interest. 2. **Get pre-approved** — A lender verifies income, assets and credit and states how much it is willing to lend. A pre-approval letter makes your offer credible; see [mortgage pre-approval](https://mortgage-math-us.com/buying/pre-approval/). 3. **Choose a loan type** — Conventional, FHA, VA and USDA loans differ in down payment, mortgage insurance and credit rules. The [loan types hub](https://mortgage-math-us.com/loan-types/) compares them. 4. **Shop rates and request Loan Estimates** — Each lender must send a Loan Estimate within 3 business days of your application, on a standard form that makes offers easy to compare. 5. **Make an offer and put down earnest money** — Your agent writes the contract, usually with inspection, appraisal and financing contingencies that protect your deposit. 6. **Inspection, appraisal and underwriting** — The inspector checks the house, the appraiser checks the price, and the underwriter re-checks you. Don’t open new credit or change jobs during this stage. 7. **Lock your rate and review the Closing Disclosure** — You receive the Closing Disclosure at least 3 business days before closing. Compare it line by line with your Loan Estimate. 8. **Close and get the keys** — Bring the cash to close (down payment plus closing costs), sign the note and deed of trust or mortgage, and the home is yours. ## How much house can you afford? Lenders start from your **gross monthly income** and two ratios. The housing ratio compares the full housing payment — principal, interest, property tax, insurance, mortgage insurance and any HOA dues — with income. The debt-to-income ratio (DTI) adds car loans, student loans, card minimums and other debts. Freddie Mac’s consumer guidance suggests keeping housing below 30% of gross income and all debts below 45%. Those are comfort targets, not hard limits: Fannie Mae’s Desktop Underwriter can approve loans with a DTI up to 50%, while manually underwritten loans start at 36%. *Home price supported at a 30% housing ratio — 10% down, 30-year fixed at today’s average rate, national-average taxes, insurance and PMI* | Gross income | Housing budget | Home price | 10% down payment | |---|---:|---:|---:| | $50,000 | $1,250 | $162,000 | $16,200 | | $75,000 | $1,875 | $242,000 | $24,200 | | $100,000 | $2,500 | $323,000 | $32,300 | | $150,000 | $3,750 | $485,000 | $48,500 | The table assumes no other debts. Every $100 of monthly debt you carry trims the price you can afford by roughly the amount that $100 a month would have borrowed. Our article on [how much house you can afford on $75,000](https://mortgage-math-us.com/blog/how-much-house-can-i-afford-on-75k/) works through debts, down payment and rate changes in detail. > **Tip: Budget for the whole payment** > > Principal and interest are only part of the bill. On the median-value example below, taxes, insurance and PMI add $577 a month on top of the loan payment. ## Down payment: how much do you really need? Twenty percent is a target, not a requirement. Conventional loans backed by Fannie Mae or Freddie Mac can start at 3% down, FHA loans at 3.5% with a 580 or higher credit score, and VA and USDA loans at 0% for eligible buyers. *Minimum down payment by loan type* | Loan type | Minimum down payment | Mortgage insurance | |---|---:|---| | Conventional | 3% | PMI below 20% down; cancellable | | FHA | 3.5% | Upfront 1.75% plus annual MIP (often 0.55%) | | VA | 0% | None; a one-time funding fee may apply | | USDA | 0% | Guarantee fees; income up to 115% of area median | A bigger down payment lowers the loan, the monthly payment and often the rate, and at 20% it removes PMI on a conventional loan. On the median-value home, going from 10% to 20% down cuts the monthly cost from $2,789 to $2,381. The trade-off is cash: money in the house is money not available for repairs or emergencies. Many state housing finance agencies offer [down-payment assistance](https://mortgage-math-us.com/first-time-buyers/programs/) — Texas programs, for example, cover 2%–5% of the loan amount. ## Private mortgage insurance (PMI) PMI protects the lender, not you, when you put less than 20% down on a conventional loan. Freddie Mac puts the typical cost at about $30 to $70 a month for every $100,000 borrowed — on the $324,540 example loan that is roughly $97 to $227 a month, depending mostly on credit score and down payment. > **Rule: When PMI goes away** > > Under the Homeowners Protection Act you can ask your servicer to cancel PMI once your balance is scheduled to reach 80% of the home’s original value, and it must end automatically at 78% if you are current on payments. FHA mortgage insurance follows different rules. FHA loans charge an upfront premium of 1.75% of the loan plus an annual premium; for a typical 30-year FHA loan with less than 5% down the annual rate is 0.55%, and it lasts for the life of the loan. That difference is why buyers with good credit often compare FHA and conventional quotes side by side — see [PMI explained](https://mortgage-math-us.com/buying/pmi/). ## Closing costs The CFPB estimates closing costs at $2 to $5 for every $100 of the purchase price, paid at closing on top of the down payment. They cover lender fees, the appraisal, title insurance, recording fees, prepaid interest and the first deposits into your escrow account for taxes and insurance. > **Worked example: Closing costs on the US median home value** > > At $360,600, the CFPB’s range works out to $7,200 at the low end and $18,000 at the high end. State taxes make a big difference: Texas has no real estate transfer tax, while other states charge one at recording. The [Texas guide](https://mortgage-math-us.com/location/texas/) shows the state-specific items. You can negotiate some costs: lender fees, the title company (in many states), and seller credits toward your costs. Compare the Loan Estimate and the Closing Disclosure; certain fees cannot rise at all between the two, and others only within limits. ## Credit score requirements Minimums depend on the loan type. FHA requires a decision score of at least 580 for maximum financing; scores from 500 to 579 are capped at 90% loan-to-value, which means at least 10% down. Fannie Mae requires 620 for manually underwritten fixed-rate loans. Since November 2025 its Desktop Underwriter no longer applies a minimum score, assessing the whole file instead — but a higher score still buys a lower rate and cheaper PMI. > **Watch out: Avoid new credit before closing** > > Lenders often re-check credit just before closing. A new car loan or store card can raise your DTI or lower your score enough to change the approval. ## Debt-to-income ratio DTI is total monthly debt payments, including the new housing payment, divided by gross monthly income. A household earning $100,000 a year has $8,333 a month of gross income; at Fannie Mae’s 36% manual-underwriting limit, all debts including housing must stay under $3,000. That limit rises to 45% with strong credit and reserves, and 50% through Desktop Underwriter. Paying off a small loan before applying can move you across a threshold. ## Rates, points and the Loan Estimate Freddie Mac’s survey is the benchmark: the 30-year fixed averaged 7.24% and the 15-year 6.6% in the latest week. Your quote can sit above or below that depending on credit, down payment, loan type, occupancy and whether you pay discount points to buy the rate down. Request Loan Estimates from at least three lenders on the same day, and compare section A (origination charges), the rate, the APR and the cash to close. ## The monthly payment on a typical home > **Worked example: US median home value, 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $324,540 | $2,212 | > | Property tax at 0.89% a year | $267 | > | Homeowners insurance at $4.90 per $1,000 of value | $147 | > | PMI (midpoint of Freddie Mac’s range) | $162 | > | **Total** | **$2,789** | > > Tax uses the national ratio of median taxes paid to median home value from the Census Bureau; insurance uses Freddie Mac’s 2023 average per $1,000 of value. Your state and quotes will differ. [Open the mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/) ## Mistakes first-time buyers make - **Shopping before pre-approval.** Without it, sellers discount your offer and you may fall for a house the lender won’t finance. - **Draining savings for the down payment.** Keep reserves for repairs, moving and the first months of ownership; lenders like to see them too. - **Comparing rates, not costs.** A lower rate with two points can cost more over the years you actually keep the loan. - **Ignoring taxes and insurance.** In high-tax or high-insurance states they can add hundreds a month; check the [state guides](https://mortgage-math-us.com/location/). - **Skipping the inspection.** Appraisals check value, not condition. ## All guides in this hub - [Mortgage pre-approval](https://mortgage-math-us.com/buying/pre-approval/) - [Down payment](https://mortgage-math-us.com/buying/down-payment/) - [Private mortgage insurance (PMI)](https://mortgage-math-us.com/buying/pmi/) - [Closing costs](https://mortgage-math-us.com/buying/closing-costs/) - [Credit score for a mortgage](https://mortgage-math-us.com/buying/credit-score/) - [Debt-to-income ratio](https://mortgage-math-us.com/buying/debt-to-income/) - [How mortgage rates work](https://mortgage-math-us.com/buying/mortgage-rates/) - [Mortgage points](https://mortgage-math-us.com/buying/mortgage-points/) - [Loan Estimate and Closing Disclosure](https://mortgage-math-us.com/buying/loan-estimate/) - [Appraisal and home inspection](https://mortgage-math-us.com/buying/appraisal-and-inspection/) ## Frequently asked questions ### How much do I need to save to buy a house? Plan for the down payment plus closing costs plus a cushion. With 10% down on a $300,000 home, that is $30,000 down and $6,000–$15,000 in closing costs at the CFPB’s typical 2–5% range, before moving costs and reserves. ### Is 20% down required to buy a house? No. Conventional loans start at 3% down, FHA at 3.5% and VA and USDA at zero for eligible buyers. Below 20% on a conventional loan you pay PMI until your balance reaches 78% of the original value. ### How long does pre-approval last? Every pre-approval letter carries an expiry date set by the lender, because your credit, income and assets must still be current when you close. Ask for the date up front and get the letter refreshed if your search runs past it. ### What credit score do I need to buy a house? FHA allows 580 and up with 3.5% down, or 500–579 with 10% down. Fannie Mae requires 620 for manually underwritten fixed-rate loans; automated approvals have no set minimum but price for risk. ### How much are closing costs on a house? Typically 2% to 5% of the purchase price according to the CFPB. They include lender fees, appraisal, title insurance, recording fees and prepaid taxes, insurance and interest. ### What is a good debt-to-income ratio for a mortgage? Freddie Mac suggests total debts under 45% of gross income and housing under 30%. Fannie Mae can approve up to 50% through its automated system, but a lower ratio leaves more room in your budget. ### When do I get the Closing Disclosure? At least 3 business days before closing. Compare it with your Loan Estimate; if the APR rises beyond set tolerances or the loan product changes, a new waiting period applies. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average; 15-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price); Minimum down payment on some conventional loans (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income; Freddie Mac guidance: total debt payments below this share of gross income (Jan 22, 2026) - [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) — Fannie Mae maximum DTI, manually underwritten loans; Fannie Mae maximum DTI, Desktop Underwriter loans; Fannie Mae maximum DTI, manual underwriting with strong credit and reserves (Apr 2, 2025) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-loan-estimate-en-1995/) — Lender must send the Loan Estimate within this many business days of your application (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) — You receive the Closing Disclosure at least this many business days before closing (Oct 28, 2026) - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/loan-types/purchase-loan/) — VA purchase loan down payment (price at or below appraised value) (Jan 7, 2026) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA upfront mortgage insurance premium; FHA annual MIP, 30-year loan, more than 95% LTV (Feb 22, 2023) - [USDA Rural Development](https://www.rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-guaranteed-loan-program) — USDA guaranteed loan down payment; USDA guaranteed loan income limit (share of area median income) (Oct 28, 2026) - [Texas Department of Housing and Community Affairs](https://welcomehome.tdhca.texas.gov/uploads/My-First-Texas-Home-Program-Matrix-TMS.pdf) — TDHCA My First Texas Home assistance, low end (share of loan); TDHCA My First Texas Home assistance, high end (share of loan) (Program matrix Aug 17, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) — Ask your servicer to cancel PMI at this share of original value; PMI ends automatically at this share of original value (Oct 28, 2026) - [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) — FHA minimum score for maximum financing; FHA minimum decision credit score (90% LTV cap from 500 to 579) (Oct 8, 2026) - [Fannie Mae Selling Guide B3-5.1-01](https://selling-guide.fanniemae.com/sel/b3-5.1-01/general-requirements-credit-scores) — Fannie Mae minimum score, manually underwritten fixed-rate loans (Apr 22, 2026) - [HUD](https://www.hud.gov/news/hud-no-25-145) — 2026 FHA loan limit floor (one-unit, low-cost areas) (2026 limit) - [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) — 2026 baseline conforming loan limit (one-unit) (2026 limit) - [Fannie Mae Selling Guide Announcement SEL-2025-09 (minimum credit score removed for DU loans)](https://singlefamily.fanniemae.com/news-events/announcement-sel-2025-09-selling-guide-updates) - [CFPB: Can my final mortgage costs increase from what was on my Loan Estimate?](https://www.consumerfinance.gov/ask-cfpb/can-my-final-mortgage-costs-increase-from-what-was-on-my-loan-estimate-en-172/) _General information, not financial advice._ --- # First-time home buyer guide > First-time home buyer guide: who qualifies, low-down-payment loans, down-payment assistance, tax credits, education and the path from savings to keys. URL: https://mortgage-math-us.com/first-time-buyers/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer You usually count as a first-time buyer if you haven’t owned a home in the past 3 years. First-time buyers can combine a low-down-payment loan — 3% down on conventional loans, 3.5% on FHA, nothing on VA and USDA for eligible buyers — with down-payment assistance from a state housing finance agency and, in some places, a mortgage credit certificate worth 10%–50% of your mortgage interest each year. On a $360,000 home, the cash you need ranges from about $7,200 to well over $72,000. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | First-time buyer look-back (HUD definition) | 3 years | [42 U.S.C. 12704(14)](https://www.law.cornell.edu/uscode/text/42/12704) | Oct 28, 2026 | | Lowest conventional down payment | 3% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | | Lowest FHA down payment (580+ score) | 3.5% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | | HomeReady income limit (share of area median) | 80% | [Fannie Mae Selling Guide B5-6-01](https://selling-guide.fanniemae.com/sel/b5-6-01/homeready-mortgage-loan-and-borrower-eligibility) | Jun 4, 2025 | | Penalty-free IRA withdrawal for a first home | $10,000 | [IRS Tax Topic 557](https://www.irs.gov/taxtopics/tc557) | Oct 26, 2026 | | HUD housing counseling referral line | 800-569-4287 | [HUD](https://www.hud.gov/stat/sfh/housing-counseling) | Oct 28, 2026 | ## Who counts as a first-time buyer? The common test is ownership, not age or experience: you qualify if you haven’t owned a principal residence in the past 3 years. That is the federal definition HUD uses, and Fannie Mae and the tax rules for mortgage credit certificates use the same 3-year look-back. So someone who sold a home four years ago can be a first-time buyer again. HUD’s definition adds exceptions — for example, a single parent or displaced homemaker who owned a home only with a former spouse can still qualify. Other rules use different tests: the penalty-free IRA withdrawal looks back 2 years, and state programs set their own. [Who counts as a first-time buyer?](https://mortgage-math-us.com/first-time-buyers/who-counts-as-first-time/) compares the definitions side by side. ## How much cash you need The down payment gets the attention, but closing costs — 2% to 5% of the price, according to the CFPB — are due at the same time, and you’ll want a cushion left over. *Cash to close on a $360,000 home (near the US median value), before any assistance* | Loan | Minimum down | Down payment | Closing costs | Total cash needed | |---|---:|---:|---:|---:| | VA or USDA (eligible buyers) | 0% | $0 | $7,200–$18,000 | $7,200–$18,000 | | Conventional, incl. HomeReady and Home Possible | 3% | $10,800 | $7,200–$18,000 | $18,000–$28,800 | | FHA (580+ credit score) | 3.5% | $12,600 | $7,200–$18,000 | $19,800–$30,600 | | Conventional with 10% down | 10% | $36,000 | $7,200–$18,000 | $43,200–$54,000 | | Conventional with 20% down (no PMI) | 20% | $72,000 | $7,200–$18,000 | $79,200–$90,000 | Lower down payments mean a bigger loan and, below 20% on a conventional loan, private mortgage insurance until you reach 78% of the original value. Sellers can agree to pay part of your closing costs, and assistance programs can cover part of both. [Saving for a home](https://mortgage-math-us.com/first-time-buyers/saving-for-a-home/) turns these targets into a monthly plan, and the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/) shows what price your income supports. [Open the affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/) ## Loans designed for first-time buyers No federal loan is only for first-time buyers, but several are built around small down payments and moderate incomes: | Program | Down payment | Who it suits | |---|---:|---| | [FHA](https://mortgage-math-us.com/loan-types/fha-loans/) | 3.5% with a 580+ score | Lower credit scores or higher debts | | Fannie Mae HomeReady | 3% | Incomes up to 80% of area median | | Freddie Mac Home Possible | 3% | Incomes up to 80% of area median | | [VA](https://mortgage-math-us.com/loan-types/va-loans/) | 0% | Eligible veterans, service members and some surviving spouses | | [USDA](https://mortgage-math-us.com/loan-types/usda-loans/) | 0% | Eligible rural areas, incomes up to 115% of area median | | Standard [conventional](https://mortgage-math-us.com/loan-types/conventional-loans/) | 3% | Strong credit; above 95% loan-to-value at least one borrower must be a first-time buyer | Fannie Mae and Freddie Mac require less mortgage insurance coverage on HomeReady and Home Possible loans, which usually makes PMI cheaper than on a standard low-down-payment loan. Compare a Loan Estimate for FHA and one of these on the same day — the cheaper option depends mostly on your credit score. ## Down-payment assistance and grants Most help comes from state housing finance agencies, along with some cities, counties and nonprofits. It takes three forms: - **Grants** that never have to be repaid. - **Forgivable loans** that disappear if you keep the home for a set period. - **Deferred loans** with no monthly payment, repaid when you sell, refinance or pay off the mortgage. Assistance usually sits as a second lien behind your mortgage, which is why programs allow total borrowing above the home’s value — Fannie Mae’s Community Seconds go up to 105% combined loan-to-value. Expect income limits, price limits, a minimum credit score, a homebuyer education course and a requirement to live in the home. > **Worked example: Texas as an example** > > The Texas Department of Housing and Community Affairs offers assistance of 2%–5% of the loan amount with its My First Texas Home program, with a minimum credit score of 620. The Texas State Affordable Housing Corporation offers up to 5%, with a forgivable option that is forgiven after 3 years. See the [Texas guide](https://mortgage-math-us.com/location/texas/) for the details and other state costs. [First-time buyer programs](https://mortgage-math-us.com/first-time-buyers/programs/) explains how to find your state’s agency, and [down-payment grants](https://mortgage-math-us.com/first-time-buyers/grants/) covers repayment terms and how to spot “grant” scams. > **Watch out: Real assistance never asks for an upfront fee** > > Government and nonprofit programs are applied for through approved lenders and agencies. Anyone who promises a guaranteed grant in exchange for a fee, or asks for bank details to “release” money, is running a scam. ## Tax breaks for first-time buyers - **Mortgage credit certificates.** Issued by state and local housing agencies, an MCC turns 10%–50% of the mortgage interest you pay each year into a federal tax credit; when the certificate rate is above 20%, the credit is capped at $2,000/yr. Selling within 9 years can trigger a recapture tax. See [mortgage credit certificates](https://mortgage-math-us.com/first-time-buyers/mortgage-credit-certificates/). - **IRA withdrawals.** You can take up to $10,000 (a lifetime limit) out of an IRA for a first home without the 10% early-withdrawal tax, though regular income tax can still apply. The money must be spent within 120 days. - **Mortgage interest.** Interest is deductible only if you itemize, which pays only when your deductions beat the 2026 standard deduction of $16,100 (single) or $32,200 (married filing jointly) — many first-time buyers don’t. These are summaries, not tax advice; IRS Publication 936 and Form 8396 have the full rules. ## Homebuyer education A homebuyer education course is often required: on Fannie Mae loans when every borrower is a first-time buyer and the loan-to-value is above 95%, on many HomeReady and Home Possible loans, and by many state assistance programs. Even when it isn’t required, a course explains the Loan Estimate, the closing process and the costs of owning. HUD-approved housing counseling agencies offer courses and one-on-one advice, often at little or no cost — call 800-569-4287 to find one. See [homebuyer education courses](https://mortgage-math-us.com/first-time-buyers/homebuyer-education/). ## The path from savings to keys **How to buy your first home** 1. **Check your credit and budget** — Get your free credit reports, list your monthly debts and decide on a comfortable payment, not the lender’s maximum. 2. **Save for the down payment, closing costs and a cushion** — Keep 3 to 6 months of expenses aside after closing, as the CFPB suggests. 3. **Find assistance and take a course** — Check your state housing finance agency before choosing a lender; many programs work only through approved lenders. 4. **Get pre-approved by more than one lender** — Mortgage credit checks within 45 days count as one inquiry on most scores. 5. **Shop for a home and make an offer** — Keep inspection, appraisal and financing contingencies. 6. **Compare Loan Estimates and lock a rate** — Lenders must send one within 3 business days of your application. 7. **Inspection, appraisal and underwriting** — Don’t open new credit or change jobs. 8. **Review the Closing Disclosure and close** — It arrives at least 3 business days before closing; compare it with your Loan Estimate. The [step-by-step guide](https://mortgage-math-us.com/first-time-buyers/step-by-step/) expands each stage with timing and costs, and [first-time buyer mistakes to avoid](https://mortgage-math-us.com/first-time-buyers/mistakes-to-avoid/) covers the traps at each one. ## Renting or buying? Buying usually beats renting only if you stay long enough for price growth and equity to outweigh buying and selling costs, interest, taxes and upkeep. That point varies widely by place and by how long you plan to stay. The [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/) uses your state’s median rent and price as a starting point. ## All guides in this hub - [First-time home buyer programs](https://mortgage-math-us.com/first-time-buyers/programs/) - [Down-payment grants](https://mortgage-math-us.com/first-time-buyers/grants/) - [Step-by-step buying guide](https://mortgage-math-us.com/first-time-buyers/step-by-step/) - [Who counts as a first-time buyer?](https://mortgage-math-us.com/first-time-buyers/who-counts-as-first-time/) - [Homebuyer education courses](https://mortgage-math-us.com/first-time-buyers/homebuyer-education/) - [Mortgage credit certificates](https://mortgage-math-us.com/first-time-buyers/mortgage-credit-certificates/) - [Saving for a home](https://mortgage-math-us.com/first-time-buyers/saving-for-a-home/) - [First-time buyer mistakes to avoid](https://mortgage-math-us.com/first-time-buyers/mistakes-to-avoid/) ## Frequently asked questions ### Who qualifies as a first-time home buyer? Usually anyone who hasn’t owned a principal residence in the past 3 years. HUD’s definition adds exceptions for single parents and displaced homemakers who owned only with a former spouse, and state programs can set their own tests. ### How much do I need for a down payment as a first-time buyer? As little as 3% on a conventional loan, 3.5% on FHA with a 580+ credit score, or nothing on VA and USDA loans for eligible buyers. Add closing costs of about 2%–5% of the price. ### Are there grants for first-time home buyers? Yes, mostly through state housing finance agencies, cities and nonprofits, though many “grants” are actually forgivable or deferred second loans. Check the repayment terms, income and price limits, and whether you must live in the home for a set time. ### What credit score do first-time buyers need? FHA accepts 580 and up for the minimum down payment, or 500 with 10% down. Assistance programs often set their own minimum — 620 for Texas’s My First Texas Home, for example. ### Can I use my IRA to buy my first home? You can withdraw up to $10,000 over your lifetime for a first home without the 10% early-withdrawal tax, if you haven’t owned a home in the past 2 years. Regular income tax may still apply to pre-tax money. ### Is a homebuyer education course required? Often. Fannie Mae requires one when all borrowers are first-time buyers and the loan-to-value is above 95%, and many down-payment assistance programs require one. HUD-approved counselors offer courses, often at little or no cost. ### What is a mortgage credit certificate? A certificate from a state or local housing agency that turns 10%–50% of your yearly mortgage interest into a federal tax credit, capped at $2,000/yr when the rate is above 20%. Selling within 9 years may trigger a recapture tax. ## Sources - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price); Minimum down payment on some conventional loans (Oct 28, 2026) - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/loan-types/purchase-loan/) — VA purchase loan down payment (price at or below appraised value) (Jan 7, 2026) - [42 U.S.C. 12704(14)](https://www.law.cornell.edu/uscode/text/42/12704) — First-time homebuyer: has not owned a home in the past (HUD/HOME statute) (Oct 28, 2026) - [IRS Form 8396](https://www.irs.gov/pub/irs-pdf/f8396.pdf) — Mortgage credit certificate rate, lowest; Mortgage credit certificate rate, highest; Mortgage credit certificate: the yearly dollar cap applies when the rate is above (Tax year 2025) - [Fannie Mae Selling Guide E-3-06](https://selling-guide.fanniemae.com/sel/e-3-06/acronyms-and-glossary-defined-terms-f) — Fannie Mae: first-time buyer had no ownership interest in the past (Sep 3, 2025) - [26 U.S.C. 72(t)(8)](https://www.govinfo.gov/link/uscode/26/72) — IRA first-home exception: no ownership interest in a principal residence in the past; IRA first-home withdrawal must be spent on the purchase within (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) — PMI ends automatically at this share of original value (Oct 28, 2026) - [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) — FHA minimum score for maximum financing; FHA minimum decision credit score (90% LTV cap from 500 to 579) (Oct 8, 2026) - [Fannie Mae Selling Guide B5-6-01](https://selling-guide.fanniemae.com/sel/b5-6-01/homeready-mortgage-loan-and-borrower-eligibility) — Fannie Mae HomeReady income limit (share of area median income) (Jun 4, 2025) - [Freddie Mac Home Possible fact sheet](https://sf.freddiemac.com/docs/pdf/fact-sheet/home_possible_factsheet.pdf) — Freddie Mac Home Possible income limit (share of area median income) (Feb 1, 2026) - [USDA Rural Development](https://www.rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-guaranteed-loan-program) — USDA guaranteed loan down payment; USDA guaranteed loan income limit (share of area median income) (Oct 28, 2026) - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae: above this LTV, at least one borrower must be a first-time buyer (non-HomeReady, no Community Seconds) (Apr 1, 2026) - [Fannie Mae Selling Guide B5-5.1-02](https://selling-guide.fanniemae.com/sel/b5-5.1-02/community-seconds-loan-eligibility) — Fannie Mae Community Seconds maximum combined LTV (May 3, 2023) - [Texas Department of Housing and Community Affairs](https://welcomehome.tdhca.texas.gov/uploads/My-First-Texas-Home-Program-Matrix-TMS.pdf) — TDHCA My First Texas Home assistance, low end (share of loan); TDHCA My First Texas Home assistance, high end (share of loan); TDHCA My First Texas Home minimum middle credit score (Program matrix Aug 17, 2026) - [Texas State Affordable Housing Corporation](https://www.tsahc.org/landing/home-down-payment-assistance) — TSAHC down payment assistance, up to (share of loan); TSAHC forgivable second lien is forgiven after (Oct 28, 2026) - [IRS Tax Topic 557](https://www.irs.gov/taxtopics/tc557) — Penalty-free IRA withdrawal for a first home (lifetime limit); Additional tax on early IRA distributions unless an exception applies (Oct 26, 2026) - [IRS](https://www.irs.gov/newsroom/working-families-tax-cuts-individuals-and-workers) — 2026 standard deduction, single filers; 2026 standard deduction, married filing jointly (Tax year 2026) - [Fannie Mae Selling Guide B2-2-06](https://selling-guide.fanniemae.com/sel/b2-2-06/homeownership-education-and-housing-counseling) — Fannie Mae requires homebuyer education above this LTV when all borrowers are first-time buyers (Nov 5, 2025) - [HUD](https://www.hud.gov/stat/sfh/housing-counseling) — HUD housing counseling referral line (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-exactly-happens-when-a-mortgage-lender-checks-my-credit-en-2005/) — Mortgage credit checks within this window count as one inquiry (Aug 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-loan-estimate-en-1995/) — Lender must send the Loan Estimate within this many business days of your application (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) — You receive the Closing Disclosure at least this many business days before closing (Oct 28, 2026) - [CFPB: Buying a house — tools and resources for homebuyers](https://www.consumerfinance.gov/owning-a-home/) - [HUD: Buying a home](https://www.hud.gov/topics/buying_a_home) - [Fannie Mae Selling Guide B5-6-01: HomeReady Mortgage Loan and Borrower Eligibility](https://selling-guide.fanniemae.com/sel/b5-6-01/homeready-mortgage-loan-and-borrower-eligibility) - [IRS Form 8396: Mortgage Interest Credit](https://www.irs.gov/forms-pubs/about-form-8396) _General information, not financial advice._ --- # Borrowing against your home equity > How to borrow against home equity: HELOCs, home equity loans and cash-out refinances compared, how much you can borrow, costs, risks and tax rules. URL: https://mortgage-math-us.com/home-equity/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer Home equity is your home’s value minus what you owe on it. You can borrow against it with a **HELOC** (a variable-rate credit line, usually prime — now 7% — plus a margin, often interest-only for the first years), a **home equity loan** (a fixed-rate lump sum) or a **cash-out refinance** (a new, larger first mortgage at today’s rate, averaging 7.24% for a 30-year loan). Lenders usually cap all loans on the home at a share of its value, and every option puts the home at risk if you can’t pay. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Prime rate (common HELOC index) | 7% | [Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/) | Oct 28, 2026 | | Example HELOC draw period (CFPB) | 10 years | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) | Aug 28, 2026 | | HELOC repayment period, often up to | 20 years | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) | Aug 28, 2026 | | Conventional cash-out limit (one-unit home) | 80% | [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) | Apr 1, 2026 | | Right to cancel on your main home | 3 business days | [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) | Aug 8, 2024 | | Mortgage debt with deductible interest | $750,000 | [IRS Publication 936](https://www.irs.gov/pub/irs-pdf/p936.pdf) | Tax year 2025 | ## What home equity is Equity is the part of your home’s value that isn’t owed to a lender. It grows as you pay down principal and as the home gains value, and it shrinks if prices fall or you borrow against it. A home worth $360,000 with $200,000 left on the mortgage has $160,000 of equity — about 44% of its value — and a loan-to-value ratio of 55.6%. Lenders don’t let you borrow all of it. They cap the **combined loan-to-value (CLTV)** — every loan secured by the home, divided by its appraised value. Each lender sets its own cap for home equity loans and lines; conventional and FHA cash-out refinances stop at 80%, and in Texas the state constitution limits home equity borrowing on a homestead to 80%. *How much you could borrow on a $360,000 home with $200,000 owed* | Lender’s CLTV limit | Total that can be owed | Available to borrow | |---|---:|---:| | 75% (example) | $270,000 | $70,000 | | 80% (example) | $288,000 | $88,000 | | 85% (example) | $306,000 | $106,000 | | 90% (example) | $324,000 | $124,000 | The limits are examples, not offers; your credit, income and the appraisal decide the real figure. [How much equity can you borrow?](https://mortgage-math-us.com/home-equity/how-much-equity/) works through the math in more detail. ## Three ways to borrow against your home *HELOC, home equity loan and cash-out refinance compared* | | HELOC | Home equity loan | Cash-out refinance | |---|---|---|---| | What you get | A credit line you draw on as needed | A lump sum at closing | A new, larger first mortgage; you receive the difference | | Rate | Usually variable: index (often prime) + margin | Usually fixed | Fixed or adjustable, at today’s mortgage rates | | Payments | Often interest-only during the draw period, then principal and interest | Equal monthly payments | One new mortgage payment | | Your first mortgage | Stays as it is | Stays as it is | Paid off and replaced | | Closing costs | Often lower; some lenders charge annual or early-closure fees | Similar to a small mortgage | Similar to a purchase loan: 3%–6% of the loan, per Freddie Mac | | Best for | Ongoing or uncertain costs, such as a renovation in stages | A single known expense with a fixed budget | Large sums when today’s rate is close to, or below, your current rate | Each has its own guide: [HELOCs](https://mortgage-math-us.com/home-equity/heloc/), [home equity loans](https://mortgage-math-us.com/home-equity/home-equity-loan/) and [cash-out refinance vs HELOC](https://mortgage-math-us.com/home-equity/cash-out-vs-heloc/). Homeowners aged 62 years or older have a fourth option, a [reverse mortgage](https://mortgage-math-us.com/loan-types/reverse-mortgages/), which requires no monthly loan payment. ## The same $50,000 three ways The choice often comes down to the rate on the mortgage you already have. If it is well below today’s rates, a cash-out refinance gives that rate up on the whole balance. > **Worked example: $360,000 home, $200,000 owed at an example rate of 4.5% with 25 years left — raising $50,000** > > | Option | New monthly payments on the home | Change from today | > |---|---:|---:| > | Do nothing (current mortgage) | $1,112 | — | > | Cash-out refinance: $250,000 over 30 years at 7.24% | $1,704 | +$592 | > | HELOC at 8.00% (prime + an example 1-point margin), interest-only | $1,445 | +$333 | > | Same HELOC once 20-year repayment starts | $1,530 | +$418 | > | Home equity loan, 15 years at an example fixed 8.25% | $1,597 | +$485 | > > Closing costs are left out. The HELOC rate moves with prime: if prime rose 2 points, the interest-only payment on the line would be $417 and the repayment payment $483. In this case the cash-out refinance costs the most each month because it moves $200,000 of low-rate debt to today’s rate. If your current rate were at or above today’s average, the comparison could flip. The [HELOC payment calculator](https://mortgage-math-us.com/tools/heloc-payment-calculator/) and the [refinance break-even calculator](https://mortgage-math-us.com/tools/refinance-break-even-calculator/) let you run your own numbers. [Open the heloc payment calculator](https://mortgage-math-us.com/tools/heloc-payment-calculator/) ## How HELOC payments change over time A HELOC has two phases. During the **draw period** — 10 years in the CFPB’s example — you can borrow, repay and borrow again, and many plans require only interest. When it ends, you can’t draw any more and the balance is repaid with principal and interest over a **repayment period** that often runs up to 20 years, or on some plans in a single balloon payment. In the example above the line’s payment rises from $333 to $418 a month, a 25% jump, even if rates don’t move. Plan for that date well ahead; [HELOC draw and repayment periods](https://mortgage-math-us.com/home-equity/heloc-draw-and-repayment/) covers the options. ## Requirements Lenders look at four things, and set most thresholds themselves: - **Equity** — enough that all loans on the home stay within their CLTV limit after the new loan. - **Credit** — a score and payment history they accept; a higher score usually means a lower margin or rate. - **Income and debts** — the new payment must fit within the debt-to-income ratio they allow, and HELOCs are often qualified at a payment that includes principal. - **The property** — a principal residence is easiest; second homes and rentals face tighter limits, and some lenders don’t lend on them at all. Texas adds its own constitutional rules for homesteads: borrowing capped at 80% of value, lender fees capped at 2% of the principal, at least 12 days between application and closing, and generally 12 months between home equity loans. See [home equity requirements](https://mortgage-math-us.com/home-equity/home-equity-requirements/) and the [Texas guide](https://mortgage-math-us.com/location/texas/). ## Costs and your right to cancel Home equity loans and HELOCs can carry an appraisal, origination and title charges, and HELOCs sometimes add annual, inactivity or early-closure fees. Federal rules require HELOC lenders to give you disclosures and a CFPB brochure with the application, and they can’t charge a nonrefundable fee until 3 business days after you receive them. > **Rule: Three business days to change your mind** > > For a HELOC, home equity loan or cash-out refinance with a new lender on your principal residence, federal law gives you 3 business days after closing to cancel. If you do, the lender must return your money and release its lien within 20 days. ## The risks Your home is the collateral. If you can’t make the payments, the lender can foreclose — even if your first mortgage is current. Variable HELOC rates can rise with prime. A lender can freeze a HELOC or cut its limit if your home’s value falls significantly — the official interpretation treats a drop that halves the original cushion of equity above the credit limit as significant — or if your finances change materially, and must notify you within 3 business days. A falling market can leave you owing more than the home is worth. > **Watch out: Watch for high-cost offers** > > A home-secured loan becomes a federally regulated “high-cost mortgage” when its APR is more than 8.5% points above the average prime offer rate on a second lien, or its points and fees exceed 5% of the loan. Those loans require extra disclosures and counseling. Walk away from any offer that pressures you to sign quickly or to borrow more than you asked for. [Risks of borrowing against your home](https://mortgage-math-us.com/home-equity/home-equity-risks/) covers each one with numbers. ## Taxes on home equity interest Interest on a HELOC or home equity loan is deductible only if you use the money to buy, build or substantially improve the home that secures the loan, and only on combined mortgage debt up to $750,000 for loans taken out after December 15, 2017. You also have to itemize, which pays only when your deductions beat the standard deduction — $16,100 for single filers and $32,200 for married couples filing jointly in 2026. This is general information, not tax advice; see [home equity interest and taxes](https://mortgage-math-us.com/home-equity/home-equity-interest-deduction/). ## How to borrow against your equity, step by step **How to tap your home equity** 1. **Define the need** — A fixed amount for a single cost points to a home equity loan; spending over time points to a HELOC. 2. **Estimate your equity** — Recent sale prices nearby give a rough value; subtract every loan on the home. 3. **Compare the three options** — Weigh your current mortgage rate against today’s average before considering a cash-out refinance. 4. **Get offers from several lenders** — For a HELOC compare the index, the margin, any rate caps, the draw and repayment periods and the fees; for a loan compare the APR. 5. **Plan the repayment** — Work out the payment when a HELOC’s draw period ends and if its rate rises 2 points. 6. **Read the disclosures, then close** — You have 3 business days after closing to cancel on your main home. ## All guides in this hub - [HELOC (home equity line of credit)](https://mortgage-math-us.com/home-equity/heloc/) - [Home equity loan](https://mortgage-math-us.com/home-equity/home-equity-loan/) - [Cash-out refinance vs HELOC](https://mortgage-math-us.com/home-equity/cash-out-vs-heloc/) - [How much equity can you borrow?](https://mortgage-math-us.com/home-equity/how-much-equity/) - [HELOC draw and repayment periods](https://mortgage-math-us.com/home-equity/heloc-draw-and-repayment/) - [Home equity loan requirements](https://mortgage-math-us.com/home-equity/home-equity-requirements/) - [Risks of borrowing against your home](https://mortgage-math-us.com/home-equity/home-equity-risks/) - [Home equity interest and taxes](https://mortgage-math-us.com/home-equity/home-equity-interest-deduction/) ## Frequently asked questions ### What is the difference between a HELOC and a home equity loan? A HELOC is a revolving credit line, usually at a variable rate, that you draw on as needed and often pay interest-only on at first. A home equity loan is a lump sum at a fixed rate, repaid in equal monthly payments. Both are usually second mortgages that leave your first mortgage in place. ### How much equity can I borrow? Multiply your home’s appraised value by the lender’s combined loan-to-value limit and subtract what you owe. On a $360,000 home with $200,000 owed, an 80% limit leaves about $88,000. ### Is a HELOC or a cash-out refinance better? If your current mortgage rate is well below today’s rates, a HELOC or home equity loan usually costs less, because a cash-out refinance moves your whole balance to the new rate. If your rate is at or above today’s, a cash-out refinance can make sense, especially for a large sum. ### What rate will I pay on a HELOC? Most HELOCs use a variable rate: an index, often the prime rate (7%), plus a margin set by the lender based on your credit and equity. When prime changes, your rate and payment change. ### Can a lender freeze my HELOC? Yes. Federal rules let a lender suspend draws or reduce your limit if your home’s value falls significantly, if your finances change materially or if you default on a key term. It must tell you in writing within 3 business days. ### Is home equity interest tax-deductible? Only if the money buys, builds or substantially improves the home securing the loan, within the IRS limit of $750,000 of mortgage debt for loans after December 15, 2017, and only if you itemize. ### Can I cancel a home equity loan after signing? Yes, on your principal residence you have 3 business days after closing to cancel a HELOC, home equity loan or refinance with a new lender, under the federal right of rescission. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/) — Bank prime loan rate (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) — Example HELOC draw period (CFPB); HELOC repayment period, often up to (CFPB) (Aug 28, 2026) - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae cash-out refinance maximum LTV, one-unit principal residence (Apr 1, 2026) - [Texas Constitution, Art. XVI §50(a)(6)](https://capitol.texas.gov/tlodocs/85R/billtext/pdf/SJ00060E.pdf) — Maximum combined loan-to-value for Texas home equity loans; Texas home equity fee cap (share of original principal); Minimum wait after application before a Texas home equity loan can close (Nov 7, 2017) - [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) — Typical refinance closing costs, low end (share of loan principal); Typical refinance closing costs, high end (share of loan principal) (Oct 28, 2026) - [24 CFR 206.33](https://www.ecfr.gov/current/title-24/subtitle-B/chapter-II/subchapter-B/part-206/subpart-B) — HECM reverse mortgage: youngest borrower must be at least (Oct 7, 2026) - [12 CFR 1026.40(h)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.40) — No nonrefundable HELOC application fee until this long after you receive the disclosures and brochure (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) — Right to cancel a refinance or home equity loan on your principal home; After you cancel, the lender must return your money and release the lien within (Aug 8, 2024) - [12 CFR 1026.9(c)(1)(iii)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-B/section-1026.9) — Lender must send written notice of a HELOC freeze or credit-limit cut within (Oct 28, 2026) - [12 CFR 1026.32(a)(1)(i)](https://www.consumerfinance.gov/rules-policy/regulations/1026/32/) — High-cost mortgage trigger: APR more than this many percentage points above the average prime offer rate (subordinate lien); High-cost mortgage trigger: points and fees above this share of the total loan amount (Oct 28, 2026) - [IRS Publication 936](https://www.irs.gov/pub/irs-pdf/p936.pdf) — Mortgage debt on which interest is deductible (loans after Dec 15, 2017) (Tax year 2025) - [IRS](https://www.irs.gov/newsroom/working-families-tax-cuts-individuals-and-workers) — 2026 standard deduction, single filers; 2026 standard deduction, married filing jointly (Tax year 2026) - [CFPB: What is a home equity line of credit (HELOC)?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) - [CFPB: What you should know about HELOCs (brochure)](https://files.consumerfinance.gov/f/documents/cfpb_heloc-brochure_print.pdf) - [12 CFR 1026.40: Requirements for home equity plans](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.40) - [IRS Publication 936: Home Mortgage Interest Deduction](https://www.irs.gov/publications/p936) _General information, not financial advice._ --- # Types of mortgage loans, compared > Compare mortgage loan types: conventional, FHA, VA, USDA and jumbo loans, fixed vs adjustable rates, and specialty loans, with 2026 limits and costs. URL: https://mortgage-math-us.com/loan-types/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer The main mortgage types are **conventional** loans (from 3% down, private mortgage insurance below 20% down), **FHA** loans (3.5% down with a 580+ credit score, mortgage insurance usually for the life of the loan), **VA** loans (0% down for eligible veterans and service members, a one-time funding fee and no monthly insurance) and **USDA** loans (0% down in eligible rural areas for moderate incomes). Loans above the $832,750 conforming limit are **jumbo** loans. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Lowest conventional down payment | 3% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | | Lowest FHA down payment (580+ score) | 3.5% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | | VA down payment (eligible borrowers) | 0% | [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/loan-types/purchase-loan/) | Jan 7, 2026 | | USDA income limit (share of area median) | 115% | [USDA Rural Development](https://www.rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-guaranteed-loan-program) | Oct 28, 2026 | | 2026 conforming limit, most counties | $832,750 | [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) | 2026 limit | | 2026 conforming limit, high-cost areas | $1,249,125 | [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) | 2026 limit | ## The four main loan programs Every mortgage has two layers: the **program** that sets the rules — who backs the loan, how much you must put down, what insurance you pay — and the **product**, such as a 30-year fixed rate or a 5/6 adjustable rate. Start with the program, because it decides how much cash you need. *Main mortgage programs at a glance (2026 rules)* | | Conventional | FHA | VA | USDA | |---|---|---|---|---| | Who backs it | Nobody; most follow Fannie Mae and Freddie Mac rules | Federal Housing Administration (HUD) | Department of Veterans Affairs | USDA Rural Development | | Who can use it | Anyone who qualifies | Anyone buying a principal residence | Eligible veterans, service members and some surviving spouses | Moderate incomes, up to 115% of area median, in eligible rural areas | | Minimum down payment | 3% | 3.5% (580+ score) | 0% | 0% | | Credit score floor | 620 on manual underwriting; set by the automated system otherwise | 500 | No VA minimum; lenders set one | No USDA minimum; lenders set one | | Mortgage insurance | PMI below 20% down; cancellable | Upfront 1.75% plus annual MIP | None; one-time funding fee instead | Upfront 1% plus 0.35% a year | | One-unit loan limit | $832,750 ($1,249,125 in high-cost areas) | $541,287 to $1,249,125 by county | No VA limit with full entitlement | Set by income and repayment ability | Lenders can set stricter rules than the program — called overlays — so it pays to ask more than one. Each program has its own guide: [conventional loans](https://mortgage-math-us.com/loan-types/conventional-loans/), [FHA loans](https://mortgage-math-us.com/loan-types/fha-loans/), [VA loans](https://mortgage-math-us.com/loan-types/va-loans/) and [USDA loans](https://mortgage-math-us.com/loan-types/usda-loans/). ## Government-backed vs conventional FHA, VA and USDA loans are made by private lenders but insured or guaranteed by a federal agency. If the borrower defaults, the agency covers part of the lender’s loss, which is why these programs accept small or zero down payments and more flexible credit. You pay for that protection: FHA through mortgage insurance premiums, VA through a funding fee, USDA through guarantee fees. Conventional loans have no government backing. Most are “conforming” — they follow the rules of Fannie Mae and Freddie Mac, which buy them from lenders — and stay within the conforming loan limit. Below 20% down, a private mortgage insurer protects the lender instead. That insurance is priced on your credit score and, unlike most FHA insurance, it ends: you can ask to cancel it at 80% of the home’s original value, and it stops automatically at 78%. ## What each loan costs on the same home > **Worked example: $360,000 home (near the US median value), smallest down payment on each program, 30-year fixed at an example rate of 7.24%** > > | Program | Down payment | Principal and interest | Insurance or fee | Monthly total | > |---|---:|---:|---:|---:| > | Conventional | $10,800 | $2,380 | $175 | $2,968 | > | FHA | $12,600 | $2,409 | $159 | $2,982 | > | VA (first use) | $0 | $2,506 | $0 | $2,920 | > | USDA | $0 | $2,478 | $106 | $2,998 | > > Loan amounts, with financed fees: conventional $349,200, FHA $353,480, VA $367,740 and USDA $363,600. The monthly total adds property tax (0.89% a year) and insurance at national averages. Every row uses Freddie Mac’s weekly conventional average so the programs are compared on the same rate; actual FHA, VA and USDA quotes are often different. Conventional PMI is the midpoint of Freddie Mac’s typical range and FHA’s annual MIP is 0.55%; FHA’s upfront premium, the VA funding fee of 2.15% (first use, under 5% down) and USDA’s 1% guarantee fee are added to the loan. The table hides two differences that matter over time. FHA’s mortgage insurance usually lasts for the life of the loan, while conventional PMI ends; and VA borrowers who receive VA disability compensation are exempt from the funding fee. Compare the cost over the years you expect to keep the loan, not just the first payment. ## Which loan fits your situation? | If you… | Look first at | Why | |---|---|---| | Have a credit score in the 700s and 5–20% down | Conventional | PMI is cheaper with strong credit and can be cancelled | | Have a score in the 500s or low 600s, or higher debts | FHA | Lower score floor and flexible debt ratios | | Are an eligible veteran or service member | VA | No down payment, no monthly mortgage insurance | | Are buying in a rural or small-town area with a moderate income | USDA | No down payment and low annual fee | | Need to borrow more than your county’s conforming limit | Jumbo | Conforming and FHA loans can’t go that high | | Own your home outright or nearly so and are 62 years or older | Reverse mortgage (HECM) | Turns equity into income without monthly payments | Many buyers qualify for more than one. Ask lenders for a Loan Estimate on two programs on the same day, then compare the payment, the cash to close and how long the mortgage insurance lasts. The [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/) shows what price each debt-to-income limit supports. ## Fixed rate or adjustable rate? Any of the programs above can come as a fixed-rate loan, which keeps the same rate and principal-and-interest payment for the whole term, and most can come as an adjustable-rate mortgage (ARM). An ARM starts with a fixed rate for a set period, then resets to an index plus a margin. Fannie Mae’s ARMs use 30-day average SOFR, and caps limit each change: on a standard 5/6 ARM the caps are 2/1/5 — the most the rate can rise at the first reset, at each later reset and over the life of the loan, in percentage points. An ARM can make sense if you are confident you will sell or refinance before the first reset and the starting rate is meaningfully lower. If you plan to stay, or a higher payment would strain your budget, a fixed rate removes the risk. [Fixed vs adjustable-rate mortgages](https://mortgage-math-us.com/loan-types/fixed-vs-adjustable-rate/) works through a worst-case reset in dollars. Term matters too. The 30-year fixed averaged 7.24% and the 15-year 6.6% in Freddie Mac’s latest survey; the shorter term costs more each month but far less in total interest. The [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/) compares both. ## Loan size: conforming, high-balance and jumbo The Federal Housing Finance Agency sets the conforming loan limit each year. For 2026 it is $832,750 for a one-unit home in most counties, up from $806,500 in 2025, and up to $1,249,125 in high-cost areas. Loans between the baseline and the local high-cost limit are often called high-balance conforming loans; they follow the same rules but can price slightly differently. Above your county’s limit, the loan is a [jumbo loan](https://mortgage-math-us.com/loan-types/jumbo-loans/). Fannie Mae and Freddie Mac can’t buy it, so each lender sets its own down payment, credit and cash-reserve requirements — usually stricter than for conforming loans. A larger down payment that brings the loan under the limit can open up conforming pricing and rules. ## Specialty loans - **[Interest-only mortgages](https://mortgage-math-us.com/loan-types/interest-only-mortgages/)** let you pay only interest for a set period, then the payment jumps when principal is added. They can’t be Qualified Mortgages under the CFPB’s ability-to-repay rule, so they are offered as non-QM loans. - **[Reverse mortgages](https://mortgage-math-us.com/loan-types/reverse-mortgages/)** let homeowners aged 62 years and older borrow against their equity with no monthly loan payment. The FHA-insured HECM has a 2026 limit of $1,249,125, an initial mortgage insurance premium of 2% and required counseling. - **[Construction loans](https://mortgage-math-us.com/loan-types/construction-loans/)** fund a build in stages. A single-close loan converts to a permanent mortgage when the home is finished; Fannie Mae limits the construction period to 12 months at a time. - **[DSCR investor loans](https://mortgage-math-us.com/loan-types/dscr-loans/)** qualify a rental property on its rent rather than your income. They are business-purpose, non-QM loans with lender-set terms; a conventional investment-property loan, by contrast, goes up to 85% of the price under Fannie Mae’s rules. > **Watch out: Know what kind of loan you’re signing** > > A Qualified Mortgage can’t have interest-only payments, negative amortization or a term over 30 years, and caps points and fees at 3% on most loans. Loans outside those rules aren’t illegal, but they carry more risk — read the Loan Estimate’s “Loan Terms” table for a balloon payment, a prepayment penalty or a payment that can rise. ## How to choose, step by step **How to choose a mortgage type** 1. **Check your eligibility** — Military service (VA), a rural address and moderate income (USDA) or a credit score below the conventional comfort zone (FHA) narrow the list quickly. 2. **Count your cash** — Down payment plus closing costs of about 2%–5% of the price, according to the CFPB, plus reserves. 3. **Decide fixed or adjustable** — Match the product to how long you expect to keep the loan. 4. **Check the loan limit for your county** — It decides whether you need a jumbo loan and caps FHA borrowing. 5. **Get Loan Estimates on two programs** — Request them on the same day so rates are comparable, and look at page 1 and the “Comparisons” section on page 3. 6. **Compare total cost over your time horizon** — Include how long mortgage insurance lasts, not only the first payment. ## All guides in this hub - [Conventional loans](https://mortgage-math-us.com/loan-types/conventional-loans/) - [FHA loans](https://mortgage-math-us.com/loan-types/fha-loans/) - [VA loans](https://mortgage-math-us.com/loan-types/va-loans/) - [USDA loans](https://mortgage-math-us.com/loan-types/usda-loans/) - [Jumbo loans](https://mortgage-math-us.com/loan-types/jumbo-loans/) - [Fixed vs adjustable-rate (ARM)](https://mortgage-math-us.com/loan-types/fixed-vs-adjustable-rate/) - [Interest-only mortgages](https://mortgage-math-us.com/loan-types/interest-only-mortgages/) - [Reverse mortgages](https://mortgage-math-us.com/loan-types/reverse-mortgages/) - [Construction loans](https://mortgage-math-us.com/loan-types/construction-loans/) - [DSCR investor loans](https://mortgage-math-us.com/loan-types/dscr-loans/) ## Frequently asked questions ### What are the main types of mortgage loans? Conventional loans, FHA loans, VA loans and USDA loans are the four main programs. Each can be fixed-rate or, in most cases, adjustable-rate. Loans above the conforming limit are jumbo loans, and specialty types include interest-only, reverse, construction and investor loans. ### Which mortgage type has the lowest down payment? VA and USDA loans allow 0% down for eligible borrowers. Conventional loans start at 3% and FHA loans at 3.5% with a credit score of 580 or higher. ### Is FHA or conventional better? With strong credit and at least 5% down, a conventional loan is usually cheaper because PMI is priced on your score and can be cancelled. With a lower score or higher debts, FHA can be easier to qualify for. Compare Loan Estimates for both. ### What is the conforming loan limit for 2026? $832,750 for a one-unit home in most of the country and up to $1,249,125 in high-cost areas, set by the Federal Housing Finance Agency. ### Do VA loans have mortgage insurance? No monthly mortgage insurance. Most borrowers pay a one-time funding fee — 2.15% of the loan on a first purchase with less than 5% down — which can be financed. Veterans receiving VA disability compensation are exempt. ### Who qualifies for a USDA loan? Buyers of a principal residence in a USDA-eligible rural area whose household income is no more than 115% of the area median, and who can show they can repay. USDA’s eligibility website checks both the address and the income. ### Should I choose a fixed or adjustable rate? A fixed rate suits most buyers who plan to stay, because the payment never changes. An ARM can cost less if you are confident you will sell or refinance before the first rate reset, but its payment can rise up to the lifetime cap. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average; 15-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum down payment on some conventional loans; Minimum FHA down payment; Typical closing costs, low end (share of purchase price) (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA upfront mortgage insurance premium; FHA annual MIP, 30-year loan, more than 95% LTV (Feb 22, 2023) - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) — VA funding fee, first use, less than 5% down (Apr 7, 2023) - [USDA Rural Development](https://www.rd.usda.gov/media/file/download/usda-rd-sfh-guarantee-loan-program-101-jan-2026.pdf) — USDA guaranteed loan upfront guarantee fee; USDA guaranteed loan annual fee (FY2026) - [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) — FHA minimum score for maximum financing; FHA minimum decision credit score (90% LTV cap from 500 to 579) (Oct 8, 2026) - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/loan-types/purchase-loan/) — VA purchase loan down payment (price at or below appraised value) (Jan 7, 2026) - [USDA Rural Development](https://www.rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-guaranteed-loan-program) — USDA guaranteed loan down payment; USDA guaranteed loan income limit (share of area median income) (Oct 28, 2026) - [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) — 2026 baseline conforming loan limit (one-unit); 2026 high-cost area conforming ceiling (one-unit); 2025 baseline conforming loan limit (one-unit) (2026 limit) - [Fannie Mae Selling Guide B3-5.1-01](https://selling-guide.fanniemae.com/sel/b3-5.1-01/general-requirements-credit-scores) — Fannie Mae minimum score, manually underwritten fixed-rate loans (Apr 22, 2026) - [HUD](https://www.hud.gov/news/hud-no-25-145) — 2026 FHA loan limit floor (one-unit, low-cost areas); 2026 FHA loan limit ceiling (one-unit, high-cost areas) (2026 limit) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) — Ask your servicer to cancel PMI at this share of original value; PMI ends automatically at this share of original value (Oct 28, 2026) - [24 CFR 206.33](https://www.ecfr.gov/current/title-24/subtitle-B/chapter-II/subchapter-B/part-206/subpart-B) — HECM reverse mortgage: youngest borrower must be at least (Oct 7, 2026) - [Fannie Mae Selling Guide B2-1.4-02](https://selling-guide.fanniemae.com/sel/b2-1.4-02/adjustable-rate-mortgages-arms) — Index on Fannie Mae ARMs (Dec 10, 2025) - [Fannie Mae Standard ARM Plan Matrix](https://singlefamily.fanniemae.com/media/6951/display) — Rate caps on a Fannie Mae 5/6 ARM (first/periodic/lifetime) (Oct 1, 2021) - [HUD Mortgagee Letter 2025-22](https://www.hud.gov/sites/dfiles/hudclips/documents/2025-22hsgml.pdf) — 2026 HECM maximum claim amount (2026 limit) - [HUD Mortgagee Letter 2017-12](https://www.hud.gov/sites/documents/17-12ml.pdf) — HECM initial mortgage insurance premium (share of maximum claim amount) (Oct 2, 2017) - [Fannie Mae Selling Guide B5-3.1-02](https://selling-guide.fanniemae.com/sel/b5-3.1-02/conversion-construction-permanent-financing-single-closing-transactions) — Fannie Mae single-closing construction loan: longest single construction period (May 6, 2026) - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae maximum LTV, one-unit investment property purchase (Apr 1, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-qualified-mortgage-en-1789/) — Longest term allowed on a Qualified Mortgage (Jan 7, 2025) - [CFPB, Federal Register 90 FR 57890](https://www.federalregister.gov/documents/2025/12/15/2025-22773/truth-in-lending-regulation-z-annual-threshold-adjustments-credit-cards-hoepa-and-qualified) — Qualified Mortgage points-and-fees cap (loans of $137,958 or more) (2026 threshold) - [CFPB: Understand loan options](https://www.consumerfinance.gov/owning-a-home/loan-options/) - [FHFA: Conforming loan limit values for 2026](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) - [VA: Purchase loan](https://www.va.gov/housing-assistance/home-loans/loan-types/purchase-loan/) - [USDA Rural Development: Single Family Housing Guaranteed Loan Program](https://www.rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-guaranteed-loan-program) _General information, not financial advice._ --- # Refinancing your mortgage: when it pays and how it works > How mortgage refinancing works: rate-and-term, cash-out and streamline options, closing costs, break-even math, requirements and when not to refinance. URL: https://mortgage-math-us.com/refinancing/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer Refinancing replaces your current mortgage with a new loan — to get a lower rate, change the term, drop mortgage insurance or take cash out. Closing costs typically run 3%–6% of the loan, according to Freddie Mac, so divide them by the monthly saving to find your break-even point. On a $250,000 balance, a rate one point lower at the same term saves about **$168 a month** and pays back $7,500 of costs in **3 years 9 months**. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Typical refinance costs, low end (Freddie Mac) | 3% | [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) | Oct 28, 2026 | | Typical refinance costs, high end (Freddie Mac) | 6% | [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) | Oct 28, 2026 | | Conventional cash-out limit (one-unit home) | 80% | [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) | Apr 1, 2026 | | Loan age needed for a conventional cash-out | 12 months | [Fannie Mae Selling Guide B2-1.3-03](https://selling-guide.fanniemae.com/sel/b2-1.3-03/cash-out-refinance-transactions) | Dec 10, 2025 | | FHA Streamline waiting period | 210 days | [FDIC Affordable Mortgage Lending Guide (summary of HUD Handbook 4000.1)](https://www.fdic.gov/system/files/2024-07/streamline-refinance.pdf) | Oct 28, 2026 | | Right to cancel with a new lender | 3 business days | [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) | Aug 8, 2024 | ## How refinancing works When you refinance, a lender pays off your existing mortgage with a new loan secured by the same home. You go through much of the purchase process again — application, Loan Estimate, underwriting, often an appraisal, closing — and you start a new loan with its own rate, term and costs. Your old loan disappears; nothing about it carries over except the balance you owed. People refinance for four reasons: - **A lower rate** — the most common. A lower rate cuts the payment and the total interest. - **A different term** — shortening from 30 years to 15 or 20 pays the loan off faster; lengthening lowers the payment but costs more interest. - **Dropping mortgage insurance** — usually moving from an FHA loan to a conventional one once you have enough equity. - **Taking cash out** — borrowing more than you owe and receiving the difference. ## Types of refinance *Main refinance types* | Type | What it does | Key limits | |---|---|---| | [Rate-and-term](https://mortgage-math-us.com/refinancing/rate-and-term/) | New rate or term for about the same balance | Conventional: up to 97% of value; cash back no more than the greater of 1% of the loan or $2,000 | | [Cash-out](https://mortgage-math-us.com/refinancing/cash-out-refinance/) | Larger loan; you receive the difference | Conventional and FHA: up to 80% of value on a one-unit home; VA allows up to 100% | | [FHA Streamline](https://mortgage-math-us.com/refinancing/streamline-refinance/) | FHA to FHA with less paperwork | 6 payments and 210 days since closing; no more than $500 cash back | | [VA IRRRL](https://mortgage-math-us.com/refinancing/streamline-refinance/) | VA to VA rate reduction | Fixed to fixed must cut the rate by at least 0.5%; costs recouped within 36 months | A cash-out refinance resets the rate on your whole balance, not just the cash you take. If today’s rate is higher than your current one, a [home equity line of credit](https://mortgage-math-us.com/home-equity/heloc/) or [home equity loan](https://mortgage-math-us.com/home-equity/home-equity-loan/) may cost less — see [cash-out refinance vs HELOC](https://mortgage-math-us.com/home-equity/cash-out-vs-heloc/). ## How big a rate drop do you need? There is no universal rule, because the answer depends on your costs and how long you’ll keep the loan. The table keeps everything else fixed so you can see how the drop alone changes the result. > **Worked example: $250,000 balance with 27 years left, new loan for the same 27 years at today’s average of 7.24%, $7,500 of costs (3%) paid in cash** > > | Rate drop | Current → new rate | Monthly saving | Simple break-even | Ahead or behind after 5 years | > |---|---|---:|---:|---:| > | 0.5 points | 7.74% → 7.24% | $83 | 7 years 7 months | −$1,212 | > | 0.75 points | 7.99% → 7.24% | $125 | 5 years | +$1,938 | > | 1 point | 8.24% → 7.24% | $168 | 3 years 9 months | +$5,091 | > | 1.5 points | 8.74% → 7.24% | $254 | 2 years 6 months | +$11,407 | > > “Ahead or behind” counts payments made plus the balance still owed on each loan, plus the costs. Current rates are examples set above this week’s average. The term matters as much as the rate. With the same one-point drop, stretching the 27 remaining years into a new 30-year loan lowers the payment by $223 instead of $168 — but most of the extra saving comes from spreading the debt over more years. Compare that case on a full basis with the [refinance break-even calculator](https://mortgage-math-us.com/tools/refinance-break-even-calculator/), and read [the break-even point explained](https://mortgage-math-us.com/refinancing/break-even/). [Open the refinance break even calculator](https://mortgage-math-us.com/tools/refinance-break-even-calculator/) ## What refinancing costs Freddie Mac puts typical refinance costs at 3% to 6% of the loan principal. They include the lender’s origination charges, the appraisal, the lender’s title policy, settlement and recording fees and any discount points. You don’t pay a down payment or a real estate transfer tax, and you normally don’t buy a new owner’s title policy. Prepaid interest and a new escrow deposit appear on the Closing Disclosure too, but your old escrow balance is refunded after the payoff. You can pay the costs in cash, add them to the loan or accept a slightly higher rate in exchange for a lender credit. A [no-closing-cost refinance](https://mortgage-math-us.com/refinancing/no-closing-cost-refinance/) uses the last two — the costs don’t disappear, they move into the rate or the balance. [Refinance closing costs](https://mortgage-math-us.com/refinancing/refinance-closing-costs/) goes through the Loan Estimate line by line. > **Rule: Your right to cancel** > > When you refinance your principal residence with a new lender, federal law gives you 3 business days after signing to change your mind. If the lender didn’t give the required notice or disclosures, the right can last up to 3 years. It doesn’t apply to a purchase loan or to a same-lender refinance that adds no new money. ## Refinance requirements Lenders look at the same things as for a purchase — credit, income, debts and the home’s value — with rules that depend on the loan type: | | Conventional | FHA | VA | |---|---|---|---| | Rate-and-term, highest loan-to-value | 97% | Streamline: no new appraisal needed in many cases | IRRRL: replaces the existing VA loan; no cash back from equity | | Cash-out, highest loan-to-value | 80% (one unit) | 80% | 100%; lenders may set less | | Waiting period | Cash-out: existing loan at least 12 months old | Streamline: 6 payments and 210 days | IRRRL: 6 payments and 210 days | | Debt-to-income | Up to 50% through Fannie Mae’s automated system | Streamline: often no income check | IRRRL: often no income check | Second homes, investment properties and two- to four-unit homes have lower cash-out limits — 75% on a second home under Fannie Mae’s matrix. [Refinance requirements](https://mortgage-math-us.com/refinancing/refinance-requirements/) covers credit, documents and appraisals in detail. ## Refinancing to drop mortgage insurance On a conventional loan you rarely need to refinance to remove PMI: you can ask your servicer to cancel it once the balance reaches 80% of the home’s original value, and it ends automatically at 78%. Fannie Mae also allows cancellation based on today’s value after 2 years, at 75% loan-to-value for loans two to five years old. FHA is different. When the starting loan-to-value was above 90%, annual MIP lasts for the life of the loan, so refinancing into a conventional loan with at least 20% equity is the usual way out. Whether it pays depends on the MIP you drop versus the closing costs and the new rate — see [refinancing to remove PMI or MIP](https://mortgage-math-us.com/refinancing/refinance-to-remove-pmi/). ## When not to refinance - **You expect to move or refinance again before the break-even point.** Every month before it leaves you behind. - **Most of the saving comes from a longer term.** Restarting a 30-year clock lowers the payment but can raise total interest. - **Your loan has a prepayment penalty.** On Qualified Mortgages it is limited to 2% of the amount prepaid in the first two years and 1% in the third, and none after 3 years — but it still adds to the cost. - **The loan is nearly paid off.** Late in a loan most of each payment is principal, so a lower rate saves little. - **Your credit or your home’s value has slipped.** A lower score or less equity can mean a worse rate or mortgage insurance on the new loan. [When not to refinance](https://mortgage-math-us.com/refinancing/when-not-to-refinance/) puts numbers on each case. ## How to refinance, step by step **How to refinance a mortgage** 1. **Set your goal** — Lower payment, shorter term, no mortgage insurance or cash out. The goal decides the loan type and term. 2. **Check your numbers** — Your balance, current rate, years left, an estimate of the home’s value and your credit score. 3. **Request Loan Estimates from several lenders** — On the same day, for the same loan type and term. Credit checks for a mortgage within 45 days count as a single inquiry on most scores. 4. **Run the break-even** — Divide section D costs plus any points by the monthly saving, and compare with how long you’ll keep the loan. 5. **Lock the rate and apply** — Send documents promptly; an appraisal may be ordered. 6. **Review the Closing Disclosure and close** — Compare it with the Loan Estimate. With a new lender, the 3 business days you have to cancel start after signing. ## All guides in this hub - [Rate-and-term refinance](https://mortgage-math-us.com/refinancing/rate-and-term/) - [Cash-out refinance](https://mortgage-math-us.com/refinancing/cash-out-refinance/) - [Streamline refinance (FHA and VA)](https://mortgage-math-us.com/refinancing/streamline-refinance/) - [Refinance break-even point](https://mortgage-math-us.com/refinancing/break-even/) - [When not to refinance](https://mortgage-math-us.com/refinancing/when-not-to-refinance/) - [Refinance closing costs](https://mortgage-math-us.com/refinancing/refinance-closing-costs/) - [No-closing-cost refinance](https://mortgage-math-us.com/refinancing/no-closing-cost-refinance/) - [Refinancing to remove PMI or MIP](https://mortgage-math-us.com/refinancing/refinance-to-remove-pmi/) - [Refinance requirements](https://mortgage-math-us.com/refinancing/refinance-requirements/) ## Frequently asked questions ### When is it worth refinancing a mortgage? When the monthly saving repays the closing costs before you expect to sell or refinance again, without relying on a much longer term. On a $250,000 balance with 27 years left, a one-point lower rate at the same term pays back $7,500 of costs in about 3 years 9 months. ### How much does it cost to refinance? Typically 3% to 6% of the loan principal, according to Freddie Mac. Your Loan Estimate lists the exact charges; compare several lenders on the same day. ### How soon can I refinance after buying? It depends on the loan. A conventional cash-out refinance needs the existing loan to be at least 12 months old. FHA Streamlines and VA IRRRLs need 6 payments and about 210 days. A conventional rate-and-term refinance has no fixed waiting period, though lenders may set one. ### How much equity do I need to refinance? For a conventional rate-and-term refinance, Fannie Mae allows up to 97% of the home’s value on a one-unit primary home. For cash out, the limit is 80% on conventional and FHA loans; VA allows up to 100%. ### Does refinancing hurt your credit? The lender’s credit check can lower your score slightly, and a new account changes your credit age. Rate-shopping inquiries within 45 days are counted as one on most scoring models. ### Can I refinance with the same lender? Yes, and it can save time, but compare offers from other lenders too. A same-lender refinance with no new money doesn’t carry the federal right to cancel after signing. ### What is a no-closing-cost refinance? A refinance where the lender covers your costs in exchange for a higher rate, or adds them to the loan. You still pay — through the rate or the balance — so compare it with paying the costs in cash over the years you’ll keep the loan. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) — Typical refinance closing costs, low end (share of loan principal); Typical refinance closing costs, high end (share of loan principal) (Oct 28, 2026) - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae limited cash-out refinance maximum LTV, one-unit principal residence (fixed rate); Fannie Mae cash-out refinance maximum LTV, one-unit principal residence; Fannie Mae cash-out refinance maximum LTV, second home (Apr 1, 2026) - [Fannie Mae Selling Guide B2-1.3-02](https://selling-guide.fanniemae.com/sel/b2-1.3-02/limited-cash-out-refinance-transactions) — Fannie Mae limited cash-out refinance: cash back up to the greater of this share of the loan; Fannie Mae limited cash-out refinance: cash back up to the greater of 1% or (Oct 8, 2025) - [38 CFR 36.4306](https://www.ecfr.gov/current/title-38/chapter-I/part-36/subpart-B/section-36.4306) — VA refinance (including cash-out) maximum loan-to-value allowed by VA (Oct 22, 2026) - [FDIC Affordable Mortgage Lending Guide (summary of HUD Handbook 4000.1)](https://www.fdic.gov/system/files/2024-07/streamline-refinance.pdf) — FHA Streamline: monthly payments already made; FHA Streamline: days that must pass since the current loan closed (Oct 28, 2026) - [HUD: Streamline Refinance](https://hud.gov/hud-partners/single-family-streamline) — FHA Streamline: most cash a borrower can take out (Oct 28, 2026) - [38 U.S.C. 3709](https://www.govinfo.gov/link/uscode/38/3709) — VA IRRRL fixed-to-fixed: new rate at least this much lower; VA IRRRL: fees and closing costs must be recouped within; VA IRRRL seasoning: consecutive monthly payments made (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) — Right to cancel a refinance or home equity loan on your principal home (Aug 8, 2024) - [12 CFR 1026.15(a)(3) and 1026.23(a)(3)](https://www.consumerfinance.gov/rules-policy/regulations/1026/15/) — Right to cancel lasts up to this long if the required notice or disclosures were not given (Oct 28, 2026) - [HUD Mortgagee Letter 2019-11](https://www.hud.gov/sites/dfiles/OCHCO/documents/19-11ml.pdf) — FHA cash-out refinance maximum loan-to-value (Aug 1, 2019) - [Fannie Mae Selling Guide B2-1.3-03](https://selling-guide.fanniemae.com/sel/b2-1.3-03/cash-out-refinance-transactions) — Fannie Mae cash-out: existing first mortgage must be at least (Dec 10, 2025) - [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) — Fannie Mae maximum DTI, Desktop Underwriter loans (Apr 2, 2025) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) — Ask your servicer to cancel PMI at this share of original value; PMI ends automatically at this share of original value (Oct 28, 2026) - [Fannie Mae Servicing Guide B-8.1-04](https://servicing-guide.fanniemae.com/svc/b-8.1-04/termination-conventional-mortgage-insurance) — Fannie Mae: PMI cancellation on current value needs the loan to be at least; Fannie Mae: PMI cancellation on current value, loan two to five years old, LTV at or below (May 15, 2019) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA annual MIP ends after 11 years when the starting LTV is at or below (Feb 22, 2023) - [12 CFR 1026.43(g)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43) — Maximum prepayment penalty in the first two years (share of balance prepaid); Maximum prepayment penalty in the third year (share of balance prepaid); Prepayment penalty may not apply after this many years (qualified mortgages) (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-exactly-happens-when-a-mortgage-lender-checks-my-credit-en-2005/) — Mortgage credit checks within this window count as one inquiry (Aug 28, 2026) - [Freddie Mac My Home: Costs of refinancing](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) - [CFPB: Is there such a thing as a no-cost loan or refinancing?](https://www.consumerfinance.gov/ask-cfpb/is-there-such-a-thing-as-a-no-cost-or-no-closing-loan-or-refinancing-en-141/) - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) _General information, not financial advice._ --- # Appraisal and home inspection > How a mortgage appraisal differs from a home inspection, your right to a copy of the appraisal, options after a low appraisal, and contingencies. URL: https://mortgage-math-us.com/buying/appraisal-and-inspection/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer An appraisal is an independent estimate of the home’s market value that your lender relies on; a home inspection is your own check of the home’s condition. The lender must give you a free copy of every appraisal promptly, and no later than 3 business days before closing unless you waive that timing. If the appraisal comes in below the price, you can renegotiate, cover the gap in cash, ask for a reconsideration of value or, with an appraisal contingency, walk away with your deposit. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Appraisal copy due before closing (unless you waive the timing) | 3 business days | [CFPB, Regulation B 1002.14](https://www.consumerfinance.gov/rules-policy/regulations/1002/14) | Oct 28, 2026 | | Fannie Mae maximum loan-to-value, one-unit home you live in | 97% | [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) | Apr 1, 2026 | | VA down payment when the price doesn’t exceed the appraised value | 0% | [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/loan-types/purchase-loan/) | Jan 7, 2026 | | PMI can be cancelled at this share of original value | 80% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) | Oct 28, 2026 | ## Appraisal vs inspection at a glance *Two different reports* | | Appraisal | Home inspection | |---|---|---| | Question it answers | What is the home worth? | What condition is it in? | | Who orders it | The lender | You | | Who it protects | Mainly the lender | You | | Required? | For most purchase loans, though some qualify for a waiver | Usually your choice; some loans or areas require specific checks | | Who pays | Usually you, as a closing cost | You, usually directly to the inspector | | Who gets the report | The lender, with a free copy to you | You | | Typical depth | Walk-through, measurements, photos and comparable sales | A system-by-system examination of the visible structure and equipment | An appraisal is not an inspection. The appraiser notes obvious condition problems because they affect value, but generally won’t test appliances, look under sinks or climb onto the roof. ## How an appraisal works The lender orders the appraisal from a licensed or certified appraiser who must be independent: loan officers and agents can’t pressure the appraiser toward a number. For most homes the appraiser compares the property with recent nearby sales of similar homes, adjusting for size, condition, features and location, and reports a market value. That value matters because your loan is limited by the **lower** of the price and the appraised value. A conventional loan on a one-unit home you live in can go up to 97% of that figure, and the same lower value becomes the “original value” that later decides when you can drop PMI at 80% — see [PMI](https://mortgage-math-us.com/buying/pmi/). Government loans add property checks. The FHA appraiser also confirms the home meets HUD’s minimum property standards — see [FHA loans](https://mortgage-math-us.com/loan-types/fha-loans/) — and a VA appraisal sets the “reasonable value”; with VA, you can buy with 0% down only if the price isn’t above that value. Some conventional loans skip the full appraisal when Fannie Mae’s or Freddie Mac’s systems accept the value from their data; your lender will tell you if yours qualifies. ## Your right to a copy > **Rule: Equal Credit Opportunity Act valuation rule** > > For a first-lien loan on a home, the lender must give you a copy of every appraisal and written valuation it obtains — promptly once complete, or 3 business days before closing, whichever comes first. You may waive the timing and receive copies at or before closing. The lender can charge you for the appraisal itself but not for the copy, and the rule applies even if the loan is denied or you withdraw. Read it as soon as it arrives. Check the address, the square footage, the bedroom and bathroom counts and the comparable sales. Factual errors are the easiest ground for a challenge. ## When the appraisal comes in low > **Worked example: Contract price $360,000, appraisal $350,000, buyer planning 10% down** > > | Option | Price | Loan | Cash down | Loan-to-value | > |---|---:|---:|---:|---:| > | Original plan (appraisal at the price) | $360,000 | $324,000 | $36,000 | 90.0% | > | Keep 10% down on the appraised value | $360,000 | $315,000 | $45,000 | 90.0% | > | Keep the original loan amount | $360,000 | $324,000 | $36,000 | 92.6% | > | Seller cuts the price to the appraisal | $350,000 | $315,000 | $35,000 | 90.0% | > | Split the difference on price | $355,000 | $315,000 | $40,000 | 90.0% | > > Loan-to-value is measured against the appraised value. Keeping 10% down on the lower value means $9,000 more cash; keeping the original loan raises the loan-to-value, which usually raises PMI. Closing costs are on top of the cash down. Your options: 1. **Renegotiate.** Ask the seller to lower the price to the appraisal or to meet you partway. A low appraisal is a strong negotiating point, because the next buyer who uses a loan may run into the same value. 2. **Cover the gap.** Pay the difference in cash, or accept a higher loan-to-value if your program allows it. 3. **Ask for a reconsideration of value.** If the report has factual errors or missed better comparable sales, give your lender the evidence and ask how to request a reconsideration. Agents can help find comparable sales. 4. **Walk away.** With an appraisal contingency in your contract, you can cancel and recover your earnest money if the deal can’t be fixed. FHA and VA require purchase contracts to include a clause that lets you cancel without losing your deposit if the appraised value is below the price. ## How a home inspection works You hire the inspector, ideally as soon as your offer is accepted, and attend if you can. A general inspection looks at what is visible and accessible: - **Structure:** foundation, framing, roof, attic, chimney exterior and drainage around the house. - **Systems:** electrical panel and outlets, plumbing and water heater, heating and air conditioning. - **Interior and exterior:** windows, doors, stairs, built-in appliances, and signs of water intrusion or past leaks. General inspections usually exclude what the inspector can’t see or test without specialist tools: the inside of walls, sewer lines, wells and septic systems, radon, mold, lead paint, pests and pools. If the house, its age or your area raises one of these questions, order a specialist inspection. Licensing rules for inspectors vary by state. The report will list many small items. Focus on safety issues, water and the big systems — roof, foundation, electrical, plumbing and heating and cooling — and use those to ask for repairs, a price reduction or a credit at closing. Credits appear on your Closing Disclosure; see [Loan Estimate and Closing Disclosure](https://mortgage-math-us.com/buying/loan-estimate/). ## Contingencies that protect you *Common purchase contract contingencies* | Contingency | What it protects | Watch for | |---|---|---| | Inspection | Your right to inspect and to negotiate or cancel based on the findings | The deadline for inspections and for your response | | Appraisal | Your deposit if the appraisal comes in below the price | Whether it lets you cancel or only renegotiate | | Financing | Your deposit if your loan isn’t approved despite good-faith efforts | The date by which you must have loan approval | Each contingency has a deadline in the contract. Miss it and the protection usually lapses, putting your earnest money at risk. > **Watch out: Waiving contingencies has a price** > > In competitive markets buyers sometimes waive the inspection or appraisal contingency to win a house. That can work, but you accept the risk of repairs you didn’t know about or a cash gap you must cover. Never waive one without knowing how you would pay if it went wrong. The appraisal and inspection fall in the middle of the purchase described in the [buying a home hub](https://mortgage-math-us.com/buying/); the appraisal fee shows up in section B of your [closing costs](https://mortgage-math-us.com/buying/closing-costs/), which our [closing cost estimator](https://mortgage-math-us.com/tools/closing-cost-calculator/) totals by state. ## Frequently asked questions ### What is the difference between an appraisal and a home inspection? An appraisal estimates market value for the lender, using comparable sales. An inspection examines the home’s condition for you — roof, structure, plumbing, electrical, heating and cooling. Lenders require the first for most loans; the second is your choice and your protection. ### Do I get a copy of the appraisal? Yes. Your lender must give you a free copy of every appraisal and written valuation promptly once it is complete, and no later than 3 business days before closing unless you waive that timing. You get it even if the loan doesn’t close. ### What happens if the appraisal is lower than the offer? The lender bases the loan on the lower appraised value, so you either renegotiate the price, pay the gap in cash, challenge the appraisal with a reconsideration of value or, if your contract has an appraisal contingency, cancel and recover your deposit. ### Is a home inspection required to get a mortgage? Usually not by the lender, although some loans and areas call for specific checks. It is still one of the best protections a buyer has, because an appraisal doesn’t check condition in any depth. ### Who pays for the appraisal? Usually the buyer, as a closing cost listed in section B of the Loan Estimate. Until you receive the Loan Estimate and say you intend to proceed, the lender can charge only a credit report fee. ### Does an FHA appraisal replace a home inspection? No. The FHA appraiser checks value and HUD’s minimum property standards, which is narrower than a full inspection. FHA encourages buyers to get their own inspection. ## Sources - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [CFPB, Regulation B 1002.14](https://www.consumerfinance.gov/rules-policy/regulations/1002/14) — Lender must give you the appraisal at least this long before closing (or promptly) (Oct 28, 2026) - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae maximum LTV, one-unit principal residence purchase (Apr 1, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) — Ask your servicer to cancel PMI at this share of original value (Oct 28, 2026) - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/loan-types/purchase-loan/) — VA purchase loan down payment (price at or below appraised value) (Jan 7, 2026) - [CFPB: Loan Estimate explainer](https://www.consumerfinance.gov/owning-a-home/loan-estimate/) - [12 CFR 1026.19: Loan Estimate timing and fees before the estimate](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-C/section-1026.19) _General information, not financial advice._ --- # Closing costs for buyers, line by line > What buyers pay at closing, section by section on the Loan Estimate, how state transfer and mortgage taxes change the total, and ways to pay less. URL: https://mortgage-math-us.com/buying/closing-costs/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer Closing costs typically run 2%–5% of the purchase price, according to the CFPB — $7,200 to $18,000 on a $360,000 home. They cover lender charges, third-party services such as the appraisal and title insurance, government recording fees and taxes, and prepaid interest, insurance and escrow deposits. State taxes make the biggest difference: on that price with 10% down, statewide transfer and mortgage taxes range from nothing in Texas to about $4,680 in New York. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Typical closing costs, low end (CFPB) | 2% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | | Typical closing costs, high end (CFPB) | 5% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | | Largest escrow cushion a lender may hold | 2 months | [CFPB, Regulation X 1024.17](https://www.consumerfinance.gov/rules-policy/regulations/1024/17/) | Oct 28, 2026 | | Cap on increases for recording fees and lender-listed services | 10% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-my-final-mortgage-costs-increase-from-what-was-on-my-loan-estimate-en-172/) | Sep 11, 2024 | | Closing Disclosure arrives before closing | 3 business days | [CFPB](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) | Oct 28, 2026 | ## Closing costs on the Loan Estimate, section by section Every lender lists closing costs on page 2 of the Loan Estimate in the same lettered sections, and the Closing Disclosure repeats them. Learn the letters once and you can compare any two offers. *Loan Estimate page 2, “Closing Cost Details”* | Section | What it holds | Can it change before closing? | |---|---|---| | A. Origination Charges | The lender’s own fees and any discount points | No increase once disclosed (points can change until you lock) | | B. Services You Cannot Shop For | Appraisal, credit report, flood certification and other services the lender picks | No increase | | C. Services You Can Shop For | Title services, settlement agent, survey, pest inspection | Up to 10% in total if you use the lender’s list; no limit if you choose your own provider | | D. Total Loan Costs | A + B + C | — | | E. Taxes and Other Government Fees | Recording fees and transfer taxes | Recording fees fall under the 10% limit; transfer taxes can’t rise | | F. Prepaids | Homeowners insurance premium, prepaid interest, property taxes due | Can change | | G. Initial Escrow Payment at Closing | The opening deposit for future tax and insurance bills | Can change | | H. Other | Owner’s title insurance and items your contract assigns to you, such as HOA transfer fees | Generally can change | | I. Total Other Costs | E + F + G + H | — | | J. Total Closing Costs | D + I, minus lender credits | — | The tolerance column is the short version; the [Loan Estimate and Closing Disclosure guide](https://mortgage-math-us.com/buying/loan-estimate/) explains when a lender may issue a revised estimate. Sections A and J are where offers differ most: points add to A, and lender credits reduce J — see [mortgage points](https://mortgage-math-us.com/buying/mortgage-points/). ## How much to budget > **Worked example: $360,000 home, 10% down ($324,000 loan), 30-year fixed at the 7.24% weekly average** > > | Item | Estimate | > |---|---:| > | Closing costs at the CFPB’s 2% low end | $7,200 | > | Closing costs at the CFPB’s 5% high end | $18,000 | > | Of which: prepaid interest if you close mid-month (about 15 days) | $964 | > | Of which: first-year homeowners insurance at $4.90 per $1,000 of value | $1,764 | > | Of which: largest escrow cushion (2 months of tax and insurance) | $828 | > | **Cash to close: 10% down plus closing costs** | **$43,200–$54,000** | > > Interest is charged daily — about $64 a day on this loan — from the closing date to the end of the month. Insurance uses Freddie Mac’s national average and tax the Census Bureau’s 0.89% national ratio. Earnest money you paid with your offer is credited at closing, as are any seller or lender credits, so your final cash to close is usually lower than the gross total. ## State transfer and mortgage taxes Two state taxes explain most of the gap between cheap and expensive places to close. A **transfer tax** (sometimes called a deed or documentary stamp tax) is charged on the sale price when the deed is recorded. A **mortgage tax** is charged on the loan amount when the mortgage is recorded, and only a handful of states levy one. *Statewide taxes on a $360,000 purchase with a $324,000 loan (before county and city taxes)* | State | Transfer tax rate | Transfer tax | Mortgage tax rate | Mortgage tax | |---|---:|---:|---:|---:| | Florida | 0.7% | $2,520 | 0.55% | $1,782 | | New York | 0.4% | $1,440 | 1% | $3,240 | | Pennsylvania | 1% | $3,600 | — | — | | Washington | 1.1% | $3,960 | — | — | | Virginia | 0.35% | $360 | 0.25% | $810 | | Georgia | 0.1% | $360 | 0.3% | $972 | | Minnesota | 0.33% | $1,188 | 0.23% | $745 | | Texas | 0% | $0 | — | — | A dash means no statewide mortgage tax in our data. Washington’s rate is graduated and the figure applies its brackets. New York’s mortgage tax is about 1% outside New York City and higher in the city, and Florida’s combines documentary stamps on the note with an intangible tax. Who pays depends on state law and your contract. Transfer taxes are often the seller’s or split; mortgage taxes attach to your loan, so buyers generally pay them. Counties and cities can add their own taxes and recording fees. Our [closing cost estimator](https://mortgage-math-us.com/tools/closing-cost-calculator/) applies the rules for all 50 states and DC. [Open the closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/) ## The escrow deposit and cushion Most lenders collect property tax and insurance with your monthly payment and pay the bills from an escrow account. At closing you fund that account in section G. The deposit depends on when the next tax and insurance bills fall due, and federal rules let the servicer hold an extra cushion of no more than one-sixth of a year’s escrow payments — 2 months. On the example home that cushion is at most $828. Escrow money isn’t a fee: it is your money, set aside for bills you would pay anyway. It still has to be in your account on closing day. ## Ways to lower closing costs - **Compare Loan Estimates.** Request them from several lenders on the same day and compare section A and the total in J, not just the rate. - **Shop section C.** Get your own quotes for title and settlement services where the lender allows it — but note that services you pick yourself aren’t covered by the 10% limit. - **Ask the seller for a credit.** Seller concessions can pay part of your closing costs, within limits each loan program sets. - **Take a lender credit.** A slightly higher rate can cover some costs; it pays off if you won’t keep the loan long. - **Look for assistance.** Many state housing agencies help with closing costs as well as the down payment — see [first-time buyer programs](https://mortgage-math-us.com/first-time-buyers/programs/). - **Pick the closing date.** Closing later in the month means less prepaid interest at the table. It doesn’t lower the interest you pay overall, but it eases the cash you need on the day. FHA borrowers can finance the upfront mortgage insurance premium instead of paying it at closing — see the [FHA loans guide](https://mortgage-math-us.com/loan-types/fha-loans/). The [buying a home hub](https://mortgage-math-us.com/buying/) shows where closing fits in the whole purchase. ## Frequently asked questions ### How much are closing costs for a buyer? Typically 2%–5% of the purchase price according to the CFPB, paid on top of the down payment. On a $360,000 home that is $7,200 to $18,000. State taxes, title insurance and the escrow deposit explain most of the variation. ### Who pays closing costs, the buyer or the seller? Each side pays its own, as set by local custom and the purchase contract. Buyers pay most loan-related costs; sellers often pay their agent’s commission and, in many states, some or all of the transfer tax. A seller can also agree to credit you money toward your costs. ### Can closing costs be rolled into the mortgage on a purchase? Generally not directly, because the loan is capped by the price and the down payment rules. Seller credits and lender credits can cover part of the costs, and FHA lets you finance the upfront mortgage insurance premium. ### What are prepaid costs? Items you pay in advance at closing rather than fees for services: daily interest from closing to the end of the month, the first year of homeowners insurance and any property taxes due. They appear in section F of the Loan Estimate. ### When will I know my exact closing costs? Your Closing Disclosure, which must arrive at least 3 business days before closing, shows the final figures. Compare it section by section with your Loan Estimate. ### Why is my cash to close different from my closing costs? Cash to close adds the down payment and subtracts credits — earnest money already paid, seller credits and lender credits. The Loan Estimate shows the calculation at the bottom of page 2. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [CFPB, Regulation X 1024.17](https://www.consumerfinance.gov/rules-policy/regulations/1024/17/) — Most an escrow account may hold as a cushion (one-sixth of annual escrow payments) (Oct 28, 2026) - [Florida Department of Revenue](https://floridarevenue.com/Forms_library/current/gt800014.pdf) — State real estate transfer tax (Dec 1, 2017) - [Florida Statutes 199.133; Florida DOR GT-800014](https://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0100-0199/0199/Sections/0199.133.html) — State tax on recording a mortgage (Oct 28, 2026) - [New York Department of Taxation and Finance](https://www.tax.ny.gov/pit/mortgage/mtgidx.htm) — State tax on recording a mortgage (Dec 30, 2025) - [Code of Virginia, Title 58.1, Chapter 8](https://law.lis.virginia.gov/vacodefull/title58.1/chapter8/) — State tax on recording a mortgage; State real estate transfer tax (Oct 28, 2026) - [Georgia Department of Revenue](https://dor.georgia.gov/intangible-recording-tax) — State tax on recording a mortgage (Oct 28, 2026) - [Minnesota Department of Revenue](https://www.revenue.state.mn.us/deed-tax-rate) — State real estate transfer tax (Oct 28, 2026) - [Minnesota Department of Revenue](https://www.revenue.state.mn.us/mortgage-tax-rate) — State tax on recording a mortgage (Oct 28, 2026) - [Texas Constitution, Art. VIII §29](https://capitol.texas.gov/tlodocs/84R/amendments/html/SJ00001H21.HTM) — State real estate transfer tax (Jan 1, 2016) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-my-final-mortgage-costs-increase-from-what-was-on-my-loan-estimate-en-172/) — Cumulative limit on increases for recording fees and lender-listed services (Sep 11, 2024) - [New York Department of Taxation and Finance](https://www.tax.ny.gov/bus/transfer/rptidx.htm) — State real estate transfer tax (Jun 1, 2026) - [Pennsylvania Department of Revenue](https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/realty-transfer-tax) — State real estate transfer tax (Oct 28, 2026) - [Washington Department of Revenue](https://dor.wa.gov/taxes-rates/other-taxes/real-estate-excise-tax) — State real estate transfer tax (Oct 28, 2026) - [Georgia Department of Revenue](https://dor.georgia.gov/real-estate-transfer-tax) — State real estate transfer tax (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) — You receive the Closing Disclosure at least this many business days before closing (Oct 28, 2026) - [CFPB: Loan Estimate explainer](https://www.consumerfinance.gov/owning-a-home/loan-estimate/) - [12 CFR 1026.37: Content of the Loan Estimate](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.37) _General information, not financial advice._ --- # What credit score do you need for a mortgage? > Minimum credit scores for FHA, conventional, VA and USDA loans, how your score affects the rate and PMI, rate shopping, and how to raise a score. URL: https://mortgage-math-us.com/buying/credit-score/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer FHA loans accept credit scores down to 500 with 10% down, or 580 and up with 3.5% down. Fannie Mae requires 620 for manually underwritten fixed-rate loans, while its Desktop Underwriter system has had no set minimum since November 2025. VA publishes no minimum score and USDA says its guaranteed loan has no credit score requirement, but lenders set their own. Above the minimum, a higher score generally buys a lower rate and cheaper PMI. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Lowest score FHA accepts (10% down) | 500 | [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) | Oct 8, 2026 | | FHA score for the minimum down payment | 580 | [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) | Oct 8, 2026 | | Fannie Mae minimum, manual underwriting | 620 | [Fannie Mae Selling Guide B3-5.1-01](https://selling-guide.fanniemae.com/sel/b3-5.1-01/general-requirements-credit-scores) | Apr 22, 2026 | | Mortgage credit checks counted as one inquiry | 45 days | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-exactly-happens-when-a-mortgage-lender-checks-my-credit-en-2005/) | Aug 28, 2026 | ## Minimum credit scores by loan type *Credit score rules by program* | Loan type | Program minimum | What else to know | |---|---|---| | FHA | 500 with 10% down; 580 for 3.5% down | Below 500 isn’t eligible. Lenders may set higher minimums | | Conventional, Fannie Mae manual underwriting | 620 for fixed-rate loans | Higher for adjustable-rate loans | | Conventional, Fannie Mae Desktop Underwriter | No set minimum since November 2025 | The system weighs the whole file; low scores still cost more | | VA | None published by VA | You must meet VA’s and the lender’s credit standards | | USDA guaranteed | No credit score requirement, says USDA | You must show a willingness and ability to manage debt | “No minimum” at the program level rarely means no minimum at the lender. Many lenders add their own floors, called overlays, so a lender that turns you down isn’t the last word. The [FHA loans guide](https://mortgage-math-us.com/loan-types/fha-loans/) covers the FHA rules in detail. ## Which score lenders use Mortgage lenders usually pull a report and score from each of the three nationwide credit bureaus. When there are three scores, lenders generally use the middle one, and with co-borrowers the program’s rules decide whose score counts. FHA calls the result the minimum decision credit score. The scoring models matter too. Mortgage scores often come from older versions of the models than the free scores in banking apps, so the number a lender sees can differ from the one you check. FHA has announced that, for case numbers assigned from January 1, 2027, lenders may also use FICO 10T and VantageScore 4.0 alongside Classic FICO, while keeping the three-bureau report and the same minimum scores. ## How your score affects the rate and PMI Above the minimum, your score works as a price signal. Fannie Mae and Freddie Mac charge lenders loan-level price adjustments that depend on credit score and down payment, and lenders pass them on through the rate or points. Mortgage insurers price PMI on the same two factors. FHA’s annual mortgage insurance, by contrast, doesn’t vary with your score — which is why FHA can be the cheaper route for lower scores. We don’t publish a score-to-rate table because pricing changes daily and differs by lender. What you can measure is how much each step in the rate costs: > **Worked example: What a higher rate costs on a $300,000 30-year loan** > > | Rate | Principal and interest | Extra a month | Extra over 30 years | > |---|---:|---:|---:| > | Weekly average, 7.24% | $2,044 | — | — | > | +0.25 point, 7.49% | $2,096 | +$51 | +$18,394 | > | +0.5 point, 7.74% | $2,147 | +$103 | +$36,961 | > | +1 point, 8.24% | $2,252 | +$207 | +$74,591 | > > The base rate is Freddie Mac’s weekly average for borrowers with 20% down and strong credit. Each quarter of a percentage point costs about $51 a month here; try your own loan in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/). PMI moves the same way. Freddie Mac’s typical range of $30–$70 a month per $100,000 means $90 to $210 a month on this loan, and credit score is one of the main things that sets where you land. See [PMI](https://mortgage-math-us.com/buying/pmi/) for how long it lasts. ## Shopping for a mortgage without hurting your score Each lender that pre-approves you makes a hard inquiry. According to the CFPB, an inquiry typically has a small negative effect, and multiple mortgage credit checks count as a single inquiry as long as the last is within 45 days of the first. Shopping several lenders inside that window costs no more than applying once, and the CFPB notes that shopping can save a lot of money over the life of a loan. What does hurt is other new credit. Applying for a car loan or credit card right before or during the mortgage process adds inquiries and debts. The [pre-approval guide](https://mortgage-math-us.com/buying/pre-approval/) lists the other changes that can derail an approval. ## How to raise your score before you apply **How to improve your credit score for a mortgage** 1. **Get your reports** — You can check your report from each nationwide bureau free once a week at AnnualCreditReport.com. 2. **Dispute errors** — Wrong late payments, accounts that aren’t yours and outdated debts can be disputed with the bureau and the company that reported them. 3. **Pay every bill on time** — Payment history generally carries the most weight, and a recent late payment does the most damage. 4. **Lower card balances** — Paying revolving balances down relative to their limits is often the quickest legitimate improvement. 5. **Leave the rest alone** — Avoid new accounts in the months before you apply, and think twice before closing old cards. 6. **Ask about a rapid rescore** — If you pay down a balance or fix an error mid-application, your lender may be able to request an updated score. Be wary of anyone promising to remove accurate negative information for a fee. Accurate items generally stay on your report; only time and good habits outweigh them. ## Options with a lower score - **Compare FHA with conventional.** FHA’s insurance doesn’t rise with a lower score, while PMI does. - **Put more down.** A larger down payment lowers the lender’s risk and can offset a lower score in pricing. - **Lower your debts.** A lower [debt-to-income ratio](https://mortgage-math-us.com/buying/debt-to-income/) strengthens a file that automated systems weigh as a whole. - **Wait and improve.** A few months of on-time payments and lower balances can move you up a pricing tier. - **Talk to a HUD-approved housing counselor.** Free or low-cost help is available through HUD’s referral line, 800-569-4287. The [buying a home hub](https://mortgage-math-us.com/buying/) puts credit in the context of the whole purchase. ## Frequently asked questions ### What is the minimum credit score to buy a house? It depends on the loan. FHA accepts 500 with 10% down and 580 with 3.5% down. Fannie Mae requires 620 for manually underwritten fixed-rate loans, while its automated system has no set minimum. VA and USDA don’t set a program minimum, but lenders do. ### Can I get a mortgage with a 580 credit score? Yes, typically through FHA, which allows its minimum 3.5% down payment from a score of 580. Individual lenders may require more, so compare several. ### Does shopping for a mortgage hurt my credit? Only slightly. Multiple mortgage credit checks within 45 days of the first count as one inquiry, so you can compare lenders in that window without extra damage. ### Which credit score do mortgage lenders use? Usually scores from all three nationwide bureaus, using the middle one when there are three. They are often older score versions than the ones in free apps, so expect a different number. ### How much does my credit score change my mortgage rate? Pricing varies by lender and day, so there’s no single table. As a guide, every quarter of a percentage point on a $300,000 30-year loan at 7.24% adds about $51 a month. A better score also lowers PMI. ### How fast can I raise my credit score? Correcting an error or paying down card balances can show up within a reporting cycle or two. Recovering from late payments takes longer. There’s no legitimate shortcut for removing accurate negative information. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) — FHA minimum decision credit score (90% LTV cap from 500 to 579); FHA minimum score for maximum financing (Oct 8, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment (Oct 28, 2026) - [Fannie Mae Selling Guide B3-5.1-01](https://selling-guide.fanniemae.com/sel/b3-5.1-01/general-requirements-credit-scores) — Fannie Mae minimum score, manually underwritten fixed-rate loans (Apr 22, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-exactly-happens-when-a-mortgage-lender-checks-my-credit-en-2005/) — Mortgage credit checks within this window count as one inquiry (Aug 28, 2026) - [HUD](https://www.hud.gov/stat/sfh/housing-counseling) — HUD housing counseling referral line (Oct 28, 2026) - [Fannie Mae Selling Guide Announcement SEL-2025-09 (minimum credit score removed for DU loans)](https://singlefamily.fanniemae.com/news-events/announcement-sel-2025-09-selling-guide-updates) - [USDA Rural Development: Single Family Housing Guaranteed Loan Program](https://www.rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-guaranteed-loan-program) - [VA: Purchase loan](https://www.va.gov/housing-assistance/home-loans/loan-types/purchase-loan/) - [FTC: Free credit reports](https://consumer.ftc.gov/articles/free-credit-reports) _General information, not financial advice._ --- # Debt-to-income ratio (DTI) for a mortgage > How lenders calculate debt-to-income ratio, with a worked example, DTI limits for Fannie Mae, Freddie Mac and FHA loans, and which debts count. URL: https://mortgage-math-us.com/buying/debt-to-income/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer Debt-to-income ratio is your monthly debt payments, including the new housing payment, divided by your gross monthly income. Fannie Mae allows up to 36% on manually underwritten loans (45% with strong credit and reserves) and up to 50% through its Desktop Underwriter system. FHA’s manual limits without compensating factors are 31% for housing and 43% for all debts. Freddie Mac’s consumer guidance suggests keeping housing under 30% and all debts under 45%. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Fannie Mae maximum, Desktop Underwriter | 50% | [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) | Apr 2, 2025 | | Fannie Mae maximum, manual underwriting | 36% | [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) | Apr 2, 2025 | | FHA manual limit, all debts (no compensating factors) | 43% | [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) | Oct 8, 2026 | | Freddie Mac guidance for all debts | 45% | [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) | Jan 22, 2026 | | Fannie Mae payment for deferred student loans (share of balance) | 1% | [Fannie Mae Selling Guide B3-6-05](https://selling-guide.fanniemae.com/sel/b3-6-05/monthly-debt-obligations) | Aug 5, 2026 | | FHA payment for a $0 student loan (share of balance) | 0.5% | [HUD Mortgagee Letter 2021-13](https://www.hud.gov/sites/dfiles/OCHCO/documents/2021-13hsgml.pdf) | Jun 17, 2021 | ## How DTI is calculated Lenders work with two ratios, both based on **gross** monthly income — before taxes and deductions: - **Housing ratio (front-end):** the full monthly housing payment ÷ gross monthly income. The payment includes principal, interest, property tax, homeowners and flood insurance, mortgage insurance, HOA dues and payments on any second mortgage on the home. - **Debt-to-income ratio (back-end):** the housing payment plus every other monthly debt ÷ gross monthly income. Fannie Mae’s limits apply to the back-end ratio. FHA’s manual rules and Freddie Mac’s consumer guidance look at both. Income must be stable and documented: salary and wages, plus overtime, bonus, self-employment or other income only when the lender can verify a history of it. ## Worked example > **Worked example: $100,000 a year, buying a $360,000 home with 10% down at the 7.24% weekly average** > > | | Monthly | > |---|---:| > | Gross monthly income | $8,333 | > | Housing payment: principal, interest, tax, insurance and PMI | $2,784 | > | Car loan | $450 | > | Student loan | $250 | > | Credit card minimums | $75 | > | **Total monthly debts** | **$3,559** | > | **Housing ratio** | **33.4%** | > | **Debt-to-income ratio** | **42.7%** | > > Paying off the car loan before applying would bring the debt-to-income ratio down to 37.3%. Here is how those two ratios compare with each limit: *The example measured against each DTI limit* | Limit | Maximum | Example | Result | |---|---:|---:|---| | Freddie Mac guidance, housing | 30% | 33.4% | Above | | Freddie Mac guidance, all debts | 45% | 42.7% | Within | | FHA manual underwriting, housing | 31% | 33.4% | Above | | FHA manual underwriting, all debts | 43% | 42.7% | Within | | Fannie Mae manual underwriting | 36% | 42.7% | Above | | Fannie Mae manual, strong credit and reserves | 45% | 42.7% | Within | | Fannie Mae Desktop Underwriter | 50% | 42.7% | Within | The same borrower can look comfortable to one system and stretched to another. Automated approvals above the manual limits usually depend on strong credit, a larger down payment or savings left after closing. ## DTI limits by loan type - **Fannie Mae conventional loans:** up to 36% when manually underwritten, rising to 45% with the credit score and reserves in Fannie Mae’s eligibility matrix; up to 50% when Desktop Underwriter approves the loan. - **FHA loans:** 31% housing and 43% total for manually underwritten loans without compensating factors. Higher ratios are possible with compensating factors and a score of 580 or more, and FHA’s automated approvals can go higher still — see the [FHA loans guide](https://mortgage-math-us.com/loan-types/fha-loans/). - **VA loans:** VA looks at the debt ratio together with residual income — the money left each month after major expenses — so a higher ratio can be offset. - **Freddie Mac’s consumer guidance:** housing under 30% and all debts under 45%. These are comfort targets for your budget, not underwriting limits. ## Which debts count *How common payments are treated (Fannie Mae rules unless noted)* | Payment | Counted? | How | |---|---|---| | New housing payment | Yes | Principal, interest, tax, insurance, mortgage insurance and HOA dues | | Car loans and other installment debts | Yes, if more than 10 payments remain | Fewer still count if they significantly affect your ability to pay | | Credit cards and other revolving accounts | Yes | The minimum payment on your credit report; 5% of the balance if none is reported | | Student loans | Yes | See below | | Alimony, child support, other mortgages | Yes | The required monthly amount | | Co-signed loans | Usually | Unless the lender can document that the other borrower makes the payments | | Open 30-day charge accounts | Not required | Fannie Mae doesn’t require them in the ratio | | Utilities, phone, car insurance, groceries | No | Not debts, though they matter to your budget | ## Student loans Student loans count even when you are not paying them. Fannie Mae uses the payment on your credit report. If it shows $0 because you are on an income-driven plan, the lender can use $0 with documentation of that payment. If the loan is deferred or in forbearance, the lender uses 1% of the balance or a fully amortizing payment from the loan terms. FHA uses 0.5% of the outstanding balance when the reported payment is zero. On a $40,000 balance in deferment, that is $400 a month under Fannie Mae’s percentage rule and $200 under FHA’s rule for a $0 payment — enough to change the price you qualify for. If you are on an income-driven plan, ask your servicer for a letter showing your actual payment before you apply. ## How to lower your DTI 1. **Pay off small installment loans** that are close to the end, or pay one down to a few remaining payments. 2. **Pay down credit cards.** Lower balances lower the minimum payments and often help your score. 3. **Add a co-borrower** whose income is counted along with their debts. 4. **Document all your income.** Overtime, bonuses and side income only count with a verifiable history. 5. **Borrow less.** A larger down payment or a cheaper home lowers the housing payment directly — see [down payment](https://mortgage-math-us.com/buying/down-payment/). 6. **Hold off on new debt** until after closing; a new payment can push you over a limit at the last moment. The [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/) shows the price your income supports at each limit, and the [buying a home hub](https://mortgage-math-us.com/buying/) puts DTI alongside the other approval factors, including [credit score](https://mortgage-math-us.com/buying/credit-score/). [Open the affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/) ## Frequently asked questions ### What is a good debt-to-income ratio for a mortgage? Freddie Mac’s consumer guidance suggests housing under 30% of gross income and all debts under 45%. Lenders can approve higher ratios, but staying near those targets leaves room in your budget. ### What is the maximum DTI for a conventional loan? For Fannie Mae loans, 36% when manually underwritten — up to 45% with strong credit and reserves — and 50% when approved through Desktop Underwriter. ### What is the maximum DTI for an FHA loan? Manually underwritten FHA loans without compensating factors are limited to 31% for housing and 43% in total. Compensating factors and FHA’s automated approvals can allow more. ### Is DTI based on gross or net income? Gross. Lenders divide your monthly debts by your income before taxes and deductions, which is why a ratio that looks fine on paper can feel tight in practice. ### Do utilities and insurance count in DTI? No. Utilities, phone bills, car insurance and living costs aren’t debts. The homeowners insurance and property tax on the new home do count, as part of the housing payment. ### How are student loans on income-driven plans counted? Fannie Mae can use a documented $0 payment. For deferred loans it uses 1% of the balance or a fully amortizing payment, and FHA uses 0.5% of the balance when the reported payment is zero. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income; Freddie Mac guidance: total debt payments below this share of gross income (Jan 22, 2026) - [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) — FHA manual underwriting housing ratio (no compensating factors); FHA manual underwriting debt-to-income ratio (no compensating factors); FHA minimum score for maximum financing (Oct 8, 2026) - [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) — Fannie Mae maximum DTI, manually underwritten loans; Fannie Mae maximum DTI, manual underwriting with strong credit and reserves; Fannie Mae maximum DTI, Desktop Underwriter loans (Apr 2, 2025) - [Fannie Mae Selling Guide B3-6-05](https://selling-guide.fanniemae.com/sel/b3-6-05/monthly-debt-obligations) — Fannie Mae: monthly payment counted for a deferred or forbearance student loan, share of balance; Fannie Mae: installment debts count in DTI when more than this many payments remain; Fannie Mae: monthly payment counted for a revolving account with no reported payment, share of balance (Aug 5, 2026) - [HUD Mortgagee Letter 2021-13](https://www.hud.gov/sites/dfiles/OCHCO/documents/2021-13hsgml.pdf) — FHA: monthly payment counted for a student loan reported at $0, share of balance (Jun 17, 2021) - [Fannie Mae Selling Guide B3-6-03: Monthly housing expense](https://selling-guide.fanniemae.com/sel/b3-6-03/monthly-housing-expense-subject-property) _General information, not financial advice._ --- # How much down payment do you need? > Down payment minimums by loan type, what 3%, 5%, 10% and 20% down cost on a median-value home, gift rules, assistance programs and the PMI trade-off. URL: https://mortgage-math-us.com/buying/down-payment/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer The minimum down payment is 3% on some conventional loans, 3.5% on FHA loans with a credit score of 580 or higher, and 0% on VA and USDA loans for eligible buyers. On a $360,000 home — near the US median value — 5% down is $18,000, 10% is $36,000 and 20% is $72,000, the level at which a conventional loan needs no PMI. A bigger down payment lowers the monthly cost; a smaller one keeps more cash for closing costs and emergencies. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Conventional minimum (Fannie Mae and Freddie Mac programs) | 3% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | | FHA minimum with a 580+ credit score | 3.5% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | | VA minimum (price at or below appraised value) | 0% | [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/loan-types/purchase-loan/) | Jan 7, 2026 | | USDA guaranteed loan minimum | 0% | [USDA Rural Development](https://www.rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-guaranteed-loan-program) | Oct 28, 2026 | | PMI ends automatically at this share of original value | 78% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) | Oct 28, 2026 | | Penalty-free IRA withdrawal for a first home (lifetime) | $10,000 | [IRS Tax Topic 557](https://www.irs.gov/taxtopics/tc557) | Oct 26, 2026 | ## Minimum down payment by loan type Every major loan program accepts less than 20% down. The catch is the cost that replaces the missing equity — PMI, FHA mortgage insurance or a one-time fee. *Smallest down payment on a $360,000 home* | Loan type | Minimum | Cash on $360,000 | Who qualifies and what it costs | |---|---:|---:|---| | Conventional | 3% | $10,800 | Up to 97% loan-to-value on a one-unit home you live in; PMI below 20% down | | FHA | 3.5% | $12,600 | Score of 580+ (10% down from 500); upfront 1.75% plus annual MIP | | VA | 0% | $0 | Eligible service members, veterans and some surviving spouses; funding fee of 2.15% on first use with under 5% down | | USDA | 0% | $0 | Eligible rural areas, household income up to 115% of the area median; upfront fee of 1% | The VA minimum applies when the price isn’t higher than the appraised value. FHA details, including how long its mortgage insurance lasts, are in our [FHA loans guide](https://mortgage-math-us.com/loan-types/fha-loans/). ## What each down payment costs every month > **Worked example: $360,000 home, conventional 30-year fixed at the 7.24% weekly average** > > | Down payment | Cash down | Loan | Principal and interest | PMI | Total monthly | > |---|---:|---:|---:|---:|---:| > | 3% | $10,800 | $349,200 | $2,380 | $175 | $2,968 | > | 5% | $18,000 | $342,000 | $2,331 | $171 | $2,916 | > | 10% | $36,000 | $324,000 | $2,208 | $162 | $2,784 | > | 20% | $72,000 | $288,000 | $1,963 | None | $2,377 | > > Totals include property tax at the 0.89% national ratio and homeowners insurance at $4.90 per $1,000 of value. PMI uses the midpoint of Freddie Mac’s $30–$70 per $100,000 range for every row; in practice smaller down payments and lower credit scores sit toward the top of the range. Rates can also be better with more down. Going from 10% to 20% down takes another $36,000 of cash and cuts the monthly cost by about $407. That saving comes partly from a smaller loan and partly from losing PMI, which would have ended on its own anyway. ## The PMI trade-off PMI isn’t permanent on a conventional loan. It must end automatically once your balance is scheduled to reach 78% of the home’s original value, and you can ask to cancel it earlier, at 80%. Here is how long it would run on the same home if you only made scheduled payments: *How long PMI lasts and what it costs in total, $360,000 home at 7.24%* | Down payment | PMI a month | Ends automatically after | PMI paid by then | |---|---:|---:|---:| | 3% | $175 | 12 years, 10 months | $26,888 | | 5% | $171 | 12 years, 1 month | $24,795 | | 10% | $162 | 9 years, 10 months | $19,116 | Extra principal payments or a rise in value can end it sooner — the [PMI guide](https://mortgage-math-us.com/buying/pmi/) shows how. Measured against the cash it lets you keep, PMI is often a reasonable price for buying sooner. It is a poor deal if it forces you into a loan you can only just afford. ## Where the down payment can come from **Your own savings** are the simplest source. Lenders will ask where every large deposit came from, so keep money where it is once you start the process, or keep the paper trail. **Gifts from family.** Fannie Mae accepts gifts from relatives, a fiancé or domestic partner, and some people with a long-standing family-like relationship — but never from the builder, agent or anyone else with an interest in the sale. The donor signs a letter stating the amount, that no repayment is expected, and their name, address, phone number and relationship to you. On a one-unit home you will live in, the entire down payment can be a gift. On a two- to four-unit home or a second home with less than 20% down, at least 5% must come from your own funds. FHA also allows documented gifts. **Retirement savings.** A first-time buyer can take up to $10,000 from an IRA without the early-withdrawal penalty, although income tax may still apply. Weigh it carefully: that money stops growing for retirement. **Down payment assistance.** State and local housing finance agencies offer grants, deferred loans and forgivable second mortgages. Fannie Mae’s Community Seconds rules allow a combined loan-to-value of up to 105% when a qualifying agency provides the second loan, and two low-down-payment programs serve lower-income buyers: Fannie Mae HomeReady (household income up to 80% of the area median) and Freddie Mac Home Possible (up to 80%). See [first-time buyer programs](https://mortgage-math-us.com/first-time-buyers/programs/) and [down-payment grants](https://mortgage-math-us.com/first-time-buyers/grants/). > **Tip: Seller credits help with closing costs, not the down payment** > > A seller can agree to pay part of your closing costs, within limits each loan program sets, but the down payment itself must come from you, a gift or an approved program. ## How to choose your number Start from cash, not from the percentage: 1. **Closing costs come first.** The CFPB puts them at 2%–5% of the price — $7,200 to $18,000 here — on top of the down payment. See [closing costs](https://mortgage-math-us.com/buying/closing-costs/). 2. **Keep reserves.** A new home brings repairs, moving costs and furniture. Lenders also like to see savings left after closing. 3. **Then compare the monthly cost.** Use the table above, or our [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/) with your own price and rate. 4. **Check the thresholds.** Down payments of 5%, 10% and 20% often move pricing, and 20% removes PMI. Ask your lender to quote both sides of a threshold you are close to. If you are deciding how much you can afford in total, the [buying a home hub](https://mortgage-math-us.com/buying/) walks through the whole budget. [Open the affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/) ## Frequently asked questions ### What is the minimum down payment for a house? 3% on some conventional loans, 3.5% on FHA loans with a 580+ credit score, and nothing on VA and USDA loans for eligible buyers. On a $360,000 home, 3% down is $10,800. ### Is it better to put 20% down? It gives the lowest monthly payment and avoids PMI, but it isn’t always better. On a $360,000 home, going from 10% to 20% down takes another $36,000 of cash to save about $407 a month. If that would empty your savings, a smaller down payment is usually safer. ### Can my down payment be a gift? Yes. Conventional and FHA loans accept documented gifts from family and certain close relationships. The donor signs a gift letter saying no repayment is expected, and the lender verifies the transfer. ### Does the down payment include closing costs? No. Closing costs are separate and typically run 2%–5% of the price according to the CFPB. Your cash to close is the down payment plus closing costs, minus any credits and the earnest money you already paid. ### Can I use my IRA or 401(k) for a down payment? A first-time buyer can withdraw up to $10,000 from an IRA without the early-withdrawal penalty, though income tax may still be due. 401(k) plans have their own rules on loans and withdrawals; ask your plan administrator. ### What happens if I put less than 20% down on a conventional loan? You pay PMI, typically $30–$70 a month per $100,000 borrowed according to Freddie Mac. You can ask to cancel it when your balance reaches 80% of the original value, and it ends automatically at 78%. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price); Minimum down payment on some conventional loans (Oct 28, 2026) - [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) — FHA minimum score for maximum financing; FHA minimum decision credit score (90% LTV cap from 500 to 579) (Oct 8, 2026) - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/loan-types/purchase-loan/) — VA purchase loan down payment (price at or below appraised value) (Jan 7, 2026) - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae maximum LTV, one-unit principal residence purchase (Apr 1, 2026) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA upfront mortgage insurance premium (Feb 22, 2023) - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) — VA funding fee, first use, less than 5% down (Apr 7, 2023) - [USDA Rural Development](https://www.rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-guaranteed-loan-program) — USDA guaranteed loan down payment; USDA guaranteed loan income limit (share of area median income) (Oct 28, 2026) - [USDA Rural Development](https://www.rd.usda.gov/media/file/download/usda-rd-sfh-guarantee-loan-program-101-jan-2026.pdf) — USDA guaranteed loan upfront guarantee fee (FY2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) — PMI ends automatically at this share of original value; Ask your servicer to cancel PMI at this share of original value (Oct 28, 2026) - [Fannie Mae Selling Guide B3-4.3-04](https://selling-guide.fanniemae.com/sel/b3-4.3-04/personal-gifts) — Fannie Mae: own funds required above 80% LTV on a two- to four-unit principal residence or second home (Feb 4, 2026) - [IRS Tax Topic 557](https://www.irs.gov/taxtopics/tc557) — Penalty-free IRA withdrawal for a first home (lifetime limit) (Oct 26, 2026) - [Fannie Mae Selling Guide B5-5.1-02](https://selling-guide.fanniemae.com/sel/b5-5.1-02/community-seconds-loan-eligibility) — Fannie Mae Community Seconds maximum combined LTV (May 3, 2023) - [Fannie Mae Selling Guide B5-6-01](https://selling-guide.fanniemae.com/sel/b5-6-01/homeready-mortgage-loan-and-borrower-eligibility) — Fannie Mae HomeReady income limit (share of area median income) (Jun 4, 2025) - [Freddie Mac Home Possible fact sheet](https://sf.freddiemac.com/docs/pdf/fact-sheet/home_possible_factsheet.pdf) — Freddie Mac Home Possible income limit (share of area median income) (Feb 1, 2026) - [CFPB: What is private mortgage insurance?](https://www.consumerfinance.gov/ask-cfpb/what-is-private-mortgage-insurance-en-122/) _General information, not financial advice._ --- # Loan Estimate and Closing Disclosure > When you get the Loan Estimate and Closing Disclosure, which costs can and can’t change between them, the APR rule, and how to compare offers page by page. URL: https://mortgage-math-us.com/buying/loan-estimate/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer Your lender must send a Loan Estimate within 3 business days of receiving your application, and you must receive the Closing Disclosure at least 3 business days before closing. Between the two, the lender’s own fees and services you can’t shop for can’t go up, while recording fees and services chosen from the lender’s list can rise by no more than 10% in total. If the APR rises by more than 0.125%, the loan product changes or a prepayment penalty is added, you get a fresh 3 business days before you can close. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Loan Estimate due after your application | 3 business days | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-loan-estimate-en-1995/) | Oct 28, 2026 | | Loan Estimate must be sent at least this long before closing | 7 business days | [12 CFR 1026.19(e)(1)(iii)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-C/section-1026.19) | Oct 28, 2026 | | Closing Disclosure arrives before closing | 3 business days | [CFPB](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) | Oct 28, 2026 | | Cap on increases for recording fees and lender-listed services | 10% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-my-final-mortgage-costs-increase-from-what-was-on-my-loan-estimate-en-172/) | Sep 11, 2024 | | Revised Loan Estimate due after a valid change | 3 business days | [12 CFR 1026.19(e)(4)(i)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-C/section-1026.19) | Oct 28, 2026 | | Loan Estimate can be revised if you take longer than this to proceed | 10 business days | [12 CFR 1026.19(e)(3)(iv)(E)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-C/section-1026.19) | Oct 28, 2026 | ## When you get each form **From application to closing** 1. **Apply** — For these rules, an application means six pieces of information: your name, income, Social Security number, the property address, an estimate of its value and the loan amount. Until you have the Loan Estimate and say you want to go ahead, a lender may charge only a reasonable fee for your credit report. 2. **Receive the Loan Estimate** — The lender must deliver or mail it within 3 business days of your application, and no later than 7 business days before closing. 3. **Say you intend to proceed** — Tell the lender you want to go ahead, in any way it accepts. If you wait more than 10 business days, or longer if the lender allows, it can issue a new estimate with different costs. 4. **Revisions, if something changes** — When a valid change occurs — you change the loan amount, the appraisal comes in low, you lock the rate — the lender must send a revised Loan Estimate within 3 business days of learning about it. 5. **Receive the Closing Disclosure** — You must have it at least 3 business days before closing. 6. **Close** — Compare the final figures with your last Loan Estimate before you sign. For the closing waiting periods, a business day generally means every day except Sundays and federal public holidays. You can shorten the Closing Disclosure wait only for a genuine personal financial emergency, such as a foreclosure sale, with a signed statement. Pre-approval usually comes before you have an address, so you may not get a Loan Estimate until you apply on a specific home — see [mortgage pre-approval](https://mortgage-math-us.com/buying/pre-approval/). ## What can change — the tolerance rules The Loan Estimate is a good-faith estimate, and federal rules sort every charge into one of three groups: *How much each cost can rise between the Loan Estimate and closing* | Group | Examples | Increase allowed | |---|---|---| | Zero tolerance | Lender’s origination charges, discount points after you lock, fees paid to the lender’s affiliates, services you couldn’t shop for, transfer taxes | None | | 10% cumulative | Recording fees; third-party services you could shop for but chose from the lender’s list | All of them together can rise no more than 10% | | No limit | Prepaid interest, homeowners insurance, escrow deposits, property taxes, services from providers you found yourself | Any amount, as long as the estimate was made in good faith | Charges can exceed these limits only after a valid change in circumstances or in your application, documented on a revised Loan Estimate. If the lender exceeds a tolerance without one, it must refund the difference after closing. The [closing costs guide](https://mortgage-math-us.com/buying/closing-costs/) explains each lettered section the groups refer to, and the [closing cost estimator](https://mortgage-math-us.com/tools/closing-cost-calculator/) shows the state taxes that land in section E. ## The three-day rule on the Closing Disclosure Most corrections can be made on a revised Closing Disclosure at or before closing without delaying it. Three changes give you a fresh 3 business days before you can close: - **The APR becomes inaccurate** — for a regular loan, it rises by more than 0.125%; - **The loan product changes** — for example, from a fixed rate to an adjustable rate; - **A prepayment penalty is added.** ## How to compare Loan Estimates page by page Ask two or three lenders for Loan Estimates on the same day, for the same loan type, term, down payment and lock period. Mortgage credit checks within 45 days count as one inquiry, so shopping won’t cost you more than one hit to your score. **Page 1 — the loan.** Check the loan amount, rate, monthly principal and interest, and whether there is a prepayment penalty or balloon payment. Projected payments show mortgage insurance and escrow, and the costs-at-closing box shows estimated closing costs and cash to close. The rate lock box says whether the rate is locked and when estimated closing costs expire. **Page 2 — the costs.** Compare section A first: it holds the lender’s own fees and any points, and it is the part one lender can undercut another on. Then check the shoppable services in section C, prepaid items in F, and lender credits in J. See [mortgage points](https://mortgage-math-us.com/buying/mortgage-points/) to weigh points against credits. **Page 3 — the comparisons.** This section sums up the cost of the loan in a few standard measures: > **Worked example: Page 3 on a $324,000 loan, 30-year fixed at the 7.24% weekly average** > > | Measure | What it means | Example | > |---|---|---:| > | In 5 Years — total paid | Principal, interest and mortgage insurance over the first five years, plus loan costs | $142,203 before loan costs | > | In 5 Years — principal paid off | How much of the loan you will have repaid | $18,244 | > | APR | The yearly cost of the credit including points, fees and mortgage insurance | Higher than the rate whenever there are fees or mortgage insurance | > | Total Interest Percentage (TIP) | Interest over the full term as a share of the loan | 145.3% | > > Mortgage insurance uses the midpoint of Freddie Mac’s typical range. Section D loan costs from your own estimate are added to the first line on the real form. A lower rate with high section A costs can lose to a slightly higher rate with low costs if you will move or refinance within a few years — the In 5 Years figure catches that. [How mortgage rates work](https://mortgage-math-us.com/buying/mortgage-rates/) explains why quotes differ. ## Review the Closing Disclosure - Match the loan terms — amount, rate, product, monthly payment — to your latest Loan Estimate. - Compare each section of closing costs and check that lender credits and seller credits appear. - Confirm your earnest money is credited and the cash to close makes sense. - Check names, the property address and the escrow figures. - Confirm wiring instructions by phone with a number you already know; never trust instructions sent only by email. If something is wrong or unexplained, ask before closing day. The [buying a home hub](https://mortgage-math-us.com/buying/) shows where both forms fall in the purchase, and the same forms apply to [FHA loans](https://mortgage-math-us.com/loan-types/fha-loans/). ## Frequently asked questions ### How long does a lender have to send a Loan Estimate? It must deliver or mail it within 3 business days of receiving your application, and at least 7 business days before closing. ### When do I get the Closing Disclosure? You must receive it at least 3 business days before closing. A new waiting period starts if the APR rises by more than 0.125% on a regular loan, the loan product changes or a prepayment penalty is added. ### Can closing costs go up after the Loan Estimate? Some can’t rise at all, including the lender’s own fees and services you couldn’t shop for. Recording fees and services from the lender’s list can rise by up to 10% in total. Prepaid interest, insurance and escrow can change freely. Larger increases need a valid change in circumstances. ### Does a Loan Estimate commit me to the lender? No. It is an estimate, not an offer you have accepted. You can request several and choose one; you tell your chosen lender you intend to proceed. ### How long is a Loan Estimate good for? The lender can revise the costs if you don’t say you intend to proceed within 10 business days of receiving it, unless it gives you longer. The rate itself is only fixed if it is locked; page 1 shows when the lock and the cost estimates expire. ### Can I close sooner than three business days after the Closing Disclosure? Only for a bona fide personal financial emergency, such as an imminent foreclosure sale, and only with a signed statement waiving the waiting period. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-loan-estimate-en-1995/) — Lender must send the Loan Estimate within this many business days of your application (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) — You receive the Closing Disclosure at least this many business days before closing (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-my-final-mortgage-costs-increase-from-what-was-on-my-loan-estimate-en-172/) — Cumulative limit on increases for recording fees and lender-listed services (Sep 11, 2024) - [12 CFR 1026.22](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-C/section-1026.22) — APR change that triggers a new 3-business-day wait (regular loans) (Oct 28, 2026) - [12 CFR 1026.19(e)(1)(iii)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-C/section-1026.19) — Loan Estimate must be delivered or mailed at least this many business days before closing; Lender may revise the Loan Estimate if you indicate intent to proceed after more than this many business days; Revised Loan Estimate due within this many business days of learning of a changed circumstance (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-exactly-happens-when-a-mortgage-lender-checks-my-credit-en-2005/) — Mortgage credit checks within this window count as one inquiry (Aug 28, 2026) - [12 CFR 1026.37: Content of the Loan Estimate](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.37) - [CFPB: Loan Estimate explainer](https://www.consumerfinance.gov/owning-a-home/loan-estimate/) _General information, not financial advice._ --- # Mortgage points and lender credits > How discount points work, a worked break-even example, lender credits, the Qualified Mortgage points-and-fees cap and how the IRS treats points. URL: https://mortgage-math-us.com/buying/mortgage-points/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer One discount point costs 1% of the loan amount and buys a lower interest rate; how much lower depends on the lender, the loan and the market. To judge it, divide the cost by the monthly saving. On a $324,000 30-year loan at 7.24%, if one point cut the rate by an example 0.25 percentage point, it would cost $3,240, save $55 a month and take **5 years** to pay back. If you are likely to sell or refinance sooner, points lose money. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | One discount point (share of the loan) | 1% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/how-should-i-use-lender-credits-and-points-also-called-discount-points-en-136/) | Oct 19, 2023 | | 30-year fixed average used in the example | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | Qualified Mortgage cap on points and fees | 3% | [CFPB, Federal Register 90 FR 57890](https://www.federalregister.gov/documents/2025/12/15/2025-22773/truth-in-lending-regulation-z-annual-threshold-adjustments-credit-cards-hoepa-and-qualified) | 2026 threshold | | Mortgage debt on which interest is deductible | $750,000 | [IRS Publication 936](https://www.irs.gov/pub/irs-pdf/p936.pdf) | Tax year 2025 | ## What a discount point is A discount point is prepaid interest: you pay 1% of the loan amount at closing for each point, and the lender lowers your rate for the life of a fixed-rate loan. Lenders also quote fractions of a point, such as a quarter or three-eighths. According to the CFPB, how much the rate drops for each point depends on the lender, the kind of loan and market conditions — there is no standard exchange rate. Points appear on page 2 of the Loan Estimate in section A, “Origination Charges.” Origination fees sit in the same section but don’t lower your rate, so ask the lender which charges are discount points. ## Break-even: when points pay off The simple test is the cost of the points divided by the monthly saving. The fuller test also counts the fact that a lower rate pays the balance down faster. > **Worked example: $324,000 loan (10% down on a $360,000 home), 30-year fixed, starting from the 7.24% weekly average** > > | Option | Rate | Cost at closing | Monthly payment | Monthly saving | Simple break-even | Net after 5 years | Net after 10 years | > |---|---:|---:|---:|---:|---:|---:|---:| > | No points | 7.24% | $0 | $2,208 | — | — | — | — | > | 1 point | 6.99% | $3,240 | $2,153 | $55 | 5 years | $841 | $4,933 | > | 2 points | 6.74% | $6,480 | $2,099 | $109 | 5 years | $1,677 | $9,844 | > > **Assumption:** each point lowers the rate by 0.25 percentage point. That is an example only — real pricing varies by lender, loan and day, so use the figures on your own Loan Estimates. Net figures add the monthly savings and the lower remaining balance, minus the cost of the points. Before the break-even month, you would have been better off without points; after it, you are ahead every month you keep the loan. The CFPB suggests comparing total costs over the shortest, longest and most likely time you expect to keep the loan. An option that wins in all three is a safe choice. Our [refinance break-even calculator](https://mortgage-math-us.com/tools/refinance-break-even-calculator/) runs the same arithmetic for a new rate against costs. ## Lender credits: points in reverse Lender credits lower your closing costs in exchange for a higher rate; lenders sometimes call them negative points. They show up as a negative number on the Lender Credits line in section J of the Loan Estimate. Using the same example assumption in reverse, a credit of $3,240 for a rate 0.25 percentage point higher would add about $55 a month, so the credit stays ahead for roughly 4 years, 10 months. If you expect to move or refinance before then, the credit is the better deal — and it keeps cash in your pocket for the down payment or reserves. See [closing costs](https://mortgage-math-us.com/buying/closing-costs/) for what credits can cover. ## When points make sense Points tend to pay off when: - **You expect to keep the loan for many years**, well past the break-even month. - **Rates are unlikely to fall far enough to make you refinance** — although no one can know that in advance. - **You have cash to spare** after the down payment, closing costs and an emergency fund. They tend not to when: - **You might move, sell or refinance** within a few years. - **The money would do more elsewhere.** Putting the same cash toward a larger down payment can cut PMI or lift you into better pricing — compare the options in our [down payment guide](https://mortgage-math-us.com/buying/down-payment/). - **The loan is adjustable.** On an ARM the discount usually only matters during the fixed period. Deciding between points and a larger down payment? See [points or a bigger down payment](https://mortgage-math-us.com/blog/points-or-bigger-down-payment/). ## Points and the Qualified Mortgage cap A Qualified Mortgage gives the lender legal protection, and in return the points and fees it charges are capped. On loans of the size in our example, total points and fees generally can’t exceed 3% of the loan amount — $9,720 on a $324,000 loan. Some bona fide discount points can be left out of the count when the rate before the discount is close to the market average, but the cap is one reason a lender may limit how many points you can buy. Smaller loans have higher percentage caps. ## Are points tax-deductible? IRS Publication 936 treats points as prepaid interest. The general rule is that you deduct them gradually over the life of the loan. You can deduct them all in the year you pay them if the loan is to buy or build your main home and several tests are met, including: - paying points is an established practice in your area, and the amount is typical there; - the points are figured as a percentage of the loan and clearly shown as points on your settlement statement; - the cash you brought to closing, plus any points the seller paid, at least equals the points. Points on a refinance are generally deducted over the life of the new loan, and points the seller pays are treated as paid by you. You only benefit if you itemize, and the mortgage interest deduction is limited to interest on up to $750,000 of mortgage debt for loans taken out after December 15, 2017. Check the publication or a tax professional for your situation. Points are one way to shape the rate; the [mortgage rates guide](https://mortgage-math-us.com/buying/mortgage-rates/) covers the rest, and the [buying a home hub](https://mortgage-math-us.com/buying/) shows where the decision fits. FHA borrowers can buy points too — see the [FHA loans guide](https://mortgage-math-us.com/loan-types/fha-loans/). ## Frequently asked questions ### How much does one mortgage point cost? One point costs 1% of the loan amount — $3,240 on a $324,000 loan. It is paid at closing and listed in section A of the Loan Estimate. ### How much does a point lower the interest rate? There is no fixed amount. The CFPB says it depends on the lender, the kind of loan and market conditions. Compare Loan Estimates with and without points on the same day to see the trade each lender offers. ### How do I calculate the break-even point on mortgage points? Divide the cost of the points by the monthly payment saving. In our example, $3,240 ÷ $55 a month is about 5 years. If you keep the loan longer than that, the points pay off. ### Are mortgage points worth it? Only if you keep the loan past the break-even month and the cash isn’t better used elsewhere, such as for a larger down payment or reserves. If you might sell or refinance within a few years, they usually aren’t. ### What are negative points? Another name for lender credits: the lender pays part of your closing costs in exchange for a higher rate. They appear as a negative number on the Lender Credits line in section J of the Loan Estimate. ### Are mortgage points tax-deductible? Yes, as mortgage interest, if you itemize. On a loan to buy your main home you can often deduct them all in the year paid if the IRS tests in Publication 936 are met; otherwise, and on refinances, they are deducted over the life of the loan. ### Can the seller pay for my points? Yes, as part of seller concessions within your loan program’s limits. For taxes, the IRS treats seller-paid points as paid by you, and they reduce your cost basis in the home. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/how-should-i-use-lender-credits-and-points-also-called-discount-points-en-136/) — Cost of one discount point (share of loan amount) (Oct 19, 2023) - [CFPB, Federal Register 90 FR 57890](https://www.federalregister.gov/documents/2025/12/15/2025-22773/truth-in-lending-regulation-z-annual-threshold-adjustments-credit-cards-hoepa-and-qualified) — Qualified Mortgage points-and-fees cap (loans of $137,958 or more) (2026 threshold) - [IRS Publication 936](https://www.irs.gov/pub/irs-pdf/p936.pdf) — Mortgage debt on which interest is deductible (loans after Dec 15, 2017) (Tax year 2025) - [CFPB: Loan Estimate explainer](https://www.consumerfinance.gov/owning-a-home/loan-estimate/) - [12 CFR 1026.37: Content of the Loan Estimate](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.37) _General information, not financial advice._ --- # How mortgage rates work > What moves mortgage rates, how Freddie Mac’s weekly average is measured, APR vs interest rate, rate locks, and what each rate costs per $100,000 borrowed. URL: https://mortgage-math-us.com/buying/mortgage-rates/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer Freddie Mac’s weekly survey puts the 30-year fixed average at 7.24% and the 15-year at 6.6%; the 30-year was 7.32% a week earlier. That average describes a conventional purchase loan with 20% down and strong credit, so your quote depends on your credit, down payment, loan type, points and the day you lock. At 7.24%, every $100,000 borrowed over 30 years costs **$681.50 a month** in principal and interest; one percentage point either way changes that by roughly $68. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | 30-year fixed average (Freddie Mac) | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | 15-year fixed average (Freddie Mac) | 6.6% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | 30-year fixed average, previous week | 7.32% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 22, 2026 | | Bank prime rate (Federal Reserve) | 7% | [Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/) | Oct 28, 2026 | | Typical rate lock periods (CFPB) | 30, 45 or 60 days | [CFPB](https://www.consumerfinance.gov/ask-cfpb/whats-a-lock-in-or-a-rate-lock-en-143/) | Oct 28, 2026 | ## What moves mortgage rates Many US mortgages are pooled into mortgage-backed securities and sold to investors, so mortgage rates follow what those investors demand. In practice, 30-year fixed rates tend to move with long-term Treasury yields, especially the 10-year, plus a spread for the extra risks of mortgages — chiefly that borrowers can repay early when rates fall. - **Inflation.** Investors want a return above expected inflation. Consumer prices rose 3.7% over the latest 12 months, according to the Bureau of Labor Statistics. - **The Federal Reserve.** The Fed sets a short-term policy rate, which directly moves the bank prime rate (now 7%) and with it many home equity lines. Its effect on 30-year mortgage rates is indirect, through expectations for inflation and future policy. - **The economy and markets.** Strong growth and heavy government borrowing tend to push long-term yields up; weaker data and demand for safe assets tend to pull them down. - **Lender capacity and competition.** When lenders are busy they can price less aggressively, and the spread over Treasuries can widen. Nobody can reliably forecast where rates go next. Plan with the rate you can lock today, and treat a later [refinance](https://mortgage-math-us.com/refinancing/) as a possibility, not a plan. ## The benchmark: Freddie Mac’s weekly survey The Primary Mortgage Market Survey is the rate you see quoted in the news. Freddie Mac builds it from thousands of loan applications submitted through its Loan Product Advisor system and publishes it on Thursdays at 12 p.m. ET, averaging the previous Thursday through Wednesday. It describes a narrow borrower: a conventional, conforming home purchase loan on an owner-occupied single-family home, with 20% down and good to excellent credit. It doesn’t report fees or points, because lenders don’t always submit them. This week’s 30-year average of 7.24% is down 0.08 percentage point from 7.32% the week before — a change of about $5.43 a month per $100,000 borrowed. The 15-year average is 6.6%, which with the shorter term means a much higher payment of $876.61 per $100,000 but far less interest; see [15-year vs 30-year mortgages](https://mortgage-math-us.com/blog/15-year-vs-30-year-mortgage/). ## What each rate costs per $100,000 > **Worked example: Monthly principal and interest per $100,000 borrowed, 30-year fixed** > > | Rate | Monthly payment | Total interest over 30 years | > |---|---:|---:| > | 6.24% (−1 point) | $615.07 | $121,424 | > | 6.74% (−0.5 point) | $647.93 | $133,256 | > | **7.24% (this week’s average)** | $681.50 | $145,339 | > | 7.74% (+0.5 point) | $715.72 | $157,660 | > | 8.24% (+1 point) | $750.56 | $170,203 | > > Multiply by your loan amount in hundreds of thousands. On a $300,000 loan, one percentage point above the average adds about $207 a month. Taxes, insurance and mortgage insurance come on top — the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/) adds them. ## Interest rate vs APR The **interest rate** sets your monthly principal and interest. The **annual percentage rate (APR)** expresses the yearly cost of the credit including most lender charges — points, origination fees and mortgage insurance — so it is usually higher than the rate. A loan with a low rate and heavy fees can carry a higher APR than a loan with a slightly higher rate and no points. APR is most useful for comparing the same loan type and term between lenders, on the same day. It assumes you keep the loan for the full term, so it overstates the effect of upfront fees if you will sell or refinance in a few years. It also matters at closing: if the APR on your Closing Disclosure rises by more than 0.125% on a regular loan, you get a fresh 3 business days before you can close — see [Loan Estimate and Closing Disclosure](https://mortgage-math-us.com/buying/loan-estimate/). ## Why your quote differs from the average - **Credit score.** Fannie Mae and Freddie Mac charge loan-level price adjustments by score and down payment, and lenders pass them on — see [credit score for a mortgage](https://mortgage-math-us.com/buying/credit-score/). - **Down payment.** Less than 20% down usually raises the rate or adds PMI, or both. - **Loan type and size.** FHA, VA and USDA loans are priced differently, and jumbo loans above the conforming limit ($832,750 in most counties) follow their own market. - **Term and rate type.** Shorter terms and adjustable-rate loans usually start lower than a 30-year fixed — see [fixed vs adjustable-rate](https://mortgage-math-us.com/loan-types/fixed-vs-adjustable-rate/). - **Points and credits.** Paying [discount points](https://mortgage-math-us.com/buying/mortgage-points/) buys the rate down; taking lender credits pushes it up. - **Property and occupancy.** Second homes, investment properties, condos and two- to four-unit homes often cost more. - **Lock period and timing.** Longer locks usually cost more, and lenders reprice during the day as markets move. ## Rate locks A rate lock means your interest rate won’t change between the offer and closing, as long as you close within the lock period. The CFPB says locks are typically available for 30, 45 or 60 days, sometimes longer, and extensions can be expensive — your Loan Estimate shows whether the rate is locked and when the lock ends, but not what an extension costs, so ask. A lock isn’t absolute. Your rate can still change if your application changes: a different loan amount or down payment, a change in your credit score, income the lender can’t document, or an appraisal that comes in higher or lower than expected. Many buyers lock once they have a signed purchase contract and a closing date. Our article on [how a rate lock works](https://mortgage-math-us.com/blog/how-a-rate-lock-works/) goes into more detail. The [buying a home hub](https://mortgage-math-us.com/buying/) shows where rate shopping fits in the purchase, and the [FHA loans guide](https://mortgage-math-us.com/loan-types/fha-loans/) explains how FHA pricing differs. ## Frequently asked questions ### What is the average mortgage rate today? Freddie Mac’s latest weekly survey puts the 30-year fixed at 7.24% and the 15-year fixed at 6.6%. These are averages for conventional purchase loans with 20% down and strong credit; your quote can be higher or lower. ### Why is my mortgage rate higher than the average? The average assumes 20% down, strong credit and a conventional loan on a single-family home you live in. A lower score, a smaller down payment, a different loan type, an investment property or a longer lock period can all move your rate, as can paying fewer points. ### What is the difference between APR and interest rate? The interest rate sets your monthly payment; the APR adds most lender charges — points, fees and mortgage insurance — to show the yearly cost of the credit. Compare APRs for the same loan type and term. ### How long can I lock a mortgage rate? Lock periods are typically 30, 45 or 60 days according to the CFPB, and sometimes longer. Longer locks usually cost more, and extending a lock that runs out can be expensive. ### Does the Federal Reserve set mortgage rates? No. The Fed sets a short-term policy rate, which moves the prime rate and many home equity lines directly. Mortgage rates are set by lenders and investors and follow long-term bond yields, which the Fed influences only indirectly. ### Should I wait for mortgage rates to fall? No one can reliably predict rates. Buy when the payment works at today’s rate. If rates later fall enough, a refinance can lower the payment, but it has costs and is never guaranteed. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average; 15-year fixed rate, national weekly average; 30-year fixed rate, previous week (Week of Oct 29, 2026) - [Bureau of Labor Statistics](https://www.bls.gov/news.release/cpi.nr0.htm) — Consumer prices, 12-month change (CPI-U, all items) (September 2026) - [Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/) — Bank prime loan rate (Oct 28, 2026) - [12 CFR 1026.22](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-C/section-1026.22) — APR change that triggers a new 3-business-day wait (regular loans) (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) — You receive the Closing Disclosure at least this many business days before closing (Oct 28, 2026) - [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) — 2026 baseline conforming loan limit (one-unit) (2026 limit) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/whats-a-lock-in-or-a-rate-lock-en-143/) — Typical rate lock periods (Oct 28, 2026) - [CFPB: Loan Estimate explainer](https://www.consumerfinance.gov/owning-a-home/loan-estimate/) - [CFPB: How should I use lender credits and points?](https://www.consumerfinance.gov/ask-cfpb/how-should-i-use-lender-credits-and-points-also-called-discount-points-en-136/) _General information, not financial advice._ --- # Private mortgage insurance (PMI) explained > How PMI is priced, borrower-paid vs lender-paid PMI, the 80% and 78% cancellation rules with a worked example, and how FHA mortgage insurance differs. URL: https://mortgage-math-us.com/buying/pmi/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer PMI is insurance that a conventional lender requires when you put less than 20% down. Freddie Mac puts the typical cost at $30–$70 a month for every $100,000 borrowed. You can ask to cancel it once your balance is scheduled to reach 80% of the home’s original value, and it must end automatically at 78%. On a $360,000 home bought with 10% down at 7.24%, that is after **8 years, 7 months** and **9 years, 10 months** of payments. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Typical PMI, low end (Freddie Mac) | $30 per $100k a month | [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) | Oct 28, 2026 | | Typical PMI, high end (Freddie Mac) | $70 per $100k a month | [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) | Oct 28, 2026 | | Ask your servicer to cancel at this share of original value | 80% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) | Oct 28, 2026 | | PMI ends automatically at this share of original value | 78% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) | Oct 28, 2026 | | FHA annual MIP with under 5% down (for comparison) | 0.55% | [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) | Feb 22, 2023 | ## What PMI is Private mortgage insurance covers the lender, not you, if you stop paying. Conventional loans backed by Fannie Mae and Freddie Mac need it whenever the loan is more than 80% of the home’s value, which is why it comes with any down payment under 20%. You pay the premium; the lender is the beneficiary. Other loans handle the same risk differently. FHA loans charge their own mortgage insurance premium (MIP), VA loans have no mortgage insurance but may charge a one-time funding fee, and USDA loans charge guarantee fees. This guide is about conventional PMI; the [buying a home hub](https://mortgage-math-us.com/buying/) covers the rest of the purchase. ## What PMI costs Insurers price PMI mainly on your down payment and credit score; the loan term and the amount of coverage the loan requires also play a part. Freddie Mac’s consumer site gives a typical range of $30–$70 a month per $100,000 borrowed. *Monthly PMI across Freddie Mac’s typical range* | Loan amount | Low end | Midpoint | High end | |---|---:|---:|---:| | $200,000 | $60 | $100 | $140 | | $300,000 | $90 | $150 | $210 | | $400,000 | $120 | $200 | $280 | | $500,000 | $150 | $250 | $350 | Your Loan Estimate shows the actual premium on page 1 under projected payments. Because credit score moves you within the range, a few points of improvement before you apply can pay off every month — see [credit score for a mortgage](https://mortgage-math-us.com/buying/credit-score/). ## Ways to pay for it *PMI payment options* | Type | How you pay | Cancellable? | |---|---|---| | Borrower-paid, monthly | A premium added to each mortgage payment — the most common option | Yes, under the rules below | | Single premium | One upfront payment at closing | Ask whether any part is refundable if you sell or refinance early | | Split premium | A smaller upfront payment plus a lower monthly premium | The monthly part follows the rules below | | Lender-paid | No separate premium; you accept a higher interest rate instead | No — the higher rate stays unless you refinance | The CFPB notes that loans with small down payments and no PMI usually carry a higher interest rate. Lender-paid coverage can make sense if you expect to move or refinance before borrower-paid PMI would have ended; otherwise you may pay for it long after PMI would have come off. Upfront premiums appear in the closing costs on your [Loan Estimate](https://mortgage-math-us.com/buying/loan-estimate/). ## When PMI ends: the three rules > **Rule: The Homeowners Protection Act** > > - **On request at 80%.** You can ask in writing to cancel PMI when your balance is scheduled to reach 80% of the original value — or earlier if extra payments get you there. You need a good payment history, no second mortgage or other junior lien, and you may have to show, for example with an appraisal, that the home hasn’t lost value. > - **Automatically at 78%.** The servicer must end PMI on the date the balance is scheduled to reach 78% of the original value, if you are current on payments. > - **At the midpoint.** Even if neither balance is reached, PMI must end the month after the loan reaches the midpoint of its schedule — halfway through the original term — if you are current. “Original value” generally means the lower of the purchase price and the appraised value when you bought. These rules cover single-family homes you live in, financed on or after July 29, 1999. Your PMI disclosure form, received with your mortgage, shows the first date you can ask. ## Worked example: when PMI comes off > **Worked example: $360,000 home, 10% down ($324,000 loan), 30-year fixed at the 7.24% weekly average, PMI at $162 a month** > > | Milestone | Balance | Reached after | PMI paid to then | > |---|---:|---:|---:| > | Ask to cancel (80% of original value) | $287,980 | 8 years, 7 months | $16,686 | > | Ends automatically (78%) | $280,615 | 9 years, 10 months | $19,116 | > | Final termination (month after the midpoint) | — | 15 years, 1 month | — | > | Ask to cancel, paying $200 extra each month | — | 5 years, 6 months | $10,692 | > > PMI uses the midpoint of Freddie Mac’s range. At this rate the balance reaches 78% long before the midpoint, so the final-termination rule only matters on loans with very small down payments, high rates or interest-only periods. The last row is the cheapest lever most buyers have: extra principal moves the date you can ask for cancellation, while the automatic date stays tied to the original schedule. Our [extra payment calculator](https://mortgage-math-us.com/tools/extra-payment-calculator/) shows the full schedule for your own loan. Home values can help too. Fannie Mae and Freddie Mac servicers can cancel PMI based on a new appraisal once you have owned the home for some years and the balance is low enough against today’s value; ask your servicer for its requirements. Another route is to [refinance to remove PMI](https://mortgage-math-us.com/refinancing/refinance-to-remove-pmi/), which only makes sense if the new rate and costs work on their own. ## PMI vs FHA mortgage insurance *Conventional PMI and FHA MIP compared* | | Conventional PMI | FHA MIP | |---|---|---| | Upfront charge | None with monthly PMI | 1.75% of the base loan, usually financed | | Annual cost | About $30–$70 a month per $100,000 | 0.5%–0.55% a year on most 30-year loans | | Priced on credit score | Yes | No — set by HUD by loan size, term and down payment | | When it ends | 80% on request, 78% automatically | 11 years with 10% or more down; otherwise the life of the loan | On a $360,000 home with 3.5% down, FHA’s 0.55% annual premium costs about $159 a month and doesn’t cancel. That is why buyers with good credit usually come out ahead with PMI, while lower scores can tip the balance toward FHA. The [FHA loans guide](https://mortgage-math-us.com/loan-types/fha-loans/) runs the full comparison, and the [down payment guide](https://mortgage-math-us.com/buying/down-payment/) shows how long PMI lasts at each down payment. ## Is PMI tax-deductible? The IRS’s draft Publication 936 for 2026 says the itemized deduction for qualified mortgage insurance premiums — PMI, FHA and USDA premiums and VA funding fees — has been reinstated for tax year 2026. It phases out once adjusted gross income passes $100,000, and you only benefit if you itemize. Check the final publication before you file. ## Frequently asked questions ### How much is PMI a month? Freddie Mac puts it at about $30–$70 a month for every $100,000 borrowed. On a $324,000 loan that is roughly $97 to $227 a month, depending mostly on your credit score and down payment. ### When does PMI go away? You can ask your servicer to cancel it once your balance is scheduled to reach 80% of the home’s original value, and it must end automatically at 78% if you are current. On a $360,000 home with 10% down at 7.24%, that takes about 8 years, 7 months and 9 years, 10 months. ### Can I remove PMI if my home has gone up in value? Often, yes, but on your servicer’s terms rather than under the federal schedule. Fannie Mae and Freddie Mac servicers can cancel PMI based on a new appraisal once the loan has been in place for some years and the balance is low enough against the current value. Ask your servicer what it requires. ### Is lender-paid PMI a good idea? It replaces the monthly premium with a higher interest rate that lasts for the life of the loan. It can work if you expect to sell or refinance within a few years; if you keep the loan longer, borrower-paid PMI that you can cancel usually costs less. ### Do FHA loans have PMI? No — they have their own mortgage insurance premium. FHA charges 1.75% upfront plus annual MIP, and with less than 10% down the annual premium lasts for the life of the loan. ### Do VA loans require PMI? No. VA loans have no monthly mortgage insurance, but a one-time funding fee may apply — 2.15% of the loan on first use with less than 5% down. ### Is PMI tax-deductible? For tax year 2026, the IRS draft Publication 936 says the deduction for mortgage insurance premiums is back for people who itemize, phasing out above an adjusted gross income of $100,000. Confirm with the final publication. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) — Ask your servicer to cancel PMI at this share of original value; PMI ends automatically at this share of original value; PMI must end the month after the loan reaches the midpoint of its schedule (Oct 28, 2026) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA annual MIP, 30-year loan, more than 95% LTV; FHA upfront mortgage insurance premium; FHA annual MIP, 30-year loan, 95% LTV or less (Feb 22, 2023) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment (Oct 28, 2026) - [IRS draft Publication 936 (2026)](https://www.irs.gov/pub/irs-dft/p936--dft.pdf) — Mortgage insurance premium deduction starts phasing out above this AGI (2026) (Tax year 2026) - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) — VA funding fee, first use, less than 5% down (Apr 7, 2023) - [CFPB: What is private mortgage insurance?](https://www.consumerfinance.gov/ask-cfpb/what-is-private-mortgage-insurance-en-122/) _General information, not financial advice._ --- # Mortgage pre-approval, step by step > How mortgage pre-approval works: pre-qualification vs pre-approval, documents lenders ask for, credit checks, how long a letter lasts and what undoes it. URL: https://mortgage-math-us.com/buying/pre-approval/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer Pre-approval means a lender has verified your income, assets and credit and says in writing how much it is prepared to lend; pre-qualification is usually a quicker estimate built on what you tell the lender. Neither is a guaranteed loan offer. Mortgage credit checks made within 45 days of each other count as a single inquiry, so you can get pre-approved by more than one lender. Every letter carries an expiry date set by the lender, partly because Fannie Mae requires credit, income and asset documents to be no more than 4 months old when you close. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Mortgage credit checks counted as one inquiry | 45 days | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-exactly-happens-when-a-mortgage-lender-checks-my-credit-en-2005/) | Aug 28, 2026 | | Oldest credit and income documents allowed at closing (Fannie Mae) | 4 months | [Fannie Mae Selling Guide B1-1-03](https://selling-guide.fanniemae.com/sel/b1-1-03/allowable-age-credit-documents-and-federal-income-tax-returns) | Apr 2, 2025 | | Employment re-checked within this many business days of closing | 10 business days | [Fannie Mae Selling Guide B3-3.1-04](https://selling-guide.fanniemae.com/sel/b3-3.1-04/verbal-verification-employment) | Oct 7, 2026 | | Highest DTI Fannie Mae’s automated system accepts | 50% | [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) | Apr 2, 2025 | | Loan Estimate arrives within this time of a full application | 3 business days | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-loan-estimate-en-1995/) | Oct 28, 2026 | ## Pre-qualification vs pre-approval Lenders don’t use these words consistently. The CFPB notes that some lenders issue a “prequalification” based on unverified information you report, while others issue a “preapproval” only after checking documents. What matters is what the lender actually verified, so ask. *What usually separates the two letters* | | Pre-qualification | Pre-approval | |---|---|---| | Based on | Income, debts and assets you report | Pay stubs, tax forms, bank statements and a credit report | | Credit check | Sometimes, sometimes not | Yes, usually from all three nationwide credit bureaus | | Underwriting | Rough estimate | Often run through an automated underwriting system | | What it tells a seller | You have talked to a lender | A lender has checked your file | | Binding? | No | No — the final approval comes after the appraisal and underwriting | A pre-qualification is fine for early budgeting. Once you are ready to make offers, a pre-approval is what sellers and agents expect. ## Documents lenders ask for Expect to provide most of the following. Lenders ask for more when income is irregular or comes from a business. - **Identity:** government photo ID and your Social Security number for the credit check. - **Employment income:** recent pay stubs and W-2 forms, plus the name and contact details of each employer. - **Self-employment, commission or rental income:** recent federal tax returns, business returns and a year-to-date profit-and-loss statement. - **Other income:** award letters for Social Security, pensions or disability, and a court order if you want alimony or child support counted. - **Assets:** recent statements for every bank, brokerage and retirement account, all pages, with an explanation for any large deposit that isn’t payroll. - **Gifts:** a signed gift letter and proof of the transfer — see [down payment](https://mortgage-math-us.com/buying/down-payment/) for the rules. - **Debts and history:** statements for loans that may not appear on your credit report, divorce decrees, and bankruptcy papers if you have them. - **VA loans:** your Certificate of Eligibility. Documents go stale. On loans sold to Fannie Mae, credit reports and employment, income and asset documents must be no more than 4 months old on the day you sign the note, so a lender will ask for fresh copies if your search runs long. ## How the credit check works A pre-approval normally involves a hard credit inquiry. According to the CFPB, an inquiry typically has a small negative effect on your scores, and multiple mortgage credit checks are recorded as one inquiry as long as the last comes within 45 days of the first. That is your window to compare lenders. Check your own reports first. You can see your report from each nationwide bureau free once a week at AnnualCreditReport.com, and fixing an error before you apply is far easier than during underwriting. Our [credit score guide](https://mortgage-math-us.com/buying/credit-score/) covers the minimum scores for each loan type. ## What a pre-approval amount really means The letter states the most the lender will lend, which is often more than you would choose to spend. Lenders size it by your debt-to-income ratio, and different limits give very different answers. > **Worked example: $100,000 income, $400 a month of other debts, 10% down, 30-year fixed at the 7.24% weekly average** > > | Limit used | Housing budget a month | Home price it supports | > |---|---:|---:| > | Freddie Mac guidance: housing under 30%, all debts under 45% | $2,500 | $323,000 | > | Fannie Mae manual underwriting: all debts up to 36% | $2,600 | $336,000 | > | Fannie Mae Desktop Underwriter maximum: all debts up to 50% | $3,767 | $487,000 | > > The housing budget covers principal, interest, property tax at the 0.89% national ratio, insurance and PMI. A letter based on the automated maximum could be about $164,000 above the price that fits Freddie Mac’s comfort guidance. Try your own figures in the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/). Rates matter too. On the first row, a rise of half a percentage point would cut the price the same budget supports by about $12,000. A pre-approval doesn’t lock your rate; that comes later, once you have a property — see [how mortgage rates work](https://mortgage-math-us.com/buying/mortgage-rates/). ## What can break a pre-approval The final approval re-checks everything. On Fannie Mae loans the lender must re-verify your employment no more than 10 business days before the note date, and many lenders pull credit again shortly before closing. The usual problems: - **New credit.** A car loan, a store card or co-signing for someone adds a payment and an inquiry, and can push your [debt-to-income ratio](https://mortgage-math-us.com/buying/debt-to-income/) over the limit. - **Job changes.** Moving from salary to commission or self-employment, cutting hours or leaving a job can change how your income is counted. - **Unexplained money.** Large deposits need a paper trail; cash that appears from nowhere can’t be used. - **Missed payments.** One late payment can lower your score and the price of the loan. - **A different loan.** Changing the loan type or down payment means the lender has to re-run the file. - **The house itself.** A low appraisal or a property the program won’t finance — see [appraisal and inspection](https://mortgage-math-us.com/buying/appraisal-and-inspection/). > **Watch out: Keep your finances still until closing** > > Don’t open, close or max out accounts, change jobs or move large sums between accounts without talking to your lender first. ## How to get pre-approved **How to get a mortgage pre-approval** 1. **Check your credit** — Pull your reports, dispute errors and note your scores before a lender sees them. 2. **Gather documents** — Collect pay stubs, W-2s, tax returns, statements and any gift paperwork in one folder. 3. **Apply with two or three lenders** — Keep the applications within 45 days so the credit checks count once, and compare the same loan type and down payment. 4. **Read the letter** — Note the amount, loan type, assumed down payment, conditions and expiry date. Ask whether the lender can tailor the amount to each offer. 5. **Apply with a property** — Once you have an address, a full application triggers a Loan Estimate within 3 business days; see [Loan Estimate and Closing Disclosure](https://mortgage-math-us.com/buying/loan-estimate/). The pre-approval is the second step of the purchase described in our [buying a home hub](https://mortgage-math-us.com/buying/). If your credit or down payment is thin, compare an [FHA loan](https://mortgage-math-us.com/loan-types/fha-loans/) with conventional options before you apply. ## Frequently asked questions ### How long does a mortgage pre-approval last? The lender sets the expiry date, and it is printed on the letter. Whatever the date, your documents must still be current at closing — no more than 4 months old on Fannie Mae loans — so expect to send updated pay stubs and statements if your search runs long. ### Does getting pre-approved hurt your credit? A hard inquiry usually has a small effect. Multiple mortgage credit checks within 45 days of the first count as one inquiry, so comparing several lenders in that window costs no more than applying once. ### Is pre-qualification enough to make an offer? It can be, but many sellers and agents expect a pre-approval because it shows that a lender has checked your income, assets and credit. Ask your lender which kind of letter it is issuing and what it verified. ### Can you be denied after pre-approval? Yes. The final approval depends on the appraisal, updated documents and a fresh look at your credit and employment. New debt, a job change, missed payments or a low appraisal are the usual reasons a pre-approval falls through. ### Should I get pre-approved by more than one lender? It is a good way to compare service and pricing, and the credit checks count as one inquiry if they fall within 45 days. Once you have a property, request Loan Estimates from each lender on the same day. ### Does a pre-approval lock my interest rate? No. A rate lock is a separate agreement, usually made once you have a signed contract on a home. The letter may assume a rate, but the rate you get depends on the day you lock. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income; Freddie Mac guidance: total debt payments below this share of gross income (Jan 22, 2026) - [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) — Fannie Mae maximum DTI, manually underwritten loans; Fannie Mae maximum DTI, Desktop Underwriter loans (Apr 2, 2025) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-exactly-happens-when-a-mortgage-lender-checks-my-credit-en-2005/) — Mortgage credit checks within this window count as one inquiry (Aug 28, 2026) - [Fannie Mae Selling Guide B1-1-03](https://selling-guide.fanniemae.com/sel/b1-1-03/allowable-age-credit-documents-and-federal-income-tax-returns) — Fannie Mae: credit, income, employment and asset documents may be no older than this on the note date (Apr 2, 2025) - [Fannie Mae Selling Guide B3-3.1-04](https://selling-guide.fanniemae.com/sel/b3-3.1-04/verbal-verification-employment) — Fannie Mae: employment re-verified no more than this many business days before the note date (Oct 7, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-loan-estimate-en-1995/) — Lender must send the Loan Estimate within this many business days of your application (Oct 28, 2026) - [CFPB: What’s the difference between a prequalification letter and a preapproval letter?](https://www.consumerfinance.gov/ask-cfpb/whats-the-difference-between-a-prequalification-letter-and-a-preapproval-letter-en-127/) - [FTC: Free credit reports](https://consumer.ftc.gov/articles/free-credit-reports) _General information, not financial advice._ --- # Down-payment grants and assistance loans > How down-payment grants differ from forgivable and deferred second loans, what assistance does to your mortgage, and how to spot grant scams. URL: https://mortgage-math-us.com/first-time-buyers/grants/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer A true grant never has to be repaid, but most down-payment help is a second loan: a **forgivable** loan disappears if you keep the home for a set period — 3 years in a typical Texas program — while a **deferred** loan has no monthly payment but is due when you sell, refinance or pay off the mortgage. Assistance lets your total borrowing exceed the home’s value — Fannie Mae allows up to 105% combined loan-to-value — and real programs come through housing agencies and lenders, never from strangers asking for a fee. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Fannie Mae combined LTV limit with a Community Seconds loan | 105% | [Fannie Mae Selling Guide B5-5.1-02](https://selling-guide.fanniemae.com/sel/b5-5.1-02/community-seconds-loan-eligibility) | May 3, 2023 | | Freddie Mac total LTV limit with Affordable Seconds | 105% | [Freddie Mac Home Possible fact sheet](https://sf.freddiemac.com/docs/pdf/fact-sheet/home_possible_factsheet.pdf) | Feb 1, 2026 | | Deferred at least this long, a second loan stays out of DTI | 5 years | [Fannie Mae Selling Guide B5-5.1-02](https://selling-guide.fanniemae.com/sel/b5-5.1-02/community-seconds-loan-eligibility) | May 3, 2023 | | TDHCA assistance in Texas, up to (share of loan) | 5% | [Texas Department of Housing and Community Affairs](https://welcomehome.tdhca.texas.gov/uploads/My-First-Texas-Home-Program-Matrix-TMS.pdf) | Program matrix Aug 17, 2026 | | TSAHC forgivable loan is forgiven after | 3 years | [Texas State Affordable Housing Corporation](https://www.tsahc.org/landing/home-down-payment-assistance) | Oct 28, 2026 | ## Grant, forgivable or deferred: what “assistance” means Programs use the word “grant” loosely. Read the documents for one question: is there a note and a lien? If there is, it is a loan, whatever the brochure calls it. *The four common forms of down-payment help* | Form | Monthly payment | Repaid? | Watch for | |---|---|---|---| | Grant | None | Never | Often smaller amounts or stricter income limits | | Forgivable second loan | None | Forgiven after a set period if you stay | Sell, refinance or move out early and it is generally due | | Deferred (repayable) second loan | None | In full when you sell, refinance or pay off the first mortgage | Reduces your equity until it is paid | | Amortizing second loan | Yes | Monthly, like any loan | The payment counts in your debt-to-income ratio | Texas shows all of these side by side. TSAHC offers a grant that “never has to be repaid,” a forgivable second lien forgiven after 3 years if you don’t sell, refinance or move out, and a deferred second lien repaid when the first mortgage is sold, refinanced or paid off. TDHCA’s My First Texas Home offers a 0% deferred loan due on sale or refinance, or a 0% loan forgiven after 36 months if you keep living in the home. ## How assistance affects your mortgage **Combined loan-to-value.** A second loan stacks on top of the first, so total debt can exceed the price. Fannie Mae allows a combined loan-to-value of up to 105% with an eligible Community Seconds loan, and Freddie Mac allows 105% with Affordable Seconds. On a $360,000 home, the 105% limit leaves room for $18,000 of borrowing above the price — the part that pays closing costs. **Debt-to-income.** Under Fannie Mae’s rules, a Community Seconds loan whose payments are deferred for at least 5 years doesn’t add a monthly payment to your [debt-to-income ratio](https://mortgage-math-us.com/buying/debt-to-income/). An amortizing second does. **Mortgage insurance.** Assistance covers cash, not risk: with a small down payment you still pay PMI or FHA mortgage insurance on the first loan, and the CFPB notes that many state and local programs require mortgage insurance. **Equity.** Owing more than the home is worth at the start means selling in the first few years could require bringing cash to closing, especially once a sales commission is paid. ## What happens when you sell or refinance > **Worked example: 5% assistance on the median Texas home ($313,200) with an FHA loan** > > The 3.5% down payment is $10,962, and closing costs at the CFPB’s 2%–5% range are $6,264–$15,660. With the upfront FHA premium financed, the loan is about $307,527, so 5% assistance is **$15,376** — enough for the down payment and $4,414 toward closing costs. > > | If the help is a… | You sell in year 2 | You sell in year 4 | > |---|---:|---:| > | Grant | $0 | $0 | > | 3-year forgivable second loan | $15,376 | $0 | > | Deferred repayable second loan (0%) | $15,376 | $15,376 | > > The repayment comes out of your sale proceeds at closing. A refinance usually triggers the same payoff unless the program agrees to stay in second position, which some programs allow and others don’t. ## Where legitimate assistance comes from Fannie Mae’s list of eligible Community Seconds providers is a good map of who offers real help: - State housing finance agencies and other state agencies. - Counties, cities, towns and similar local governments. - Nonprofits recognized under section 501(c)(3). - Federal Home Loan Banks, through their affordable housing programs. - Employers, for their own employees. The seller, builder or real estate agent generally can’t be the source. Start with your state’s programs — the [first-time buyer programs](https://mortgage-math-us.com/first-time-buyers/programs/) guide explains how to find your housing finance agency — and ask lenders which local programs they work with. Many programs require a [homebuyer education course](https://mortgage-math-us.com/first-time-buyers/homebuyer-education/) and set income and price limits. ## How to spot a “grant” scam > **Watch out: Real grants don’t come looking for you** > > The FTC warns that the government won’t contact you out of the blue about grants, and no agency will call, text or email to ask for your Social Security, bank account or credit card number. Don’t pay an up-front fee or buy a list of grants, and treat any request to pay by gift card, wire transfer, cash reload card or cryptocurrency as a scam. Scammers also invent official-sounding agencies; the FTC gives the “Federal Grants Administration” as an example of one that doesn’t exist. Legitimate down-payment help is applied for through a participating lender or the agency itself, alongside your mortgage application. If you aren’t sure, call HUD’s housing counseling line at 800-569-4287 and ask a HUD-approved counselor. ## Questions to ask before you accept - Is this a grant or a loan, and is a lien recorded against the home? - If it is forgivable, over what period, and is it forgiven all at once or a little each year? - What makes it due early — selling, refinancing, renting the home out, moving out? - Does the program require a particular first mortgage, rate or lender, and how does that rate compare with a loan without assistance? - Are there income limits, purchase-price limits or a minimum credit score? Ask for a Loan Estimate with the assistance and one without, and compare the rate, fees and cash to close. Assistance that pushes you into a costlier first mortgage can cost more over time than it saves up front; the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/) shows how the payment changes. ## Frequently asked questions ### Do I have to pay back a down-payment grant? Not if it is a true grant. Many programs called grants are actually forgivable or deferred second loans: forgivable loans are wiped out after a set period if you stay, and deferred loans are repaid when you sell, refinance or pay off the mortgage. ### What is a forgivable down-payment assistance loan? A second loan with no monthly payment that is forgiven if you keep the home as your residence for a set period. In Texas, TSAHC’s forgivable loan is forgiven after 3 years; selling, refinancing or moving out before then generally means repaying it. ### Can I use down-payment assistance with an FHA loan? Yes. FHA allows assistance from approved government and nonprofit programs, and many state programs are built around FHA loans — Texas’s TDHCA program pairs its 2%–5% assistance with FHA, VA or USDA loans. ### Does down-payment assistance affect my loan approval? It can. A second loan raises your combined loan-to-value, which Fannie Mae caps at 105%, and an assistance loan with monthly payments counts in your debt-to-income ratio. One deferred for at least 5 years doesn’t, under Fannie Mae’s rules. ### How can I tell if a grant offer is a scam? The FTC says the government won’t contact you unprompted about grants and won’t ask for your Social Security or bank details by phone, text or email. Never pay a fee for a “free” grant or pay by gift card, wire or cryptocurrency. ### Can assistance cover closing costs as well as the down payment? Often, yes. Because programs can take combined borrowing above the home’s value, assistance of 5% of the loan on the median Texas home covers the $10,962 FHA down payment and part of the closing costs. ## Sources - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US48) — Median value of owner-occupied homes (2024 ACS 1-year) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment; Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA upfront mortgage insurance premium (Feb 22, 2023) - [Texas State Affordable Housing Corporation](https://www.tsahc.org/landing/home-down-payment-assistance) — TSAHC down payment assistance, up to (share of loan); TSAHC forgivable second lien is forgiven after (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [Fannie Mae Selling Guide B5-5.1-02](https://selling-guide.fanniemae.com/sel/b5-5.1-02/community-seconds-loan-eligibility) — Fannie Mae Community Seconds maximum combined LTV; Community Seconds payments deferred at least this long are left out of the debt-to-income ratio (May 3, 2023) - [Texas Department of Housing and Community Affairs](https://welcomehome.tdhca.texas.gov/uploads/My-First-Texas-Home-Program-Matrix-TMS.pdf) — TDHCA forgivable second lien is forgiven after; TDHCA My First Texas Home assistance, low end (share of loan); TDHCA My First Texas Home assistance, high end (share of loan) (Aug 17, 2026) - [Freddie Mac Home Possible fact sheet](https://sf.freddiemac.com/docs/pdf/fact-sheet/home_possible_factsheet.pdf) — Freddie Mac Home Possible maximum TLTV with Affordable Seconds (Feb 1, 2026) - [HUD](https://www.hud.gov/stat/sfh/housing-counseling) — HUD housing counseling referral line (Oct 28, 2026) - [FTC: Government grant scams](https://consumer.ftc.gov/articles/government-grant-scams) - [CFPB: Where can I get money for a down payment on a home?](https://www.consumerfinance.gov/ask-cfpb/where-can-i-get-money-for-a-down-payment-on-a-home-en-123/) - [TDHCA: My First Texas Home program matrix](https://welcomehome.tdhca.texas.gov/uploads/My-First-Texas-Home-Program-Matrix-TMS.pdf) _General information, not financial advice._ --- # Homebuyer education courses > When a homebuyer education course is required by Fannie Mae, HomeReady, Home Possible and state programs, what it covers, its cost and how to find one. URL: https://mortgage-math-us.com/first-time-buyers/homebuyer-education/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer A homebuyer education course is required on a Fannie Mae loan when all borrowers are first-time buyers and the loan-to-value is above 95%, on HomeReady and Home Possible purchases when all occupying borrowers are first-time buyers, and by many state assistance programs — Texas’s TDHCA requires it of every borrower. At least one borrower usually has to finish before closing. HUD-approved housing counseling agencies offer courses and one-on-one counseling, often at little or no cost; call 800-569-4287 to find one. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Fannie Mae: course required above this LTV if all are first-time | 95% | [Fannie Mae Selling Guide B2-2-06](https://selling-guide.fanniemae.com/sel/b2-2-06/homeownership-education-and-housing-counseling) | Nov 5, 2025 | | Lowest conventional down payment (above that LTV) | 3% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | | HomeReady income limit (share of area median) | 80% | [Fannie Mae Selling Guide B5-6-01](https://selling-guide.fanniemae.com/sel/b5-6-01/homeready-mortgage-loan-and-borrower-eligibility) | Jun 4, 2025 | | Home Possible income limit (share of area median) | 80% | [Freddie Mac Home Possible fact sheet](https://sf.freddiemac.com/docs/pdf/fact-sheet/home_possible_factsheet.pdf) | Feb 1, 2026 | | HUD housing counseling line | 800-569-4287 | [HUD](https://www.hud.gov/stat/sfh/housing-counseling) | Oct 28, 2026 | ## When a course is required Homebuyer education is a condition of certain loans and programs, not of buying a home in general. These are the main triggers: *Who requires homebuyer education* | Loan or program | When it is required | Who must take it | |---|---|---| | Fannie Mae conventional loan | Purchase with loan-to-value above 95% and all borrowers first-time buyers | At least one borrower, before closing | | Fannie Mae, any purchase | No borrower has a credit account (automated approval) or a credit score (manual) | At least one borrower | | Fannie Mae HomeReady | Purchase where all occupying borrowers are first-time buyers | At least one borrower | | Freddie Mac Home Possible | Purchase where all occupying borrowers are first-time buyers, or credit is built only from non-credit payment references | At least one occupying borrower, before the note date | | TDHCA My First Texas Home | Every loan | All borrowers, through a HUD-certified course | Because a 3% down payment means a loan-to-value of 97%, first-time buyers putting down less than 5% on a Fannie Mae loan will generally need a course. State and local assistance programs often go further, requiring it of every borrower whatever the down payment. Check [who counts as a first-time buyer](https://mortgage-math-us.com/first-time-buyers/who-counts-as-first-time/) if you have owned before. > **Worked example: When the Fannie Mae rule applies on a $360,000 home, all borrowers first-time buyers** > > | Down payment | Loan-to-value | Course required? | > |---|---:|---| > | 3% ($10,800) | 97% | Yes, if all borrowers are first-time buyers | > | 4% ($14,400) | 96% | Yes, if all borrowers are first-time buyers | > | 5% ($18,000) | 95% | No (unless HomeReady or no credit history) | > | 10% ($36,000) | 90% | No (unless HomeReady or no credit history) | > > The threshold is “above 95%”: at exactly 95%, a standard loan doesn’t trigger it. HomeReady requires the course whenever all occupying borrowers are first-time buyers, whatever the down payment. ## Education vs one-on-one counseling **Homebuyer education** is a course — online, in a classroom, by phone or a mix — that walks a group of buyers through the process. Fannie Mae accepts courses from any qualified provider independent of the lender, as long as the content follows National Industry Standards or HUD standards. **Housing counseling** is individual advice from a HUD-approved agency, built around your own credit, budget and goals. Fannie Mae accepts counseling in place of the course, and HomeReady borrowers who complete housing counseling in the months before closing may qualify for a loan-level pricing credit. Counseling is the better choice if you have credit problems to fix, are weighing several assistance programs or aren’t sure you are ready to buy. ## What a course covers Courses vary by provider, but most cover the whole path from renting to owning: - **Readiness and budgeting** — renting vs buying, setting a payment you can carry, and building savings. The [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/) is a useful companion. - **Credit** — reading your credit report, fixing errors and how scores affect your rate. - **Mortgages** — loan types, down payments, mortgage insurance, and assistance programs such as [down-payment grants](https://mortgage-math-us.com/first-time-buyers/grants/). - **Shopping and the contract** — working with an agent, making an offer, inspections and appraisals. - **Disclosures and closing** — reading the Loan Estimate and Closing Disclosure and what happens at the closing table. - **Life as an owner** — maintenance, escrow for taxes and insurance, and what to do if you fall behind on payments. ## Cost, format and timing Cost depends on the provider. The CFPB says HUD-approved housing counselors offer advice often at little or no cost; ask any provider what it charges before you sign up. Online courses let you work at your own pace; classroom and counseling sessions are scheduled with the agency. Timing matters more than format. Fannie Mae requires the course to be completed before closing and Freddie Mac before the note date, and the lender keeps your certificate of completion in the loan file. Take it early — ideally before you make an offer — so what you learn can still shape your budget and loan choice. ## How to find a course **Finding an approved homebuyer course** 1. **Ask what counts** — Check with your lender and any assistance program which providers they accept. Some programs require a specific course or a HUD-certified counselor. 2. **Find a HUD-approved agency** — Call HUD’s housing counseling line at 800-569-4287 or use the CFPB’s search by ZIP code to find agencies near you. 3. **Complete the course or counseling** — Choose online, in person or by phone, and finish before your closing date. 4. **Send your certificate** — Give the completion certificate to your lender, and keep a copy for any assistance program. > **Tip: Use the counselor for more than the certificate** > > A HUD-approved counselor can also tell you which state and local [first-time buyer programs](https://mortgage-math-us.com/first-time-buyers/programs/) you qualify for — often the most valuable part of the session. ## Frequently asked questions ### Is a homebuyer education course required? Only for some loans and programs. Fannie Mae requires it when all borrowers are first-time buyers and the loan-to-value is above 95%; HomeReady and Home Possible require it when all occupying borrowers are first-time buyers; and many state assistance programs require it for every borrower. ### How much does a homebuyer education course cost? It varies by provider. The CFPB says HUD-approved housing counselors offer advice often at little or no cost. Ask what a course costs before you enroll. ### Can I take a homebuyer education course online? Yes, if your lender or program accepts it. Fannie Mae allows in-person, online, telephone or hybrid courses from a qualified provider independent of the lender. ### When do I need to finish the course? Before closing. Fannie Mae requires completion before the loan closes and Freddie Mac before the note date. Starting early gives you time to use what you learn. ### Does every borrower have to take the course? For Fannie Mae and Freddie Mac, at least one borrower must complete it. Some state programs are stricter: Texas’s TDHCA requires a HUD-certified course for all borrowers. ### How do I find a HUD-approved housing counselor? Call HUD’s housing counseling line at 800-569-4287 or search the CFPB’s list of HUD-approved agencies by ZIP code. ## Sources - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [Fannie Mae Selling Guide B2-2-06](https://selling-guide.fanniemae.com/sel/b2-2-06/homeownership-education-and-housing-counseling) — Fannie Mae requires homebuyer education above this LTV when all borrowers are first-time buyers (Nov 5, 2025) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum down payment on some conventional loans (Oct 28, 2026) - [HUD](https://www.hud.gov/stat/sfh/housing-counseling) — HUD housing counseling referral line (Oct 28, 2026) - [Fannie Mae Selling Guide B5-6-01](https://selling-guide.fanniemae.com/sel/b5-6-01/homeready-mortgage-loan-and-borrower-eligibility) — Fannie Mae HomeReady income limit (share of area median income) (Jun 4, 2025) - [Freddie Mac Home Possible fact sheet](https://sf.freddiemac.com/docs/pdf/fact-sheet/home_possible_factsheet.pdf) — Freddie Mac Home Possible income limit (share of area median income) (Feb 1, 2026) - [Fannie Mae Selling Guide B2-2-06: Homeownership education and housing counseling](https://selling-guide.fanniemae.com/sel/b2-2-06/homeownership-education-and-housing-counseling) - [Freddie Mac: Home Possible fact sheet](https://sf.freddiemac.com/docs/pdf/fact-sheet/home_possible_factsheet.pdf) - [CFPB: Find a housing counselor](https://www.consumerfinance.gov/find-a-housing-counselor/) - [TDHCA: My First Texas Home program matrix](https://welcomehome.tdhca.texas.gov/uploads/My-First-Texas-Home-Program-Matrix-TMS.pdf) _General information, not financial advice._ --- # First-time home buyer mistakes to avoid > Ten first-time buyer mistakes and the rules that prevent them: PMI, debt-to-income, rate shopping, appraisals, Closing Disclosure timing, transfer taxes. URL: https://mortgage-math-us.com/first-time-buyers/mistakes-to-avoid/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer The costliest first-time buyer mistakes are budgeting to the lender’s maximum debt-to-income ratio (50%) instead of a comfortable one (45% or less), getting a quote from only one lender when every mortgage credit check within 45 days counts as one inquiry, waiving the inspection, opening new credit before closing, and not checking the Closing Disclosure you receive 3 business days before signing. Underestimating PMI, property taxes and transfer taxes, and emptying your savings to close, round out the list. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Comfortable total debt-to-income (Freddie Mac) | 45% | [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) | Jan 22, 2026 | | Rate-shopping window for credit checks | 45 days | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-exactly-happens-when-a-mortgage-lender-checks-my-credit-en-2005/) | Aug 28, 2026 | | Ask to cancel PMI at this loan-to-value | 80% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) | Oct 28, 2026 | | Appraisal copy due before closing (or promptly) | 3 business days | [CFPB, Regulation B 1002.14](https://www.consumerfinance.gov/rules-policy/regulations/1002/14) | Oct 28, 2026 | | Closing Disclosure arrives before closing | 3 business days | [CFPB](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) | Oct 28, 2026 | | Delaware state transfer tax (typically split) | 2.5% | [Delaware Division of Revenue](https://revenue.delaware.gov/first-time-home-buyer-tax-credit/) | Apr 16, 2024 | ## The ten mistakes at a glance *First-time buyer mistakes and the rule that prevents each* | Mistake | The rule or number to know | |---|---| | 1. Assuming you need 20% down | Conventional from 3%, FHA from 3.5%, VA and USDA from 0% | | 2. Ignoring what mortgage insurance costs and when it ends | PMI cancellable at 80%, automatic at 78%; FHA MIP often for the life of the loan | | 3. Budgeting to the lender’s maximum | Freddie Mac suggests total debts under 45% of gross income | | 4. Missing programs you qualify for | Most first-time tests look back 3 years, not a lifetime | | 5. Emptying savings to close | CFPB: keep 3–6 months of expenses | | 6. Getting one quote | Credit checks within 45 days count as one inquiry | | 7. Comparing rates, not costs | One point costs 1% of the loan | | 8. Forgetting taxes, insurance and transfer taxes | Property tax averages 0.89% of value nationally, 1.31% in Texas | | 9. Skipping the inspection or ignoring the appraisal | You get the appraisal at least 3 business days before closing, or promptly | | 10. New credit before closing, and an unread Closing Disclosure | Disclosure arrives 3 business days before closing | ## Before you shop ### 1. Assuming you need 20% down Waiting for 20% can cost years of rent. Conventional loans start at 3% down, FHA at 3.5% with a 580 or higher score, and VA and USDA at 0% for eligible buyers. The [saving for a home](https://mortgage-math-us.com/first-time-buyers/saving-for-a-home/) guide shows how long each target takes. ### 2. Ignoring what mortgage insurance costs — and when it ends The flip side of a small down payment is mortgage insurance. Freddie Mac puts PMI at about $30–$70 a month per $100,000 borrowed — on a $342,000 loan (5% down on a $360,000 home), roughly $103–$239 a month. On a conventional loan you can ask to cancel PMI when the balance reaches 80% of the original value, and it ends automatically at 78%. FHA’s annual premium of 0.55% lasts for the life of the loan unless you start at 90% loan-to-value or less. See [PMI](https://mortgage-math-us.com/buying/pmi/). ### 3. Budgeting to the lender’s maximum A lender’s approval is a ceiling, not a recommendation. > **Worked example: The same income, three budgets** > > On the US median household income of $81,604/yr ($6,800 a month before tax): > > | Limit | Monthly debts allowed | > |---|---:| > | Fannie Mae automated approval, up to 50% of income (all debts) | $3,400 | > | Freddie Mac’s comfort guide, 45% (all debts) | $3,060 | > | Freddie Mac’s housing guide, 30% (housing only) | $2,040 | > > The gap between the first and last lines — $1,360 a month — is the room an approval can give you to overspend. [Debt-to-income](https://mortgage-math-us.com/buying/debt-to-income/) explains how lenders count. ### 4. Missing programs you qualify for Many buyers assume they don’t count as first-time because they owned a home once. Most definitions only look back 3 years. Check [first-time buyer programs](https://mortgage-math-us.com/first-time-buyers/programs/) and your state housing finance agency before you set a budget; in Texas, for example, TDHCA assistance covers 2%–5% of the loan. ### 5. Emptying your savings to close New owners face repairs, furniture and moving costs right away. The CFPB suggests an emergency cushion of usually 3–6 months of expenses. If a bigger down payment would leave you with less than 3 months of expenses in the bank, consider putting down less. ## While you shop ### 6. Getting a quote from only one lender Rates and fees vary between lenders for the same borrower. The CFPB says multiple mortgage credit checks within 45 days are recorded as a single inquiry, so shopping doesn’t hurt your score more than one application. Each lender must send a Loan Estimate within 3 business days of your application; ask for them on the same day so the rates are comparable. ### 7. Comparing rates instead of total cost A lower rate can come with discount points, each costing 1% of the loan — $3,420 per point on a $342,000 loan. Compare the APR, the origination charges and the cash to close on each [Loan Estimate](https://mortgage-math-us.com/buying/loan-estimate/), and work out how long you would need to keep the loan for the lower payment to repay the points. ### 8. Forgetting taxes, insurance and transfer taxes The listing price says little about the monthly cost. Property tax averages 0.89% of value nationally but 1.31% in Texas — $267 versus $393 a month on the same $360,000 home. Get insurance quotes before you make an offer. Transfer taxes vary even more. Texas has none, while Delaware’s state transfer tax is 2.5% of the price where a local tax also applies, typically split between buyer and seller: on the median Delaware home ($371,600) the state portion alone is $9,290, or about $4,645 for each side. The [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/) shows your state. ## Under contract ### 9. Skipping the inspection or ignoring the appraisal The appraisal checks value for the lender; only an inspection checks condition for you. Keep an inspection contingency so you can renegotiate or walk away. Under Regulation B, the lender must give you a copy of the appraisal promptly or at least 3 business days before closing — read it, and if the value comes in below the price, use it to negotiate. More in [appraisal and inspection](https://mortgage-math-us.com/buying/appraisal-and-inspection/). ### 10. Opening new credit — and not reading the Closing Disclosure > **Watch out: Don’t change anything before closing** > > Lenders often re-check credit and employment just before closing. A new car loan, a store card or a job change can raise your debt-to-income ratio or lower your score enough to change the approval. Then read the Closing Disclosure, which must reach you at least 3 business days before closing. Compare it with your last Loan Estimate: some fees can’t increase at all, and others can rise by no more than 10% in total. If the APR rises by more than 0.125%, the loan product changes or a prepayment penalty is added, you get a new disclosure and a new waiting period. The [step-by-step guide](https://mortgage-math-us.com/first-time-buyers/step-by-step/) puts each deadline in order. ## Frequently asked questions ### What is the biggest mistake first-time home buyers make? Buying at the top of what a lender approves. Fannie Mae’s automated system can approve debts up to 50% of gross income, but Freddie Mac suggests keeping all debts under 45% and housing under 30%. ### Does shopping for a mortgage hurt my credit score? Not much, if you do it in a short window. The CFPB says multiple mortgage credit checks within 45 days are recorded as a single inquiry. ### Should I waive the home inspection to win a bidding war? It is risky. The appraisal protects the lender, not you, and only an inspection tells you about the roof, foundation and systems. If you must compete, consider a shorter inspection period rather than none. ### Can I buy furniture or a car before closing? Wait until after closing. New debt can raise your debt-to-income ratio or lower your score, and lenders often re-check credit just before closing. ### When should I get the Closing Disclosure? At least 3 business days before closing. Compare it line by line with your Loan Estimate and ask the lender to explain any increase. ### How do I avoid paying PMI for too long? On a conventional loan, ask your servicer to cancel PMI when your balance reaches 80% of the original value; it ends automatically at 78%. Extra principal payments get you there sooner. ## Sources - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) — Fannie Mae maximum DTI, Desktop Underwriter loans (Apr 2, 2025) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: total debt payments below this share of gross income; Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/how-should-i-use-lender-credits-and-points-also-called-discount-points-en-136/) — Cost of one discount point (share of loan amount) (Oct 19, 2023) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US10) — Median value of owner-occupied homes (2024 ACS 1-year) - [Delaware Division of Revenue](https://revenue.delaware.gov/first-time-home-buyer-tax-credit/) — State real estate transfer tax (Apr 16, 2024) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US48) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — CFPB: emergency cushion, low end (months of expenses); Minimum down payment on some conventional loans; Minimum FHA down payment (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-exactly-happens-when-a-mortgage-lender-checks-my-credit-en-2005/) — Mortgage credit checks within this window count as one inquiry (Aug 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) — You receive the Closing Disclosure at least this many business days before closing (Oct 28, 2026) - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/loan-types/purchase-loan/) — VA purchase loan down payment (price at or below appraised value) (Jan 7, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) — Ask your servicer to cancel PMI at this share of original value; PMI ends automatically at this share of original value (Oct 28, 2026) - [42 U.S.C. 12704(14)](https://www.law.cornell.edu/uscode/text/42/12704) — First-time homebuyer: has not owned a home in the past (HUD/HOME statute) (Oct 28, 2026) - [CFPB, Regulation B 1002.14](https://www.consumerfinance.gov/rules-policy/regulations/1002/14) — Lender must give you the appraisal at least this long before closing (or promptly) (Oct 28, 2026) - [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) — FHA minimum score for maximum financing (Oct 8, 2026) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA annual MIP, 30-year loan, more than 95% LTV; FHA annual MIP ends after 11 years when the starting LTV is at or below (Feb 22, 2023) - [Texas Department of Housing and Community Affairs](https://welcomehome.tdhca.texas.gov/uploads/My-First-Texas-Home-Program-Matrix-TMS.pdf) — TDHCA My First Texas Home assistance, low end (share of loan); TDHCA My First Texas Home assistance, high end (share of loan) (Program matrix Aug 17, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-loan-estimate-en-1995/) — Lender must send the Loan Estimate within this many business days of your application (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-my-final-mortgage-costs-increase-from-what-was-on-my-loan-estimate-en-172/) — Cumulative limit on increases for recording fees and lender-listed services (Sep 11, 2024) - [12 CFR 1026.22](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-C/section-1026.22) — APR change that triggers a new 3-business-day wait (regular loans) (Oct 28, 2026) - [CFPB: What happens when a mortgage lender checks my credit?](https://www.consumerfinance.gov/ask-cfpb/what-exactly-happens-when-a-mortgage-lender-checks-my-credit-en-2005/) - [CFPB: Regulation B 1002.14, rules on providing appraisals](https://www.consumerfinance.gov/rules-policy/regulations/1002/14) - [CFPB: Closing Disclosure explainer](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) _General information, not financial advice._ --- # Mortgage credit certificates (MCCs) > How a mortgage credit certificate turns 10%–50% of your mortgage interest into a tax credit: the $2,000 cap, carryforward, recapture and who can get one. URL: https://mortgage-math-us.com/first-time-buyers/mortgage-credit-certificates/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer A mortgage credit certificate (MCC), issued by a state or local housing agency, lets you claim a federal tax credit equal to 10%–50% of the mortgage interest you pay each year, claimed on IRS Form 8396. If the certificate rate is above 20%, the credit is capped at $2,000 a year. Unused credit carries forward up to 3 years, and selling within 9 years may trigger a recapture tax. On a $342,000 loan at 7.24%, a 20% certificate is worth about **$4,930** in the first year. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Lowest certificate credit rate | 10% | [IRS Form 8396](https://www.irs.gov/pub/irs-pdf/f8396.pdf) | Tax year 2025 | | Highest certificate credit rate | 50% | [IRS Form 8396](https://www.irs.gov/pub/irs-pdf/f8396.pdf) | Tax year 2025 | | Yearly credit cap on high-rate certificates | $2,000/yr | [IRS Form 8396](https://www.irs.gov/pub/irs-pdf/f8396.pdf) | Tax year 2025 | | Unused credit carries forward up to | 3 years | [IRS Form 8396](https://www.irs.gov/pub/irs-pdf/f8396.pdf) | Tax year 2025 | | Selling within this period may trigger recapture | 9 years | [IRS Form 8396](https://www.irs.gov/pub/irs-pdf/f8396.pdf) | Tax year 2025 | | TSAHC certificate rate in Texas | 15% | [Texas State Affordable Housing Corporation](https://www.tsahc.org/homebuyers-renters/mcc-calculator/) | Oct 28, 2026 | ## How a mortgage credit certificate works A mortgage credit certificate is issued when you buy a home through a participating lender in a state or local MCC program. Each year you own the home and live in it, you multiply the mortgage interest you paid by the certificate rate and claim that amount as a credit on IRS Form 8396. A **credit** is worth more than a **deduction** of the same size: a credit reduces your tax bill dollar for dollar, while a deduction only reduces the income you are taxed on — and only if you itemize. The MCC works whether or not you itemize, which matters if you take the standard deduction. Federal law lets each program choose a certificate rate from 10% to 50%. Above 20%, a yearly dollar cap applies, so a higher rate isn’t always a bigger credit. ## The rules on Form 8396 *Mortgage credit certificate rules (IRS Form 8396)* | Rule | What it means for you | |---|---| | Credit = interest paid × certificate rate | Based on interest on the certified loan amount shown on your certificate | | Rate between 10% and 50% | Set by the issuing agency, printed on your certificate | | Yearly cap of $2,000 if the rate is above 20% | No cap at or below 20%; credit above the cap is lost, not carried forward | | Limited to your tax liability | The credit can’t reduce your tax below zero; it isn’t refundable | | Unused credit carries forward up to 3 years | Credit you couldn’t use because of the tax limit can be used in later years | | Itemizers reduce their mortgage interest deduction | You deduct interest paid minus the credit, even if part of the credit carries forward | | Refinancing | The credit continues only if the agency reissues the certificate for the new loan | A VA certificate of eligibility or an FHA document isn’t an MCC; only a certificate issued under a qualified state or local program counts. ## Worked example > **Worked example: $360,000 home (near the US median), 5% down, $342,000 loan, 30-year fixed at an example rate of 7.24%** > > First-year interest on this loan comes to about **$24,652**. Here is what certificates at different rates would be worth that year: > > | Certificate rate | Interest × rate | Cap applies? | First-year credit | Interest left to deduct if you itemize | > |---|---:|---|---:|---:| > | 10% | $2,465 | No | **$2,465** | $22,187 | > | 15% | $3,698 | No | **$3,698** | $20,954 | > | 20% | $4,930 | No | **$4,930** | $19,722 | > | 30% | $7,396 | Yes | **$2,000** | $22,652 | > > Above 20% the $2,000 cap bites, so on a loan this size a 20% certificate is worth more than a 30% one. Over the first five years, interest totals about $120,586, so a 20% certificate could be worth about $24,117 in credits — if your federal tax bill each year is at least as large as the credit. The example also shows why the credit matters to buyers who don’t itemize. First-year interest of $24,652 plus property tax of about $3,204 at the national average ratio comes to $27,856, below the $32,200 standard deduction for a married couple. With no other itemized deductions, that couple gets no tax benefit from the interest — but an MCC still cuts their tax. ## Who can get one MCCs are issued by states and local governments that are allowed to issue tax-exempt mortgage revenue bonds, usually through the state housing finance agency or a city or county program. Because they follow the same federal rules as bond-financed loans, eligibility generally requires: - **First-time buyer status** — no ownership interest in a principal residence during the 3 years before the mortgage, waived in targeted areas and once for veterans. See [who counts as a first-time buyer](https://mortgage-math-us.com/first-time-buyers/who-counts-as-first-time/). - **Income limits** — up to 115% of the greater of area or statewide median family income, lower for one- and two-person households and higher in targeted areas. - **Purchase price limits** — up to 90% of the average area purchase price, or more in targeted areas. - **Principal residence** — you must live in the home. Many agencies offer the MCC only alongside their own loans or [down-payment assistance](https://mortgage-math-us.com/first-time-buyers/grants/), and funding is limited. Your state housing finance agency, listed through the [first-time buyer programs](https://mortgage-math-us.com/first-time-buyers/programs/) guide, can tell you whether a program is open. **Texas example.** TSAHC’s certificate rate is 15%; its stand-alone MCC has been discontinued, so the certificate is available only with TSAHC’s down-payment assistance and no-assistance loans, and it is free for Homes for Texas Heroes buyers. TDHCA charges an issuance fee of $400 where its MCC applies. More on Texas programs in the [Texas guide](https://mortgage-math-us.com/location/texas/). ## Recapture if you sell early > **Watch out: Selling within 9 years can cost you** > > If you sell a home bought with an MCC within 9 years, you may have to repay part of the benefit as a recapture tax, figured on IRS Form 8828. You owe nothing if you sell at a loss or your income stays at or below the adjusted qualifying income the form sets, and the tax can never exceed 50% of your gain. Ask the issuing agency how recapture would apply to you before closing. ## How to claim it each year Apply through a participating lender as part of your purchase, and keep the certificate with your tax records. Each year, file Form 8396 with your return using the interest on your Form 1098, and carry any unused credit forward. If you refinance, ask the agency about reissuing the certificate before you close the new loan, or the credit ends. Use the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/) to see how much interest your own loan generates. ## Frequently asked questions ### How much is a mortgage credit certificate worth? The credit is the interest you pay times the certificate rate, from 10% to 50%, capped at $2,000 a year when the rate is above 20%. On the $342,000 example loan, a 20% certificate is worth about $4,930 in the first year. ### Is an MCC better than the mortgage interest deduction? It works on top of it. You claim the credit and, if you itemize, deduct the remaining interest. Because a credit cuts tax dollar for dollar and doesn’t require itemizing, it can be worth more than the deduction alone, especially if you don’t itemize. ### What happens if my credit is more than my tax bill? The credit can’t take your tax below zero. The unused amount carries forward for up to 3 years, except any part above the $2,000 cap, which is lost. ### Do I have to repay a mortgage credit certificate? Not if you keep the home. Selling within 9 years may trigger a recapture tax figured on Form 8828, but none is due on a sale at a loss, and it can’t exceed 50% of your gain. ### Can I keep my MCC if I refinance? Only if the issuing agency reissues the certificate for the new loan. The reissued certificate can’t exceed the original loan balance or credit rate. ### Who issues mortgage credit certificates? State and local governments that can issue mortgage revenue bonds, usually through the state housing finance agency or a city or county program. In Texas, TSAHC and TDHCA both offer them with their home loan programs. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [IRS Form 8396](https://www.irs.gov/pub/irs-pdf/f8396.pdf) — Mortgage credit certificate cap when the rate is above 20%; Mortgage credit certificate: the yearly dollar cap applies when the rate is above; Mortgage credit certificate rate, lowest (Tax year 2025) - [Texas State Affordable Housing Corporation](https://www.tsahc.org/homebuyers-renters/mcc-calculator/) — TSAHC Mortgage Credit Certificate rate (share of mortgage interest) (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [IRS](https://www.irs.gov/newsroom/working-families-tax-cuts-individuals-and-workers) — 2026 standard deduction, married filing jointly (Tax year 2026) - [26 U.S.C. 143(d)](https://www.govinfo.gov/link/uscode/26/143) — MCC and mortgage revenue bond loans: no ownership interest in a principal residence in the past; MCC and mortgage revenue bond income limit (share of the greater of area or statewide median family income); MCC and mortgage revenue bond purchase price limit (share of average area purchase price) (Oct 28, 2026) - [Texas Department of Housing and Community Affairs](https://welcomehome.tdhca.texas.gov/uploads/My-First-Texas-Home-Program-Matrix-TMS.pdf) — TDHCA Mortgage Credit Certificate issuance fee (Aug 17, 2026) - [IRS Form 8828](https://www.irs.gov/pub/irs-pdf/f8828.pdf) — MCC recapture tax can never exceed this share of the gain on sale (Rev. November 2024) - [IRS Form 8396: Mortgage Interest Credit](https://www.irs.gov/pub/irs-pdf/f8396.pdf) - [26 U.S.C. 25: Interest on certain home mortgages](https://www.govinfo.gov/link/uscode/26/25) - [IRS Form 8828: Recapture of federal mortgage subsidy](https://www.irs.gov/pub/irs-pdf/f8828.pdf) - [TSAHC: Mortgage credit certificates](https://www.tsahc.org/homebuyers-renters/mcc-calculator/) _General information, not financial advice._ --- # First-time home buyer programs > First-time home buyer programs explained: FHA, VA, USDA, HomeReady, Home Possible, state housing agency help, Good Neighbor Next Door and Texas. URL: https://mortgage-math-us.com/first-time-buyers/programs/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer First-time buyer help usually stacks in three layers: a low-down-payment loan — FHA at 3.5%, VA and USDA at 0%, or Fannie Mae HomeReady and Freddie Mac Home Possible at 3% for incomes up to 80% of area median — plus down-payment assistance from a state housing finance agency or city, plus sometimes a mortgage credit certificate. Teachers, police, firefighters and EMTs can also look at HUD’s Good Neighbor Next Door, which takes 50% off the list price in designated areas. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | HomeReady and Home Possible minimum down payment | 3% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | | HomeReady income limit (share of area median) | 80% | [Fannie Mae Selling Guide B5-6-01](https://selling-guide.fanniemae.com/sel/b5-6-01/homeready-mortgage-loan-and-borrower-eligibility) | Jun 4, 2025 | | USDA income limit (share of area median) | 115% | [USDA Rural Development](https://www.rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-guaranteed-loan-program) | Oct 28, 2026 | | Combined LTV allowed with a Community Seconds loan | 105% | [Fannie Mae Selling Guide B5-5.1-02](https://selling-guide.fanniemae.com/sel/b5-5.1-02/community-seconds-loan-eligibility) | May 3, 2023 | | Good Neighbor Next Door discount off list price | 50% | [HUD](https://www.hud.gov/helping-americans/good-neighbor) | Oct 28, 2026 | | TDHCA down-payment help in Texas, up to | 5% | [Texas Department of Housing and Community Affairs](https://welcomehome.tdhca.texas.gov/uploads/My-First-Texas-Home-Program-Matrix-TMS.pdf) | Program matrix Aug 17, 2026 | ## How first-time buyer programs fit together There is no single federal “first-time buyer program.” Instead, help comes from three places, and you can often use more than one: 1. **The mortgage itself.** Government-backed loans (FHA, VA, USDA) and low-down-payment conventional loans from Fannie Mae and Freddie Mac cut the cash you need up front. 2. **Assistance on top of the loan.** State housing finance agencies, cities, counties and nonprofits offer grants or second loans for the down payment and closing costs. See [down-payment grants](https://mortgage-math-us.com/first-time-buyers/grants/) for how each type is repaid. 3. **Tax help.** Some agencies issue a [mortgage credit certificate](https://mortgage-math-us.com/first-time-buyers/mortgage-credit-certificates/), which turns part of your mortgage interest into a tax credit each year. Most of the loan programs are open to repeat buyers too. The layers that usually do require first-time status — bond-funded agency loans and mortgage credit certificates — use a three-year test explained in [who counts as a first-time buyer](https://mortgage-math-us.com/first-time-buyers/who-counts-as-first-time/). ## National loan programs compared *Low-down-payment loans available nationwide* | Program | Minimum down | Income limit | Mortgage insurance or fee | Who it suits | |---|---:|---|---|---| | [FHA](https://mortgage-math-us.com/loan-types/fha-loans/) | 3.5% with a 580+ score | None | 1.75% upfront plus annual MIP | Lower scores, higher debts | | VA | 0% | None | Funding fee (2.15% first use, under 5% down); no monthly MI | Eligible service members and veterans | | USDA guaranteed | 0% | 115% of area median | 1% upfront, 0.35% a year | Buyers in eligible rural areas | | Fannie Mae HomeReady | 3% | 80% of area median | PMI, cancellable | Low- to moderate-income buyers | | Freddie Mac Home Possible | 3% | 80% of area median | PMI, cancellable | Low- to moderate-income buyers | HomeReady and Home Possible are conventional loans with a maximum loan-to-value of 97%. Neither requires you to be a first-time buyer, but both require a [homebuyer education course](https://mortgage-math-us.com/first-time-buyers/homebuyer-education/) when every occupying borrower is buying for the first time. ## Down-payment assistance on top of the loan Assistance is usually a second loan recorded behind your mortgage. Fannie Mae calls an eligible one a Community Seconds loan and allows a combined loan-to-value of up to 105%; Freddie Mac’s Affordable Seconds allow up to 105% with a fixed-rate first mortgage. That headroom above 100% is what lets assistance cover closing costs as well as the down payment. > **Worked example: How much room a Community Seconds loan leaves on a $360,000 home** > > | | Amount | > |---|---:| > | First mortgage at 97% loan-to-value (3% down) | $349,200 | > | Most total debt allowed at 105% combined LTV | $378,000 | > | **Largest possible second loan** | **$28,800** | > | Down payment it would replace | $10,800 | > | Left over toward closing costs | $18,000 | > > Closing costs on this home run about $7,200–$18,000 at the CFPB’s 2%–5% range, so a second loan this size could cover nearly all the cash due at closing. Real programs set their own, often smaller, maximums. ## State housing finance agencies Every state, plus DC, Puerto Rico and the US Virgin Islands, has a housing finance agency (HFA). Most work through participating lenders rather than lending to you directly, and they typically offer some mix of: - **Below-market first mortgages** funded by mortgage revenue bonds, usually limited to first-time buyers. - **Down-payment and closing-cost assistance** as a grant, a forgivable loan or a deferred loan. - **Mortgage credit certificates** for buyers who meet federal income and price limits. Expect income and purchase-price limits, a minimum credit score, a homebuyer education requirement and funding that can run out. To find yours, use the National Council of State Housing Agencies member directory (listed in the sources below), call HUD’s housing counseling line at 800-569-4287 for a counselor who knows local programs, or ask lenders whether they participate in your state’s HFA programs. Cities, counties and nonprofits run separate programs, so ask the counselor about those as well. ## HUD Good Neighbor Next Door Good Neighbor Next Door sells HUD-owned homes in designated revitalization areas to law enforcement officers, pre-kindergarten through 12th-grade teachers, firefighters and emergency medical technicians at a 50% discount off the list price. You must live in the home as your principal residence for 36 months, and you sign a second mortgage and note for the discount amount; no interest or payments are due on it if you meet the occupancy term. On a home listed at $200,000, the discount is $100,000, so you finance or pay $100,000. Eligible homes are listed by state on HUD’s HUD Home Store site, and when more than one eligible buyer bids on the same home, HUD picks the winner by random lottery. ## Texas as a worked example Texas shows how state programs layer on top of national loans. Two agencies run them through participating lenders: *Texas state-level programs* | Program | First-time rule | Help available | Paired with | |---|---|---|---| | TDHCA My First Texas Home | No owned-and-occupied home in the last 3 years; veterans and targeted areas exempt | 2%–5% of the loan | FHA, VA or USDA loan; minimum score 620 | | TSAHC Homes for Texas Heroes and Home Sweet Texas | Not required for the assistance | Up to 5% of the loan | Grant, forgivable or repayable second lien | > **Worked example: TDHCA help on the median Texas home ($313,200) with an FHA loan** > > The 3.5% down payment is $10,962. With the upfront FHA premium financed, the loan is about $307,527, so TDHCA’s 2%–5% works out to **$6,151–$15,376** — at the top of the range, more than the whole down payment, with the rest going toward closing costs. Both agencies also offer mortgage credit certificates. The [Texas guide](https://mortgage-math-us.com/location/texas/) covers property taxes, insurance and closing costs that shape the rest of the budget. ## How to choose between programs Start with the loan that fits your credit and down payment, then check what your state and city add. Ask each lender for a Loan Estimate with the assistance and one without: program loans can carry different rates and fees, and assistance that must be repaid when you sell or refinance is a debt, not free money. Run both payments through the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/) before you commit. [Open the affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/) ## Frequently asked questions ### What is the best program for first-time home buyers? It depends on your credit, income and location. FHA suits lower credit scores, VA needs no down payment or monthly mortgage insurance for eligible veterans, USDA offers 0% down in eligible areas, and HomeReady or Home Possible suit moderate incomes with good credit. Then add whatever your state housing finance agency offers. ### Do I have to be a first-time buyer to use these programs? Not for FHA, VA, USDA, HomeReady or Home Possible. State bond-funded loans and mortgage credit certificates usually do require it, generally meaning no ownership of a principal residence in the past 3 years, with exceptions for veterans and targeted areas. ### How do I find my state’s first-time buyer program? Look up your state housing finance agency in the National Council of State Housing Agencies member directory, or call HUD’s housing counseling line at 800-569-4287 to reach a counselor who knows local programs. Lenders that participate in your state’s programs can also check eligibility. ### Can I combine down-payment assistance with an FHA or conventional loan? Yes. Many programs are built to sit behind an FHA, VA, USDA or conventional loan. Fannie Mae allows a combined loan-to-value up to 105% with an eligible Community Seconds loan. ### Who qualifies for Good Neighbor Next Door? Law enforcement officers, pre-kindergarten through 12th-grade teachers, firefighters and emergency medical technicians buying a HUD-listed home in a revitalization area. You must live there for 36 months to keep the 50% discount. ### What does Texas offer first-time buyers? TDHCA’s My First Texas Home pairs an FHA, VA or USDA loan with 2%–5% of the loan in assistance, and TSAHC offers up to 5% without a first-time requirement for the assistance itself. ## Sources - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum down payment on some conventional loans; Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [Fannie Mae Selling Guide B5-5.1-02](https://selling-guide.fanniemae.com/sel/b5-5.1-02/community-seconds-loan-eligibility) — Fannie Mae Community Seconds maximum combined LTV (May 3, 2023) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US48) — Median value of owner-occupied homes (2024 ACS 1-year) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA upfront mortgage insurance premium (Feb 22, 2023) - [Texas Department of Housing and Community Affairs](https://welcomehome.tdhca.texas.gov/uploads/My-First-Texas-Home-Program-Matrix-TMS.pdf) — TDHCA My First Texas Home assistance, low end (share of loan); TDHCA My First Texas Home assistance, high end (share of loan); TDHCA first-time buyer test: no owned and occupied home in the last (Program matrix Aug 17, 2026) - [HUD](https://www.hud.gov/helping-americans/good-neighbor) — HUD Good Neighbor Next Door discount off list price; Good Neighbor Next Door required owner-occupancy (Oct 28, 2026) - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/loan-types/purchase-loan/) — VA purchase loan down payment (price at or below appraised value) (Jan 7, 2026) - [Fannie Mae Selling Guide B5-6-01](https://selling-guide.fanniemae.com/sel/b5-6-01/homeready-mortgage-loan-and-borrower-eligibility) — Fannie Mae HomeReady income limit (share of area median income) (Jun 4, 2025) - [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) — FHA minimum score for maximum financing (Oct 8, 2026) - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) — VA funding fee, first use, less than 5% down (Apr 7, 2023) - [USDA Rural Development](https://www.rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-guaranteed-loan-program) — USDA guaranteed loan down payment; USDA guaranteed loan income limit (share of area median income) (Oct 28, 2026) - [USDA Rural Development](https://www.rd.usda.gov/media/file/download/usda-rd-sfh-guarantee-loan-program-101-jan-2026.pdf) — USDA guaranteed loan upfront guarantee fee; USDA guaranteed loan annual fee (FY2026) - [Freddie Mac Home Possible fact sheet](https://sf.freddiemac.com/docs/pdf/fact-sheet/home_possible_factsheet.pdf) — Freddie Mac Home Possible income limit (share of area median income); Freddie Mac Home Possible maximum TLTV with Affordable Seconds (Feb 1, 2026) - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae maximum LTV, one-unit principal residence purchase (Apr 1, 2026) - [HUD](https://www.hud.gov/stat/sfh/housing-counseling) — HUD housing counseling referral line (Oct 28, 2026) - [Texas State Affordable Housing Corporation](https://www.tsahc.org/landing/home-down-payment-assistance) — TSAHC down payment assistance, up to (share of loan) (Oct 28, 2026) - [26 U.S.C. 143(d)](https://www.govinfo.gov/link/uscode/26/143) — MCC and mortgage revenue bond loans: no ownership interest in a principal residence in the past (Oct 28, 2026) - [National Council of State Housing Agencies: member HFA directory](https://www.ncsha.org/membership/hfa-members/) - [CFPB: Where can I find information on programs for first-time home buyers?](https://www.consumerfinance.gov/ask-cfpb/where-can-i-find-information-on-programs-for-first-time-home-buyers-en-2156/) - [HUD: Good Neighbor Next Door](https://www.hud.gov/helping-americans/good-neighbor) _General information, not financial advice._ --- # Saving for a home: targets, timelines and shortcuts > How much to save for a house at 3%, 5%, 10% and 20% down plus closing costs, how long it takes, and how IRA withdrawals and family gifts can help. URL: https://mortgage-math-us.com/first-time-buyers/saving-for-a-home/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer On a $360,000 home near the US median value, you need about **$23,400** with 3% down or **$84,600** with 20% down, counting closing costs at the middle of the CFPB’s 2%–5% range. Saving $1,000 a month, the 5% target of $30,600 takes about 31 months, so many buyers combine savings with a low-down-payment loan, assistance, a family gift or a penalty-free IRA withdrawal of up to $10,000. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | US median home value | $360,600 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) | 2024 ACS 1-year | | Closing costs, low end (share of price) | 2% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | | Closing costs, high end (share of price) | 5% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | | Penalty-free IRA withdrawal for a first home (lifetime) | $10,000 | [IRS Tax Topic 557](https://www.irs.gov/taxtopics/tc557) | Oct 26, 2026 | | Annual gift tax exclusion per recipient (2026) | $19,000 | [IRS: What's new — Estate and gift tax](https://www.irs.gov/businesses/small-businesses-self-employed/whats-new-estate-and-gift-tax) | Tax year 2026 | | Emergency cushion, up to (CFPB) | 6 months | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | ## How much you need to save Three pots of money: the down payment, closing costs — which the CFPB puts at 2%–5% of the purchase price, on top of the down payment — and a cash cushion you keep after closing. *Cash to close on a $360,000 home (near the US median value of $360,600)* | Down payment | Down payment amount | Closing costs (2%–5%) | Cash to close | |---|---:|---:|---:| | 3% | $10,800 | $7,200–$18,000 | **$18,000–$28,800** | | 5% | $18,000 | $7,200–$18,000 | **$25,200–$36,000** | | 10% | $36,000 | $7,200–$18,000 | **$43,200–$54,000** | | 20% | $72,000 | $7,200–$18,000 | **$79,200–$90,000** | Twenty percent is not a requirement. Conventional loans start at 3% down, FHA at 3.5% and VA and USDA at 0% for eligible buyers. Putting down less means paying mortgage insurance and a bigger monthly payment, so the right target is the one that leaves you a payment you can carry — the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/) shows both. ## How long it will take *Months to reach each target (closing costs at the 3.5% midpoint, before interest)* | Target | $500/mo | $1,000/mo | $1,500/mo | $2,000/mo | |---|---:|---:|---:|---:| | 3% down ($23,400) | 47 | 24 | 16 | 12 | | 5% down ($30,600) | 62 | 31 | 21 | 16 | | 10% down ($48,600) | 98 | 49 | 33 | 25 | | 20% down ($84,600) | 170 | 85 | 57 | 43 | Interest on savings shortens these times a little; rising prices lengthen them. If the 20% row is years away, compare the extra rent you would pay while saving with the cost of PMI on a smaller down payment — the [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/) runs that comparison. [Open the rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/) ## Keep a cushion after closing Don’t put every dollar into the purchase. The CFPB suggests an emergency cushion of usually 3–6 months of expenses. Counting only the housing payment on this home with 10% down — about $2,784 a month — that is $8,352–$16,704, before groceries, car payments and repairs. Lenders also like to see reserves left over after closing, and a few months’ cushion can make a borderline approval stronger. ## Where to keep the money Money you will need within a few years belongs somewhere safe and easy to reach, such as a federally insured savings account, rather than investments that can fall just before you buy. Keep it in your own name and leave a clear paper trail: lenders review your recent bank statements and typically ask you to explain and document large deposits that aren’t from your paycheck. ## Using an IRA for a first home Early withdrawals from an IRA usually carry a 10% additional tax, but IRS Tax Topic 557 lists an exception for up to $10,000 used for a qualified first-time home purchase. The rules that come with it: - **Lifetime limit.** $10,000 in total, reduced by any earlier first-home withdrawals. - **IRAs only.** The exception doesn’t apply to 401(k) and other workplace plans. - **Definition of first-time.** You and your spouse can’t have owned a principal residence in the 2 years before the purchase — a shorter test than most [first-time buyer definitions](https://mortgage-math-us.com/first-time-buyers/who-counts-as-first-time/). - **Deadline.** The money must be spent on the purchase within 120 days of the withdrawal. - **Income tax still applies.** The exception removes only the additional tax; the taxable part of a traditional IRA withdrawal is still income for the year. > **Worked example: Using the IRA exception for a 5% down payment** > > The 5% target on this home is $30,600. Taking $10,000 from a traditional IRA cuts what you still need to $20,600 and avoids $1,000 of additional tax — but the $10,000 is added to your taxable income, so set aside money for the income tax bill. ## Gifts from family A gift from family can close the gap quickly. On a Fannie Mae loan for a one-unit home you live in, a gift can cover the whole down payment, closing costs and reserves; you aren’t required to put in any of your own money. Acceptable donors include relatives, a fiancé or domestic partner, but not the seller, builder or real estate agent. The donor signs a gift letter stating the amount, their relationship to you and that no repayment is expected. For the giver, the annual gift tax exclusion is $19,000 per recipient in 2026. A larger gift to one person in a year generally means the giver files a gift tax return. FHA and other loan programs have their own gift rules, so ask your lender before the money moves. ## Ways to need less - **Choose a low-down-payment loan.** Compare FHA, VA, USDA and conventional options in [first-time buyer programs](https://mortgage-math-us.com/first-time-buyers/programs/). - **Apply for assistance.** State and local [down-payment grants and loans](https://mortgage-math-us.com/first-time-buyers/grants/) can cover the down payment and part of the closing costs. - **Negotiate seller credits.** A seller can agree to pay part of your closing costs, within limits set by your loan type. - **Shop closing costs.** Compare lender fees on each Loan Estimate and, where allowed, shop for title and settlement services. ## Frequently asked questions ### How much should I save before buying a house? Enough for the down payment, closing costs of 2%–5% of the price, and a cushion. On a $360,000 home that is about $23,400 with 3% down or $84,600 with 20% down, using the middle of the closing-cost range. ### How long does it take to save for a house? At $1,000 a month, a 5% down payment plus closing costs on a $360,000 home takes about 31 months; at $2,000 a month, about 16. Assistance programs, gifts and an IRA withdrawal can shorten that. ### Can I use my IRA to buy my first home? Yes. Up to $10,000 over your lifetime can come out without the 10% additional tax if it is used for a first home within 120 days. Regular income tax still applies to the taxable part, and the exception doesn’t cover 401(k) plans. ### Can my parents give me money for a down payment? Yes. Fannie Mae lets a gift from a relative cover the entire down payment and closing costs on a one-unit home you will live in, documented with a signed gift letter. Gifts above $19,000 to one person in a year generally require the giver to file a gift tax return. ### Should I wait until I have 20% down? Not necessarily. Waiting avoids mortgage insurance but means more years of rent and exposure to price changes. Compare the cost of PMI with the cost of waiting, and keep an emergency cushion either way. ### How big should my emergency fund be when buying a home? The CFPB suggests usually 3–6 months of expenses, kept separate from the money you use for the down payment and closing costs. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price); CFPB: emergency cushion, low end (months of expenses) (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [IRS Tax Topic 557](https://www.irs.gov/taxtopics/tc557) — Penalty-free IRA withdrawal for a first home (lifetime limit); Additional tax on early IRA distributions unless an exception applies (Oct 26, 2026) - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/loan-types/purchase-loan/) — VA purchase loan down payment (price at or below appraised value) (Jan 7, 2026) - [26 U.S.C. 72(t)(8)](https://www.govinfo.gov/link/uscode/26/72) — IRA first-home exception: no ownership interest in a principal residence in the past; IRA first-home withdrawal must be spent on the purchase within (Oct 28, 2026) - [IRS: What's new — Estate and gift tax](https://www.irs.gov/businesses/small-businesses-self-employed/whats-new-estate-and-gift-tax) — Annual gift tax exclusion per recipient (2026) (Tax year 2026) - [IRS Tax Topic 557: Additional tax on early distributions](https://www.irs.gov/taxtopics/tc557) - [IRS: Exceptions to tax on early distributions](https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-exceptions-to-tax-on-early-distributions) - [Fannie Mae Selling Guide B3-4.3-04: Personal gifts](https://selling-guide.fanniemae.com/sel/b3-4.3-04/personal-gifts) _General information, not financial advice._ --- # How to buy your first home, step by step > The path from savings to keys in 12 steps: credit, savings, programs, pre-approval, Loan Estimates, offer, inspection, appraisal, Closing Disclosure. URL: https://mortgage-math-us.com/first-time-buyers/step-by-step/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer Start months ahead by checking your credit and saving for the down payment, closing costs of 2%–5% of the price and a cash cushion. Then get pre-approved — keeping mortgage credit checks within 45 days so they count as one inquiry — compare Loan Estimates, which lenders must send within 3 business days of your application, make an offer with inspection and appraisal contingencies, and review your Closing Disclosure, which must arrive at least 3 business days before you sign. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Mortgage credit checks in this window count as one | 45 days | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-exactly-happens-when-a-mortgage-lender-checks-my-credit-en-2005/) | Aug 28, 2026 | | Loan Estimate arrives within | 3 business days | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-loan-estimate-en-1995/) | Oct 28, 2026 | | Appraisal copy due before closing (or promptly) | 3 business days | [CFPB, Regulation B 1002.14](https://www.consumerfinance.gov/rules-policy/regulations/1002/14) | Oct 28, 2026 | | Closing Disclosure arrives before closing | 3 business days | [CFPB](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) | Oct 28, 2026 | | Closing costs, high end of the CFPB range | 5% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | ## The 12 steps from savings to keys **How to buy your first home** 1. **Check your credit and debts** — Pull your free credit reports, fix errors, and add up every monthly debt payment. Freddie Mac suggests keeping housing costs below 30% of gross income and all debts below 45%; see [debt-to-income](https://mortgage-math-us.com/buying/debt-to-income/) for how lenders count. 2. **Set a savings target** — Plan for the down payment, closing costs of 2%–5% of the price, moving costs and a cushion for repairs. [Saving for a home](https://mortgage-math-us.com/first-time-buyers/saving-for-a-home/) works out targets and timelines. 3. **Find the help you qualify for** — Check national loan programs and your state housing finance agency’s assistance before you settle on a budget. Start with [first-time buyer programs](https://mortgage-math-us.com/first-time-buyers/programs/) and check [who counts as a first-time buyer](https://mortgage-math-us.com/first-time-buyers/who-counts-as-first-time/). 4. **Take a homebuyer education course** — Many assistance programs require one, and Fannie Mae does when all borrowers are first-time buyers and the loan-to-value is above 95%. Doing it early helps with every later step. 5. **Get pre-approved** — A lender checks your credit, income and assets and states how much it will lend. Apply with several lenders within 45 days, so their credit checks show up as a single inquiry. More in [mortgage pre-approval](https://mortgage-math-us.com/buying/pre-approval/). 6. **Compare Loan Estimates** — Each lender must send a standard Loan Estimate within 3 business days of a full application. Compare the rate, points, lender fees and cash to close, not just the monthly payment. 7. **Shop for a home within your budget** — Choose a payment you are comfortable with, not the most a lender will approve. Check each listing’s property taxes, HOA dues and likely insurance cost before you fall for it. 8. **Make an offer** — Your agent writes the contract and you put down earnest money. Inspection, appraisal and financing contingencies protect that deposit if something goes wrong. 9. **Inspect the home and get the appraisal** — The inspector checks condition; the appraiser checks value for the lender. You must get a copy of the appraisal promptly or at least 3 business days before closing. 10. **Finish underwriting and lock your rate** — Answer document requests quickly. Don’t open new credit, make large unexplained deposits or change jobs until after closing. 11. **Review the Closing Disclosure** — It must reach you at least 3 business days before closing. Compare it line by line with your last Loan Estimate and ask about every difference. 12. **Close and get the keys** — Do a final walk-through, bring your cash to close by a verified wire or cashier’s check, sign the note and mortgage or deed of trust, and collect the keys. ## How long each stage takes Most of the waiting happens before you ever make an offer. Saving and fixing credit can take months or years; the stretch from accepted offer to closing usually takes several weeks and is set by your contract’s deadlines. A handful of federal rules set the clock along the way: *The deadlines that set the pace* | Stage | Typical timing | Rule that applies | |---|---|---| | Credit and savings | Months to years before you buy | — | | Pre-approval and rate shopping | Shortly before you start touring homes | Mortgage credit checks within 45 days count as one inquiry | | Loan Estimate | Right after you apply | Sent within 3 business days of the application | | Inspection | Early in the contract period | Set by your contract’s inspection deadline | | Appraisal | During underwriting | Copy promptly, or at least 3 business days before closing | | Closing Disclosure | Just before closing | Received at least 3 business days before closing | If the APR rises by more than 0.125%, the loan product changes or a prepayment penalty is added after you receive the Closing Disclosure, the lender must give you a new one and a new 3 business days wait starts. Plan your move-out date with a few days of slack. ## What the money looks like > **Worked example: First home at $360,000 (near the US median value), 5% down, 30-year fixed at an example rate of 7.24%** > > | Cash needed up front | Amount | > |---|---:| > | Down payment (5%) | $18,000 | > | Closing costs at 2%–5% | $7,200–$18,000 | > | **Cash to close** | **$25,200–$36,000** | > > | Monthly payment | Amount | > |---|---:| > | Principal and interest on $342,000 | $2,331 | > | Property tax at 0.89% | $267 | > | Homeowners insurance | $147 | > | PMI (midpoint of Freddie Mac’s range) | $171 | > | **Total** | **$2,916** | > > On the US median household income of $81,604/yr, that payment is $2,916 out of $6,800 a month, or about 43% — compare that with the 30% guideline before you shop. Assistance programs, seller credits toward closing costs and a lower price all shrink the first table; a larger down payment and a better credit score shrink the second. Try your own numbers in the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/). [Open the affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/) ## Mistakes to avoid at each step > **Tip: Keep your finances still until closing** > > Lenders often re-check credit and employment just before closing. A new car loan, a new credit card or a job change can change the approval, so wait until you have the keys. Other common slips — skipping the inspection, comparing rates instead of total costs, or forgetting taxes and insurance — are covered in [first-time buyer mistakes to avoid](https://mortgage-math-us.com/first-time-buyers/mistakes-to-avoid/). Once you move in, look into your state’s homestead exemption, which lowers the taxable value of a primary residence in many states; in Texas, for example, school districts exempt $140,000 of a homestead’s value, and you have to apply for it. ## Frequently asked questions ### What is the first step to buying a house? Check your credit reports and add up your monthly debts. That tells you which loans you can get and what payment you can carry; lenders and Freddie Mac’s guidance both start from your debt-to-income ratio. ### How long does it take to buy a first home? Preparing — saving and improving credit — can take months or years. Once an offer is accepted, closing usually takes several weeks, depending on your contract deadlines, the appraisal and underwriting. ### How much money do I need to buy my first house? The down payment plus closing costs plus a cushion. On a $360,000 home with 5% down, that is $18,000 down and about $7,200–$18,000 in closing costs before moving costs and reserves. ### Should I get pre-approved before looking at houses? Yes. A pre-approval shows sellers you can get financing and stops you falling for a home a lender won’t finance. Apply with several lenders within 45 days so the credit checks count as one inquiry. ### When do I get the Closing Disclosure? At least 3 business days before closing. If the APR rises by more than 0.125%, the loan product changes or a prepayment penalty is added, you get a new disclosure and a new waiting period. ### Do I need a homebuyer education course? Only for some loans and programs. Fannie Mae requires one when all borrowers are first-time buyers and the loan-to-value is above 95%, and many state assistance programs require one for every borrower. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income; Freddie Mac guidance: total debt payments below this share of gross income (Jan 22, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-exactly-happens-when-a-mortgage-lender-checks-my-credit-en-2005/) — Mortgage credit checks within this window count as one inquiry (Aug 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-loan-estimate-en-1995/) — Lender must send the Loan Estimate within this many business days of your application (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) — You receive the Closing Disclosure at least this many business days before closing (Oct 28, 2026) - [Fannie Mae Selling Guide B2-2-06](https://selling-guide.fanniemae.com/sel/b2-2-06/homeownership-education-and-housing-counseling) — Fannie Mae requires homebuyer education above this LTV when all borrowers are first-time buyers (Nov 5, 2025) - [CFPB, Regulation B 1002.14](https://www.consumerfinance.gov/rules-policy/regulations/1002/14) — Lender must give you the appraisal at least this long before closing (or promptly) (Oct 28, 2026) - [12 CFR 1026.22](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-C/section-1026.22) — APR change that triggers a new 3-business-day wait (regular loans) (Oct 28, 2026) - [Texas Comptroller](https://comptroller.texas.gov/taxes/property-tax/exemptions/) — School district residence homestead exemption (Dec 11, 2025) - [CFPB: What happens when a mortgage lender checks my credit?](https://www.consumerfinance.gov/ask-cfpb/what-exactly-happens-when-a-mortgage-lender-checks-my-credit-en-2005/) - [CFPB: Closing Disclosure explainer](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) - [CFPB: Regulation B 1002.14, rules on providing appraisals](https://www.consumerfinance.gov/rules-policy/regulations/1002/14) _General information, not financial advice._ --- # Who counts as a first-time home buyer? > Who counts as a first-time home buyer: the 3-year rule used by HUD, Fannie Mae and tax law, exceptions for single parents and displaced homemakers. URL: https://mortgage-math-us.com/first-time-buyers/who-counts-as-first-time/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer In most programs you are a first-time buyer if you haven’t owned a home in the past 3 years — the test used by HUD’s statutory definition, by Fannie Mae (3 years) and by federal tax law for mortgage credit certificates (3 years). HUD’s definition adds exceptions: a single parent or displaced homemaker who owned only with a spouse can still qualify. The IRA first-home withdrawal uses a shorter 2-year look-back, and state programs set their own rules — Texas’s TDHCA counts a home you owned *and lived in* during the last 3 years. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | HUD definition: no home owned in the past | 3 years | [42 U.S.C. 12704(14)](https://www.law.cornell.edu/uscode/text/42/12704) | Oct 28, 2026 | | Fannie Mae: no ownership interest in the past | 3 years | [Fannie Mae Selling Guide E-3-06](https://selling-guide.fanniemae.com/sel/e-3-06/acronyms-and-glossary-defined-terms-f) | Sep 3, 2025 | | Credit certificates and bond loans: no home owned in | 3 years | [26 U.S.C. 143(d)](https://www.govinfo.gov/link/uscode/26/143) | Oct 28, 2026 | | IRA first-home withdrawal: no home owned in | 2 years | [26 U.S.C. 72(t)(8)](https://www.govinfo.gov/link/uscode/26/72) | Oct 28, 2026 | | TDHCA (Texas): no owned-and-occupied home in | 3 years | [Texas Department of Housing and Community Affairs](https://welcomehome.tdhca.texas.gov/uploads/My-First-Texas-Home-Program-Matrix-TMS.pdf) | Program matrix Aug 17, 2026 | ## The short answer: usually three years “First-time buyer” rarely means someone who has never owned. In most definitions it means you haven’t owned a home recently — usually within 3 years of the new purchase. So if you sold a home years ago and have rented since, you probably count again. The details still matter, because each program words the test differently: some look at *any* residential property, others only at a home you lived in; some cover your spouse; and several carve out exceptions. *How the main definitions compare* | Definition | Look-back | What counts against you | Notable exceptions | |---|---|---|---| | HUD (42 U.S.C. 12704) | 3 years before purchase | Owning a home (you or your spouse) | Displaced homemakers, single parents, homes not on a permanent foundation | | Fannie Mae | 3 years before purchase | Any ownership interest in residential property, sole or joint | Displaced homemakers and single parents who owned only with a spouse | | Mortgage credit certificates and bond loans (26 U.S.C. 143) | 3 years before the mortgage | A present ownership interest in your principal residence | Targeted areas; veterans, once | | IRA first-home withdrawal (26 U.S.C. 72) | 2 years before acquisition | An ownership interest in a principal residence (you or your spouse) | — | | TDHCA, Texas | 3 years | A primary residence you owned and occupied | Veterans; targeted census tracts | ## HUD’s definition and its exceptions The federal housing statute defines a first-time homebuyer as an individual and his or her spouse who have not owned a home during the 3 years before buying a home with help from HUD’s HOME Investment Partnerships program. Many state and local assistance programs borrow this wording. It then lists three groups who may not be excluded: - **Displaced homemakers** — not excluded because, while a homemaker, they owned a home with a spouse or lived in a home the spouse owned. The statute defines a displaced homemaker as an adult who has not worked full-time, full-year in the labor force for a number of years but has worked primarily without pay to care for the home and family, and who is unemployed or underemployed and having difficulty getting or upgrading employment. - **Single parents** — not excluded because, while married, they owned a home with a spouse or lived in a home the spouse owned. A single parent is someone unmarried or legally separated who has custody or joint custody of one or more minor children, or is pregnant. - **Owners of certain structures** — owning a home that isn’t permanently affixed to a permanent foundation, or that doesn’t meet building codes and can’t be brought up to code for less than the cost of a permanent structure, doesn’t disqualify you. > **Note: The exceptions are narrow** > > They cover ownership *with a spouse*. A single parent who owned a home alone in the past 3 years is not a first-time buyer under this definition. ## Fannie Mae’s definition Fannie Mae’s Selling Guide treats you as a first-time homebuyer if you are buying the home, will live in it as your principal residence, and had no ownership interest — sole or joint — in a residential property during the 3 years before the purchase. Note “residential property”: owning a rental or vacation home in that window counts against you. A displaced homemaker or single parent qualifies if their only ownership in that period was joint ownership of a principal residence with a spouse. The status matters in a few places on a Fannie Mae loan: - **Down payment below 5%.** For a standard (non-HomeReady) purchase above 95% loan-to-value without a Community Seconds loan, at least one borrower must be a first-time buyer. - **Homebuyer education.** If all borrowers are first-time buyers and the loan-to-value is above 95%, or on a HomeReady purchase where all occupying borrowers are first-time buyers, one borrower must complete a [homebuyer education course](https://mortgage-math-us.com/first-time-buyers/homebuyer-education/). ## Tax-law definitions: credit certificates and IRAs **Mortgage credit certificates and mortgage revenue bond loans** follow 26 U.S.C. 143: the borrower must have had no present ownership interest in a principal residence during the 3 years ending on the date the mortgage is signed. The rule is waived for homes in targeted areas and, once, for veterans. See [mortgage credit certificates](https://mortgage-math-us.com/first-time-buyers/mortgage-credit-certificates/). **The IRA first-home withdrawal** uses a shorter test: you, and your spouse if married, must have had no present ownership interest in a principal residence during the 2 years ending on the date you acquire the new home. The money can also go toward a first home for your or your spouse’s child, grandchild, parent or other ancestor, and it must be spent within 120 days of the withdrawal. The lifetime limit is $10,000; [saving for a home](https://mortgage-math-us.com/first-time-buyers/saving-for-a-home/) covers the tax side. > **Worked example: You sold your last home on March 15, 2024** > > | Definition | You count as first-time for a purchase after | > |---|---| > | HUD, Fannie Mae, MCC and bond loans (3-year look-back) | March 15, 2027 | > | IRA first-home withdrawal (2-year look-back) | March 15, 2026 | > > As of October 2026, you could already use the IRA exception but would have to wait for programs that use the three-year rule — unless an exception, such as the veteran or targeted-area waiver, applies. ## State programs may differ: Texas State housing finance agencies write their own eligibility rules, usually within federal limits. Texas shows the range: - **TDHCA’s My First Texas Home** requires that you haven’t owned *and occupied* a primary residence in the last 3 years. Buyers who are honorably discharged veterans, or whose spouse is, and buyers in qualified targeted census tracts are exempt. - **TSAHC’s down-payment assistance** is open to repeat buyers, but its mortgage credit certificate follows the federal 3 years rule for a principal residence, with the same veteran and targeted-area waivers. Other states’ rules differ, so check your state agency’s program guide or the [Texas guide](https://mortgage-math-us.com/location/texas/) if you are buying there. ## Programs that don’t ask FHA, VA and USDA loans don’t require first-time status, and neither do Fannie Mae HomeReady or Freddie Mac Home Possible. If you have owned recently, the [first-time buyer programs](https://mortgage-math-us.com/first-time-buyers/programs/) guide shows what is still open to you. ## Frequently asked questions ### Can I be a first-time home buyer if I owned a home before? Usually yes, if you haven’t owned one in the past 3 years. HUD’s statutory definition, Fannie Mae and the mortgage credit certificate rules all use a three-year look-back; the IRA first-home withdrawal uses 2 years. ### Does my spouse’s home ownership count? Under HUD’s definition the test covers you and your spouse, and the IRA rule does too. HUD’s exceptions protect single parents and displaced homemakers who owned only with a spouse. ### Does owning a rental or vacation home count? Under Fannie Mae’s definition, yes — any ownership interest in residential property in the past 3 years counts. The tax-law tests for credit certificates and IRAs look only at a principal residence. ### Are veterans considered first-time buyers? For mortgage credit certificates and bond-funded loans, federal law waives the three-year rule once for veterans. Texas’s TDHCA and TSAHC programs also exempt qualified veterans from their first-time requirement. ### Do I need to be a first-time buyer for an FHA loan? No. FHA, VA and USDA loans are open to repeat buyers. First-time status matters mainly for state bond-funded loans, mortgage credit certificates, some assistance programs and conventional loans above 95% loan-to-value that aren’t HomeReady. ### Who counts as a displaced homemaker? An adult who has not worked full-time, full-year for a number of years but has worked primarily without pay caring for the home and family, and who is unemployed or underemployed and having difficulty finding or upgrading work. ## Sources - [42 U.S.C. 12704(14)](https://www.law.cornell.edu/uscode/text/42/12704) — First-time homebuyer: has not owned a home in the past (HUD/HOME statute) (Oct 28, 2026) - [26 U.S.C. 72(t)(8)](https://www.govinfo.gov/link/uscode/26/72) — IRA first-home exception: no ownership interest in a principal residence in the past; IRA first-home withdrawal must be spent on the purchase within (Oct 28, 2026) - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae: above this LTV, at least one borrower must be a first-time buyer (non-HomeReady, no Community Seconds) (Apr 1, 2026) - [Fannie Mae Selling Guide E-3-06](https://selling-guide.fanniemae.com/sel/e-3-06/acronyms-and-glossary-defined-terms-f) — Fannie Mae: first-time buyer had no ownership interest in the past (Sep 3, 2025) - [26 U.S.C. 143(d)](https://www.govinfo.gov/link/uscode/26/143) — MCC and mortgage revenue bond loans: no ownership interest in a principal residence in the past (Oct 28, 2026) - [Texas Department of Housing and Community Affairs](https://welcomehome.tdhca.texas.gov/uploads/My-First-Texas-Home-Program-Matrix-TMS.pdf) — TDHCA first-time buyer test: no owned and occupied home in the last (Program matrix Aug 17, 2026) - [Fannie Mae Selling Guide B2-2-06](https://selling-guide.fanniemae.com/sel/b2-2-06/homeownership-education-and-housing-counseling) — Fannie Mae requires homebuyer education above this LTV when all borrowers are first-time buyers (Nov 5, 2025) - [IRS Tax Topic 557](https://www.irs.gov/taxtopics/tc557) — Penalty-free IRA withdrawal for a first home (lifetime limit) (Oct 26, 2026) - [42 U.S.C. 12704: Definitions (Cornell LII)](https://www.law.cornell.edu/uscode/text/42/12704) - [Fannie Mae Selling Guide E-3-06: Glossary, first-time homebuyer](https://selling-guide.fanniemae.com/sel/e-3-06/acronyms-and-glossary-defined-terms-f) - [26 U.S.C. 143: Mortgage revenue bonds, 3-year requirement](https://www.govinfo.gov/link/uscode/26/143) - [26 U.S.C. 72(t)(8): Qualified first-time homebuyer distributions](https://www.govinfo.gov/link/uscode/26/72) _General information, not financial advice._ --- # Cash-out refinance vs HELOC > Cash-out refinance or HELOC? A worked comparison of payments, blended rates and five-year interest, plus FHA, VA and conventional cash-out limits. URL: https://mortgage-math-us.com/home-equity/cash-out-vs-heloc/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer A cash-out refinance replaces your whole mortgage with a bigger one at today’s rate (the 30-year average is 7.24%); a HELOC leaves your mortgage alone and borrows only the new money, usually at a variable rate tied to prime (7%). If your current rate is well below today’s, the HELOC usually costs less: in our example, raising $60,000 adds **$716 a month** with a cash-out refinance but **$400** with a HELOC during the draw period. Conventional and FHA cash-out loans stop at 80% of the home’s value. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | 30-year fixed average (Freddie Mac) | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | Prime rate, the usual HELOC index | 7% | [Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/) | Oct 28, 2026 | | Conventional cash-out limit (Fannie Mae) | 80% | [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) | Apr 1, 2026 | | FHA cash-out limit | 80% | [HUD Mortgagee Letter 2019-11](https://www.hud.gov/sites/dfiles/OCHCO/documents/19-11ml.pdf) | Aug 1, 2019 | | VA cash-out limit set by VA | 100% | [38 CFR 36.4306](https://www.ecfr.gov/current/title-38/chapter-I/part-36/subpart-B/section-36.4306) | Oct 22, 2026 | | Texas cap, including cash-out on a homestead | 80% | [Texas Constitution, Art. XVI §50(a)(6)](https://capitol.texas.gov/tlodocs/85R/billtext/pdf/SJ00060E.pdf) | Nov 7, 2017 | ## The key difference A [cash-out refinance](https://mortgage-math-us.com/refinancing/cash-out-refinance/) pays off your existing mortgage with a new, larger one and hands you the difference in cash. Everything you owe — old balance and new money — moves to the new rate and a new term. A [HELOC](https://mortgage-math-us.com/home-equity/heloc/) is a second loan: your first mortgage keeps its rate, balance and payoff date, and only the new money is borrowed at the line’s rate. So the question is mostly about **which rate your old balance ends up on**. If you locked in a mortgage when rates were lower, a cash-out refinance gives that rate up on the whole balance, not just on the cash you need. ## A side-by-side example > **Worked example: $400,000 home, $200,000 left on a mortgage at an example 4% with 25 years to go, and $60,000 needed** > > | | Keep mortgage + HELOC | Cash-out refinance | > |---|---:|---:| > | Rate on the $200,000 you already owe | 4% | 7.24% | > | Rate on the new $60,000 | 8% (variable) | 7.24% (fixed) | > | Blended rate on everything | 4.92% | 7.24% | > | Monthly payment | $1,456 | $1,772 | > | Increase over today’s $1,056 payment | $400 | $716 | > | Interest paid in the first five years | $61,550 | $91,673 | > | Total owed after five years | $234,209 | $245,360 | > | Upfront costs | Lender fees vary | $7,800–$15,600 | > > The cash-out refinance is a new 30-year loan at Freddie Mac’s weekly average; the HELOC uses prime of 7% plus an example 1-point margin, interest only, with prime unchanged. Refinance costs use Freddie Mac’s typical 3%–6% of the loan. The HELOC route keeps the blended rate low and adds less to the monthly bill. Its catches: the rate can rise with prime, and when the draw period ends, paying off the $60,000 over 20 years raises the HELOC payment from $400 to $502 — see [HELOC draw and repayment periods](https://mortgage-math-us.com/home-equity/heloc-draw-and-repayment/). ## When a cash-out refinance wins Flip the example: if your current rate were already 7.24%, keeping it and adding a HELOC would leave a blended rate of 7.42% — higher than refinancing everything at 7.24%, and partly variable. A cash-out refinance tends to make more sense when: - **your current rate is at or above today’s rates**, so you lose nothing by replacing it; - **you need a large sum** and want one fixed payment instead of two loans; - **you want to change the loan anyway** — remove FHA mortgage insurance, take someone off the loan, or switch from an adjustable rate; - **you’re a veteran** and VA’s cash-out rules let you borrow more of the home’s value than other options. A HELOC tends to win when your current rate is well below today’s, when you need money in stages, or when you can repay within a few years, because its upfront costs are usually lower. ## How much each option lets you borrow *Cash-out limits on the same $400,000 home with $200,000 owed (before closing costs)* | Option | Maximum loan-to-value | Most cash available | Other rules | |---|---:|---:|---| | Conventional (Fannie Mae) | 80% | $120,000 | Existing loan generally at least 12 months old; one-unit main home | | FHA | 80% | $120,000 | Upfront MIP of 1.75% plus annual MIP | | VA | Up to 100% | $200,000 | VA’s ceiling; lenders may set lower. Funding fee 2.15% on first use | | HELOC or home equity loan | Set by each lender | $140,000 at an example 85% | Rate and fees vary by lender | In Texas, every home equity borrowing on a homestead — HELOC, home equity loan or cash-out refinance — is capped at 80% of the home’s value, and closing can’t happen until 12 days after application. See the [Texas guide](https://mortgage-math-us.com/location/texas/) and [how much equity you can borrow](https://mortgage-math-us.com/home-equity/how-much-equity/). ## Costs, timing and your right to cancel A cash-out refinance is a full mortgage closing: appraisal, title insurance, lender fees and prepaid items. A HELOC usually costs less to open, though fees vary — some lenders charge annual or early-closure fees. Compare both on the same day, using a Loan Estimate for the refinance and the HELOC disclosures for the line. You have 3 business days to cancel either one on your principal home. With a refinance from your current lender, that right covers only the new money you borrow; with a new lender, it covers the whole loan. **How to choose** 1. **Find your current rate and balance** — Both are on your latest mortgage statement. 2. **Price both options** — Get a refinance quote at today’s rates and a HELOC quote with its margin, rate cap and fees. 3. **Compare blended rates and payments** — Include the HELOC payment after the draw period and with a higher prime rate. 4. **Weigh costs against time** — Set closing costs against the years you’ll keep the loan; the [refinance break-even calculator](https://mortgage-math-us.com/tools/refinance-break-even-calculator/) helps. ## Frequently asked questions ### Is a HELOC cheaper than a cash-out refinance? Often, when your current mortgage rate is well below today’s rates, because a HELOC borrows only the new money and leaves your low rate in place. In our example, raising $60,000 added $400 a month with a HELOC versus $716 with a cash-out refinance. ### How much cash can I take out with a cash-out refinance? Conventional loans backed by Fannie Mae allow up to 80% of the home’s value on a one-unit main home, minus what you owe. FHA allows 80%, and VA rules allow up to 100%, though lenders may set lower limits. ### Does a cash-out refinance reset my mortgage? Yes. It replaces your loan with a new one, usually with a new 30-year term at today’s rate, so you start the payment schedule again on the whole balance. ### Can I have a HELOC and then do a cash-out refinance later? Yes. A cash-out refinance can pay off both the first mortgage and the HELOC, as long as the new loan stays within the cash-out limit for its program. ### Which is better for home improvements? For a project paid in stages, a HELOC lets you draw as bills arrive and pay interest only on what you’ve used. For a single fixed-price contract, a home equity loan or cash-out refinance gives a fixed payment. Interest on any of them may be deductible when the money substantially improves the home. ### Does Texas limit cash-out refinances? Yes. A cash-out refinance of a Texas homestead is generally treated as a home equity loan under the state constitution, so total borrowing is capped at 80% of the home’s value and closing can’t happen until 12 days after application. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/) — Bank prime loan rate (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) — HELOC repayment period, often up to (CFPB) (Aug 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) — Typical refinance closing costs, low end (share of loan principal); Typical refinance closing costs, high end (share of loan principal) (Oct 28, 2026) - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae cash-out refinance maximum LTV, one-unit principal residence (Apr 1, 2026) - [HUD Mortgagee Letter 2019-11](https://www.hud.gov/sites/dfiles/OCHCO/documents/19-11ml.pdf) — FHA cash-out refinance maximum loan-to-value (Aug 1, 2019) - [38 CFR 36.4306](https://www.ecfr.gov/current/title-38/chapter-I/part-36/subpart-B/section-36.4306) — VA refinance (including cash-out) maximum loan-to-value allowed by VA (Oct 22, 2026) - [Fannie Mae Selling Guide B2-1.3-03](https://selling-guide.fanniemae.com/sel/b2-1.3-03/cash-out-refinance-transactions) — Fannie Mae cash-out: existing first mortgage must be at least (Dec 10, 2025) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA upfront mortgage insurance premium (Feb 22, 2023) - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) — VA funding fee, cash-out refinance, first use (Apr 7, 2023) - [Texas Constitution, Art. XVI §50(a)(6)](https://capitol.texas.gov/tlodocs/85R/billtext/pdf/SJ00060E.pdf) — Maximum combined loan-to-value for Texas home equity loans; Minimum wait after application before a Texas home equity loan can close (Nov 7, 2017) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) — Right to cancel a refinance or home equity loan on your principal home (Aug 8, 2024) - [CFPB: What you should know about home equity lines of credit (brochure)](https://files.consumerfinance.gov/f/documents/cfpb_heloc-brochure_print.pdf) - [Fannie Mae Selling Guide B2-1.3-03: Cash-out refinance transactions](https://selling-guide.fanniemae.com/sel/b2-1.3-03/cash-out-refinance-transactions) - [12 CFR 1026.23: Right of rescission](https://www.consumerfinance.gov/rules-policy/regulations/1026/23/) _General information, not financial advice._ --- # HELOC draw and repayment periods > What happens when a HELOC draw period ends: how much the payment jumps, balloon plans, and your options to refinance, pay down or lock a fixed rate first. URL: https://mortgage-math-us.com/home-equity/heloc-draw-and-repayment/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer During the draw period — 10 years in the CFPB’s example — many HELOCs require only interest. When it ends you can’t borrow any more, and the balance is repaid with principal and interest over a period often up to 20 years, or, on some plans, all at once as a balloon. A $60,000 balance at 8% goes from about **$400** to **$502 a month** — a 25% jump — and to $579 if prime has risen 2 points by then. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Example draw period (CFPB) | 10 years | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) | Aug 28, 2026 | | Repayment period, often up to (CFPB) | 20 years | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) | Aug 28, 2026 | | Prime rate (most common HELOC index) | 7% | [Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/) | Oct 28, 2026 | | 30-year fixed average, for refinancing | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | HUD housing counselor referral line | 800-569-4287 | [HUD](https://www.hud.gov/stat/sfh/housing-counseling) | Oct 28, 2026 | ## Two phases, two very different payments A [HELOC](https://mortgage-math-us.com/home-equity/heloc/) has a **draw period**, when you can borrow up to your limit, followed by a **repayment period**, when you can’t borrow and must pay the balance off. Your agreement sets both lengths. In the CFPB’s example the draw period lasts 10 years, and repayment periods often run up to 20 years. Many plans let you pay only interest during the draw. That payment is simple: balance × rate ÷ 12. It covers none of the principal, so after years of on-time payments you can still owe exactly what you borrowed. When repayment begins, the same balance must be paid off over a fixed number of years, and the payment includes principal for the first time. ## How big is the jump? > **Worked example: $60,000 balance at 8% (prime of 7% plus an example 1-point margin)** > > | | Monthly payment | > |---|---:| > | Draw period, interest only | $400 | > | Repayment over 20 years, same rate | $502 | > | Repayment if prime is 2 points higher by then | $579 | > > The payment rises 25% at the same rate and 45% if rates have climbed 2 points. If the rate never changed, the $60,000 would cost about $108,447 in interest over the life of the plan. The jump is bigger when the repayment period is shorter. The CFPB’s HELOC brochure notes that some lenders set repayment over ten or 15 years: *Payment before and after the draw period ends, at 8%* | Balance | Draw period (interest only) | Repayment over 20 years | Repayment over 10 years | |---|---:|---:|---:| | $25,000 | $167 | $209 | $303 | | $50,000 | $333 | $418 | $607 | | $100,000 | $667 | $836 | $1,213 | Check your agreement for three things: the date the draw period ends, how the repayment payment is calculated, and whether the plan ends in a balloon. ## Balloon-payment plans Some HELOCs have no repayment period at all. When the draw period ends, the whole balance is due at once — a balloon payment. On the example above, that would be the full $60,000. The FTC warns that balloon payments are often large because they include all the unpaid principal, and that borrowers who can’t pay may need a new loan to cover it. > **Watch out: A balloon you can’t pay puts your home at risk** > > The CFPB is blunt: if you can’t pay a balloon payment in full, you could lose your home. If your plan has one, arrange the payoff — savings, a new loan or a sale — well before the due date, while your credit and the home’s value still support refinancing. ## Paying down principal during the draw The cheapest way to avoid payment shock is to never rely on interest-only payments. Paying the line as if it were a loan over the plan’s full 30-year life costs a little more each month at first, but the payment never jumps (at an unchanged rate): > **Worked example: $60,000 at 8%: interest only vs paying principal from day one** > > | | Interest only | Principal from day one | > |---|---:|---:| > | Payment during the draw period | $400 | $440 | > | Balance when the draw period ends | $60,000 | $52,635 | > | Payment in the repayment period | $502 | $440 | An extra $40 a month during the draw keeps the payment flat. Lump-sum paydowns from bonuses or tax refunds help the same way. The [HELOC payment calculator](https://mortgage-math-us.com/tools/heloc-payment-calculator/) shows the effect on your own numbers. ## Your options before the draw period ends Start planning at least a year before the date. The CFPB brochure lists renewing, refinancing and paying off as the main routes: **What to do before repayment starts** 1. **Find the date and the new payment** — Your statement or agreement shows when the draw ends; ask the lender to calculate the repayment payment at today’s rate and at a higher one. 2. **Pay down the balance** — Even part of the balance repaid now lowers every future payment. 3. **Ask about a fixed-rate option** — Some HELOCs let you convert part or all of the balance to a fixed rate. The CFPB notes that rate is typically higher than the variable rate, but the payment becomes predictable. 4. **Refinance the balance** — A fixed-rate [home equity loan](https://mortgage-math-us.com/home-equity/home-equity-loan/) over 20 years at an example 8.25% would cost about $511 a month on $60,000. A new HELOC restarts the draw period but not the debt; a [cash-out refinance](https://mortgage-math-us.com/refinancing/cash-out-refinance/) folds it into your first mortgage — see [cash-out refinance vs HELOC](https://mortgage-math-us.com/home-equity/cash-out-vs-heloc/). 5. **Renew if offered** — Some lenders extend the draw period. Check the fees and whether the margin changes. 6. **Get help early if the payment won’t fit** — Call the lender before you miss a payment, and a HUD-approved housing counselor at 800-569-4287. Refinancing depends on having enough equity and income when the time comes, so don’t leave it to the last month — a [line freeze or a lower appraisal](https://mortgage-math-us.com/home-equity/home-equity-risks/) can close that door. ## Frequently asked questions ### What happens when the HELOC draw period ends? You can no longer borrow from the line, and your payment switches to principal plus interest over the repayment period — or, on balloon plans, the whole balance is due. In our example the payment rises from $400 to $502 a month. ### How much will my HELOC payment go up? It depends on your balance, rate and repayment term. Switching from interest only to repayment over 20 years at the same rate raised the example payment by about 25%. A shorter repayment period or a higher rate makes the jump bigger. ### Can I extend my HELOC draw period? Some lenders offer to renew or extend the line, and the CFPB notes that keeping a line open avoids the cost of a new loan. It isn’t guaranteed, and fees or the margin may change, so ask well before the end date. ### Can I convert a HELOC to a fixed rate? Some plans let you lock part or all of the balance at a fixed rate. The fixed rate is typically higher than the variable rate, but the payment no longer moves with prime. If your plan doesn’t offer it, a fixed-rate home equity loan can refinance the balance. ### What is a HELOC balloon payment? A plan feature that makes the entire remaining balance due in one payment, usually when the draw period ends. If you can’t pay it or refinance it, you could lose your home. ### Should I pay principal during the draw period? If you can, yes. Every dollar of principal you repay during the draw lowers the payment later. Paying the example balance as a loan over the plan’s full life costs $40 more a month at first and avoids the jump entirely if rates hold. ## Sources - [Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/) — Bank prime loan rate (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) — Example HELOC draw period (CFPB); HELOC repayment period, often up to (CFPB) (Aug 28, 2026) - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [HUD](https://www.hud.gov/stat/sfh/housing-counseling) — HUD housing counseling referral line (Oct 28, 2026) - [CFPB: What you should know about home equity lines of credit (brochure)](https://files.consumerfinance.gov/f/documents/cfpb_heloc-brochure_print.pdf) - [CFPB: What is a home equity line of credit (HELOC)?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) - [FTC: Home equity loans and home equity lines of credit](https://consumer.ftc.gov/articles/home-equity-loans-and-home-equity-lines-credit) _General information, not financial advice._ --- # How a HELOC works > How a home equity line of credit works: draw and repayment periods, prime-plus-margin rates, federal rules on freezes and fees, and your right to cancel. URL: https://mortgage-math-us.com/home-equity/heloc/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer A HELOC is a revolving line of credit secured by your home. You draw what you need during a **draw period** — 10 years in the CFPB’s example — often paying only interest, then repay the balance over a **repayment period** that often runs up to 20 years. The rate is usually variable: an index such as the prime rate, now 7%, plus a margin. On a $40,000 balance at 8%, interest-only payments are about **$267 a month**, rising to about **$335** when repayment starts. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Prime rate (most common HELOC index) | 7% | [Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/) | Oct 28, 2026 | | Example draw period (CFPB) | 10 years | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) | Aug 28, 2026 | | Repayment period, often up to (CFPB) | 20 years | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) | Aug 28, 2026 | | Time to cancel a HELOC on your main home | 3 business days | [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) | Aug 8, 2024 | | Notice deadline after a freeze or limit cut | 3 business days | [12 CFR 1026.9(c)(1)(iii)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-B/section-1026.9) | Oct 28, 2026 | | Texas cap on home equity borrowing | 80% | [Texas Constitution, Art. XVI §50(a)(6)](https://capitol.texas.gov/tlodocs/85R/billtext/pdf/SJ00060E.pdf) | Nov 7, 2017 | ## How a HELOC works A home equity line of credit (HELOC) is a revolving credit line secured by your home. The lender approves a credit limit and you borrow what you need, when you need it; as you repay, the credit becomes available again. It works much like a credit card, except that your house is the collateral. You pay interest only on what you have drawn, not on the whole limit, which suits costs that arrive in stages — a renovation paid in installments, tuition each semester. For a single, known amount, a fixed-rate [home equity loan](https://mortgage-math-us.com/home-equity/home-equity-loan/) is often simpler. *The two phases of a HELOC* | | Draw period | Repayment period | |---|---|---| | Length | Set by the plan — 10 years in the CFPB’s example | Set by the plan — often up to 20 years | | Can you borrow? | Yes, up to the limit | No | | Minimum payment | Often interest only | Principal and interest until paid off | | Watch for | Rate changes | Some plans require the whole balance at once (a balloon) | The switch from one phase to the other is where many borrowers get caught out — see [HELOC draw and repayment periods](https://mortgage-math-us.com/home-equity/heloc-draw-and-repayment/). ## How the interest rate is set Most HELOCs have a variable rate made of two parts: - **Index** — a published benchmark that moves with the market. The most common is the prime rate, 7% in the Federal Reserve’s latest release. Federal rules require the index to be outside the lender’s control and available to the public. - **Margin** — the extra percentage the lender adds, fixed in your agreement. It depends on your credit, how much of the home’s value you borrow against and the lender’s pricing. With prime at 7% and an example margin of 1 percentage point, the rate is 8%, and it moves when prime does. An introductory rate, if offered, is temporary. Every variable-rate loan secured by a home must state a maximum rate in the contract — ask what that cap is and whether you can lock part of the balance at a fixed rate. ## Federal rules for home equity plans HELOCs secured by a home are governed by Regulation Z, 12 CFR 1026.40 — the Truth in Lending Act rules for home equity plans. *Main protections in 12 CFR 1026.40* | Rule | What it means for you | |---|---| | Disclosures with the application | The plan’s fees, rate formula, payment rules and maximum rate, plus the CFPB’s HELOC brochure — including a warning that you could lose your home if you default. | | No nonrefundable fees yet | No one may charge a nonrefundable application fee until 3 business days after you receive those disclosures. | | Refund if terms change | If a disclosed term changes before the plan opens and you decide not to go ahead, every fee you paid must be refunded. Normal index moves don’t count. | | No changing the deal | After opening, the lender can’t change the terms except in narrow cases the rule lists. | | Limits on calling the loan | The lender can demand the full balance early only for fraud or material misrepresentation, failure to repay as agreed, or action or inaction that harms its security in the home. | ## When a lender can freeze or cut your line A lender can stop further draws or lower your limit only during periods when a listed condition applies, including: - the home’s value **declines significantly** below the appraised value used for the plan; - the lender reasonably believes you **can’t keep up payments** because of a material change in your finances; - you are **in default** of a material obligation in the agreement; - government action prevents the lender from charging the agreed rate or weakens its lien; - its regulator says further advances would be unsafe and unsound. Under the official interpretation, a value drop is significant when it shrinks the original gap between your credit limit and your available equity by 50%. The lender must send written notice with the reasons within 3 business days, and restore the line once the condition ends — or tell you that you need to ask for reinstatement. [Risks of borrowing against your home](https://mortgage-math-us.com/home-equity/home-equity-risks/) works through an example. > **Watch out: Don’t treat unused credit as savings** > > A HELOC can be frozen exactly when you need it most — when home prices fall or your income drops. Keep a separate cash emergency fund. ## Your right to cancel For a HELOC on your principal home, you have 3 business days after the plan opens to cancel for any reason. Saturdays count as business days; Sundays and federal holidays don’t. You must cancel in writing. The lender then has 20 days to return what you paid and release its lien, and it generally can’t release funds until the cancellation window has passed. If the lender never gave you the required notice or key disclosures, the right can last up to 3 years. The right also applies when your credit limit is increased, but not to ordinary draws within the existing limit, and not to second homes or rentals. In Texas, the state constitution separately lets you rescind within 3 days and caps home equity borrowing at 80% of the home’s value — see the [Texas guide](https://mortgage-math-us.com/location/texas/). ## A HELOC payment, worked out > **Worked example: $360,000 home (near the US median value), $180,000 mortgage, 80% combined limit, $40,000 drawn at 8%** > > | | Monthly payment | > |---|---:| > | Draw period (10 years), interest only | $267 | > | Repayment period (20 years) | $335 | > | Draw period if prime rises 2 points | $333 | > | Repayment if prime rises 2 points | $386 | > > Credit available: $360,000 × 80% − $180,000 = $108,000. If the rate never changed, the $40,000 would cost about $72,298 in interest across both periods — more than the amount borrowed, because no principal is repaid during the draw period. The 80% limit and the 1-point margin are examples; each lender sets its own. [Open the heloc payment calculator](https://mortgage-math-us.com/tools/heloc-payment-calculator/) ## HELOC or another way to borrow? *Three ways to borrow against your home* | | HELOC | Home equity loan | Cash-out refinance | |---|---|---|---| | How you get the money | Draw as needed | Lump sum | Lump sum | | Rate | Usually variable | Usually fixed | Fixed or adjustable | | Your first mortgage | Stays as it is | Stays as it is | Replaced by a larger loan | | Upfront costs | Fees vary by lender | Closing costs | Refinance costs, typically 3%–6% of the loan | If your mortgage rate is well below today’s 30-year average of 7.24%, a HELOC keeps it; a [cash-out refinance](https://mortgage-math-us.com/refinancing/cash-out-refinance/) gives it up on the whole balance — [cash-out refinance vs HELOC](https://mortgage-math-us.com/home-equity/cash-out-vs-heloc/) runs the numbers. Either way, the interest is deductible only if the money buys, builds or substantially improves the home ([home equity interest and taxes](https://mortgage-math-us.com/home-equity/home-equity-interest-deduction/)). ## Frequently asked questions ### How does a HELOC work? The lender approves a credit limit secured by your home. During the draw period you borrow, repay and borrow again as needed, often paying only interest. When the draw period ends, you stop borrowing and repay the balance with interest, or pay it off in one sum if your plan has a balloon payment. ### How is a HELOC rate calculated? Usually as an index plus a margin. Most lenders use the prime rate, currently 7%, and add a margin set by your credit and the share of your home’s value you borrow against. Prime at 7% plus a 1-point margin gives 8%. ### How long is a HELOC draw period? Your agreement sets it. The CFPB uses 10 years as an example, with repayment periods often up to 20 years afterwards. Check both dates before you sign, because the payment can rise sharply when the draw period ends. ### Is a HELOC a second mortgage? Usually. If you still have a first mortgage, the HELOC is a second lien on the home. If you own the home outright, the HELOC can be the first and only lien. Either way, falling behind can lead to foreclosure. ### Can a lender freeze my HELOC? Yes, but only in situations federal rules allow — mainly a significant drop in the home’s value, a material change in your finances that makes repayment doubtful, or a default under the agreement. The lender must tell you in writing, with reasons, within 3 business days. ### Can I cancel a HELOC after signing? On your principal home, yes: you have 3 business days after the plan opens to cancel in writing for any reason, and the lender must refund your fees within 20 days. The right doesn’t apply to second homes or investment properties. ## Sources - [Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/) — Bank prime loan rate (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) — Example HELOC draw period (CFPB); HELOC repayment period, often up to (CFPB) (Aug 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [12 CFR 1026.40(h)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.40) — No nonrefundable HELOC application fee until this long after you receive the disclosures and brochure (Oct 28, 2026) - [CFPB, Regulation Z official interpretation 1026.40(f)(3)(vi)-6](https://www.consumerfinance.gov/rules-policy/regulations/1026/interp-40/) — HELOC freeze: a value drop that cuts the original gap between credit limit and available equity by this share counts as significant (Oct 28, 2026) - [12 CFR 1026.9(c)(1)(iii)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-B/section-1026.9) — Lender must send written notice of a HELOC freeze or credit-limit cut within (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) — Right to cancel a refinance or home equity loan on your principal home; After you cancel, the lender must return your money and release the lien within (Aug 8, 2024) - [12 CFR 1026.15(a)(3) and 1026.23(a)(3)](https://www.consumerfinance.gov/rules-policy/regulations/1026/15/) — Right to cancel lasts up to this long if the required notice or disclosures were not given (Oct 28, 2026) - [Texas Constitution, Art. XVI, Sec. 50(a)(6)(Q)(viii)](https://capitol.texas.gov/tlodocs/85R/billtext/pdf/SJ00060E.pdf) — Texas: owner and spouse may rescind a home equity loan within this many days after it is made; Maximum combined loan-to-value for Texas home equity loans (Nov 7, 2017) - [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) — Typical refinance closing costs, low end (share of loan principal); Typical refinance closing costs, high end (share of loan principal) (Oct 28, 2026) - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [CFPB: What is a home equity line of credit (HELOC)?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) - [CFPB: What you should know about home equity lines of credit (brochure)](https://files.consumerfinance.gov/f/documents/cfpb_heloc-brochure_print.pdf) - [12 CFR 1026.40: Requirements for home equity plans](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.40) - [FTC: Home equity loans and home equity lines of credit](https://consumer.ftc.gov/articles/home-equity-loans-and-home-equity-lines-credit) _General information, not financial advice._ --- # Is home equity interest tax-deductible? > When HELOC and home equity loan interest is deductible: the IRS buy, build or improve rule, debt limits and when itemizing beats the standard deduction. URL: https://mortgage-math-us.com/home-equity/home-equity-interest-deduction/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer Interest on a HELOC or home equity loan is deductible only if you use the money to buy, build or substantially improve the home that secures the loan, and only on combined mortgage debt up to $750,000 for loans taken out after December 15, 2017 ($1,000,000 for older loans). You must also itemize, which pays only when your deductions exceed the standard deduction — $16,100 for single filers and $32,200 for married couples filing jointly in 2026. Interest on equity used for a car, a vacation or credit cards isn’t deductible. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Debt limit, loans after Dec 15, 2017 | $750,000 | [IRS Publication 936](https://www.irs.gov/pub/irs-pdf/p936.pdf) | Tax year 2025 | | Debt limit, loans before Dec 16, 2017 | $1,000,000 | [IRS Publication 936](https://www.irs.gov/pub/irs-pdf/p936.pdf) | Tax year 2025 | | 2026 standard deduction, single | $16,100 | [IRS](https://www.irs.gov/newsroom/working-families-tax-cuts-individuals-and-workers) | Tax year 2026 | | 2026 standard deduction, married filing jointly | $32,200 | [IRS](https://www.irs.gov/newsroom/working-families-tax-cuts-individuals-and-workers) | Tax year 2026 | > **Note: General information, not tax advice** > > This page summarizes IRS rules as published in Publication 936. Your situation may differ; check with a tax professional or the IRS before you file. ## The buy, build or improve rule IRS Publication 936 sets one test for interest on a home equity loan, a [HELOC](https://mortgage-math-us.com/home-equity/heloc/) or any other loan secured by your home: the interest is deductible as home mortgage interest only to the extent the money was used to **buy, build or substantially improve the home that secures the loan**. The IRS’s draft 2026 edition keeps the same rule. Three conditions follow from that: - **Use of the money.** Spending it on the home counts; spending it on a car, tuition, a vacation or paying off credit cards doesn’t, even though the loan is secured by your house. - **The right home.** The improved home must be the one securing the loan. A HELOC on your main home used to renovate a vacation home doesn’t qualify. - **A qualified home.** That means your main home or one second home that you choose to treat as such. If you use part of the money on the home and part on something else, only the interest on the part spent on the home qualifies. If you used the money for business or investment, other rules may apply — see Publication 936. ## What counts as a substantial improvement Publication 936 calls an improvement substantial if it adds to your home’s value, prolongs its useful life or adapts it to new uses. An addition, a remodeled kitchen or a new roof generally fits. Repairs that only keep the home in good condition — repainting, for example — don’t, unless they are part of a larger renovation that substantially improves the home. Keep contracts, invoices and bank records that show the borrowed money went into the work. Your lender’s Form 1098 reports how much interest you paid, not what you spent the money on. ## The debt limits Home equity debt used to improve the home counts toward the same limit as your first mortgage. The limit depends on when the debt was taken out: *Limits on mortgage debt with deductible interest (IRS Publication 936)* | Debt taken out | Limit | Married filing separately | |---|---:|---:| | After December 15, 2017 | $750,000 | $375,000 | | Before December 16, 2017 | $1,000,000 | $500,000 | If your qualifying debt is above the limit, only part of the interest is deductible. With $800,000 of post-2017 debt used to buy and improve the home, for example, interest on roughly 93.75% of it would qualify; Publication 936 has a worksheet for the exact figure. ## Will itemizing beat the standard deduction? Mortgage and home equity interest is an itemized deduction, claimed on Schedule A. You either itemize or take the standard deduction — whichever is larger. For many households the standard deduction wins, so the interest saves nothing. > **Worked example: $400,000 home: first year of a $300,000 mortgage at 7.24%, plus a $50,000 HELOC at 8% spent on a kitchen remodel** > > | | Single filer | Married filing jointly | > |---|---:|---:| > | Mortgage interest, first year | $21,625 | $21,625 | > | HELOC interest (remodel) | $4,000 | $4,000 | > | Property tax at 0.89% of value | $3,560 | $3,560 | > | **Itemized total** | **$29,185** | **$29,185** | > | 2026 standard deduction | $16,100 | $32,200 | > | Better choice | Itemize, by $13,085 | Standard deduction, by $3,015 | > | If the HELOC paid for a car instead | Itemize, by $9,085 | Standard deduction, by $7,015 | > > The HELOC rate is prime (7%) plus an example 1-point margin, interest only. Property tax uses the national average rate. Charitable gifts and state and local taxes, which are capped, would add to the itemized total. Itemizing lowers taxable income only by the amount your itemized total exceeds the standard deduction. Here the $4,000 of HELOC interest raises the single filer’s deductions by $4,000 and the married couple’s not at all — the same interest, worth very different amounts depending on where the standard deduction sits. **Checking your own case** 1. **Trace the money** — List what the loan paid for and keep the receipts. Only the part spent on buying, building or substantially improving the home qualifies. 2. **Check the limit** — Add your mortgage and qualifying home equity debt and compare the total with $750,000 (or $1,000,000 for older debt). 3. **Add up your itemized deductions** — Qualifying interest, property and other state and local taxes up to the cap, and charitable gifts. 4. **Compare with your standard deduction** — Itemize only if the total is higher. ## How this affects your borrowing choice Don’t count on a tax break to make home equity borrowing cheaper. If you would take the standard deduction anyway, the after-tax rate is the full rate. Compare the actual cost of a [home equity loan](https://mortgage-math-us.com/home-equity/home-equity-loan/), a HELOC or a [cash-out refinance](https://mortgage-math-us.com/refinancing/cash-out-refinance/) first, and treat any deduction as a bonus. The same rule applies to cash-out refinancing: only the part used to buy, build or improve the home counts toward deductible mortgage debt. For the borrowing risks themselves, see [risks of borrowing against your home](https://mortgage-math-us.com/home-equity/home-equity-risks/). ## Frequently asked questions ### Is HELOC interest tax-deductible in 2026? Only if you use the money to buy, build or substantially improve the home that secures the HELOC, your total qualifying mortgage debt is within $750,000, and you itemize deductions. Interest on HELOC money spent on anything else isn’t deductible. ### Can I deduct home equity loan interest if I paid off credit cards? No. Publication 936 allows the deduction only when the borrowed money buys, builds or substantially improves the home that secures the loan. Paying off cards, a car or tuition doesn’t qualify. ### What is the limit on deductible mortgage interest? Interest on up to $750,000 of qualifying mortgage debt taken out after December 15, 2017 ($375,000 if married filing separately), or $1,000,000 for debt taken out before December 16, 2017. Home equity debt used to improve the home counts toward the same limit. ### Do I need to itemize to deduct HELOC interest? Yes. The interest is claimed on Schedule A, so it helps only if your itemized deductions exceed the standard deduction — $16,100 for single filers and $32,200 for married couples filing jointly in 2026. ### Does repainting or fixing the roof count as an improvement? Routine repairs and repainting don’t count on their own. An improvement qualifies if it adds value, extends the home’s life or adapts it to new uses; a full roof replacement or a renovation generally qualifies, and painting done as part of that work can be included. ### Can I deduct interest on a HELOC used for a second home? Only if the HELOC is secured by that second home and the money buys, builds or substantially improves it. A HELOC on your main home used to improve a vacation home doesn’t qualify. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/) — Bank prime loan rate (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [IRS](https://www.irs.gov/newsroom/working-families-tax-cuts-individuals-and-workers) — 2026 standard deduction, single filers; 2026 standard deduction, married filing jointly (Tax year 2026) - [IRS Publication 936](https://www.irs.gov/pub/irs-pdf/p936.pdf) — Mortgage debt on which interest is deductible (loans after Dec 15, 2017); Deductible mortgage debt limit for loans taken out before Dec 16, 2017 (Tax year 2025) - [IRS Publication 936: Home Mortgage Interest Deduction](https://www.irs.gov/publications/p936) - [IRS draft Publication 936 (2026)](https://www.irs.gov/pub/irs-dft/p936--dft.pdf) - [IRS: Instructions for Schedule A (Form 1040)](https://www.irs.gov/instructions/i1040sca) _General information, not financial advice._ --- # Home equity loans explained > How a home equity loan works: a fixed-rate lump sum on top of your mortgage, payments by term, how it compares with a HELOC and your right to cancel. URL: https://mortgage-math-us.com/home-equity/home-equity-loan/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer A home equity loan lends you a lump sum against your home’s equity, usually at a fixed rate, repaid in equal monthly payments over a set term. Because it sits behind your first mortgage, it is often called a second mortgage. Borrowing $50,000 over 15 years at an example rate of 8.25% costs about **$485 a month**. On your main home you have 3 business days after closing to cancel. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Time to cancel on your main home | 3 business days | [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) | Aug 8, 2024 | | Loan Estimate arrives within | 3 business days | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-loan-estimate-en-1995/) | Oct 28, 2026 | | Closing Disclosure arrives before closing | 3 business days | [CFPB](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) | Oct 28, 2026 | | Texas cap on home equity borrowing | 80% | [Texas Constitution, Art. XVI §50(a)(6)](https://capitol.texas.gov/tlodocs/85R/billtext/pdf/SJ00060E.pdf) | Nov 7, 2017 | | Texas wait from application to closing | 12 days | [Texas Constitution, Art. XVI §50(a)(6)(M)(i)](https://capitol.texas.gov/tlodocs/85R/billtext/pdf/SJ00060E.pdf) | Nov 7, 2017 | ## How a home equity loan works A home equity loan turns part of the value you own in your home into cash. The lender pays you the full amount at closing and takes a lien on the home — usually a second lien behind your existing mortgage. You then repay it in equal monthly installments of principal and interest over a fixed term, such as 10, 15 or 20 years, while you keep paying your first mortgage as before. The CFPB notes that a home equity loan usually has a fixed rate that won’t change. That predictability is the main difference from a [HELOC](https://mortgage-math-us.com/home-equity/heloc/), whose rate typically moves with the prime rate. The trade-off is flexibility: you borrow everything at once and pay interest on all of it from day one, and if you need more later, you need a new loan. Common uses are one-time costs with a known price: a renovation with a fixed contract, consolidating higher-rate debts, or a large medical or education bill. Interest is tax-deductible only when the money buys, builds or substantially improves the home that secures the loan. ## What the payment looks like > **Worked example: $50,000 home equity loan at an example fixed rate of 8.25%** > > | Term | Monthly payment | Total interest | Total repaid | > |---|---:|---:|---:| > | 10 years | $613 | $23,592 | $73,592 | > | 15 years | $485 | $37,313 | $87,313 | > | 20 years | $426 | $52,248 | $102,248 | > > The example rate is one point above this week’s 30-year fixed average of 7.24%, rounded, because second-lien loans are often priced above first mortgages. Your quote depends on your credit, the share of the home’s value you borrow against and the lender. At one point higher, the 15-year payment would be $515. A shorter term means a bigger payment but far less interest. Since the rate is fixed, the payment you sign for is the payment you keep — unlike a HELOC, where the same $50,000 would cost about $333 a month interest-only at prime plus an example 1-point margin (8%), but could rise with prime and then jump when repayment starts. ## Home equity loan vs HELOC *Home equity loan and HELOC side by side* | | Home equity loan | HELOC | |---|---|---| | How you get the money | Lump sum at closing | Draw as needed during the draw period | | Rate | Usually fixed | Usually variable (index + margin) | | Payment | Same every month | Often interest only at first, then higher | | Interest charged on | The whole amount from day one | Only what you have drawn | | Disclosures | Loan Estimate and Closing Disclosure | HELOC disclosures and CFPB brochure | | Borrowing more later | New loan needed | Draw again up to the limit | Pick the loan when you know the amount and value a fixed payment; pick the line when costs are uncertain or spread out. If you would replace your first mortgage anyway, compare a [cash-out refinance](https://mortgage-math-us.com/refinancing/cash-out-refinance/) too — [cash-out refinance vs HELOC](https://mortgage-math-us.com/home-equity/cash-out-vs-heloc/) shows when that wins. ## How much you can borrow Lenders cap the **combined loan-to-value (CLTV)**: all loans on the home, including the new one, as a share of its appraised value. Each lender sets its own limit. On a $360,000 home with a $200,000 mortgage, an 80% limit allows up to $88,000; borrowing $50,000 would put the CLTV at 69.4%. In Texas, the state constitution caps home equity borrowing on a homestead at 80% and limits most lender fees to 2% of the loan — see the [Texas guide](https://mortgage-math-us.com/location/texas/). [How much equity can you borrow?](https://mortgage-math-us.com/home-equity/how-much-equity/) shows the math for other limits. Your credit, income and debts matter as much as equity: federal ability-to-repay rules require the lender to make a reasonable, good-faith judgment that you can afford the payment. See [home equity loan requirements](https://mortgage-math-us.com/home-equity/home-equity-requirements/). ## Costs and paperwork Expect closing costs similar in kind to a mortgage: an appraisal or other valuation, origination or application fees, a title search and recording fees. The FTC points out that a home equity loan’s APR includes interest and other credit costs, which makes offers easier to compare. **From application to cash** 1. **Apply and get a Loan Estimate** — The lender must send it within 3 business days of your application. Compare the rate, APR, fees and cash to close across at least two or three lenders. 2. **Valuation and underwriting** — The lender checks the home’s value, your credit, income and existing mortgage. 3. **Review the Closing Disclosure** — It arrives at least 3 business days before closing. Check it against the Loan Estimate. 4. **Close and wait out the cancellation period** — On your principal home, funds are generally released only once 3 business days have passed, so you can still change your mind. ## Your right to cancel Federal law gives you 3 business days after closing to cancel a home equity loan on your principal home, for any reason. Saturdays count; Sundays and federal holidays don’t. Cancel in writing; the lender must return your fees and release its lien within 20 days. If you never received the required notice or key disclosures, the right can last up to 3 years. It doesn’t apply to second homes or rentals. > **Watch out: Your home is the collateral** > > Missing payments on a home equity loan can lead to foreclosure, even if your first mortgage is current. Borrow only what a fixed payment you can afford will cover. ## Frequently asked questions ### What is a home equity loan? A loan for a lump sum secured by the equity in your home, usually at a fixed rate and repaid in equal monthly payments over a set term. If you still have a mortgage, it is a second lien on the home. ### How is a home equity loan payment calculated? Like any fixed-rate loan: the amount, rate and term set an equal monthly payment of principal and interest. $50,000 over 15 years at an example 8.25% works out to about $485 a month. ### Is a home equity loan better than a HELOC? It suits a single, known cost and a preference for a fixed payment. A HELOC suits costs that come in stages, since you pay interest only on what you draw — but its rate usually varies and payments can rise. ### How much can I borrow with a home equity loan? Lenders cap the total of your mortgage and the new loan at a share of the home’s appraised value, and each sets its own limit. In Texas the constitution limits home equity borrowing on a homestead to 80% of fair market value. ### Can I cancel a home equity loan after closing? On your principal home, yes: you have 3 business days after closing to cancel in writing, and the lender must return your fees within 20 days. ### Is home equity loan interest tax-deductible? Only if the money is used to buy, build or substantially improve the home that secures the loan, and within the IRS mortgage debt limit of $750,000. Interest on money used for other purposes isn’t deductible. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/) — Bank prime loan rate (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) — Right to cancel a refinance or home equity loan on your principal home; After you cancel, the lender must return your money and release the lien within (Aug 8, 2024) - [Texas Constitution, Art. XVI §50(a)(6)](https://capitol.texas.gov/tlodocs/85R/billtext/pdf/SJ00060E.pdf) — Maximum combined loan-to-value for Texas home equity loans; Texas home equity fee cap (share of original principal); Minimum wait after application before a Texas home equity loan can close (Nov 7, 2017) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-loan-estimate-en-1995/) — Lender must send the Loan Estimate within this many business days of your application (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) — You receive the Closing Disclosure at least this many business days before closing (Oct 28, 2026) - [12 CFR 1026.15(a)(3) and 1026.23(a)(3)](https://www.consumerfinance.gov/rules-policy/regulations/1026/15/) — Right to cancel lasts up to this long if the required notice or disclosures were not given (Oct 28, 2026) - [IRS Publication 936](https://www.irs.gov/pub/irs-pdf/p936.pdf) — Mortgage debt on which interest is deductible (loans after Dec 15, 2017) (Tax year 2025) - [CFPB: What is a home equity loan?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-loan-en-106/) - [FTC: Home equity loans and home equity lines of credit](https://consumer.ftc.gov/articles/home-equity-loans-and-home-equity-lines-credit) - [12 CFR 1026.23: Right of rescission](https://www.consumerfinance.gov/rules-policy/regulations/1026/23/) _General information, not financial advice._ --- # Home equity loan and HELOC requirements > What you need for a home equity loan or HELOC: equity, credit, debt-to-income, documents and occupancy rules, plus the extra protections in Texas law. URL: https://mortgage-math-us.com/home-equity/home-equity-requirements/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer To qualify for a home equity loan or HELOC you need enough equity that all loans on the home stay within the lender’s combined loan-to-value limit, a credit history and score the lender accepts, and income that covers the new payment at a debt-to-income ratio it allows. Lenders set most of these thresholds themselves, and a main home is easiest to borrow against. In Texas, the constitution caps borrowing at 80% of the home’s value, limits lender fees to 2% of the loan and bars closing until 12 days after you apply. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Fannie Mae DTI ceiling on first mortgages (for comparison) | 50% | [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) | Apr 2, 2025 | | Freddie Mac guidance for total debts | 45% | [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) | Jan 22, 2026 | | Texas cap on home equity borrowing | 80% | [Texas Constitution, Art. XVI §50(a)(6)](https://capitol.texas.gov/tlodocs/85R/billtext/pdf/SJ00060E.pdf) | Nov 7, 2017 | | Texas wait from application to closing | 12 days | [Texas Constitution, Art. XVI §50(a)(6)(M)(i)](https://capitol.texas.gov/tlodocs/85R/billtext/pdf/SJ00060E.pdf) | Nov 7, 2017 | | Texas cap on lender fees | 2% | [Texas Constitution, Art. XVI §50(a)(6)(E)](https://capitol.texas.gov/tlodocs/85R/billtext/pdf/SJ00060E.pdf) | Nov 7, 2017 | | Federal right to cancel on a main home | 3 business days | [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) | Aug 8, 2024 | ## What lenders check There is no single federal rulebook that sets a minimum credit score or equity level for home equity borrowing. Each lender sets its own standards and prices the risk through your rate or margin. What they all look at is similar: *Home equity requirements at a glance* | Requirement | What the lender looks at | Who sets the bar | |---|---|---| | Equity | Combined loan-to-value (CLTV): all loans on the home, including the new one, ÷ appraised value | Each lender; Texas law caps homesteads at 80% | | Credit | Score, payment history, recent late payments, existing credit lines | Each lender; stronger credit usually earns a lower rate or margin | | Debt-to-income (DTI) | Monthly debt payments, including the new one, ÷ gross monthly income | Each lender | | Income and job | Pay stubs, W-2s or tax returns, and employment checks | Verified by the lender; federal ability-to-repay rules cover home equity loans | | Property | Value, condition, type and whether you live there | Each lender; main homes are the easiest | Because lenders differ, being turned down by one doesn’t mean all will. Ask each lender for its maximum CLTV, any minimum score and how it calculates DTI for the product you want. ## Equity The equity test is a CLTV limit, not a minimum percentage of equity. Multiply the home’s value by the limit and subtract what you owe; whatever is left is the most you can borrow. A lender with an 80% limit lends nothing if your mortgage already equals 80% of the value. [How much equity can you borrow?](https://mortgage-math-us.com/home-equity/how-much-equity/) has the table for common limits. ## Credit and debt-to-income Your DTI is all monthly debt payments — mortgage (with taxes and insurance), car, student and card minimums, plus the new home equity payment — divided by gross monthly income. Lenders set their own ceilings. For context, Fannie Mae’s automated system accepts DTIs up to 50% on first mortgages it buys, and Freddie Mac’s consumer guidance suggests keeping total debts below 45% of income. > **Worked example: DTI check: $96,000 income ($8,000 a month), $2,500 of existing monthly debts, borrowing $40,000** > > | Scenario | Monthly debts | DTI | > |---|---:|---:| > | Today (mortgage $1,900, car $450, cards $150) | $2,500 | 31.3% | > | Plus a 15-year home equity loan at an example 8.25% | $2,888 | 36.1% | > | Plus a HELOC, interest only at 8% | $2,767 | 34.6% | > | Plus the same HELOC, repayment payment | $2,835 | 35.4% | > > The HELOC rate is prime (7%) plus an example 1-point margin. Lenders may qualify you on a HELOC’s higher repayment payment rather than the interest-only minimum. Recent late payments, especially on your current mortgage, weigh heavily against you. Check your credit reports before applying and pay down card balances if you are near a lender’s cutoff. ## Documents to have ready **Gathering your paperwork** 1. **Identity** — Government photo ID and Social Security number for every borrower. 2. **Income** — Recent pay stubs and W-2s; if you are self-employed, tax returns and business records. Add statements for pensions, Social Security or other income you want counted. 3. **The home** — Latest mortgage statement for every loan on the property, homeowners insurance declarations page, property tax bill and any HOA details. 4. **Debts and assets** — Statements for other loans and accounts the lender asks about. 5. **Purpose** — For a renovation, contractor bids help the lender and your own records if you plan to [deduct the interest](https://mortgage-math-us.com/home-equity/home-equity-interest-deduction/). ## Main home, second home or rental **Principal residence.** The widest choice of lenders and the most protection: federal law gives you 3 business days after closing to cancel, and in Texas the homestead rules below apply. **Second home.** Some lenders will lend against one, often with tighter limits. The federal right to cancel does not apply. **Investment property.** Fewer lenders offer home equity loans or HELOCs on rentals, and those that do often set lower CLTV limits and higher rates. A loan used for a rental you don’t live in may be treated as business credit, which can fall outside some federal consumer-lending protections. Read the terms closely. ## Texas home equity rules Texas writes its home equity rules into the state constitution (Article XVI, Section 50). They apply to home equity loans, HELOCs and cash-out refinances secured by a homestead: *Texas constitutional requirements for home equity borrowing* | Rule | Requirement | |---|---| | Borrowing cap | All loans on the homestead together up to 80% of fair market value | | Waiting period | No closing until 12 days after you apply | | Fees | Lender fees up to 2% of the original principal; some costs, such as the appraisal and survey, are excluded | | How often | Generally no new home equity loan within 12 months of the previous one | | Cancel after closing | 3 days to rescind without penalty | | HELOC draws | Each advance at least $4,000; no draws by credit or debit card | | Where you close | At the lender’s office, an attorney’s office or a title company | | Personal liability | None — the loan is without recourse against you personally, except for actual fraud | | Foreclosure | Only with a court order | These rules protect borrowers but also mean Texas closings take longer to arrange. See the [Texas guide](https://mortgage-math-us.com/location/texas/) for taxes, insurance and closing costs in the state. > **Tip: Before you apply anywhere** > > Pull your credit reports, list every monthly debt, and estimate your CLTV with a realistic value. Then compare at least two lenders’ limits, rates and fees — a [HELOC](https://mortgage-math-us.com/home-equity/heloc/) and a [home equity loan](https://mortgage-math-us.com/home-equity/home-equity-loan/) can qualify differently. ## Frequently asked questions ### What credit score do you need for a home equity loan? There is no federal minimum. Each lender sets its own score requirement, and higher scores usually get lower rates or margins. Ask lenders for their minimum before you apply. ### How much equity do I need for a HELOC? Enough that your current mortgage plus the new line stays within the lender’s combined loan-to-value limit. In Texas, the legal maximum on a homestead is 80% of the home’s value. ### What debt-to-income ratio do I need? Lenders set their own limits. As a reference point, Fannie Mae’s automated system accepts up to 50% on first mortgages, and Freddie Mac suggests keeping total debts below 45% of gross income. In our example, a $40,000 home equity loan raised the DTI from 31.3% to 36.1%. ### Can I get a HELOC on a rental property? Some lenders offer them, usually with lower borrowing limits and higher rates than on a main home. Federal rescission rights don’t apply, and a loan for a rental may be treated as business credit. ### How long does a Texas home equity loan take? At least 12 days from application to closing under the Texas Constitution, and the loan can close only at the lender’s office, an attorney’s office or a title company. ### Do I need an appraisal? The lender needs a value for the home. Depending on its policies and the loan size, that may be a full appraisal, a limited or desktop appraisal, or an automated valuation. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/) — Bank prime loan rate (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) — HELOC repayment period, often up to (CFPB) (Aug 28, 2026) - [Texas Constitution, Art. XVI §50(a)(6)](https://capitol.texas.gov/tlodocs/85R/billtext/pdf/SJ00060E.pdf) — Maximum combined loan-to-value for Texas home equity loans; Texas home equity fee cap (share of original principal); Minimum wait after application before a Texas home equity loan can close (Nov 7, 2017) - [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) — Fannie Mae maximum DTI, Desktop Underwriter loans (Apr 2, 2025) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: total debt payments below this share of gross income (Jan 22, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) — Right to cancel a refinance or home equity loan on your principal home (Aug 8, 2024) - [CFPB: What is a home equity loan?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-loan-en-106/) - [Texas SJR 60 (2017): Art. XVI, Sec. 50 home equity provisions](https://capitol.texas.gov/tlodocs/85R/billtext/pdf/SJ00060E.pdf) - [FTC: Home equity loans and home equity lines of credit](https://consumer.ftc.gov/articles/home-equity-loans-and-home-equity-lines-credit) _General information, not financial advice._ --- # Risks of borrowing against your home > The risks of HELOCs and home equity loans: foreclosure, rising variable rates, line freezes, falling home values and scams, with worked examples. URL: https://mortgage-math-us.com/home-equity/home-equity-risks/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer Borrowing against your home puts the home at risk: miss payments and the lender can foreclose, even if your first mortgage is current. HELOCs add rate risk — a $75,000 balance at 8% costs $500 a month interest-only, and $688 if prime rises 3 points — and the lender can freeze the line if your home’s value falls significantly. Falling prices can leave you owing more than the home is worth, and high-cost or fraudulent offers target homeowners with equity. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Prime rate (most common HELOC index) | 7% | [Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/) | Oct 28, 2026 | | Value drop that can trigger a HELOC freeze | 50% | [CFPB, Regulation Z official interpretation 1026.40(f)(3)(vi)-6](https://www.consumerfinance.gov/rules-policy/regulations/1026/interp-40/) | Oct 28, 2026 | | Notice deadline after a freeze | 3 business days | [12 CFR 1026.9(c)(1)(iii)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-B/section-1026.9) | Oct 28, 2026 | | Delinquency before foreclosure can start (closed-end loans) | 120 days | [12 CFR 1024.41(f)(1) (Regulation X)](https://www.consumerfinance.gov/rules-policy/regulations/1024/41/) | Oct 28, 2026 | | High-cost trigger: APR over benchmark, second liens (percentage points) | 8.5% | [12 CFR 1026.32(a)(1)(i)](https://www.consumerfinance.gov/rules-policy/regulations/1026/32/) | Oct 28, 2026 | | HUD housing counselor referral line | 800-569-4287 | [HUD](https://www.hud.gov/stat/sfh/housing-counseling) | Oct 28, 2026 | ## Your home is the collateral A HELOC or [home equity loan](https://mortgage-math-us.com/home-equity/home-equity-loan/) is secured by a lien on your home. If you stop paying, the lender can foreclose — a second-lien lender as well as your first-mortgage lender — and HELOC disclosures must warn you that you could lose your home. Turning card or car debt into home equity debt can lower the rate, but it converts a debt you could default on with damage to your credit into one you could lose your house over. For closed-end loans on your principal residence, including home equity loans, federal servicing rules generally bar the first foreclosure notice or filing until you are more than 120 days behind, which leaves time to apply for help. That rule doesn’t cover HELOCs. In Texas, a home equity lender can foreclose only with a court order and can’t pursue you personally for any shortfall — see the [Texas guide](https://mortgage-math-us.com/location/texas/). If a payment is in doubt, call the lender before you miss it, and talk to a HUD-approved housing counselor; HUD’s referral line is 800-569-4287. ## Rising rates on a variable line Most HELOC rates follow the prime rate, now 7%, plus a fixed margin. When prime rises, so does your payment, during both the draw and repayment periods. *Monthly payment on a $75,000 HELOC balance as rates rise (prime plus an example 1-point margin)* | Rate | Draw period, interest only | Repayment over 20 years | |---|---:|---:| | Today: 8% | $500 | $627 | | +1 point: 9% | $563 | $675 | | +2 points: 10% | $625 | $724 | | +3 points: 11% | $688 | $774 | Every variable-rate loan secured by a home must state a maximum rate in the contract, so your worst case is written down — find it before you sign. Pair a rate rise with the end of the draw period and the jump compounds; [HELOC draw and repayment periods](https://mortgage-math-us.com/home-equity/heloc-draw-and-repayment/) shows how to plan for it. ## Line freezes and cuts Federal rules (12 CFR 1026.40) let a lender stop further draws or reduce your limit while certain conditions last, mainly a significant decline in the home’s value below its appraised value, a material change in your finances that makes repayment doubtful, or a default under the agreement. The lender must notify you in writing, with reasons, within 3 business days. > **Worked example: When does a value drop count as significant?** > > A $400,000 home with a $200,000 mortgage has $200,000 of equity. A HELOC at an 80% combined limit gives a $120,000 line, leaving a gap of $80,000 between the line and your equity. The official interpretation treats a decline as significant when it shrinks that gap by 50% — here, a fall of $40,000, or 10% of the home’s value. A freeze doesn’t change what you already owe, but it removes credit you may have planned to use — mid-renovation, for example. The CFPB suggests asking why, checking your credit reports for errors, requesting a new appraisal if you think the value is wrong, and shopping for another line. ## Falling home values Prices don’t only rise. If you borrow the full line and values fall, your equity can disappear, making it hard to sell, refinance or move without bringing cash to closing. *The same $400,000 home with $320,000 owed (mortgage plus a fully drawn line)* | Change in value | Home value | Equity left | Combined loan-to-value | |---|---:|---:|---:| | No change | $400,000 | $80,000 | 80% | | −10% | $360,000 | $40,000 | 88.9% | | −20% | $320,000 | $0 | 100% | | −30% | $280,000 | −$40,000 | 114.3% | Leaving a cushion — borrowing less than the maximum — is the simplest protection. US prices rose 2.4% over the past year in FHFA’s index, but local markets can move the other way. ## Scams and predatory lending Homeowners with equity are a target. The FTC advises reading every closing paper and not signing if the financing isn’t what you expected, refusing to wire money in response to an unexpected email, and avoiding payment methods that are hard to reverse. Other warning signs: - **Loan flipping** — repeated refinancing that adds fees each time without a real benefit to you. - **Packing** — optional products such as credit insurance added to the loan without a clear choice. - **Contractor-arranged loans** — a contractor who steers you to a lender and is paid from your loan before the work is done. - **Pressure to waive your right to cancel** — you have 3 business days to cancel a loan on your main home; waiving it is meant only for genuine emergencies. > **Watch out: Never wire closing money on email instructions alone** > > Scammers pose as loan officers or title companies and send new wiring instructions. Confirm by phone, using a number you already know, before sending any money. Federal high-cost mortgage rules (HOEPA) add protections when a loan secured by your main home has an APR more than 8.5 percentage points above the average prime offer rate for a second lien (6.5 points for a first lien), or points and fees above 5% of the loan. Those loans require counseling from a HUD-approved counselor before closing, the lender can’t finance the points and fees, and it can’t encourage you to default on an existing loan. A quote anywhere near those levels is a reason to shop elsewhere. ## Borrowing for everyday spending Home equity rates are often lower than card or personal-loan rates, which makes it tempting to fund cars, vacations or living costs. The risk is time: a short-lived purchase paid over decades, secured by your house. > **Worked example: $30,000 spent on a car or trip, at 8%** > > | How it’s repaid | Interest paid | > |---|---:| > | HELOC: interest only for 10 years, then 20 years of repayment | $54,224 | > | Paid off in five years at the same rate | $6,498 | Interest on equity used for anything other than buying, building or substantially improving the home also isn’t tax-deductible — see [home equity interest and taxes](https://mortgage-math-us.com/home-equity/home-equity-interest-deduction/). ## Frequently asked questions ### Can you lose your house with a HELOC? Yes. A HELOC is secured by your home, so if you stop paying, the lender can foreclose, even if your first mortgage is current. Some plans also end with a balloon payment that, if unpaid, puts the home at risk. ### Can a bank freeze my HELOC? Yes, under conditions federal rules allow — mainly a significant fall in the home’s value, a material change in your finances that makes repayment doubtful, or a default. The lender must tell you in writing, with reasons, within 3 business days and restore the line when the condition ends. ### How much can a HELOC payment go up? As much as the rate rises, up to the maximum rate in your contract. On a $75,000 balance, each 1-point rise in prime adds about $63 a month to the interest-only payment. ### What happens to a HELOC if home values fall? You still owe the full balance. If the fall is significant, the lender can freeze or reduce the unused part of the line, and you may owe more than the home is worth, which makes selling or refinancing harder. ### How do I spot a home equity scam? Be wary of pressure to sign quickly, terms that change at closing, repeated refinancing offers, contractors who arrange your loan, and emailed wiring instructions. Confirm everything independently and never waive your right to cancel without a real emergency. ### Is it a bad idea to use home equity to pay off credit cards? It can lower your rate, but it puts your home on the line for debt that wasn’t secured before, and the interest isn’t tax-deductible. It works only if you stop running up the cards and repay the equity debt on a set schedule. ## Sources - [Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/) — Bank prime loan rate (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) — Example HELOC draw period (CFPB); HELOC repayment period, often up to (CFPB) (Aug 28, 2026) - [CFPB, Regulation Z official interpretation 1026.40(f)(3)(vi)-6](https://www.consumerfinance.gov/rules-policy/regulations/1026/interp-40/) — HELOC freeze: a value drop that cuts the original gap between credit limit and available equity by this share counts as significant (Oct 28, 2026) - [12 CFR 1026.32(a)(1)(i)](https://www.consumerfinance.gov/rules-policy/regulations/1026/32/) — High-cost mortgage trigger: APR more than this many percentage points above the average prime offer rate (subordinate lien); High-cost mortgage trigger: APR more than this many percentage points above the average prime offer rate (first lien); High-cost mortgage trigger: points and fees above this share of the total loan amount (Oct 28, 2026) - [12 CFR 1024.41(f)(1) (Regulation X)](https://www.consumerfinance.gov/rules-policy/regulations/1024/41/) — Servicer cannot make the first foreclosure notice or filing until a closed-end mortgage is more than this delinquent (Oct 28, 2026) - [HUD](https://www.hud.gov/stat/sfh/housing-counseling) — HUD housing counseling referral line (Oct 28, 2026) - [12 CFR 1026.9(c)(1)(iii)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-B/section-1026.9) — Lender must send written notice of a HELOC freeze or credit-limit cut within (Oct 28, 2026) - [FHFA House Price Index](https://www.fhfa.gov/news/news-release/fhfa-house-price-index-up-0.3-percent-in-august-up-2.4-percent-from-last-year) — US house prices, 12-month change (FHFA HPI) (August 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) — Right to cancel a refinance or home equity loan on your principal home (Aug 8, 2024) - [FTC: Home equity loans and home equity lines of credit](https://consumer.ftc.gov/articles/home-equity-loans-and-home-equity-lines-credit) - [CFPB: What you should know about home equity lines of credit (brochure)](https://files.consumerfinance.gov/f/documents/cfpb_heloc-brochure_print.pdf) - [12 CFR 1026.34: Prohibited acts for high-cost mortgages](https://www.consumerfinance.gov/rules-policy/regulations/1026/34/) - [12 CFR 1026.40: Requirements for home equity plans](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.40) _General information, not financial advice._ --- # How much equity can you borrow? > Work out how much home equity you can borrow: equity and combined loan-to-value math, a table for common lender limits, the Texas 80% rule and appraisals. URL: https://mortgage-math-us.com/home-equity/how-much-equity/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer Multiply your home’s appraised value by the lender’s combined loan-to-value (CLTV) limit, then subtract everything you owe on the home. On a $360,000 home with $200,000 owed, an 80% limit leaves about **$88,000** to borrow; 90% would allow $124,000. Each lender sets its own limit, but Texas caps home equity borrowing on a homestead at 80%, and conventional cash-out refinances stop at 80%. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Texas cap on home equity borrowing | 80% | [Texas Constitution, Art. XVI §50(a)(6)](https://capitol.texas.gov/tlodocs/85R/billtext/pdf/SJ00060E.pdf) | Nov 7, 2017 | | Conventional cash-out limit (Fannie Mae) | 80% | [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) | Apr 1, 2026 | | FHA cash-out limit | 80% | [HUD Mortgagee Letter 2019-11](https://www.hud.gov/sites/dfiles/OCHCO/documents/19-11ml.pdf) | Aug 1, 2019 | | VA cash-out limit set by VA | 100% | [38 CFR 36.4306](https://www.ecfr.gov/current/title-38/chapter-I/part-36/subpart-B/section-36.4306) | Oct 22, 2026 | | US home prices, past 12 months (FHFA) | 2.4% | [FHFA House Price Index](https://www.fhfa.gov/news/news-release/fhfa-house-price-index-up-0.3-percent-in-august-up-2.4-percent-from-last-year) | August 2026 | ## Equity, LTV and CLTV Three numbers decide how much you can borrow against your home: - **Equity** — the home’s current value minus everything secured by it. A $360,000 home with a $200,000 mortgage has $160,000 of equity. - **Loan-to-value (LTV)** — your first mortgage as a share of the value: $200,000 ÷ $360,000 = 55.6%. - **Combined loan-to-value (CLTV)** — all loans on the home, including the new HELOC or [home equity loan](https://mortgage-math-us.com/home-equity/home-equity-loan/), as a share of the value. This is the number lenders cap. The formula for the most you can borrow is: **Home value × CLTV limit − all existing loans on the home = maximum new loan or line** Lenders keep the rest as a cushion in case prices fall or they need to foreclose. If you already have a HELOC, many lenders count its full credit limit, not just the balance. ## How much you can borrow at different limits Lenders set their own CLTV maximums, and they often vary with your credit score, the loan size and whether the home is your main residence. The percentages below are examples to show the math, not offers. *Most you could borrow on a $360,000 home (near the US median value), by lender limit and current mortgage balance* | Lender’s CLTV limit | Most total debt | $150,000 owed | $200,000 owed | $250,000 owed | $300,000 owed | |---|---:|---:|---:|---:|---:| | 75% | $270,000 | $120,000 | $70,000 | $20,000 | None | | 80% | $288,000 | $138,000 | $88,000 | $38,000 | None | | 85% | $306,000 | $156,000 | $106,000 | $56,000 | $6,000 | | 90% | $324,000 | $174,000 | $124,000 | $74,000 | $24,000 | Two things stand out. First, a few points of CLTV make a large difference: on this home, each 5 points is worth $18,000. Second, if you owe a lot, you may have little or nothing to borrow even with a generous limit — at $300,000 owed, an 80% cap leaves nothing. **How to estimate your borrowing room** 1. **Estimate the value** — Look at recent sales of similar homes nearby. National prices rose 2.4% over the past year in FHFA’s index, but your street can differ. 2. **Add up what you owe** — Your mortgage balance, plus any existing HELOC limit or second loan, from your latest statements. 3. **Apply a limit** — Multiply the value by the lender’s CLTV cap (in Texas, no more than 80%). 4. **Subtract and adjust** — Take away what you owe, then allow for closing costs and the chance that the appraisal comes in lower than your estimate. ## The Texas 80% rule In Texas, the cap is written into the state constitution, which limits home equity borrowing on a homestead — home equity loans, HELOCs and cash-out refinances alike — to 80% of the home’s fair market value, including the existing mortgage. On the example home that is $88,000, however generous a lender wants to be. Texas adds other guardrails: lender fees are capped at 2% of the loan amount (on $88,000, that is $1,760, with some costs such as the appraisal and survey excluded), closing can’t happen until 12 days after you apply, and a new home equity loan generally can’t close within 12 months of the previous one. See the [Texas guide](https://mortgage-math-us.com/location/texas/) and [home equity loan requirements](https://mortgage-math-us.com/home-equity/home-equity-requirements/). ## Cash-out refinance limits A [cash-out refinance](https://mortgage-math-us.com/refinancing/cash-out-refinance/) uses the same math on a single new first mortgage, with limits set by the loan program: *Cash-out refinance limits by program* | Program | Maximum LTV | On the $360,000 home with $200,000 owed | |---|---:|---:| | Conventional (Fannie Mae, one-unit main home) | 80% | $88,000 | | FHA | 80% | $88,000 | | VA (lenders may set lower) | 100% | $160,000 | Figures are before closing costs and fees. [Cash-out refinance vs HELOC](https://mortgage-math-us.com/home-equity/cash-out-vs-heloc/) compares the monthly cost. ## The appraisal sets the value Your estimate doesn’t count; the lender’s valuation does. Depending on the loan size and its own rules, a lender may order a full appraisal with an interior inspection, a limited exterior or desktop appraisal, or rely on an automated valuation model built from sales data. > **Worked example: What a lower appraisal does — $360,000 estimate, $200,000 owed, 80% limit** > > | Appraised value | Most you can borrow | > |---|---:| > | $360,000 (your estimate) | $88,000 | > | $342,000 (5% lower) | $73,600 | > > A 5% lower value cuts the borrowing room by $14,400, or 16.4%, because the whole shortfall comes out of the equity you can tap. If the value looks wrong, ask the lender which method it used and how to request a reconsideration, with recent comparable sales. For a cash-out refinance, which is a first mortgage, the lender must give you a copy of the appraisal promptly, and no later than 3 business days before closing. ## Equity isn’t the only limit Even with plenty of equity, the lender must be satisfied you can repay. Your credit score, income and debt-to-income ratio decide whether you qualify and at what margin or rate, and some lenders set minimum and maximum line sizes. Borrowing the full amount also leaves you less cushion if prices fall — see [risks of borrowing against your home](https://mortgage-math-us.com/home-equity/home-equity-risks/). The [HELOC payment calculator](https://mortgage-math-us.com/tools/heloc-payment-calculator/) shows the payment on any amount. ## Frequently asked questions ### How do I calculate how much equity I can borrow? Multiply the home’s value by the lender’s combined loan-to-value limit and subtract everything you owe on the home. On a $360,000 home with $200,000 owed, an 80% limit gives $88,000. ### What is combined loan-to-value (CLTV)? The total of all loans secured by the home — first mortgage, any HELOC or home equity loan, and the new loan — divided by the home’s appraised value. Lenders cap CLTV rather than the new loan alone. ### Can I borrow 100% of my home equity? Rarely. Lenders keep a cushion and cap the combined loans below the full value. VA cash-out refinances are the main exception: VA rules allow up to 100% of the value, though lenders may set lower limits and a funding fee applies. ### How much equity do I need for a HELOC? Enough that your mortgage plus the new line stays within the lender’s CLTV limit. If a lender caps CLTV at 80% and you owe 70% of the value, you could borrow only about 10% of the value. ### What is the Texas 80% rule? The Texas Constitution limits home equity borrowing on a homestead, including the existing mortgage, to 80% of fair market value. It applies to home equity loans, HELOCs and cash-out refinances. ### Does my home need an appraisal for a home equity loan? The lender needs a value, but not always a full appraisal. Depending on the loan and its policies, it may use an exterior or desktop appraisal or an automated valuation model. Ask which method it will use and what it costs. ## Sources - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [Texas Constitution, Art. XVI §50(a)(6)(E)](https://capitol.texas.gov/tlodocs/85R/billtext/pdf/SJ00060E.pdf) — Texas home equity fee cap (share of original principal); Maximum combined loan-to-value for Texas home equity loans; Minimum wait after application before a Texas home equity loan can close (Nov 7, 2017) - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae cash-out refinance maximum LTV, one-unit principal residence (Apr 1, 2026) - [HUD Mortgagee Letter 2019-11](https://www.hud.gov/sites/dfiles/OCHCO/documents/19-11ml.pdf) — FHA cash-out refinance maximum loan-to-value (Aug 1, 2019) - [38 CFR 36.4306](https://www.ecfr.gov/current/title-38/chapter-I/part-36/subpart-B/section-36.4306) — VA refinance (including cash-out) maximum loan-to-value allowed by VA (Oct 22, 2026) - [FHFA House Price Index](https://www.fhfa.gov/news/news-release/fhfa-house-price-index-up-0.3-percent-in-august-up-2.4-percent-from-last-year) — US house prices, 12-month change (FHFA HPI) (August 2026) - [CFPB, Regulation B 1002.14](https://www.consumerfinance.gov/rules-policy/regulations/1002/14) — Lender must give you the appraisal at least this long before closing (or promptly) (Oct 28, 2026) - [CFPB: What is a home equity line of credit (HELOC)?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) - [Texas SJR 60 (2017): Art. XVI, Sec. 50 home equity provisions](https://capitol.texas.gov/tlodocs/85R/billtext/pdf/SJ00060E.pdf) - [Fannie Mae Selling Guide B2-1.3-03: Cash-out refinance transactions](https://selling-guide.fanniemae.com/sel/b2-1.3-03/cash-out-refinance-transactions) _General information, not financial advice._ --- # Construction loans explained > How construction loans work: single-close construction-to-permanent vs two-time close, draws and inspections, and interest-only payments during the build. URL: https://mortgage-math-us.com/loan-types/construction-loans/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer A construction loan pays your builder in stages, or draws, as work passes inspection, and you usually pay only interest on the amount drawn so far. A **single-close (construction-to-permanent)** loan converts automatically into a regular mortgage when the house is finished, with one application and one set of closing costs; a **two-time close** uses a short-term construction loan and then a separate mortgage. Fannie Mae buys single-close loans only after conversion and limits the construction period to 12 months at a time and 18 months in total. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Fannie Mae single-close: longest construction period | 12 months | [Fannie Mae Selling Guide B5-3.1-02](https://selling-guide.fanniemae.com/sel/b5-3.1-02/conversion-construction-permanent-financing-single-closing-transactions) | May 6, 2026 | | Fannie Mae single-close: longest total, with extensions | 18 months | [Fannie Mae Selling Guide B5-3.1-02](https://selling-guide.fanniemae.com/sel/b5-3.1-02/conversion-construction-permanent-financing-single-closing-transactions) | May 6, 2026 | | Construction phase exempt from the ability-to-repay rule if no longer than | 12 months | [12 CFR 1026.43](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43) | Oct 22, 2026 | | Fannie Mae maximum LTV, principal residence purchase | 97% | [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) | Apr 1, 2026 | | 2026 conforming limit for the permanent loan | $832,750 | [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) | 2026 limit | ## How a construction loan works A bank won’t hand you the full loan on day one when the collateral is a vacant lot. Instead, the lender approves a total amount based on your plans, budget and builder, then releases money in **draws** as each stage of work is finished and inspected. During construction you typically pay **interest only** on what has been drawn, so payments start small and rise as the house goes up. When the house is complete, the construction debt has to become a long-term mortgage. How that happens is the main choice you make. ## Single-close vs two-time close | | Single-close (construction-to-permanent) | Two-time close | |---|---|---| | Closings | One | Two: construction loan, then mortgage | | Closing costs | One set | Two sets | | Qualifying | Once, before construction | Again for the permanent mortgage | | Permanent rate | Locked at closing or set at conversion, depending on the lender | Whatever rates are when the house is done | | Flexibility | Committed to one lender | Can shop for the permanent mortgage | | Risk | Less paperwork risk at the end | Job, credit or rate changes can derail the second loan | A single-close loan suits most borrowers who want certainty. A two-time close can make sense if you expect rates to fall, need a construction lender that specializes in custom builds, or plan to sell another home to make a large down payment on the permanent loan. ## Fannie Mae’s single-close rules Many single-close loans are [conventional loans](https://mortgage-math-us.com/loan-types/conventional-loans/) written to Fannie Mae’s Selling Guide so they can be sold once the house is finished. Its main rules: - **Fannie Mae buys the loan only after construction is complete** and the loan has converted to permanent financing. - **The construction period** can’t run longer than 12 months at a time, or 18 months including extensions. No exceptions are granted. - **The permanent loan** can have a term of up to 30 years after conversion, not counting the construction period. - **Loan-to-value on a purchase** is measured against the lower of the total cost (construction plus the lot’s price) or the home’s “as completed” appraised value. If you already own the lot when the first draw is made, the loan is treated as a limited cash-out refinance and measured against the as-completed value, so equity in the land works like a down payment. - **At conversion**, only the rate, loan amount, term and amortization type can change; the amount can rise only for documented cost increases, and the only allowed amortization change is from adjustable to fixed. Federal ability-to-repay rules exempt a construction phase of 12 months or less, so lenders structure the construction stage as a temporary loan and apply full underwriting to the permanent mortgage. ## Government-backed construction loans [FHA](https://mortgage-math-us.com/loan-types/fha-loans/) and VA loans can also be used for one-time-close construction-to-permanent financing through lenders that offer it, with the same benefits as on a purchase — low or no down payment and the usual mortgage insurance or [VA funding fee](https://mortgage-math-us.com/loan-types/va-loans/), which applies to construction loans at the purchase rates. USDA guaranteed loans can finance building a new home in an eligible rural area too; see [USDA loans](https://mortgage-math-us.com/loan-types/usda-loans/). Fewer lenders offer these programs, so expect to search harder and to need a builder the lender approves. ## Draws, inspections and interest during the build Before closing, your builder gives the lender a detailed budget and a draw schedule tied to stages of work. At each stage an inspector confirms the work is done, the title is checked for new liens, and the lender pays the builder or the subcontractors directly. > **Worked example: Interest during construction on a $400,000 loan — example draw schedule, rate of 7.24% used only to illustrate** > > | Stage | Month | Share | Draw | > |---|---:|---:|---:| > | Site work and foundation | 1 | 10% | $40,000 | > | Framing and roof | 3 | 20% | $80,000 | > | Windows, plumbing, electrical and HVAC rough-in | 5 | 20% | $80,000 | > | Insulation, drywall and interior work | 7 | 25% | $100,000 | > | Finishes and final inspection | 9 | 25% | $100,000 | > > | Month | Balance drawn | Interest-only payment | > |---|---:|---:| > | Month 1 | $40,000 | $241 | > | Month 3 | $120,000 | $724 | > | Month 5 | $200,000 | $1,207 | > | Month 7 | $300,000 | $1,810 | > | Month 9 | $400,000 | $2,413 | > | Month 10 | $400,000 | $2,413 | > > Months between draws repeat the previous payment. Over the 10-month build, interest-only payments total about $12,791, far less than 10 months of interest on the full loan ($24,133). After conversion, principal and interest on $400,000 over 30 years comes to $2,726 a month at the same rate. > **Watch out: Budget for overruns** > > Construction rarely goes exactly to plan. If costs exceed the budget, lenders usually expect you to pay the difference in cash before more money is drawn. Keep a contingency fund and get a fixed-price contract where you can. ## How to get a construction loan **How a single-close construction loan works** 1. **Pick the plans, lot and builder** — Lenders review the builder’s license, insurance and track record as well as your finances. 2. **Get approved** — The lender underwrites you and orders an [appraisal](https://mortgage-math-us.com/buying/appraisal-and-inspection/) of the home “as completed” from the plans and specifications. 3. **Close once** — You sign for the construction phase and the permanent mortgage together, and the lot is bought or pledged. 4. **Build in stages** — Each draw follows an inspection; you pay interest on the amount drawn. 5. **Finish and convert** — A final inspection confirms completion, and the loan converts to a regular mortgage with principal-and-interest payments. Many lenders also expect a larger down payment on construction loans than on an existing home, and some require cash reserves. Compare total costs, including any construction-period fees, on each lender’s Loan Estimate, and check the [closing cost estimator](https://mortgage-math-us.com/tools/closing-cost-calculator/) for your state. ## Frequently asked questions ### What is a construction-to-permanent loan? A single loan with one closing that pays for building the home in draws and then converts automatically into a regular mortgage when construction is finished. ### Do you pay interest during construction? Usually yes, but only on the money drawn so far, so payments start small and grow. In the example, a $400,000 build costs about $12,791 in interest over 10 months. ### How long can construction take on a single-close loan? Lenders set their own deadlines. For loans sold to Fannie Mae, no single construction period can exceed 12 months, and the total, including extensions, can’t exceed 18 months. ### Can I use an FHA or VA loan to build a house? Yes, through lenders that offer FHA or VA construction-to-permanent loans. The usual FHA mortgage insurance or VA funding fee applies, and the lender will need to approve your builder. ### Does owning the land help with a construction loan? Yes. For Fannie Mae single-close loans, if you own the lot when construction starts, the loan-to-value is based on the finished home’s appraised value, so your equity in the land counts toward the down payment. ### What happens if construction goes over budget? You usually have to cover the overrun in cash before the lender releases more money, unless your loan includes a contingency reserve. Plan a cushion before you start. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [Fannie Mae Selling Guide B5-3.1-02](https://selling-guide.fanniemae.com/sel/b5-3.1-02/conversion-construction-permanent-financing-single-closing-transactions) — Fannie Mae single-closing construction loan: longest single construction period; Fannie Mae single-closing construction loan: longest total construction period, extensions included (May 6, 2026) - [12 CFR 1026.43](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43) — Construction phase of a construction-to-permanent loan is exempt from the ability-to-repay rule if no longer than (Oct 22, 2026) - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae maximum LTV, one-unit principal residence purchase (Apr 1, 2026) - [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) — 2026 baseline conforming loan limit (one-unit) (2026 limit) - [Fannie Mae Selling Guide B5-3.1-02: Single-closing construction-to-permanent transactions](https://selling-guide.fanniemae.com/sel/b5-3.1-02/conversion-construction-permanent-financing-single-closing-transactions) - [Fannie Mae Selling Guide B5-3.1-01: Construction-to-permanent financing overview](https://selling-guide.fanniemae.com/sel/b5-3.1-01/conversion-construction-permanent-financing-overview) - [VA: Funding fee and closing costs (purchase and construction loans)](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) _General information, not financial advice._ --- # Conventional loans explained > How conventional loans work in 2026: conforming limits, 3% down, PMI cost and cancellation, credit score and DTI rules, and how they compare with FHA. URL: https://mortgage-math-us.com/loan-types/conventional-loans/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer A conventional loan is a mortgage with no government insurance behind it. Most follow Fannie Mae and Freddie Mac rules and must stay within the 2026 conforming limit of $832,750 for a one-unit home ($1,249,125 in high-cost areas). You can put down as little as 3%; below 20% you pay private mortgage insurance, which you can ask to cancel at 80% of the original value and which ends automatically at 78%. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | 2026 conforming limit, most counties | $832,750 | [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) | 2026 limit | | 2026 limit, highest-cost areas | $1,249,125 | [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) | 2026 limit | | Lowest conventional down payment | 3% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | | Minimum score, manually underwritten fixed-rate loans | 620 | [Fannie Mae Selling Guide B3-5.1-01](https://selling-guide.fanniemae.com/sel/b3-5.1-01/general-requirements-credit-scores) | Apr 22, 2026 | | Highest DTI Fannie Mae’s system accepts | 50% | [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) | Apr 2, 2025 | | PMI ends automatically at this loan-to-value | 78% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) | Oct 28, 2026 | ## What makes a loan conventional “Conventional” simply means the loan isn’t insured or guaranteed by a government agency such as the FHA, VA or USDA. The lender takes the risk — or, much more often, sells the loan to Fannie Mae or Freddie Mac, the two government-sponsored enterprises that buy most US mortgages. Loans that meet their size and underwriting rules are called **conforming loans**. Loans larger than the conforming limit are [jumbo loans](https://mortgage-math-us.com/loan-types/jumbo-loans/), which lenders keep or sell privately under their own rules. Both are conventional; this guide covers the conforming kind. ## Conforming loan limits for 2026 The Federal Housing Finance Agency (FHFA) resets the limits every year based on home prices. For 2026 the baseline for a one-unit home is $832,750, up from $806,500 in 2025. In counties where home values are high, the limit is raised, up to a ceiling of $1,249,125. Limits for two- to four-unit properties are higher. The limit applies to the loan amount, not the price. A larger down payment can keep an expensive home within conforming territory. ## Conventional loan requirements | Requirement | Conforming loan rule | |---|---| | Down payment | From 3% on a one-unit home you live in | | Credit score | 620 for manually underwritten fixed-rate loans; no set minimum in Desktop Underwriter since November 2025 | | Debt-to-income | 36% manual, up to 45% with strong credit and reserves, 50% in Desktop Underwriter | | Mortgage insurance | PMI below 20% down; cancellable | | Loan amount | Up to $832,750 ($1,249,125 in high-cost areas) | | Occupancy | Principal residence, second home or investment property | Occupancy changes the down payment. Fannie Mae’s Eligibility Matrix sets these maximum loan-to-value (LTV) ratios for one-unit homes: *Fannie Mae maximum LTV and the down payment it implies* | Transaction | Maximum LTV | Minimum down or equity | |---|---:|---:| | Purchase, principal residence (fixed rate) | 97% | 3% | | Purchase, second home | 90% | 10% | | Purchase, investment property | 85% | 15% | | Cash-out refinance, principal residence | 80% | 20% | The highest LTVs come with extra conditions, and lenders may set stricter rules (overlays). ## Credit score and debt-to-income Fannie Mae’s automated system, Desktop Underwriter (DU), stopped applying a minimum credit score in November 2025 and now weighs the whole file. Manually underwritten fixed-rate loans still need 620. In practice your score still drives the price: a higher score usually means a lower rate and much cheaper PMI. See [credit score for a mortgage](https://mortgage-math-us.com/buying/credit-score/). Your debt-to-income ratio (DTI) — all monthly debt payments including the new housing payment, divided by gross monthly income — can reach 50% with a DU approval. Freddie Mac’s consumer guidance suggests keeping total debts below 45%. The [debt-to-income guide](https://mortgage-math-us.com/buying/debt-to-income/) shows the math. ## PMI: what it costs and when it ends Private mortgage insurance protects the lender when you put down less than 20%. Freddie Mac puts the typical cost at $30–$70 a month per $100,000 borrowed, depending mostly on your credit score and down payment. > **Worked example: $360,000 home (near the US median value), 30-year fixed at an example rate of 7.24%** > > | Down payment | Loan | Principal and interest | PMI a month | Total with PMI midpoint, tax and insurance | > |---|---:|---:|---:|---:| > | 3% ($10,800) | $349,200 | $2,380 | $105–$244 | $2,968 | > | 5% ($18,000) | $342,000 | $2,331 | $103–$239 | $2,916 | > | 10% ($36,000) | $324,000 | $2,208 | $97–$227 | $2,784 | > | 20% ($72,000) | $288,000 | $1,963 | None | $2,377 | > > Tax uses the national rate of 0.89% a year and insurance Freddie Mac’s average of $4.90 per $1,000 of value. PMI is shown as Freddie Mac’s typical range; your quote depends on your credit. > **Rule: When PMI goes away** > > Under the Homeowners Protection Act you can ask your servicer to cancel PMI once your balance is scheduled to reach 80% of the home’s original value, and it must end automatically at 78% if you’re current. On the 10%-down example above, the original schedule reaches 80% after about 8 years and 7 months and 78% after about 9 years and 10 months — sooner if you prepay. More on pricing and removal in [PMI explained](https://mortgage-math-us.com/buying/pmi/). ## HomeReady and Home Possible Fannie Mae’s **HomeReady** and Freddie Mac’s **Home Possible** are conventional loans for lower- and moderate-income buyers. Both allow 3% down. HomeReady caps household income at 80% of the area median income, and Home Possible at 80%. They don’t require you to be a first-time buyer, but when every borrower is a first-time buyer and the LTV is above 95%, Fannie Mae requires a homebuyer education course. Both can be combined with state and local [down-payment assistance](https://mortgage-math-us.com/first-time-buyers/programs/). ## Conventional vs FHA *Same $360,000 home, smallest down payment on each loan* | | Conventional | FHA | |---|---:|---:| | Down payment | $10,800 (3%) | $12,600 (3.5%) | | Upfront insurance | None | 1.75% of the loan | | Monthly mortgage insurance | $175 (PMI midpoint) | $159 (annual MIP 0.55%) | | Insurance ends | At 78% of original value | Life of the loan with under 10% down | | Lowest credit score | 620 manual; none set in DU | 500 with 10% down | | Second homes and rentals | Allowed | Principal residence only | PMI is priced on your credit: on this loan Freddie Mac’s typical range runs from $105 to $244 a month, so strong credit can put it well below FHA’s MIP — and PMI ends, while FHA’s usually doesn’t. With a low score or high debts, [FHA loans](https://mortgage-math-us.com/loan-types/fha-loans/) can be easier to qualify for and sometimes cheaper at first. Ask for a Loan Estimate on both and compare the total cost over the years you expect to keep the loan. [Open the mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/) ## Who conventional loans suit - **Buyers with good credit**, who get the best PMI pricing and the option to cancel it. - **Buyers with 20% down**, who pay no mortgage insurance at all. - **Second-home buyers and investors**, since government loans require you to live in the home. - **Buyers who want flexibility** on term, fixed or [adjustable rates](https://mortgage-math-us.com/loan-types/fixed-vs-adjustable-rate/), and property type. ## Frequently asked questions ### What is the conforming loan limit for 2026? $832,750 for a one-unit home in most of the country, rising to $1,249,125 in high-cost counties. Loans above your county’s limit are jumbo loans. ### How much do you need to put down on a conventional loan? As little as 3% on a one-unit home you live in. Second homes need at least 10% down and investment properties 15% under Fannie Mae’s matrix, and putting down 20% removes PMI. ### What credit score do you need for a conventional loan? Fannie Mae requires 620 for manually underwritten fixed-rate loans. Its Desktop Underwriter system has had no set minimum since November 2025, but lenders can add their own minimums and lower scores pay more for the rate and PMI. ### How much is PMI on a conventional loan? Typically $30–$70 a month for every $100,000 borrowed, according to Freddie Mac. On a $324,000 loan that is about $97–$227 a month. ### When does PMI stop? You can ask your servicer to cancel it when your balance is scheduled to reach 80% of the original value, and it ends automatically at 78% if you are current on payments. It must also end at the midpoint of the loan’s schedule. ### Is a conventional loan better than FHA? For borrowers with good credit, usually yes: PMI tends to cost less than FHA’s mortgage insurance and it can be cancelled. FHA is often easier with a lower score or higher debts. Compare Loan Estimates for both. ### Can I use a conventional loan for a rental property? Yes. Conventional loans can finance second homes and investment properties, with larger down payments — Fannie Mae’s maximum LTV for a one-unit investment purchase is 85%. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum down payment on some conventional loans; Minimum FHA down payment (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) — Ask your servicer to cancel PMI at this share of original value; PMI ends automatically at this share of original value (Oct 28, 2026) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA annual MIP, 30-year loan, more than 95% LTV; FHA upfront mortgage insurance premium (Feb 22, 2023) - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae maximum LTV, one-unit principal residence purchase; Fannie Mae maximum LTV, second home purchase; Fannie Mae maximum LTV, one-unit investment property purchase (Apr 1, 2026) - [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) — 2026 baseline conforming loan limit (one-unit); 2026 high-cost area conforming ceiling (one-unit); 2025 baseline conforming loan limit (one-unit) (2026 limit) - [Fannie Mae Selling Guide B3-5.1-01](https://selling-guide.fanniemae.com/sel/b3-5.1-01/general-requirements-credit-scores) — Fannie Mae minimum score, manually underwritten fixed-rate loans (Apr 22, 2026) - [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) — Fannie Mae maximum DTI, manually underwritten loans; Fannie Mae maximum DTI, manual underwriting with strong credit and reserves; Fannie Mae maximum DTI, Desktop Underwriter loans (Apr 2, 2025) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: total debt payments below this share of gross income (Jan 22, 2026) - [Fannie Mae Selling Guide B5-6-01](https://selling-guide.fanniemae.com/sel/b5-6-01/homeready-mortgage-loan-and-borrower-eligibility) — Fannie Mae HomeReady income limit (share of area median income) (Jun 4, 2025) - [Freddie Mac Home Possible fact sheet](https://sf.freddiemac.com/docs/pdf/fact-sheet/home_possible_factsheet.pdf) — Freddie Mac Home Possible income limit (share of area median income) (Feb 1, 2026) - [Fannie Mae Selling Guide B2-2-06](https://selling-guide.fanniemae.com/sel/b2-2-06/homeownership-education-and-housing-counseling) — Fannie Mae requires homebuyer education above this LTV when all borrowers are first-time buyers (Nov 5, 2025) - [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) — FHA minimum decision credit score (90% LTV cap from 500 to 579) (Oct 8, 2026) - [FHFA: Conforming loan limit values for 2026](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) - [Fannie Mae Selling Guide Announcement SEL-2025-09 (minimum credit score removed for DU loans)](https://singlefamily.fanniemae.com/news-events/announcement-sel-2025-09-selling-guide-updates) - [CFPB: When can I remove PMI from my loan?](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) _General information, not financial advice._ --- # DSCR investor loans explained > How DSCR loans qualify rentals on rent instead of your income, how the ratio is calculated, why they are business-purpose loans, and how they compare. URL: https://mortgage-math-us.com/loan-types/dscr-loans/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer A DSCR (debt service coverage ratio) loan is an investor mortgage that qualifies the property on its rent: the lender divides the monthly rent by the full payment — principal, interest, taxes, insurance and association dues (PITIA). A ratio of 1.00 means the rent exactly covers the payment. Because they finance rental property you won’t live in, DSCR loans are business-purpose, non-QM loans exempt from Regulation Z’s consumer rules, and each lender sets its own minimum ratio, down payment and rate. A conventional investment loan instead counts 75% of the rent and your personal income, with up to 85% loan-to-value under Fannie Mae’s rules. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Fannie Mae max LTV, one-unit investment purchase | 85% | [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) | Apr 1, 2026 | | Share of rent Fannie Mae counts as income | 75% | [Fannie Mae Selling Guide B3-3.8-02](https://selling-guide.fanniemae.com/sel/b3-3.8-02/rental-income-subject-property) | Sep 2, 2026 | | Most financed properties under Fannie Mae (DU) | 10 | [Fannie Mae Selling Guide B2-2-03](https://selling-guide.fanniemae.com/sel/b2-2-03/multiple-financed-properties-same-borrower) | Nov 5, 2025 | | Highest DTI in Fannie Mae’s system | 50% | [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) | Apr 2, 2025 | ## What a DSCR loan is Most mortgages qualify **you**: your income, your debts and your debt-to-income ratio. A DSCR loan qualifies **the property**. If the expected rent covers the mortgage payment by enough to satisfy the lender, you may not need to show tax returns, pay stubs or a [debt-to-income ratio](https://mortgage-math-us.com/buying/debt-to-income/) at all. That appeals to investors who own several rentals, whose tax returns show little income after depreciation, or who are self-employed — see [mortgages for the self-employed](https://mortgage-math-us.com/blog/mortgages-for-the-self-employed/). DSCR loans aren’t a government program and aren’t bought by Fannie Mae or Freddie Mac. They are made by lenders that keep them or sell them to private investors, so the rules differ from lender to lender. ## How the ratio is calculated **DSCR = monthly rent ÷ monthly PITIA** PITIA is principal and interest plus property taxes, homeowners (landlord) insurance and any HOA or condo dues. The rent is usually the lease amount or the market rent an appraiser estimates for the property, whichever the lender’s rules call for. > **Worked example: $300,000 rental home, 25% down and $2,400 monthly rent — all example inputs; rate of 7.24% used only to illustrate** > > | | Monthly | > |---|---:| > | Principal and interest on $225,000, 30 years | $1,533 | > | Property tax at 0.89% a year | $223 | > | Insurance at $4.90 per $1,000 of value | $123 | > | **PITIA** | **$1,878** | > | Rent | $2,400 | > | **DSCR (rent ÷ PITIA)** | **1.28** | > > Rent of $1,878 would give a ratio of exactly 1.00. If rent came in 10% lower, at $2,160, the ratio would fall to 1.15. DSCR loan rates are set by each lender and are often above the conventional average used here; a higher rate raises PITIA and lowers the ratio. A ratio above 1.00 means the rent covers the payment with room to spare; below 1.00 means you would add money each month. The ratio ignores vacancies, repairs, management and utilities, so a property can pass the test and still lose money. ## Business-purpose, non-QM loans Regulation Z, the federal Truth in Lending rule, does not apply to “an extension of credit primarily for a business, commercial or agricultural purpose” or to credit extended to anyone other than a natural person, such as an LLC (12 CFR 1026.3(a)). The CFPB’s official interpretation adds that credit to buy, improve or maintain rental property that isn’t owner-occupied is deemed to be for business purposes, whatever the number of units. For a DSCR loan, that has real consequences: - **No ability-to-repay rule and no Qualified Mortgage status.** DSCR loans are non-QM, and features restricted on QMs — such as [interest-only payments](https://mortgage-math-us.com/loan-types/interest-only-mortgages/), prepayment penalties or balloon payments — can appear in them. - **Different paperwork.** The lender doesn’t have to use the standard Loan Estimate and Closing Disclosure, though many provide similar disclosures. State laws can still apply. - **You certify the purpose.** Lenders typically have you sign that you won’t live in the property. You can’t use a DSCR loan for a home you’ll occupy, and misstating occupancy on a loan application is a serious matter. > **Watch out: Read the note, not just the rate** > > Because consumer mortgage rules don’t apply, look closely at prepayment penalties, rate adjustments, balloon dates and any personal guarantee before you sign. ## Terms vary by lender There is no standard DSCR product. Each lender sets its own: - **Minimum ratio** — some want a cushion above 1.00, some accept lower ratios with a bigger down payment or higher rate. - **Down payment and credit score** — usually stricter than for a home you live in. - **Cash reserves** — often measured in months of PITIA. - **Rate and fees** — priced for the extra risk, with points and prepayment penalties common. - **Property types** — some finance short-term rentals or small multifamily buildings, others don’t. Compare several lenders and get the full terms in writing. A [fixed or adjustable rate](https://mortgage-math-us.com/loan-types/fixed-vs-adjustable-rate/) choice matters as much as on any other loan. ## DSCR vs conventional investment-property loans Fannie Mae and Freddie Mac also buy loans on investment properties. They qualify you on your personal income, and count only part of the rent. | | DSCR loan | Conventional investment loan (Fannie Mae) | |---|---|---| | Qualifies on | The property’s rent vs PITIA | Your income and debt-to-income ratio, up to 50% | | Rent counted | Lease or market rent, per lender | 75% of gross rent, minus PITIA | | Maximum loan-to-value | Set by lender | 85% on a one-unit purchase (15% down) | | Income documents | Usually none | Tax returns, pay stubs or other proof | | Number of financed properties | Set by lender | Up to 10 | | Borrower | Individuals or entities such as LLCs, per lender | Individuals, not LLCs | | Rates and fees | Set by lender, often higher | Standard conventional pricing with investment-property adjustments | On the example property, Fannie Mae’s method treats 75% of the $2,400 rent — $1,800 — as net rental income and subtracts the $1,878 PITIA, leaving −$78 a month. A negative figure is added to your debts in the DTI ratio; a positive one can offset the property’s payment or count as income, depending on your experience as a landlord. If your income is well documented and you have fewer than 10 financed properties, a [conventional loan](https://mortgage-math-us.com/loan-types/conventional-loans/) usually costs less. DSCR loans earn their higher price when your tax returns understate your ability to pay, you buy through an entity, or you’ve reached conventional limits. [Open the mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/) ## Frequently asked questions ### What is a good DSCR for a rental property loan? Above 1.00 means the rent covers principal, interest, taxes, insurance and dues; below 1.00 means it doesn’t. Each lender sets its own minimum, so ask before you apply. The example property has a ratio of 1.28. ### How do you calculate DSCR? Divide the monthly rent by the monthly PITIA — principal, interest, property taxes, insurance and association dues. $2,400 of rent against a $1,878 payment gives 1.28. ### Do DSCR loans require income verification? Usually not in the way a regular mortgage does; the lender relies on the property’s rent. Lenders still check credit, assets, reserves and the property, and they set their own requirements. ### Are DSCR loans regulated like regular mortgages? No. Loans primarily for a business purpose, and loans to entities such as LLCs, are exempt from Regulation Z under 12 CFR 1026.3(a), and credit for rental property you won’t occupy is deemed business-purpose. State laws may still apply. ### Can I live in a home bought with a DSCR loan? No. DSCR loans are for investment property, and lenders have you certify that you won’t occupy it. For a home you’ll live in, look at conventional, FHA, VA or USDA loans. ### Is a DSCR loan better than a conventional investment loan? Not usually on cost: conventional investment loans tend to be cheaper if you can document income and qualify. DSCR loans help when your tax returns understate your income, you buy through an LLC, or you have reached conventional limits such as 10 financed properties. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Fannie Mae Selling Guide B3-3.8-02](https://selling-guide.fanniemae.com/sel/b3-3.8-02/rental-income-subject-property) — Fannie Mae: share of gross monthly rent counted as net rental income (subject property) (Sep 2, 2026) - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae maximum LTV, one-unit investment property purchase (Apr 1, 2026) - [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) — Fannie Mae maximum DTI, Desktop Underwriter loans (Apr 2, 2025) - [Fannie Mae Selling Guide B2-2-03](https://selling-guide.fanniemae.com/sel/b2-2-03/multiple-financed-properties-same-borrower) — Fannie Mae: most financed properties a borrower may have when buying a second home or investment property (DU) (Nov 5, 2025) - [eCFR: 12 CFR 1026.3 (exempt transactions)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-A/section-1026.3) - [CFPB: Official interpretation of 1026.3 (business-purpose rental property)](https://www.consumerfinance.gov/rules-policy/regulations/1026/interp-3/) - [Fannie Mae Selling Guide B3-3.8-02: Rental income from the subject property](https://selling-guide.fanniemae.com/sel/b3-3.8-02/rental-income-subject-property) _General information, not financial advice._ --- # FHA loans explained > How FHA loans work in 2026: 3.5% down with a 580 score, upfront and annual mortgage insurance, county loan limits and how FHA compares with conventional. URL: https://mortgage-math-us.com/loan-types/fha-loans/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer An FHA loan is a mortgage insured by the Federal Housing Administration. You can put down 3.5% with a credit score of 580 or higher, or 10% with a score from 500 to 579. In return you pay an upfront premium of 1.75% of the loan plus annual mortgage insurance — 0.55% a year on a typical 30-year loan with the minimum down payment, for the life of the loan. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Minimum down payment (580+ score) | 3.5% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | | Lowest score FHA accepts (10% down) | 500 | [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) | Oct 8, 2026 | | Upfront mortgage insurance premium | 1.75% | [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) | Feb 22, 2023 | | Annual MIP, 30-year loan, under 5% down | 0.55% | [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) | Feb 22, 2023 | | 2026 FHA limit, lower-cost counties | $541,287 | [HUD](https://www.hud.gov/news/hud-no-25-145) | 2026 limit | | 2026 FHA limit, high-cost counties | $1,249,125 | [HUD](https://www.hud.gov/news/hud-no-25-145) | 2026 limit | ## How an FHA loan works The Federal Housing Administration, part of the Department of Housing and Urban Development (HUD), doesn’t lend money. It insures loans that approved lenders make, which lets those lenders accept smaller down payments and lower credit scores than they would on a conventional loan. Borrowers pay for that insurance through the mortgage insurance premium (MIP). FHA loans finance a home you will live in as your principal residence — not a vacation home or a rental. They can cover one- to four-unit properties, so you can buy a duplex and live in one unit. The home must meet HUD’s property standards, which the FHA appraiser checks along with the value. ## FHA requirements at a glance | Requirement | FHA rule | |---|---| | Down payment | 3.5% with a 580+ score; 10% with 500–579 | | Credit score | At least 500; lenders may set higher minimums | | Debt-to-income | 31% housing and 43% total for manually underwritten loans without compensating factors; automated approvals can go higher | | Upfront MIP | 1.75% of the base loan, usually added to the loan | | Annual MIP | 0.5%–0.55% on most 30-year loans, paid monthly | | Loan limit (one unit, 2026) | $541,287 in lower-cost counties up to $1,249,125 in the most expensive | | Occupancy | Must be your principal residence | Lenders can add stricter rules of their own, known as overlays — especially on credit scores. If one lender turns you down, another may not. ## FHA mortgage insurance: the real cost Mortgage insurance is what makes FHA different from a conventional loan, and it comes in two parts. **Upfront MIP** is 1.75% of the base loan. Most borrowers add it to the loan instead of paying cash. If you refinance into another FHA loan within 3 years, part of it is refunded as a credit. **Annual MIP** is charged as a percentage of the loan each year and split into your monthly payments. For loans longer than 15 years with a base amount up to $726,200, HUD’s rates are: *FHA annual MIP, terms over 15 years (HUD Mortgagee Letter 2023-05)* | Down payment | Annual MIP | How long it lasts | |---|---:|---| | Under 5% | 0.55% | Life of the loan | | 5% to under 10% | 0.5% | Life of the loan | | 10% or more | 0.5% | 11 years | Larger loans above $726,200 pay 0.7% with 5% or more down. The rule that matters most is the last column: when the starting loan-to-value is above 90%, MIP never cancels on its own. Unlike PMI on a conventional loan, it doesn’t end when you reach 20% equity — the usual way out is to [refinance into a conventional loan](https://mortgage-math-us.com/refinancing/refinance-to-remove-pmi/) once you have enough equity. ## What an FHA payment looks like > **Worked example: $360,000 home (near the US median value), 3.5% down, 30-year fixed at an example rate of 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $353,480 (upfront MIP financed) | $2,409 | > | Annual MIP at 0.55% | $159 | > | Property tax at 0.89% a year | $267 | > | Homeowners insurance | $147 | > | **Total** | **$2,982** | > > The rate is Freddie Mac’s weekly average for conventional loans, used only to keep the comparison like for like; FHA quotes can be lower or higher. Tax and insurance use national averages. Cash needed at closing is the $12,600 down payment plus closing costs — typically 2%–5% of the price, according to the CFPB. FHA lets family members, employers and approved assistance programs give you money toward both, as long as the gift is documented. ## FHA vs conventional Conventional loans backed by Fannie Mae and Freddie Mac can start at 3% down, so FHA’s advantage isn’t the down payment alone. It is how much credit history matters: *Same $360,000 home, smallest down payment on each loan* | | FHA | Conventional | |---|---:|---:| | Down payment | $12,600 (3.5%) | $10,800 (3%) | | Upfront insurance | $6,080 (financed) | None | | Monthly mortgage insurance | $159 | $175 (PMI midpoint) | | Insurance ends | Life of the loan | At 78% of original value | | Total monthly payment | $2,982 | $2,968 | PMI on a conventional loan is priced on your credit score, so the gap moves with your credit: borrowers with strong scores usually pay less for PMI than for FHA’s MIP, while borrowers with lower scores or higher debts may find FHA cheaper or easier to qualify for. Because FHA insurance usually lasts for the life of the loan, compare the total cost over the years you expect to keep the mortgage, not just the first payment. Ask for a Loan Estimate on both. ## Who FHA suits best - **Buyers with credit scores in the 500s or low 600s**, or a thin credit file. - **Buyers with higher debts**, since FHA’s automated approvals can allow a higher debt-to-income ratio than many conventional loans. - **Buyers relying on gifts or assistance** for the down payment and closing costs. - **Buyers of two- to four-unit homes** who plan to live in one unit and rent the others. FHA is usually a poor fit if you have a strong credit score and can put down 10% or more, if you need a jumbo-sized loan above your county’s FHA limit, or if the home needs major repairs to meet HUD’s standards (FHA’s 203(k) program covers renovation loans). ## Refinancing an FHA loan Two FHA options exist. An **FHA Streamline Refinance** lowers the rate with limited paperwork and no new appraisal in many cases; you must have made at least 6 payments and waited 210 days since closing, and you can take out no more than $500. An **FHA cash-out refinance** goes up to 80% of the home’s value. Once you have 20% equity, many owners refinance into a conventional loan to drop MIP — see [streamline refinances](https://mortgage-math-us.com/refinancing/streamline-refinance/). > **Tip: Check the limit for your county** > > FHA limits are set county by county each year. HUD’s FHA Mortgage Limits search shows the figure for your county; in most of the country it is the $541,287 floor. ## Frequently asked questions ### What credit score do you need for an FHA loan? At least 580 for the minimum 3.5% down payment, or 500 to 579 with 10% down. Individual lenders can require higher scores. ### How much is FHA mortgage insurance? An upfront premium of 1.75% of the loan, usually financed, plus annual MIP of 0.5% to 0.55% on most 30-year loans, paid monthly. On the median-value example above, annual MIP adds about $159 a month. ### Can you remove MIP from an FHA loan? Only if you started with 10% or more down, in which case it ends after 11 years. With less down, MIP lasts for the life of the loan, and the usual way to drop it is to refinance into a conventional loan once you have enough equity. ### What is the FHA loan limit for 2026? For a one-unit home it ranges from $541,287 in lower-cost counties to $1,249,125 in the highest-cost areas. HUD publishes the limit for each county. ### Can I use an FHA loan for an investment property? Not for a property you won’t live in. You can buy a two- to four-unit home with an FHA loan if you live in one of the units as your principal residence. ### Is FHA better than conventional for first-time buyers? It depends on your credit and down payment. FHA is often easier to qualify for with a lower score or higher debts; with good credit, conventional loans usually cost less because PMI is cheaper and can be cancelled. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment; Minimum down payment on some conventional loans; Typical closing costs, low end (share of purchase price) (Oct 28, 2026) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA upfront mortgage insurance premium; FHA annual MIP, 30-year loan, more than 95% LTV; FHA annual MIP, 30-year loan, 95% LTV or less (Feb 22, 2023) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) — FHA minimum score for maximum financing; FHA minimum decision credit score (90% LTV cap from 500 to 579); FHA manual underwriting housing ratio (no compensating factors) (Oct 8, 2026) - [HUD](https://www.hud.gov/news/hud-no-25-145) — 2026 FHA loan limit floor (one-unit, low-cost areas); 2026 FHA loan limit ceiling (one-unit, high-cost areas) (2026 limit) - [HUD FHA fact sheet](https://www.hud.gov/hud-partners/housing-fha-fact-sheet) — FHA upfront premium is partly refunded on an FHA-to-FHA refinance within (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) — PMI ends automatically at this share of original value (Oct 28, 2026) - [FDIC Affordable Mortgage Lending Guide (summary of HUD Handbook 4000.1)](https://www.fdic.gov/system/files/2024-07/streamline-refinance.pdf) — FHA Streamline: monthly payments already made; FHA Streamline: days that must pass since the current loan closed (Oct 28, 2026) - [HUD: Streamline Refinance](https://hud.gov/hud-partners/single-family-streamline) — FHA Streamline: most cash a borrower can take out (Oct 28, 2026) - [HUD Mortgagee Letter 2019-11](https://www.hud.gov/sites/dfiles/OCHCO/documents/19-11ml.pdf) — FHA cash-out refinance maximum loan-to-value (Aug 1, 2019) - [HUD Mortgagee Letter 2023-05: Reduction of FHA annual MIP](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) - [HUD: FHA Mortgage Limits search](https://entp.hud.gov/idapp/html/hicostlook.cfm) - [CFPB: FHA loans](https://www.consumerfinance.gov/owning-a-home/fha-loans/) _General information, not financial advice._ --- # Fixed-rate vs adjustable-rate mortgages > How fixed-rate and adjustable-rate mortgages compare: ARM index, margin and caps, a worst-case 5/6 ARM payment example, and when an ARM can make sense. URL: https://mortgage-math-us.com/loan-types/fixed-vs-adjustable-rate/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer A fixed-rate mortgage keeps the same interest rate and principal-and-interest payment for the whole term; the 30-year fixed averaged 7.24% in Freddie Mac’s latest survey. An adjustable-rate mortgage (ARM) has a fixed rate for an initial period — five years on a 5/6 ARM — and then resets every six months to an index, 30-day average SOFR on Fannie Mae ARMs, plus a margin. Caps limit each change: on a standard 5/6 ARM the rate can rise 2 points at the first reset, 1 point at each later reset and 5 points over the life of the loan. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | 30-year fixed average (Freddie Mac) | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | 15-year fixed average (Freddie Mac) | 6.6% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | Index on Fannie Mae ARMs | 30-day average SOFR | [Fannie Mae Selling Guide B2-1.4-02](https://selling-guide.fanniemae.com/sel/b2-1.4-02/adjustable-rate-mortgages-arms) | Dec 10, 2025 | | 5/6 ARM caps: first / later / lifetime | 2/1/5 | [Fannie Mae Standard ARM Plan Matrix](https://singlefamily.fanniemae.com/media/6951/display) | Oct 1, 2021 | | 7/6 and 10/6 ARM caps: first / later / lifetime | 5/1/5 | [Fannie Mae Standard ARM Plan Matrix](https://singlefamily.fanniemae.com/media/6951/display) | Oct 1, 2021 | ## How the two types differ With a **fixed-rate mortgage**, the rate is set at closing and never changes. Your principal-and-interest payment is the same in year 1 and year 30; only taxes and insurance in your escrow payment can move. Most fixed loans run 30 or 15 years — see [15-year vs 30-year mortgages](https://mortgage-math-us.com/blog/15-year-vs-30-year-mortgage/). With an **adjustable-rate mortgage**, the rate is fixed only for an introductory period. After that it resets on a schedule, following a market index. [Conventional](https://mortgage-math-us.com/loan-types/conventional-loans/), [FHA](https://mortgage-math-us.com/loan-types/fha-loans/) and VA loans all come in fixed and adjustable versions. ARMs are named for both periods: a **5/6 ARM** is fixed for five years and then adjusts every six months; 7/6 and 10/6 ARMs are fixed for seven and ten years. Lenders usually price the initial rate below a comparable fixed rate, because you take on the risk of future increases — see [how mortgage rates work](https://mortgage-math-us.com/buying/mortgage-rates/). ## How an ARM’s rate is set After the fixed period, your rate becomes the **index plus a margin**. The index on Fannie Mae ARMs is the 30-day average SOFR, published by the Federal Reserve Bank of New York. The margin is a fixed number of percentage points set by your lender and printed in your loan documents; it never changes. Index plus margin is the “fully indexed rate.” Three caps limit how far the rate can move: *Fannie Mae standard ARM rate caps (Standard ARM Plan Matrix)* | ARM | First adjustment | Each later adjustment | Over the life of the loan | |---|---:|---:|---:| | 5/6 | ±2 points | ±1 point | +5 points over the start rate | | 7/6 and 10/6 | ±5 points | ±1 point | +5 points over the start rate | The rate can fall as well as rise, but under Fannie Mae’s plans it can never drop below the margin. Lenders can offer other structures, so read the caps on your own Loan Estimate — it shows the highest rate and payment possible. ## Worst case on a 5/6 ARM > **Worked example: $400,000 30-year 5/6 ARM at an example start rate of 6.74% — half a point under the 7.24% fixed average, chosen only to illustrate** > > | Period | Rate | Monthly principal and interest | > |---|---:|---:| > | Years 1–5 (months 1–60) | 6.74% | $2,592 | > | First adjustment (months 61–66) | 8.74% | $3,084 | > | Next adjustment (months 67–72) | 9.74% | $3,340 | > | Next adjustment (months 73–78) | 10.74% | $3,601 | > | Lifetime cap reached (months 79 onward) | 11.74% | $3,865 | > > A 30-year fixed loan at 7.24% would cost $2,726 a month for the whole term. In this worst case — the index rising enough for every cap to bite — the ARM payment jumps by $493 a month at the first reset and ends $1,274 a month higher than where it started. The other side of the bet: during the five fixed years the ARM costs $134 a month less — about $8,056 in all — and leaves a balance of $375,461 versus $377,476 on the fixed loan. If you sell or refinance before the first reset, that saving is yours; after it, the payment depends on where the index is. Whether that is worth the risk depends on how long you keep the loan and how much a payment of $3,865 would strain your budget. > **Watch out: Plan for the capped payment, not the teaser** > > Budget as though the ARM reaches its lifetime cap. If that payment would force you to sell or refinance on bad terms, the lower start rate isn’t worth it. ## Fixed vs ARM at a glance | | Fixed rate | Adjustable rate (ARM) | |---|---|---| | Starting rate | Higher | Usually lower | | Payment | Same for the whole term | Can rise or fall after the fixed period | | Risk of rising rates | Lender’s | Yours, up to the caps | | If rates fall | Refinance to benefit | Rate can adjust down after the fixed period | | Best for | Long stays, tight budgets | Shorter stays, room to absorb increases | ## When an ARM can make sense - **You expect to move or pay off the loan within the fixed period**, so you may never see an adjustment. - **You can afford the payment at the lifetime cap**, and the initial savings are meaningful. - **Your income is set to rise**, for example at the end of training, and you have savings to cover higher payments in the meantime. An ARM is a poor fit if you are stretching to qualify, plan to stay for decades, or would only be able to keep the house by refinancing — refinancing depends on rates, home values and your credit at the time, none of which you control. Run the numbers in the [refinance break-even calculator](https://mortgage-math-us.com/tools/refinance-break-even-calculator/) before counting on it, and read [ARM risks explained](https://mortgage-math-us.com/blog/arm-risks-explained/). ## Questions to ask before choosing an ARM When you apply for an ARM, the lender must give you the CFPB’s *Consumer Handbook on Adjustable-Rate Mortgages* (or a suitable substitute). Use it along with your Loan Estimate to get answers to these: 1. What is the index, what is the margin, and what is the fully indexed rate today? 2. What are the first, periodic and lifetime caps, and what is the highest possible payment? 3. Is there a prepayment penalty, and can the loan become interest-only or negatively amortizing? (Neither is allowed on a Qualified Mortgage — see [interest-only mortgages](https://mortgage-math-us.com/loan-types/interest-only-mortgages/).) 4. How much would a fixed-rate loan cost from the same lender, with the same points? [Open the mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/) ## Frequently asked questions ### What does 5/6 ARM mean? The rate is fixed for the first five years and then adjusts every six months. On a standard Fannie Mae 5/6 ARM the caps are 2/1/5: up to 2 points at the first reset, 1 point at each later reset and 5 points over the life of the loan. ### How high can an ARM payment go? Up to the payment at the lifetime cap. In the $400,000 example above, starting at 6.74%, the worst case is $3,865 a month, versus $2,592 at the start. Your Loan Estimate shows the maximum for your loan. ### What index do ARMs use now? Fannie Mae ARMs use the 30-day average SOFR. Your rate after the fixed period is the index plus your lender’s margin, limited by the caps. ### Is a fixed or adjustable rate better? A fixed rate is better if you value a predictable payment or plan to stay a long time. An ARM can cost less if you sell or pay off the loan before the first adjustment, but you take on the risk of higher payments later. ### Can an ARM rate go down? Yes. After the fixed period the rate follows the index, so it can fall as well as rise, within the same caps. On Fannie Mae’s standard plans it can’t go below the margin. ### Can I refinance an ARM into a fixed rate? Usually, if you qualify when you apply — your credit, income, home value and market rates at that time all matter. Plan as though you may have to keep the ARM. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average; 15-year fixed rate, national weekly average (Week of Oct 29, 2026) - [Fannie Mae Standard ARM Plan Matrix](https://singlefamily.fanniemae.com/media/6951/display) — Rate caps on a Fannie Mae 5/6 ARM (first/periodic/lifetime); Rate caps on Fannie Mae 7/6 and 10/6 ARMs (first/periodic/lifetime) (Oct 1, 2021) - [Fannie Mae Selling Guide B2-1.4-02](https://selling-guide.fanniemae.com/sel/b2-1.4-02/adjustable-rate-mortgages-arms) — Index on Fannie Mae ARMs (Dec 10, 2025) - [CFPB: Consumer Handbook on Adjustable-Rate Mortgages (CHARM booklet)](https://files.consumerfinance.gov/f/documents/cfpb_charm_booklet.pdf) - [Fannie Mae Selling Guide B2-1.4-02: Adjustable-rate mortgages](https://selling-guide.fanniemae.com/sel/b2-1.4-02/adjustable-rate-mortgages-arms) - [Fannie Mae Standard ARM Plan Matrix](https://singlefamily.fanniemae.com/media/6951/display) _General information, not financial advice._ --- # Interest-only mortgages > How interest-only mortgages work, how much the payment jumps when principal kicks in, why they aren’t Qualified Mortgages, and who uses them. URL: https://mortgage-math-us.com/loan-types/interest-only-mortgages/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer An interest-only mortgage lets you pay just the interest for a set period written into the loan, such as ten years, so the balance doesn’t fall. When that period ends, the loan recasts and you repay the full balance over the remaining years, so the payment jumps — on a $500,000 loan at an example rate of 7.24%, from $3,017 to $3,949 a month after ten years. Interest-only loans can’t be Qualified Mortgages under the CFPB’s rules, so they’re offered as non-QM loans, mainly to borrowers with high or irregular incomes and to investors. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Longest term on a Qualified Mortgage | 30 years | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-qualified-mortgage-en-1789/) | Jan 7, 2025 | | QM points-and-fees cap | 3% | [CFPB, Federal Register 90 FR 57890](https://www.federalregister.gov/documents/2025/12/15/2025-22773/truth-in-lending-regulation-z-annual-threshold-adjustments-credit-cards-hoepa-and-qualified) | 2026 threshold | | General QM APR limit over the average prime offer rate | 2.25% | [CFPB, Federal Register 90 FR 57890](https://www.federalregister.gov/documents/2025/12/15/2025-22773/truth-in-lending-regulation-z-annual-threshold-adjustments-credit-cards-hoepa-and-qualified) | 2026 threshold | | 30-year fixed average, used as the example rate | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | HELOC draw period in the CFPB’s example | 10 years | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) | Aug 28, 2026 | ## How an interest-only mortgage works A normal mortgage is **fully amortizing**: each payment covers that month’s interest plus some principal, so the balance falls to zero by the end of the term. An interest-only mortgage splits the term in two: 1. **The interest-only period** — its length is set in your loan agreement; the example below uses ten years. You pay only the interest that accrues each month. Your balance stays where it started unless you choose to pay extra. 2. **The amortizing period** — the rest of the term. The loan recasts, and the full balance is repaid over the years that remain, which makes each payment larger than on a loan that amortized from day one. Many interest-only loans are also adjustable-rate mortgages, so the rate can reset around the same time the principal starts, adding a second jump. See [fixed vs adjustable-rate mortgages](https://mortgage-math-us.com/loan-types/fixed-vs-adjustable-rate/) for how ARM caps work. ## The payment jump at recast > **Worked example: $500,000 loan, 30-year term with a 10-year interest-only period, at an example fixed rate of 7.24%** > > | | Interest-only loan | Fully amortizing loan | > |---|---:|---:| > | Payment in years 1–10 | $3,017 | $3,407 | > | Balance after 10 years | $500,000 | $431,453 | > | Payment in years 11–30 | $3,949 | $3,407 | > | Total interest over 30 years | $809,724 | $726,697 | > > The interest-only borrower pays $391 a month less for ten years — $46,899 in all — but then faces a payment $932 higher (31% more) and pays $83,028 more interest over the life of the loan. The rate is Freddie Mac’s 30-year fixed average, used only for illustration; interest-only loans are priced by each lender. The jump is larger than many borrowers expect because the principal is squeezed into 20 years instead of 30. The [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/) shows both payments if you enter the loan as 30 years and then as 20. ## Why interest-only loans aren’t Qualified Mortgages Under Regulation Z, a **Qualified Mortgage (QM)** must have regular payments that don’t increase the balance and don’t let you defer repayment of principal, generally no balloon payment, and a term of no more than 30 years. An interest-only period defers principal, so an interest-only loan can never be a QM, whatever your income or credit. QMs also cap points and fees at 3% of the loan. That doesn’t make interest-only loans illegal. Lenders can still make them under the **ability-to-repay rule**, which applies to most home loans. That rule says how to test an interest-only loan: the lender must check that you can afford the payment that repays the loan over the term remaining after the recast — $3,949 a month in the example, not $3,017. So an interest-only loan generally won’t help you borrow more; it changes when you pay principal, not how much you must earn to qualify — see [debt-to-income ratio](https://mortgage-math-us.com/buying/debt-to-income/). Because the lender doesn’t get the QM legal protection, non-QM loans often come with higher rates, larger down payments or stricter reserve requirements. Credit used mainly for business purposes, such as many investor loans, falls outside these consumer rules altogether — see [DSCR investor loans](https://mortgage-math-us.com/loan-types/dscr-loans/). ## Who uses interest-only loans - **Borrowers with large but irregular income**, such as bonuses or commissions, who pay the interest monthly and put lump sums toward principal when the money arrives. - **High-net-worth borrowers**, often on [jumbo loans](https://mortgage-math-us.com/loan-types/jumbo-loans/), who prefer to keep cash invested and can pay off the balance from assets. - **Property investors**, who care about monthly cash flow and plan to sell or refinance. - **Buyers expecting to sell within the interest-only period**, who accept the risk that a sale may not happen on schedule. Home equity lines of credit often work in a similar way: a draw period — 10 years in the CFPB’s example — with interest-only payments, followed by repayment. The [HELOC payment calculator](https://mortgage-math-us.com/tools/heloc-payment-calculator/) shows that jump. ## The risks > **Watch out: No equity from your payments** > > During the interest-only period, your payments don’t reduce the debt. If the home in the example was bought for $625,000 with 20% down and is worth 10% less ten years later ($562,500), the interest-only borrower still owes $500,000, while the amortizing borrower owes $431,453 — $68,547 less. With a smaller down payment or a bigger price drop, an interest-only borrower can end up owing more than the home is worth. - **Payment shock** when principal kicks in, and possibly a rate reset at the same time. - **Refinancing risk** — counting on a refinance before the recast depends on your income, credit, home value and rates at that time. - **Higher lifetime cost**, because you pay interest on the full balance for longer. ## Alternatives to consider If the goal is a lower required payment with flexibility, a standard 30-year fixed loan with extra principal payments in good months can give you some of the same control without the recast — the [extra payment calculator](https://mortgage-math-us.com/tools/extra-payment-calculator/) shows the effect. If the goal is a lower start rate for a few years, a [fixed-period ARM](https://mortgage-math-us.com/loan-types/fixed-vs-adjustable-rate/) still amortizes from the first payment. ## Frequently asked questions ### How does an interest-only mortgage work? You pay only the interest for a set period written into the loan, so the balance doesn’t fall. Then the loan recasts and you repay principal and interest over the remaining term, which raises the payment. ### How much does the payment go up after the interest-only period? It depends on the rate and the years left. In the example, a $500,000 loan with a 10-year interest-only period rises from $3,017 to $3,949 a month, about 31% more, at the same rate. ### Is an interest-only loan a Qualified Mortgage? No. Under 12 CFR 1026.43, a Qualified Mortgage can’t let you defer repayment of principal, so interest-only loans are always non-QM. The lender must still verify your ability to repay. ### Can I qualify for a bigger loan with interest-only payments? Usually not. The ability-to-repay rule makes the lender test the payment you’ll owe after the recast, which is higher than a normal amortizing payment. ### Can I pay principal during the interest-only period? Usually, yes. On many loans, extra principal lowers both the interest-only payment and the payment after recast. Check your note for how payments are recalculated and for any prepayment penalty. ### Is a HELOC an interest-only loan? Many HELOCs are interest-only during the draw period — 10 years in the CFPB’s example — then switch to principal-and-interest repayment, with the same kind of payment jump. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-qualified-mortgage-en-1789/) — Longest term allowed on a Qualified Mortgage (Jan 7, 2025) - [CFPB, Federal Register 90 FR 57890](https://www.federalregister.gov/documents/2025/12/15/2025-22773/truth-in-lending-regulation-z-annual-threshold-adjustments-credit-cards-hoepa-and-qualified) — Qualified Mortgage points-and-fees cap (loans of $137,958 or more); General QM: APR must stay below the average prime offer rate plus this (first-lien loans of $137,958 or more) (2026 threshold) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) — Example HELOC draw period (CFPB) (Aug 28, 2026) - [eCFR: 12 CFR 1026.43 (ability to repay and qualified mortgages)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43) - [CFPB: What is a Qualified Mortgage?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-qualified-mortgage-en-1789/) - [CFPB: Consumer Handbook on Adjustable-Rate Mortgages (CHARM booklet)](https://files.consumerfinance.gov/f/documents/cfpb_charm_booklet.pdf) _General information, not financial advice._ --- # Jumbo loans explained > What a jumbo loan is in 2026, when a mortgage goes above the conforming limit, how lenders qualify jumbo borrowers, and ways to stay under the limit. URL: https://mortgage-math-us.com/loan-types/jumbo-loans/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer A jumbo loan is a mortgage larger than the conforming loan limit for your county — $832,750 for a one-unit home in most of the US in 2026, and up to $1,249,125 in high-cost areas. Because Fannie Mae and Freddie Mac can’t buy these loans, each lender sets its own down payment, credit, debt and cash-reserve requirements, usually stricter than for conforming loans. They still have to follow the federal ability-to-repay rule. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | 2026 conforming limit, most counties | $832,750 | [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) | 2026 limit | | 2026 limit, highest-cost areas | $1,249,125 | [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) | 2026 limit | | 2025 baseline limit | $806,500 | [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) | 2025 limit | | Longest term on a Qualified Mortgage | 30 years | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-qualified-mortgage-en-1789/) | Jan 7, 2025 | | Qualified Mortgage points-and-fees cap | 3% | [CFPB, Federal Register 90 FR 57890](https://www.federalregister.gov/documents/2025/12/15/2025-22773/truth-in-lending-regulation-z-annual-threshold-adjustments-credit-cards-hoepa-and-qualified) | 2026 threshold | | Mortgage debt with deductible interest | $750,000 | [IRS Publication 936](https://www.irs.gov/pub/irs-pdf/p936.pdf) | Tax year 2025 | ## When a loan becomes jumbo Fannie Mae and Freddie Mac can only buy [conventional loans](https://mortgage-math-us.com/loan-types/conventional-loans/) up to the limit set each year by the Federal Housing Finance Agency (FHFA). For 2026 that limit is $832,750 for a one-unit home in most counties, up from $806,500 in 2025. In high-cost counties the limit is higher, up to $1,249,125, and Alaska, Hawaii, Guam and the US Virgin Islands have higher limits set by statute. Limits for two- to four-unit homes are higher too. Government-backed loans have their own caps: [FHA loan limits](https://mortgage-math-us.com/loan-types/fha-loans/) run from $541,287 to $1,249,125 for one unit. What matters is the **loan amount** in your county, not the price of the home. A loan between the baseline and a high-cost county’s limit is still conforming (sometimes called “high-balance”); only a loan above your own county’s limit is jumbo. ## Jumbo vs conforming loans | | Conforming | Jumbo | |---|---|---| | Who sets the rules | Fannie Mae and Freddie Mac guidelines | Each lender and the investors that buy its loans | | Loan size | Up to your county’s limit | Above your county’s limit | | Down payment | From 3% | Set by the lender; usually larger | | Credit and debt | Published Fannie Mae and Freddie Mac limits | Lender standards; often stricter | | Cash reserves | Required in some cases | Commonly required, often several months of payments | | Appraisal | One appraisal in most cases | Lenders may ask for more review on high values | | Rate | Set by each lender, based on Fannie Mae and Freddie Mac pricing | Set by each lender; can be above or below conforming rates | Because there is no single rulebook, two jumbo lenders can give very different answers on the same file. It pays to shop more widely than for a conforming loan and to compare Loan Estimates line by line. ## How lenders qualify jumbo borrowers Every lender has to follow the CFPB’s **ability-to-repay rule**: it must make a reasonable, good-faith determination that you can repay, looking at eight factors — income or assets, employment, the monthly payment, payments on any other loan on the property, housing costs such as taxes and insurance, other debts, your debt-to-income ratio or residual income, and credit history. A jumbo loan can also be a **Qualified Mortgage (QM)**, which gives the lender legal protection, so many lenders design their jumbo loans to meet the QM rules. A QM can’t have interest-only payments, negative amortization or (with limited exceptions) a balloon, can’t run longer than 30 years, and caps points and fees at 3% of the loan. Under the general QM definition, a loan of this size must also have an APR less than 2.25% above the average prime offer rate, a weekly benchmark of typical rates. Jumbo loans with features outside those limits — such as [interest-only jumbos](https://mortgage-math-us.com/loan-types/interest-only-mortgages/) — are non-QM loans, which lenders can still make if they verify your ability to repay. In practice, expect a lender to verify income and assets thoroughly: tax returns, statements for every account you’ll draw on, and explanations of large deposits. Self-employed borrowers should see [mortgages for the self-employed](https://mortgage-math-us.com/blog/mortgages-for-the-self-employed/). ## A jumbo loan in numbers > **Worked example: $1,100,000 home with 20% down, 30-year fixed at an example rate of 7.24%** > > | | Amount | > |---|---:| > | Loan with 20% down | $880,000 | > | Above the $832,750 baseline limit by | $47,250 | > | Principal and interest | $5,997 a month | > | With property tax at 0.89% and average insurance | $7,262 a month | > | Down payment needed to stay at the baseline limit | $267,250 (24.3% of the price) | > > The rate is Freddie Mac’s average for conforming loans, used only to illustrate; jumbo quotes differ. Lenders that require reserves count them in months of the full payment — here about $7,262 per month of reserves. In a county with a higher limit, the same $880,000 loan could be conforming. Check your county’s limit before assuming you need a jumbo. ## Ways to stay under the conforming limit - **Put more down.** In the example, raising the [down payment](https://mortgage-math-us.com/buying/down-payment/) to $267,250 keeps the loan at the baseline limit. - **Use a second mortgage.** Some buyers take a first mortgage at the conforming limit and a second loan or [home equity line](https://mortgage-math-us.com/home-equity/heloc/) for the rest. Compare the blended cost: second liens usually carry higher rates. - **Negotiate the price.** Every dollar off the price is a dollar less to borrow at the same down payment. - **Check the county limit.** High-cost counties have limits well above the baseline. ## Taxes on a large mortgage Mortgage interest is deductible only on up to $750,000 of home acquisition debt for loans taken out after December 15, 2017, if you itemize. On the $880,000 example, interest on about 85% of the balance qualifies — roughly $54,062 of the $63,433 of interest paid in the first year. Talk to a tax adviser about your own return. [Open the mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/) ## Frequently asked questions ### What is considered a jumbo loan in 2026? A mortgage above your county’s conforming loan limit. For a one-unit home that is $832,750 in most counties, rising to $1,249,125 in the highest-cost areas. ### How much do you need to put down on a jumbo loan? There is no single rule. Each lender sets its own minimum, usually higher than for conforming loans, and the requirement often rises with the loan size and falls with stronger credit and reserves. ### Are jumbo mortgage rates higher? Not always. Jumbo rates are set by each lender and can be above or below conforming rates depending on the market and your profile. Compare offers from several lenders on the same day. ### Do jumbo loans have PMI? Many jumbo lenders simply require a larger down payment instead. Where a lender allows less than 20% down, ask how mortgage insurance or pricing changes, and get it in writing on the Loan Estimate. ### Can a jumbo loan be a Qualified Mortgage? Yes. If it meets the QM rules — no interest-only or negative amortization, a term of no more than 30 years, points and fees within 3% and an APR within the price limit — a jumbo loan can be a QM. ### How can I avoid a jumbo loan? Make a bigger down payment, pair a conforming first mortgage with a second loan, negotiate the price, or confirm whether your county has a higher conforming limit than the baseline. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) — 2026 baseline conforming loan limit (one-unit); 2026 high-cost area conforming ceiling (one-unit); 2025 baseline conforming loan limit (one-unit) (2026 limit) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [IRS Publication 936](https://www.irs.gov/pub/irs-pdf/p936.pdf) — Mortgage debt on which interest is deductible (loans after Dec 15, 2017) (Tax year 2025) - [HUD](https://www.hud.gov/news/hud-no-25-145) — 2026 FHA loan limit floor (one-unit, low-cost areas); 2026 FHA loan limit ceiling (one-unit, high-cost areas) (2026 limit) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum down payment on some conventional loans (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-qualified-mortgage-en-1789/) — Longest term allowed on a Qualified Mortgage (Jan 7, 2025) - [CFPB, Federal Register 90 FR 57890](https://www.federalregister.gov/documents/2025/12/15/2025-22773/truth-in-lending-regulation-z-annual-threshold-adjustments-credit-cards-hoepa-and-qualified) — Qualified Mortgage points-and-fees cap (loans of $137,958 or more); General QM: APR must stay below the average prime offer rate plus this (first-lien loans of $137,958 or more) (2026 threshold) - [FHFA: Conforming loan limit values for 2026](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) - [eCFR: 12 CFR 1026.43 (ability to repay and qualified mortgages)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43) - [CFPB: What is a Qualified Mortgage?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-qualified-mortgage-en-1789/) _General information, not financial advice._ --- # Reverse mortgages explained > How a HECM reverse mortgage works: the age 62 rule, 2026 limit, insurance and fees, required counseling, what you must keep paying, and spouses and heirs. URL: https://mortgage-math-us.com/loan-types/reverse-mortgages/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer A reverse mortgage lets homeowners borrow against their home’s equity without making monthly loan payments; the balance, with interest and fees, is repaid when the last borrower sells, moves out or dies. The FHA-insured Home Equity Conversion Mortgage (HECM) is the most common type: the youngest borrower must be at least 62, the 2026 lending limit is $1,249,125, and you pay an initial mortgage insurance premium of 2% plus 0.5% a year. Counseling with a HUD-approved counselor is required first, and you must keep paying property taxes, insurance and upkeep. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Youngest borrower must be at least | 62 years | [24 CFR 206.33](https://www.ecfr.gov/current/title-24/subtitle-B/chapter-II/subchapter-B/part-206/subpart-B) | Oct 7, 2026 | | 2026 HECM limit (maximum claim amount) | $1,249,125 | [HUD Mortgagee Letter 2025-22](https://www.hud.gov/sites/dfiles/hudclips/documents/2025-22hsgml.pdf) | 2026 limit | | Initial mortgage insurance premium | 2% | [HUD Mortgagee Letter 2017-12](https://www.hud.gov/sites/documents/17-12ml.pdf) | Oct 2, 2017 | | Annual mortgage insurance premium | 0.5% | [HUD Mortgagee Letter 2017-12](https://www.hud.gov/sites/documents/17-12ml.pdf) | Oct 2, 2017 | | Origination fee cap | $6,000 | [24 CFR 206.31](https://www.ecfr.gov/current/title-24/subtitle-B/chapter-II/subchapter-B/part-206/subpart-B) | Oct 7, 2026 | | HUD housing counseling referral line | 800-569-4287 | [HUD](https://www.hud.gov/stat/sfh/housing-counseling) | Oct 28, 2026 | ## How a reverse mortgage works With a regular mortgage you pay the lender every month and the balance shrinks. A reverse mortgage runs the other way: the lender pays you — as a lump sum, monthly payments or a line of credit — and interest, mortgage insurance and fees are added to the balance, so the amount you owe goes **up** over time. You keep the title to your home. You don’t make monthly loan payments, but the loan becomes due when the last borrower dies, sells the home or no longer lives there as a principal residence — including when no borrower has lived there for more than 12 months in a row because of illness. It can also become due earlier if you don’t pay property taxes or insurance or don’t maintain the home. Most reverse mortgages are **HECMs**, insured by the FHA — the same agency behind [FHA purchase loans](https://mortgage-math-us.com/loan-types/fha-loans/). Private “proprietary” reverse mortgages exist for higher-value homes but follow lenders’ own rules; this guide covers HECMs. ## Who qualifies for a HECM - **Age:** the youngest borrower must be 62 or older at closing. - **Equity:** you own the home outright or have a low enough mortgage balance for the reverse mortgage to pay it off. - **Occupancy:** the home is your principal residence, where you live most of the year. - **No federal debt:** you can’t be delinquent on federal debts such as income taxes or federal student loans. - **Money for ongoing costs:** the lender checks that you can keep paying taxes, insurance and other property charges — or sets aside part of the loan to pay them. - **Counseling:** you must meet with a HUD-approved HECM counselor before you apply. - **Property:** a home that meets FHA property standards and flood requirements. ## How much you can get and how it’s paid The amount available, called the principal limit, depends on the age of the youngest borrower or eligible non-borrowing spouse, the interest rate and the home’s value, capped at $1,249,125 in 2026. Older borrowers and lower rates mean more money. You won’t get the full value of the home. | Payment plan | Rate type | How it works | |---|---|---| | Lump sum | Fixed | All available funds at closing; interest accrues on the full amount from day one | | Term | Adjustable | Equal monthly payments for a set number of years | | Tenure | Adjustable | Monthly payments for as long as you keep the loan and live in the home | | Line of credit | Adjustable | Draw when you need it; unused credit can grow | Line-of-credit and monthly plans can be combined. ## What a HECM costs Three charges are set by HUD rules. The **initial MIP** is 2% of the maximum claim amount — the lower of the home’s appraised value, the sale price on a purchase and the $1,249,125 limit. The **annual MIP** is 0.5% of the balance, added each month. The **origination fee** can be the greater of $2,500 or 2% of the first $200,000 of the maximum claim amount plus 1% of the rest, but never more than $6,000. Appraisal, title, recording and other [closing costs](https://mortgage-math-us.com/buying/closing-costs/) come on top, and lenders may charge a monthly servicing fee. All of these can be financed — which means they grow with interest. > **Worked example: HUD’s maximum upfront charges at three home values** > > | Home value | Maximum claim amount | Initial MIP (2%) | Maximum origination fee | Total | > |---|---:|---:|---:|---:| > | $360,000 | $360,000 | $7,200 | $5,600 | $12,800 | > | $700,000 | $700,000 | $14,000 | $6,000 | $20,000 | > | $1,500,000 | $1,249,125 | $24,983 | $6,000 | $30,983 | > > Third-party closing costs and servicing fees are extra. The first row is near the US median home value. ## How the balance grows Because nothing is repaid, interest compounds. Suppose you draw $100,000 at closing and the loan’s rate equals the 30-year fixed average of 7.24% — an example only, since reverse mortgage rates are set differently — plus the 0.5% annual MIP. The balance would reach about $147,073 after 5 years, $216,304 after 10 and $318,124 after 15. That growth eats into the equity left for you or your heirs. A HECM is still **non-recourse** in practice: if the loan ends up larger than the home’s value, heirs can settle it by selling for at least 95% of the appraised value, and FHA mortgage insurance covers the rest. ## What stays your responsibility > **Rule: You still own the home — and its costs** > > You must keep paying property taxes, homeowners insurance (and flood insurance if required), HOA or condo dues, and keep the home in good repair. Falling behind on any of these can make the loan due and lead to foreclosure, even though you owe no monthly loan payment. Budget for these costs before you decide how much to draw, and ask about a set-aside if your income is tight. ## Spouses and heirs If your spouse isn’t a co-borrower — often because they’re under 62 — HUD rules may let an **eligible non-borrowing spouse** stay in the home after you die or move into long-term care, as long as conditions are met, including keeping it as their principal residence and having a legal right to remain. They can’t draw more money, and they must also receive counseling before the loan closes. Talk through this at counseling, because it affects how much you can borrow. When the loan comes due, heirs can keep the home by paying the balance (often with a new loan), sell it, or hand it to the lender. After the due-and-payable notice they generally have 30 days to act, and the lender may extend that to give them time to sell or arrange financing. ## Counseling comes first **How to get a HECM** 1. **Talk to a HUD-approved counselor** — Required before you apply. Call HUD’s referral line at 800-569-4287 or search HUD’s list of approved agencies. 2. **Compare lenders** — Ask each for the rate, origination fee and closing costs, and compare total costs, not just the cash you receive. 3. **Apply and complete the financial assessment** — The lender checks credit and income to make sure you can cover taxes and insurance. 4. **Appraisal** — Sets the home’s value and checks FHA property standards; repairs may be required. 5. **Close** — After closing on a HECM for a home you already own, you generally have 3 business days to cancel. ## Alternatives to compare A reverse mortgage is one way to use home equity. A [HELOC](https://mortgage-math-us.com/home-equity/heloc/) or [home equity loan](https://mortgage-math-us.com/home-equity/home-equity-loan/) costs less up front but requires monthly payments; downsizing frees cash without debt. Weigh them in [reverse mortgage pros and cons](https://mortgage-math-us.com/blog/reverse-mortgage-pros-and-cons/) and [the risks of borrowing against your home](https://mortgage-math-us.com/home-equity/home-equity-risks/). ## Frequently asked questions ### How old do you have to be for a reverse mortgage? For a HECM, the youngest borrower must be at least 62 at closing. A younger spouse can be an eligible non-borrowing spouse in some cases. ### How much does a reverse mortgage cost? An initial MIP of 2% of the maximum claim amount, an annual MIP of 0.5% of the balance, an origination fee capped at $6,000, plus closing costs and interest. On a $360,000 home, the MIP and maximum origination fee alone come to $12,800. ### Do you have to pay anything each month on a reverse mortgage? No loan payment is required, but you must keep paying property taxes, homeowners insurance, HOA dues and upkeep. Missing them can make the loan come due. ### What happens to a reverse mortgage when the borrower dies? The loan becomes due. Heirs can repay it to keep the home, sell the home, or turn it over to the lender. If the balance exceeds the value, selling for at least 95% of the appraised value settles it. ### Is reverse mortgage counseling required? Yes. You, and any non-borrowing spouse, must meet with a HUD-approved HECM counselor before applying. HUD’s referral line is 800-569-4287. ### What is the HECM limit for 2026? $1,249,125. It caps the home value used to work out how much you can borrow, not the price of homes that qualify. ### Can you lose your home with a reverse mortgage? Yes, if you stop living there as your principal residence, fail to pay property taxes or insurance, or let the home fall into disrepair. Staying current on those obligations is the key protection. ## Sources - [HUD Mortgagee Letter 2025-22](https://www.hud.gov/sites/dfiles/hudclips/documents/2025-22hsgml.pdf) — 2026 HECM maximum claim amount (2026 limit) - [HUD Mortgagee Letter 2017-12](https://www.hud.gov/sites/documents/17-12ml.pdf) — HECM initial mortgage insurance premium (share of maximum claim amount); HECM annual mortgage insurance premium (share of balance) (Oct 2, 2017) - [24 CFR 206.31](https://www.ecfr.gov/current/title-24/subtitle-B/chapter-II/subchapter-B/part-206/subpart-B) — HECM origination fee: lenders may always charge up to; HECM origination fee cap; HECM origination fee: share of the first $200,000 of the maximum claim amount (Oct 7, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/will-my-children-be-able-to-keep-my-home-after-i-die-if-i-have-a-reverse-mortgage-loan-en-242/) — Heirs can settle a HECM larger than the home’s value by selling for at least this share of the appraised value; Heirs have this long after a HECM due-and-payable notice to buy, sell or turn over the home (Aug 28, 2026) - [HUD](https://www.hud.gov/stat/sfh/housing-counseling) — HUD housing counseling referral line (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) — Right to cancel a refinance or home equity loan on your principal home (Aug 8, 2024) - [CFPB: What is a reverse mortgage?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-reverse-mortgage-en-224/) - [CFPB: Can anyone take out a reverse mortgage loan?](https://www.consumerfinance.gov/ask-cfpb/can-anyone-take-out-a-reverse-mortgage-loan-en-227/) - [HUD: FHA reverse mortgage for seniors (HECM)](https://www.hud.gov/hud-partners/single-family-hecmhome) - [CFPB: Reverse mortgage key terms](https://www.consumerfinance.gov/consumer-tools/reverse-mortgages/answers/key-terms/) _General information, not financial advice._ --- # USDA loans explained > How USDA guaranteed home loans work: no down payment, 1% upfront and 0.35% annual fees, income limits, eligible rural areas, debt ratios and how to apply. URL: https://mortgage-math-us.com/loan-types/usda-loans/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer A USDA guaranteed loan lets you buy a home in an eligible rural area with 0% down, as long as your household income is no more than 115% of the area median and you live in the home. Instead of mortgage insurance you pay an upfront guarantee fee of 1% of the loan, which can be financed, and an annual fee of 0.35%, paid monthly. Loans are 30-year fixed-rate only. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Down payment | 0% | [USDA Rural Development](https://www.rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-guaranteed-loan-program) | Oct 28, 2026 | | Household income limit (share of area median) | 115% | [USDA Rural Development](https://www.rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-guaranteed-loan-program) | Oct 28, 2026 | | Upfront guarantee fee | 1% | [USDA Rural Development](https://www.rd.usda.gov/media/file/download/usda-rd-sfh-guarantee-loan-program-101-jan-2026.pdf) | FY2026 | | Annual fee, paid monthly | 0.35% | [USDA Rural Development](https://www.rd.usda.gov/media/file/download/usda-rd-sfh-guarantee-loan-program-101-jan-2026.pdf) | FY2026 | | Housing payment ratio | 29% | [USDA Rural Development, HB-1-3555 Chapter 11](https://www.rd.usda.gov/files/3555-1chapter11.pdf) | Nov 25, 2025 | | Total debt ratio | 41% | [USDA Rural Development, HB-1-3555 Chapter 11](https://www.rd.usda.gov/files/3555-1chapter11.pdf) | Nov 25, 2025 | ## How a USDA guaranteed loan works The Single Family Housing Guaranteed Loan Program, often called Section 502 Guaranteed, is run by USDA Rural Development. Approved private lenders make the loans and set the rates; USDA guarantees most of the loan — 90% of it, according to Rural Development — so the lender can finance the full price without a down payment. There is a separate **Direct** program in which USDA itself lends to low- and very-low-income households. This guide covers the guaranteed program, which is the one most buyers use through a regular lender. ## Who qualifies | Requirement | USDA guaranteed rule | |---|---| | Down payment | 0%; closing costs can be included in the loan | | Household income | Up to 115% of the area median income | | Location | An eligible rural area on USDA’s property map | | Occupancy | Your primary residence; move in within 60 days of closing | | Credit | No USDA minimum score; you must show willingness and ability to manage debt | | Debt ratios | 29% housing and 41% total debt, measured against repayment income | | Loan term | 30-year fixed rate only | | Citizenship | US citizen, US non-citizen national or qualified alien | The income test counts the whole household, not just the people on the loan, so an adult child’s or a relative’s earnings can matter. Limits vary by county and household size; USDA’s eligibility site has an income tool for your area. Lenders often set their own credit minimums on top of USDA’s rules. ## Eligible rural areas “Rural” is broader than it sounds. Many small towns and outer suburbs qualify, while cities and denser suburbs do not. USDA’s property eligibility map lets you enter an address or browse the map; the final decision on a property belongs to Rural Development. The home can be detached or attached, a condo, a home in a planned unit development, modular or manufactured, but it can’t be income-producing, such as a working farm or a rental property. It must meet HUD’s property standards. There is no maximum purchase price; how much you can borrow is limited by your income, the income cap and the debt ratios. USDA guaranteed loans can also finance building a home, repairs that come with a purchase, and refinances of existing USDA loans. ## USDA fees vs mortgage insurance USDA charges two fees. The **upfront guarantee fee** is 1% of the loan; you can pay it at closing or add it to the loan. The **annual fee** is 0.35% of the average scheduled balance for the year, split into your monthly payments. It is charged until the guarantee ends — usually when the loan is paid off or refinanced — so unlike PMI it doesn’t cancel at 20% equity. Because the rate is low, it still tends to cost less each month than FHA’s annual MIP of 0.55%. ## What a USDA payment looks like > **Worked example: $300,000 home, smallest down payment on each loan, 30-year fixed at an example rate of 7.24%** > > | | USDA | FHA | Conventional | > |---|---:|---:|---:| > | Down payment | $0 | $10,500 | $9,000 | > | Loan, upfront fee financed | $303,000 | $294,566 | $291,000 | > | Principal and interest | $2,065 | $2,007 | $1,983 | > | Monthly fee or insurance | $88 | $133 | $146 | > | **Total with tax and insurance** | **$2,498** | **$2,485** | **$2,474** | > > Tax uses the national rate of 0.89% a year and insurance Freddie Mac’s average of $4.90 per $1,000 of value; PMI is the midpoint of Freddie Mac’s typical range. To keep the USDA payment within the 29% housing ratio, the household needs repayment income of about $103,500 a year — which must also be under the area income limit. The monthly totals land close together, so USDA’s real advantage is the cash you keep: no down payment, against $10,500 for FHA. The catch in higher-cost areas is the income window — you need enough income to afford the home but not more than the cap. Our [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/) shows how income, debts and rates combine. ## Debt ratios USDA measures debts against **repayment income** — the income of the borrowers on the loan. Your housing payment (principal, interest, taxes, insurance, the annual fee and any HOA dues) should not exceed 29%, and all debts together 41%. Lenders can ask for a waiver above those ratios when the file is strong, for example with high validated credit scores. The [debt-to-income guide](https://mortgage-math-us.com/buying/debt-to-income/) explains how the ratio is built. ## How to get a USDA loan **How to apply for a USDA guaranteed loan** 1. **Check the address** — Look up the home or the area on USDA’s property eligibility map before you shop. 2. **Check your household income** — Use USDA’s income tool with the income of the adults in your household, not just the borrowers’. 3. **Find a USDA-approved lender** — Not every lender offers the program; compare Loan Estimates from more than one. 4. **Get pre-approved and make an offer** — The lender reviews credit, income and debts, then the home is appraised against HUD property standards. 5. **Lender and USDA review** — After the lender approves the loan, Rural Development reviews the file and issues a conditional commitment to guarantee it before closing. 6. **Close and move in** — Occupy the home within 60 days and keep it as your primary residence. ## When USDA isn’t the best fit If the home is outside an eligible area or your household income is over the limit, look at [FHA loans](https://mortgage-math-us.com/loan-types/fha-loans/) or a low-down-payment [conventional loan](https://mortgage-math-us.com/loan-types/conventional-loans/). Eligible veterans should compare a [VA loan](https://mortgage-math-us.com/loan-types/va-loans/), which also needs no down payment and has no location test. ## Frequently asked questions ### What is the income limit for a USDA loan? Household income can’t exceed 115% of the median income for your area. Limits vary by county and household size, and they count the income of the adults in the household, not only the borrowers. ### How do I know if a home is in a USDA-eligible area? Enter the address on USDA Rural Development’s property eligibility map. Many small towns and outer suburbs qualify; the final determination is made by Rural Development. ### Does a USDA loan have PMI? No. Instead you pay an upfront guarantee fee of 1% of the loan, which can be financed, and an annual fee of 0.35% paid monthly. On the $300,000 example, the annual fee starts at about $88 a month. ### What credit score do you need for a USDA loan? USDA sets no minimum credit score; you must show a willingness and ability to manage debt. Lenders usually set their own minimums, so ask each lender what it requires. ### Can you build a house with a USDA loan? Yes. Guaranteed loans can finance building a new home in an eligible area, as well as repairs that come with a purchase. Ask lenders whether they offer USDA construction financing. ### Can I refinance into a USDA loan? Only if you already have a USDA loan. The guaranteed program refinances existing USDA borrowers, including streamlined options; other owners would look at conventional or FHA refinancing. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [USDA Rural Development](https://www.rd.usda.gov/media/file/download/usda-rd-sfh-guarantee-loan-program-101-jan-2026.pdf) — USDA guaranteed loan upfront guarantee fee; USDA guaranteed loan annual fee; USDA guaranteed loan: borrower must move in within (FY2026) - [USDA Rural Development, HB-1-3555 Chapter 11](https://www.rd.usda.gov/files/3555-1chapter11.pdf) — USDA guaranteed loan: housing payment ratio (share of repayment income); USDA guaranteed loan: total debt ratio (share of repayment income) (Nov 25, 2025) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment; Minimum down payment on some conventional loans (Oct 28, 2026) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA upfront mortgage insurance premium; FHA annual MIP, 30-year loan, more than 95% LTV (Feb 22, 2023) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [USDA Rural Development](https://www.rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-guaranteed-loan-program) — USDA guaranteed loan down payment; USDA guaranteed loan income limit (share of area median income) (Oct 28, 2026) - [USDA Rural Development: Single Family Housing Guaranteed Loan Program](https://www.rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-guaranteed-loan-program) - [USDA: Property and income eligibility site](https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAction=sfp) - [USDA HB-1-3555 Chapter 16: Guarantee fees](https://www.rd.usda.gov/files/3555-1chapter16.pdf) _General information, not financial advice._ --- # VA loans explained > How VA home loans work: no down payment or mortgage insurance, the funding fee table and exemptions, entitlement and limits, DTI rules and VA refinances. URL: https://mortgage-math-us.com/loan-types/va-loans/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer A VA loan is a mortgage from a private lender that the Department of Veterans Affairs partly guarantees. If you’re eligible, you can buy with 0% down as long as the price isn’t above the appraised value, and you pay no monthly mortgage insurance. Most borrowers pay a one-time funding fee instead — 2.15% of the loan on a first purchase with less than 5% down, 3.3% on later use — unless they’re exempt, for example because they receive VA disability compensation. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Minimum down payment | 0% | [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/loan-types/purchase-loan/) | Jan 7, 2026 | | Funding fee, first use, under 5% down | 2.15% | [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) | Apr 7, 2023 | | Funding fee, later use, under 5% down | 3.3% | [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) | Apr 7, 2023 | | Funding fee on a VA streamline refinance (IRRRL) | 0.5% | [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) | Apr 7, 2023 | | VA debt-to-income guideline | 41% | [38 CFR 36.4340](https://www.ecfr.gov/current/title-38/chapter-I/part-36/subpart-B/section-36.4340) | Oct 23, 2026 | | Most the seller can pay in concessions | 4% | [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) | Oct 28, 2026 | ## How a VA loan works The VA doesn’t usually lend the money. Banks, credit unions and mortgage companies make the loan, and the VA guarantees part of it, which means the lender recovers some of its loss if you default. That guarantee is why lenders can accept no down payment and skip mortgage insurance. You must live in the home as your residence, the property must pass a VA appraisal, and you need a **Certificate of Eligibility (COE)**, which your lender can usually request online. Interest rates, fees and credit standards come from the lender, within VA rules, so quotes differ from lender to lender. ## Who is eligible VA home loan benefits are available to veterans, active-duty service members, National Guard and Reserve members, and some surviving spouses. Eligibility depends on when and how long you served and on your discharge: the minimum active-duty service periods differ by era, and Guard and Reserve members qualify through Title 10 active duty or years in the Selected Reserve. The COE is the VA’s confirmation that you qualify and shows how much entitlement you have. A lender cannot close a VA loan without it. ## VA loan requirements at a glance | Requirement | VA rule | |---|---| | Down payment | 0% if the price is at or below the appraised value | | Mortgage insurance | None, monthly or upfront | | Funding fee | 1.25%–3.3% of the loan on a purchase unless exempt; can be financed | | Credit | VA publishes no minimum score; lenders set their own standards | | Debt-to-income | 41% guideline; higher ratios need documented compensating factors | | Loan limit | None with full entitlement; based on your county’s conforming limit with remaining entitlement | | Occupancy | You must live in the home | | Seller concessions | Up to 4% of the home’s reasonable value; closing-cost credits not limited | ## The VA funding fee The funding fee is a one-time charge, set in federal law and published by the VA, that keeps the program running without monthly insurance. It depends on your down payment and on whether you have used the benefit before. *VA funding fee for purchase and construction loans (rates effective April 7, 2023)* | Down payment | First use | After first use | |---|---:|---:| | Less than 5% | 2.15% | 3.3% | | 5% to under 10% | 1.5% | 1.5% | | 10% or more | 1.25% | 1.25% | A cash-out refinance costs 2.15% the first time and 3.3% after that, whatever your equity, and an Interest Rate Reduction Refinance Loan (IRRRL) costs 0.5%. You can pay the fee at closing or add it to the loan; on a purchase it is the only closing cost you can finance. > **Note: Who doesn’t pay the funding fee** > > According to the VA, you’re exempt if you receive VA compensation for a service-connected disability; if you’re eligible for that compensation but receive retirement or active-duty pay instead; if you receive Dependency and Indemnity Compensation (DIC) as a surviving spouse; if you’re a service member with a proposed or memorandum rating, before closing, that finds you eligible for compensation; or if you’re on active duty and show before closing that you received the Purple Heart. ## What a VA payment looks like > **Worked example: $360,000 home (near the US median value), smallest down payment on each loan, 30-year fixed at an example rate of 7.24%** > > | | VA, first use | VA, later use | FHA, 3.5% down | > |---|---:|---:|---:| > | Cash down | $0 | $0 | $12,600 | > | Upfront fee, financed | $7,740 | $11,880 | $6,080 | > | Loan amount | $367,740 | $371,880 | $353,480 | > | Principal and interest | $2,506 | $2,534 | $2,409 | > | Monthly mortgage insurance | $0 | $0 | $159 | > | **Total with tax and insurance** | **$2,920** | **$2,948** | **$2,982** | > > Tax uses the national rate of 0.89% a year and insurance Freddie Mac’s average of $4.90 per $1,000 of value. A borrower exempt from the funding fee would borrow $360,000 and pay $2,453 a month in principal and interest. Putting 10% down cuts the fee to 1.25% — $4,050 on this home instead of $7,740 — and lowers the loan, but many VA borrowers keep their cash for reserves and closing costs instead. Sellers can pay your closing costs, and the VA doesn’t limit those credits; other seller concessions are capped at 4% of the home’s reasonable value. The [closing cost estimator](https://mortgage-math-us.com/tools/closing-cost-calculator/) shows what to budget in your state. ## Entitlement and loan limits Entitlement is the amount the VA will guarantee for you. On most loans the VA guarantees up to 25% of the loan amount, and lenders generally want that guarantee, a down payment, or both to cover 25% of the loan. - **Full entitlement** — you’ve never used the benefit, or you had it restored, typically after selling the home and paying off the earlier VA loan. There is no VA loan limit; the lender still decides how much you can afford. - **Remaining entitlement** — part of your entitlement is still tied up, for example in a VA loan you haven’t paid off. You may still be able to buy or refinance another home, but the guarantee is based on your county’s conforming loan limit, so a larger loan may need a down payment. You can ask the VA to restore used entitlement through the same COE request. One option — restoring it after repaying a VA loan in full while keeping the home — can be used only once. ## Debt-to-income and residual income VA underwriting uses two tests. The debt-to-income guideline is 41%; above that, the lender must document compensating factors. The second test, **residual income**, checks how much money is left each month after the mortgage, taxes, other debts and living costs. The VA publishes minimums that vary by region, family size and loan amount. If your DTI is high, ask a lender to run both tests before you shop. Our [debt-to-income guide](https://mortgage-math-us.com/buying/debt-to-income/) explains the ratio. ## Refinancing a VA loan The **IRRRL**, or VA streamline refinance, swaps one VA loan for another at a lower rate with limited paperwork. You must have made 6 consecutive monthly payments and waited 210 days after the first payment due date; a fixed-to-fixed refinance must cut the rate by at least 0.5%, and the fees must be recouped within 36 months. A **VA cash-out refinance** can go up to 100% of the home’s value under VA rules, although lenders may set lower limits. See [streamline refinances](https://mortgage-math-us.com/refinancing/streamline-refinance/) and [cash-out refinancing](https://mortgage-math-us.com/refinancing/cash-out-refinance/). ## When a VA loan isn’t the best fit The funding fee for repeat users with little down is high, so a borrower with 20% down and strong credit may pay less with a [conventional loan](https://mortgage-math-us.com/loan-types/conventional-loans/), which has no fee and no PMI at that level. VA loans also can’t be used for a pure investment property. For most eligible buyers with little cash, though, no down payment and no monthly mortgage insurance make VA hard to beat — the first-use example above costs less each month than an [FHA loan](https://mortgage-math-us.com/loan-types/fha-loans/) with 3.5% down. Buyers in rural areas can also compare a zero-down [USDA loan](https://mortgage-math-us.com/loan-types/usda-loans/). ## Frequently asked questions ### How much is the VA funding fee? On a purchase it is 2.15% of the loan for first use with less than 5% down and 3.3% for later use, falling to 1.5% with 5% down and 1.25% with 10% down. An IRRRL costs 0.5%. ### Who is exempt from the VA funding fee? Veterans receiving VA compensation for a service-connected disability (or eligible for it but receiving retirement or active-duty pay instead), surviving spouses receiving Dependency and Indemnity Compensation, service members with a pre-closing proposed or memorandum rating, and active-duty Purple Heart recipients. ### Is there a VA loan limit in 2026? Not if you have full entitlement — the lender decides how much you can afford. With remaining entitlement, your guarantee is based on your county’s conforming limit, which is $832,750 in most counties. ### What credit score do you need for a VA loan? The VA doesn’t publish a minimum score. You must meet both VA standards and your lender’s, and lenders set their own minimums, so it pays to ask more than one. ### Do VA loans have PMI? No. VA loans have no private mortgage insurance and no monthly mortgage insurance premium. The one-time funding fee replaces it, and some borrowers are exempt. ### Can I use a VA loan more than once? Yes. Entitlement can be restored, typically after you sell the home and pay off the VA loan, and even without restoration you may have remaining entitlement to buy another home. Later use costs a higher funding fee when you put less than 5% down. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) — VA funding fee, first use, less than 5% down; VA funding fee, after first use, less than 5% down; VA funding fee, 10% or more down (Apr 7, 2023) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment (Oct 28, 2026) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA upfront mortgage insurance premium; FHA annual MIP, 30-year loan, more than 95% LTV (Feb 22, 2023) - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/loan-types/purchase-loan/) — VA purchase loan down payment (price at or below appraised value) (Jan 7, 2026) - [38 CFR 36.4340](https://www.ecfr.gov/current/title-38/chapter-I/part-36/subpart-B/section-36.4340) — VA debt-to-income guideline (higher ratios need documented compensating factors) (Oct 23, 2026) - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/loan-limits/) — VA guaranty on loans above $144,000 (share of the loan amount) (Aug 12, 2025) - [38 U.S.C. 3709](https://www.govinfo.gov/link/uscode/38/3709) — VA IRRRL seasoning: consecutive monthly payments made; VA IRRRL seasoning: days after the first payment due date; VA IRRRL fixed-to-fixed: new rate at least this much lower (Oct 28, 2026) - [38 CFR 36.4306](https://www.ecfr.gov/current/title-38/chapter-I/part-36/subpart-B/section-36.4306) — VA refinance (including cash-out) maximum loan-to-value allowed by VA (Oct 22, 2026) - [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) — 2026 baseline conforming loan limit (one-unit) (2026 limit) - [VA: Funding fee and closing costs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) - [VA: Loan limits and entitlement](https://www.va.gov/housing-assistance/home-loans/loan-limits/) - [VA: Purchase loan](https://www.va.gov/housing-assistance/home-loans/loan-types/purchase-loan/) _General information, not financial advice._ --- # Refinance break-even point: simple and full > When a refinance pays for itself: the simple break-even formula, the fuller test that counts your balance, two worked examples and how long you’ll stay. URL: https://mortgage-math-us.com/refinancing/break-even/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer Your simple break-even point is total closing costs divided by the monthly saving in principal and interest. With costs of 3%–6% of the loan, a one-point rate cut on a $150,000 balance saves about $98 a month and pays back $4,500 in **3 years 10 months**. A fuller test also counts the balance you still owe, which moves the answer earlier when you keep the same term and later when you stretch it or roll costs into the loan. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Typical refinance costs, low end (Freddie Mac) | 3% | [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) | Oct 28, 2026 | | Typical refinance costs, high end (Freddie Mac) | 6% | [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) | Oct 28, 2026 | | 30-year fixed average this week | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | Cost of one discount point | 1% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/how-should-i-use-lender-credits-and-points-also-called-discount-points-en-136/) | Oct 19, 2023 | | Legal recoupment limit on a VA streamline | 36 months | [38 U.S.C. 3709](https://www.govinfo.gov/link/uscode/38/3709) | Oct 28, 2026 | ## The simple formula **Break-even months = total refinance costs ÷ monthly saving.** Both halves need care: - **Costs** are what the refinance itself costs you: the loan costs on your Loan Estimate (origination charges including any points, plus the services in sections B and C) and the taxes and government fees in section E. Each point is 1% of the loan. Subtract any lender credit. Leave out prepaid interest, homeowners insurance and the new escrow deposit — you would pay those anyway, and the old escrow balance is usually refunded. - **Saving** is the drop in principal and interest. Taxes and insurance don’t change when you refinance, so ignore them — but if the new loan ends PMI or FHA mortgage insurance, add that too. If your payment goes up — because you chose a shorter term — the simple formula has nothing to divide by, and only the fuller test below can tell you when you come out ahead. ## Why the simple number can mislead The simple formula only looks at the payment. It ignores how fast each loan is paid down, which is where two common traps hide: - **A longer term.** Moving 25 remaining years into a new 30-year loan lowers the payment partly by spreading the debt over more years. The saving looks bigger than it is. - **Rolled-in costs.** Adding costs to the loan means no cash today, but a bigger balance and a smaller saving. It doesn’t make the break-even disappear. The **full break-even** compares where you stand on each path at every month: payments made plus balance still owed, plus any costs paid in cash. It is the method our [break-even calculator](https://mortgage-math-us.com/tools/refinance-break-even-calculator/) charts year by year. It can come out *earlier* than the simple answer too — when the new term is no longer than the old one, a lower rate pays the balance down faster on top of cutting the payment. ## Example 1: a smaller balance, same term > **Worked example: $150,000 balance at 8.24% with 25 years left, $4,500 of costs paid in cash** > > | New loan at 7.24% | Monthly saving | Simple break-even | Full break-even | Net position after 5 years | > |---|---:|---:|---:|---:| > | 25-year (same term) | $98 | 3 years 10 months | 3 years | +$3,032 | > | 30-year (term stretched) | $159 | 2 years 5 months | 3 years 3 months | +$2,298 | > > The current rate is an example one point above this week’s Freddie Mac 30-year average. Costs use the low end of Freddie Mac’s 3%–6% range. Net position counts payments, the balance owed and the costs. Keeping the same term, the full break-even arrives before the simple one, because the lower rate also shrinks the balance faster. Stretch to 30 years and the payment saving rises to $159, so the simple number looks better — but the full break-even comes later and you are less far ahead after five years, because much of that “saving” is debt pushed into the future. On a small balance the dollars are small either way: some costs, such as the appraisal and recording fees, don’t shrink with the loan, so they weigh more on a modest balance. ## Example 2: paying costs in cash vs rolling them in > **Worked example: $220,000 balance at 8.24% with 26 years left, new 30-year loan at 7.24%, $6,600 of costs** > > | | Costs paid in cash | Costs rolled into the loan | > |---|---:|---:| > | New loan amount | $220,000 | $226,600 | > | Monthly saving | $214 | $169 | > | Simple break-even | 2 years 7 months | 3 years 4 months | > | Full break-even | 3 years 2 months | 4 years 2 months | > | Net position after 2 years | −$2,305 | −$3,251 | > | Net position after 5 years | +$3,647 | +$1,320 | > | Net position after 10 years | +$11,674 | +$7,181 | Rolling the costs in doesn’t make the refinance free: it trims the saving by $45 a month and pushes the full break-even back by 1 year. Either way, selling after two years would leave you behind. A third option — taking a higher rate in exchange for a lender credit — is covered in our [no-closing-cost refinance](https://mortgage-math-us.com/refinancing/no-closing-cost-refinance/) guide. ## How long will you keep the loan? A break-even point only means something next to the number of years you expect to keep this mortgage — and that is often shorter than the years you expect to live in the house. The loan ends early if you: - **Sell or move** for work, family or a bigger home. - **Refinance again** because rates fall further, or to take cash out later. - **Pay it off early** with extra payments or a windfall. The CFPB suggests testing the shortest, longest and most likely time you might keep a loan when weighing points and credits; the same habit works here. If the full break-even falls well inside your shortest likely stay, the refinance is low-risk. If it lands near or beyond it, the savings are a bet on staying put. For reference, the law requires a VA streamline refinance to recoup its costs within 36 months — a useful yardstick for any refinance. See also [when not to refinance](https://mortgage-math-us.com/refinancing/when-not-to-refinance/) and [refinance closing costs](https://mortgage-math-us.com/refinancing/refinance-closing-costs/). [Open the refinance break even calculator](https://mortgage-math-us.com/tools/refinance-break-even-calculator/) ## Frequently asked questions ### How do you calculate the break-even point on a refinance? Divide the total refinance costs by the monthly saving in principal and interest. $4,500 of costs and a $98 saving pay back in 3 years 10 months. For a fuller answer, compare payments plus balance owed on each loan month by month. ### What is a good break-even period for a refinance? There is no official standard. Compare it with the shortest time you might keep the loan. For VA streamline refinances, the law sets a limit of 36 months, which is a sensible yardstick for any refinance. ### Should I include escrow and prepaid interest in refinance costs? No. Prepaid interest, homeowners insurance and the new escrow deposit are costs you would have anyway, and the old escrow balance is usually refunded. Count the loan costs, points and government recording fees, minus any lender credit. ### If I roll closing costs into the loan, is there still a break-even point? Yes. You don’t pay cash, but the bigger balance shrinks the monthly saving and adds interest. In the example above, rolling $6,600 into the loan pushed the full break-even from 3 years 2 months to 4 years 2 months. ### Why can the full break-even come before the simple one? When the new term is no longer than the years you have left, a lower rate means more of each payment goes to principal. You build equity faster on top of the payment saving, so you get ahead sooner. ### Do discount points count toward break-even? Yes. Points are a cost of the refinance — each is 1% of the loan — and they need their own break-even: the extra cost divided by the extra monthly saving they buy. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) — Typical refinance closing costs, low end (share of loan principal); Typical refinance closing costs, high end (share of loan principal) (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/how-should-i-use-lender-credits-and-points-also-called-discount-points-en-136/) — Cost of one discount point (share of loan amount) (Oct 19, 2023) - [38 U.S.C. 3709](https://www.govinfo.gov/link/uscode/38/3709) — VA IRRRL: fees and closing costs must be recouped within (Oct 28, 2026) - [Freddie Mac My Home: Costs of refinancing](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) - [CFPB: How should I use lender credits and points?](https://www.consumerfinance.gov/ask-cfpb/how-should-i-use-lender-credits-and-points-also-called-discount-points-en-136/) - [CFPB: Loan Estimate explainer](https://www.consumerfinance.gov/owning-a-home/loan-estimate/) _General information, not financial advice._ --- # Cash-out refinance: how much you can take and what it costs > How a cash-out refinance works: LTV limits on conventional, FHA and VA loans, a worked example of the cash you can take, the costs, the risks and HELOCs. URL: https://mortgage-math-us.com/refinancing/cash-out-refinance/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer A cash-out refinance replaces your mortgage with a larger one and pays you the difference. Conventional loans cap the new loan at 80% of the home’s value on a one-unit primary home, FHA at 80%, and VA rules allow up to 100%, though lenders may set lower limits. On a $360,000 home with $180,000 owed, an 80% loan frees about **$108,000** before closing costs — but the whole $288,000 is borrowed at the new rate, not just the cash. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Conventional limit, one-unit principal residence | 80% | [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) | Apr 1, 2026 | | FHA cash-out limit | 80% | [HUD Mortgagee Letter 2019-11](https://www.hud.gov/sites/dfiles/OCHCO/documents/19-11ml.pdf) | Aug 1, 2019 | | VA limit in regulation (lenders may go lower) | 100% | [38 CFR 36.4306](https://www.ecfr.gov/current/title-38/chapter-I/part-36/subpart-B/section-36.4306) | Oct 22, 2026 | | Conventional: existing loan must be at least | 12 months | [Fannie Mae Selling Guide B2-1.3-03](https://selling-guide.fanniemae.com/sel/b2-1.3-03/cash-out-refinance-transactions) | Dec 10, 2025 | | VA funding fee, cash-out, first use | 2.15% | [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) | Apr 7, 2023 | | Typical refinance costs, low end (Freddie Mac) | 3% | [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) | Oct 28, 2026 | ## How a cash-out refinance works You apply for a new first mortgage that is larger than what you owe. At closing it pays off the old loan, covers closing costs if you choose, and the rest is paid to you. Your new payment is based on the full new balance, at the new rate, over the new term. That last point is what separates a cash-out refinance from a [HELOC or home equity loan](https://mortgage-math-us.com/home-equity/cash-out-vs-heloc/), which leave your first mortgage alone and add a second loan on top. If your existing rate is low, a cash-out refinance gives it up. ## Cash-out limits by loan type *Maximum loan-to-value on a cash-out refinance, by loan type* | Loan type | Maximum LTV | Other rules | |---|---:|---| | Conventional (Fannie Mae), one-unit principal residence | 80% | Existing loan at least 12 months old; a borrower on title for 6 months | | Conventional, two- to four-unit principal residence | 75% | Same timing rules | | Conventional, second home | 75% | One unit | | Conventional, one-unit investment property | 75% | Lower for two to four units | | FHA | 80% | Upfront MIP of 1.75% plus annual MIP; other rules in HUD Handbook 4000.1 | | VA | 100% | Certificate of Eligibility; you must live in the home; funding fee 2.15% first use, 3.3% after | A few details matter more than they look: - **Conventional loans** measure the 12 months from the old loan’s note date to the new one. A home that was listed for sale must be off the market by the time the new loan funds. - **FHA** charges mortgage insurance again. At 80% LTV, the annual premium on a 30-year loan up to $726,200 is 0.5% and ends after 11 years, because the loan starts below 90% of value. - **VA** lets you refinance a non-VA loan into a VA cash-out loan. If the loan you are replacing is VA-backed, VA’s seasoning rule applies: at least 6 monthly payments and 210 days from the first payment due date. Lenders must also show you how much equity the refinance removes. Veterans receiving VA disability compensation generally don’t pay the funding fee. ## How much cash you could get > **Worked example: $360,000 home (near the US median value), $180,000 owed at an example 4% with 25 years left** > > | Step | Amount | > |---|---:| > | Largest conventional loan at 80% of value | $288,000 | > | Minus the balance paid off | −$180,000 | > | Cash before closing costs | $108,000 | > | Closing costs at 3% of the new loan | −$8,640 | > | **Cash in hand if costs come out of the proceeds** | **$99,360** | > | Old monthly principal and interest | $950 | > | New 30-year payment at 7.24% | $1,963 | > > The new rate is this week’s Freddie Mac 30-year average; cash-out loans are often priced somewhat higher than rate-and-term refinances. Costs use the low end of Freddie Mac’s 3%–6% range. The payment more than doubles, and not only because you borrowed more. The $180,000 you already owed moves from 4% to 7.24%, which on its own adds about $5,832 of interest in the first year. Before you compare offers, ask what the cash would cost through a second loan that leaves the first mortgage untouched. ## What it costs Expect the same closing costs as any refinance — Freddie Mac puts them at 3%–6% of the loan — charged on a larger loan. FHA adds upfront MIP of 1.75%; VA adds a funding fee of 2.15% the first time you use the benefit and 3.3% after that. You will usually need an appraisal, since the home’s value sets the limit; on some conventional loans Fannie Mae’s Desktop Underwriter may offer “value acceptance” in its place. See [refinance closing costs](https://mortgage-math-us.com/refinancing/refinance-closing-costs/) for the line items. ## Risks to weigh - **You reprice your whole mortgage.** If your current rate is well below today’s, the cash can be very expensive. - **You restart the clock.** A new 30-year term means paying for longer, and more total interest, unless you pay extra. - **Less equity, less cushion.** If prices fall, you could owe close to what the home is worth, which makes selling or refinancing harder. - **Taxes.** Interest on money you spend on anything other than buying, building or substantially improving the home generally isn’t deductible. See [home equity interest and taxes](https://mortgage-math-us.com/home-equity/home-equity-interest-deduction/). > **Watch out: Turning card debt into mortgage debt** > > Paying off credit cards with a cash-out refinance can cut the interest rate, but the debt is now secured by your house and stretched over decades. If you can’t keep up the payments, you can lose the home. ## Cash-out refinance or HELOC? A HELOC keeps your first mortgage — and its rate — and lets you borrow only what you need, usually at a variable rate. A cash-out refinance can give you one fixed-rate loan and one payment. As a rule of thumb, a cash-out refinance is easier to justify when your current rate is near or above today’s rates, or when you also want to change the term. When your existing rate is low, compare a HELOC or home equity loan first. Our [cash-out refinance vs HELOC](https://mortgage-math-us.com/home-equity/cash-out-vs-heloc/) guide runs the numbers side by side. ## Frequently asked questions ### How much cash can I get from a cash-out refinance? Generally up to 80% of your home’s value on a conventional loan (80% on FHA), minus what you owe and the closing costs. With a $360,000 home and $180,000 owed, that is about $108,000 before costs and $99,360 after costs of 3%. ### How soon can I do a cash-out refinance? For a conventional loan sold to Fannie Mae, the loan being paid off must be at least 12 months old, and a borrower must have been on title for 6 months. Refinancing a VA loan requires 6 monthly payments and 210 days from the first payment due date. FHA sets its own rules in HUD Handbook 4000.1. ### Can I get a cash-out refinance with VA if my current loan isn’t VA? Yes. VA’s cash-out refinance can replace a non-VA loan, as long as you have a Certificate of Eligibility, meet VA’s and the lender’s credit and income standards, and live in the home. ### Do I need an appraisal for a cash-out refinance? Usually, because the home’s value sets how much you can borrow. VA lenders order one. On some conventional loans, Fannie Mae’s Desktop Underwriter may offer value acceptance instead, in which case no appraisal is required. ### Can I do a cash-out refinance on a rental property? On a conventional loan, yes, at a lower limit: 75% of value for a one-unit investment property. VA cash-out loans require you to live in the home. ### Is a cash-out refinance better than a HELOC? It depends mostly on your current rate. A cash-out refinance replaces your whole mortgage at today’s rate; a HELOC adds a second, usually variable-rate loan and leaves your first mortgage alone. If your existing rate is low, a HELOC or home equity loan is often cheaper overall. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) — Typical refinance closing costs, low end (share of loan principal); Typical refinance closing costs, high end (share of loan principal) (Oct 28, 2026) - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae cash-out refinance maximum LTV, one-unit principal residence; Fannie Mae cash-out refinance maximum LTV, two- to four-unit principal residence; Fannie Mae cash-out refinance maximum LTV, second home (Apr 1, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [HUD Mortgagee Letter 2019-11](https://www.hud.gov/sites/dfiles/OCHCO/documents/19-11ml.pdf) — FHA cash-out refinance maximum loan-to-value (Aug 1, 2019) - [38 CFR 36.4306](https://www.ecfr.gov/current/title-38/chapter-I/part-36/subpart-B/section-36.4306) — VA refinance (including cash-out) maximum loan-to-value allowed by VA (Oct 22, 2026) - [Fannie Mae Selling Guide B2-1.3-03](https://selling-guide.fanniemae.com/sel/b2-1.3-03/cash-out-refinance-transactions) — Fannie Mae cash-out: existing first mortgage must be at least; Fannie Mae cash-out: at least one borrower on title for at least (Dec 10, 2025) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA upfront mortgage insurance premium; FHA annual MIP is higher on base loans above this amount; FHA annual MIP, 30-year loan, 95% LTV or less (Feb 22, 2023) - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) — VA funding fee, cash-out refinance, first use; VA funding fee, cash-out refinance, after first use (Apr 7, 2023) - [38 U.S.C. 3709](https://www.govinfo.gov/link/uscode/38/3709) — VA IRRRL seasoning: consecutive monthly payments made; VA IRRRL seasoning: days after the first payment due date (Oct 28, 2026) - [Fannie Mae Selling Guide B2-1.3-03: Cash-out refinance transactions](https://selling-guide.fanniemae.com/sel/b2-1.3-03/cash-out-refinance-transactions) - [VA: Cash-out refinance loan](https://www.va.gov/housing-assistance/home-loans/loan-types/cash-out-loan/) - [38 CFR 36.4306: VA refinancing loans](https://www.ecfr.gov/current/title-38/chapter-I/part-36/subpart-B/section-36.4306) - [Fannie Mae Selling Guide B4-1.4-10: Value acceptance (appraisal waiver)](https://selling-guide.fanniemae.com/sel/b4-1.4-10/value-acceptance-appraisal-waiver) _General information, not financial advice._ --- # No-closing-cost refinance: how it really works > A no-closing-cost refinance still has costs, paid through a higher rate or a bigger loan. Compare both with paying cash over 3, 5 and 10 years. URL: https://mortgage-math-us.com/refinancing/no-closing-cost-refinance/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer A no-closing-cost refinance doesn’t remove the costs — the CFPB says lenders cover them either by charging a higher rate in exchange for a credit, or by adding them to the loan. With costs at 3% of a $280,000 loan, our example shows a lender credit coming out ahead if you keep the loan three or five years, while paying $8,400 in cash wins after about **6 years**. Rolling the costs in trails both in the early years. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Typical refinance costs, low end (Freddie Mac) | 3% | [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) | Oct 28, 2026 | | Typical refinance costs, high end (Freddie Mac) | 6% | [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) | Oct 28, 2026 | | One discount point (a credit works like negative points) | 1% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/how-should-i-use-lender-credits-and-points-also-called-discount-points-en-136/) | Oct 19, 2023 | | 30-year fixed average this week | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | Loan Estimate arrives within (of applying) | 3 business days | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-loan-estimate-en-1995/) | Oct 28, 2026 | ## There is no free refinance Every mortgage costs money to make — the appraisal, title work, the lender’s own fees. Freddie Mac’s consumer site puts refinance costs at 3%–6% of the loan and warns that there is no such thing as a free loan. When an offer says “no closing costs,” it means one of two things: - **A lender credit.** You accept a higher interest rate, and the lender pays some or all of your costs. The CFPB describes credits as working like negative points: where one point costs 1% of the loan and lowers the rate, a credit lowers your costs up front and raises the rate. Credits appear as a negative number in section J of the Loan Estimate. - **Costs rolled into the loan.** The rate stays the same, but the costs are added to the balance. Nothing comes out of pocket at closing for those costs, but you borrow more and pay interest on it. The CFPB notes this raises your payments and reduces your equity. Either way, you may still need cash for prepaid interest and a new escrow deposit unless the credit is large enough to cover them. ## Three ways to pay the same costs Take a $280,000 balance at 8.24% with 29 years left, refinanced into a new 30-year loan. Costs are $8,400, the low end of Freddie Mac’s range. *Paying $8,400 of refinance costs three ways* | | Pay in cash | Roll into the loan | Lender credit | |---|---:|---:|---:| | Cash for costs at closing | $8,400 | $0 | $0 | | New loan amount | $280,000 | $288,400 | $280,000 | | Rate | 7.24% | 7.24% | 7.74% (example) | | Monthly principal and interest | $1,908 | $1,965 | $2,004 | | Saving vs current $2,118 | $210 | $153 | $114 | The base rate is this week’s Freddie Mac 30-year average and the current rate is an example one point above it. **The lender-credit rate is an assumption for illustration:** we assume half a percentage point more buys a credit equal to the costs. Lenders set this trade-off themselves and it changes daily — your Loan Estimates will show the real figures. ## Over 3, 5 and 10 years The fair comparison counts everything: payments made, the balance still owed and any cash paid at closing. Here is how far ahead of your current loan each option leaves you. > **Worked example: Net position vs keeping the current loan (best option in bold)** > > | Keep the new loan | Pay in cash | Roll into the loan | Lender credit | > |---|---:|---:|---:| > | After 3 years | −$25 | −$1,823 | **+$4,150** | > | After 5 years | +$5,506 | +$2,544 | **+$6,842** | > | After 10 years | **+$18,915** | +$13,197 | +$13,136 | > > Uses the example rates above, including the assumed 7.74% lender-credit rate. The lender credit wins early because nothing is spent up front and you are ahead from the first month. But its higher rate costs more every month, and in this example paying cash pulls ahead after about 6 years. Rolling the costs in is the weakest choice early on: you avoid the cash outlay but pay interest on the costs, without the credit’s head start, and it only overtakes the credit after about 10 years. If the rate premium is bigger than our example, the crossover comes sooner; if it is smaller, later. ## How to choose - **You may move or refinance again within a few years:** a lender credit usually costs least, because you won’t keep the higher rate long. - **You expect to keep the loan a long time:** paying the costs in cash usually wins, and buying points may even pay off. - **You plan to stay but cash is tight:** rolling the costs in keeps the lower rate, as long as the larger loan stays within the lender’s loan-to-value limit. The CFPB suggests testing the shortest, longest and most likely time you might keep the loan. Run each option through our [break-even guide](https://mortgage-math-us.com/refinancing/break-even/) or the [calculator](https://mortgage-math-us.com/tools/refinance-break-even-calculator/) for those horizons. ## Program rules that limit your options On an FHA Streamline, FHA doesn’t let lenders add closing costs to the new loan, so the choices are cash or a higher rate — HUD notes some lenders offer no-cost streamlines by charging a higher rate and using the premium to pay the costs. A VA IRRRL can include costs in the loan, but its fees and closing costs, other than the funding fee, must still be recouped within 36 months. On conventional loans, rolled-in costs must fit within the loan-to-value limit — 97% for a one-unit home on a fixed-rate [rate-and-term refinance](https://mortgage-math-us.com/refinancing/rate-and-term/) — and a higher balance can mean PMI above 80%. **How to ask for a no-closing-cost offer** 1. **Ask each lender for several pricing options** — the rate with no points and no credit, and the rate that comes with a credit large enough to cover the costs. 2. **Get Loan Estimates for each.** Lenders must send one within 3 business days of your application. Check section J for the credit and section D for the costs it must cover. 3. **Check the loan amount.** If it is higher than your payoff, costs have been rolled in rather than covered. 4. **Compare over your likely time in the loan,** not just the payment or the cash to close. See [refinance closing costs](https://mortgage-math-us.com/refinancing/refinance-closing-costs/) for what each line means. ## Frequently asked questions ### Is a no-closing-cost refinance really free? No. The CFPB explains that lenders cover the costs either by charging a higher rate in exchange for a credit, or by adding the costs to the loan. You pay them over time instead of at closing. ### Which is better, a lender credit or rolling the costs in? It depends on how long you keep the loan. In our example, the lender credit leaves you furthest ahead after three and five years, and paying cash wins after about 6 years. Rolling the costs in trails both early on and only overtakes the credit after about 10 years. ### How much higher is the rate on a no-closing-cost refinance? It varies by lender, loan and day, so ask each lender for its options. Our example assumes half a percentage point for a credit covering costs of 3% of the loan; that is an illustration, not a quote. ### Do I still need cash at closing with a no-closing-cost refinance? Possibly. Prepaid interest and the deposit for a new escrow account are separate from closing costs, and a credit may not cover them. Your old escrow balance is usually refunded after the old loan is paid off. ### Can I get a no-closing-cost FHA Streamline? Yes, through a higher rate. FHA doesn’t let lenders add closing costs to a streamline loan, but HUD notes some lenders use a higher rate to pay the costs. ### Does a lender credit change my break-even point? Yes. With no costs paid up front, you are ahead of your current loan from the first month as long as the new rate is lower. The question becomes when paying cash would have overtaken the credit — about 6 years in our example. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) — Typical refinance closing costs, low end (share of loan principal); Typical refinance closing costs, high end (share of loan principal) (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/how-should-i-use-lender-credits-and-points-also-called-discount-points-en-136/) — Cost of one discount point (share of loan amount) (Oct 19, 2023) - [38 U.S.C. 3709](https://www.govinfo.gov/link/uscode/38/3709) — VA IRRRL: fees and closing costs must be recouped within (Oct 28, 2026) - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae limited cash-out refinance maximum LTV, one-unit principal residence (fixed rate) (Apr 1, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-loan-estimate-en-1995/) — Lender must send the Loan Estimate within this many business days of your application (Oct 28, 2026) - [CFPB: Is there such a thing as a no-cost loan or refinancing?](https://www.consumerfinance.gov/ask-cfpb/is-there-such-a-thing-as-a-no-cost-or-no-closing-loan-or-refinancing-en-141/) - [CFPB: How should I use lender credits and points?](https://www.consumerfinance.gov/ask-cfpb/how-should-i-use-lender-credits-and-points-also-called-discount-points-en-136/) - [Freddie Mac My Home: Costs of refinancing](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) - [HUD: Streamline refinance](https://hud.gov/hud-partners/single-family-streamline) _General information, not financial advice._ --- # Rate-and-term refinance explained > How a rate-and-term refinance works: a new rate or term without cashing out equity, the limited cash-out rule, costs and a worked break-even example. URL: https://mortgage-math-us.com/refinancing/rate-and-term/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer A rate-and-term refinance replaces your mortgage with a new loan for about the same balance, with a lower rate, a different term or both. Fannie Mae calls it a limited cash-out refinance: you can finance closing costs, but cash back is capped at the greater of 1% of the new loan or $2,000. It pays off only if the saving earns back costs of 3%–6% of the loan before you sell or refinance again — in the example below, after about **3 years 6 months**. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Most cash back, as a share of the new loan (Fannie Mae) | 1% | [Fannie Mae Selling Guide B2-1.3-02](https://selling-guide.fanniemae.com/sel/b2-1.3-02/limited-cash-out-refinance-transactions) | Oct 8, 2025 | | …or this amount, whichever is greater | $2,000 | [Fannie Mae Selling Guide B2-1.3-02](https://selling-guide.fanniemae.com/sel/b2-1.3-02/limited-cash-out-refinance-transactions) | Oct 8, 2025 | | Maximum LTV, one-unit principal residence, fixed rate | 97% | [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) | Apr 1, 2026 | | Typical refinance costs, low end (Freddie Mac) | 3% | [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) | Oct 28, 2026 | | Typical refinance costs, high end (Freddie Mac) | 6% | [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) | Oct 28, 2026 | | 30-year fixed average this week | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | ## What a rate-and-term refinance is You take out a new mortgage, use it to pay off the old one, and keep the house as security. The new loan covers what you owe plus, if you choose, the closing costs — but not fresh cash. That is the difference from a [cash-out refinance](https://mortgage-math-us.com/refinancing/cash-out-refinance/), where you borrow more than you owe and take the difference. People use a rate-and-term refinance to: - **Lower the rate** when market rates have fallen or their credit has improved since they borrowed. - **Change the term** — from 30 years to 15 or 20 to pay the loan off sooner, or occasionally to a longer term to cut the payment. - **Switch loan type**, such as an adjustable-rate loan to a fixed rate before it resets, or an FHA loan to a conventional one to [drop mortgage insurance](https://mortgage-math-us.com/refinancing/refinance-to-remove-pmi/). FHA and VA borrowers have a lighter-paperwork version for loans of the same type, the [streamline refinance](https://mortgage-math-us.com/refinancing/streamline-refinance/). ## The limited cash-out rule on conventional loans For a conventional loan sold to Fannie Mae, a rate-and-term refinance is called a limited cash-out refinance. Under the Selling Guide, the new loan can pay off the existing first mortgage, finance closing costs, points and prepaid items, and pay off a second mortgage only if that second loan was used to buy the home. Any cash you receive at closing, added together, can’t exceed the greater of 1% of the new loan or $2,000. In practice the cap depends on the loan size: on a $350,000 refinance it is $3,500; on a $150,000 loan it is $2,000. Pay off a home equity line you used for a kitchen remodel, and the deal becomes a cash-out refinance with tighter limits and usually higher pricing. *Conventional refinance types compared (Fannie Mae rules)* | | Rate-and-term (limited cash-out) | Cash-out | |---|---|---| | Cash to you at closing | Greater of 1% or $2,000 | Equity up to the LTV limit | | Maximum LTV, one-unit principal residence | 97% (fixed rate) | 80% | | Second mortgage it can pay off | Only one used to buy the home | Any | At least one borrower must be on title when you apply, and a home that was listed for sale must be taken off the market by the time the new loan funds. ## When it makes sense A refinance makes sense when the lower payment or interest saving earns back the closing costs well before you expect to move or refinance again. Three questions decide it: 1. **How much lower is the new rate?** There is no universal rule of thumb; a small drop can pay on a large balance and fail on a small one. 2. **What term will you choose?** Restarting at 30 years when you have 25 left lowers the payment partly by stretching the debt. 3. **How long will you keep the loan?** If you may sell within a few years, the costs may never come back. See [when not to refinance](https://mortgage-math-us.com/refinancing/when-not-to-refinance/). ## A worked example > **Worked example: $350,000 balance at 7.99% with 27 years left, $10,500 of costs paid in cash** > > | New loan | Monthly P&I | Change | Simple break-even | Full break-even | Lifetime interest vs keeping | > |---|---:|---:|---:|---:|---:| > | Keep current loan | $2,638 | — | — | — | $504,586 left | > | 30-year at 7.24% | $2,385 | −$252 | 3 years 6 months | 4 years 3 months | +$4,102 | > | 25-year at 7.24% | $2,528 | −$110 | 8 years | 3 years 10 months | −$96,315 | > | 15-year at 6.6% | $3,068 | +$431 | n/a (payment rises) | 2 years | −$302,319 | > > The current rate is an example three-quarters of a point above this week’s 30-year average from Freddie Mac. Costs use the low end of Freddie Mac’s 3%–6% range. “Full break-even” is the month you are ahead counting both payments and the balance still owed. The 30-year loan gives the biggest monthly saving, yet over its full life it costs more interest than the loan you have, because it adds three years of payments. The 25-year option saves less each month, but more of each payment goes to principal, so you are ahead sooner on the full measure. The 15-year loan raises the payment by $431 a month — and pays for itself fastest, because a lower rate and a shorter term both cut interest. Which one fits depends on your budget, not only the math. Our [break-even guide](https://mortgage-math-us.com/refinancing/break-even/) explains the two measures. ## Costs, and doing it step by step Freddie Mac puts refinance costs at 3%–6% of the loan — appraisal, title services, lender and recording fees among them. You can pay them in cash, add them to the loan within the LTV limit, or take a higher rate in exchange for a lender credit; see [no-closing-cost refinances](https://mortgage-math-us.com/refinancing/no-closing-cost-refinance/) and [refinance closing costs](https://mortgage-math-us.com/refinancing/refinance-closing-costs/). **How to do a rate-and-term refinance** 1. **Gather your numbers** — balance, rate, years left and a rough home value, from your latest statement and recent sales nearby. 2. **Apply with several lenders** within 45 days, so the credit checks count as a single inquiry. 3. **Compare Loan Estimates** line by line, using the same lock period and points for each. See [Loan Estimate and Closing Disclosure](https://mortgage-math-us.com/buying/loan-estimate/). 4. **Lock and complete underwriting** — income documents, the appraisal if required, and title work. 5. **Close and wait out the right to cancel.** With a new lender you have 3 business days to change your mind before the old loan is paid off. [Open the refinance break even calculator](https://mortgage-math-us.com/tools/refinance-break-even-calculator/) ## Frequently asked questions ### Can I get cash back on a rate-and-term refinance? A little. On a conventional loan sold to Fannie Mae, cash back is capped at the greater of 1% of the new loan or $2,000. If you need more, it is a cash-out refinance, which has a lower LTV limit of 80%. ### Is rate-and-term the same as a no-cash-out refinance? Yes, the terms are used interchangeably. Fannie Mae calls it a limited cash-out refinance; FHA and VA offer streamlined versions for loans of the same type. ### Can I roll closing costs into a rate-and-term refinance? On a conventional loan, yes — Fannie Mae lets the new loan finance closing costs, points and prepaid items, as long as the loan stays within the LTV limit. An FHA Streamline is different: FHA doesn’t let lenders add closing costs to the new loan. ### Can a rate-and-term refinance pay off my HELOC? Only if the HELOC or second mortgage was used to buy the home. Paying off a line used for anything else makes it a cash-out refinance under Fannie Mae’s rules. ### How much lower does my rate need to be to refinance? There is no single threshold. Divide the costs by the monthly saving and compare that with how long you will keep the loan; in the example above, $10,500 of costs and a $252 saving pay back in 3 years 6 months. VA streamlines must cut a fixed rate by at least 0.5%. ### Does refinancing restart my mortgage? Yes. It is a new loan with a new term. Choosing a term close to the years you have left — or shorter — keeps the comparison with your current loan honest. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average; 15-year fixed rate, national weekly average (Week of Oct 29, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) — Typical refinance closing costs, low end (share of loan principal); Typical refinance closing costs, high end (share of loan principal) (Oct 28, 2026) - [Fannie Mae Selling Guide B2-1.3-02](https://selling-guide.fanniemae.com/sel/b2-1.3-02/limited-cash-out-refinance-transactions) — Fannie Mae limited cash-out refinance: cash back up to the greater of this share of the loan; Fannie Mae limited cash-out refinance: cash back up to the greater of 1% or (Oct 8, 2025) - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae limited cash-out refinance maximum LTV, one-unit principal residence (fixed rate); Fannie Mae cash-out refinance maximum LTV, one-unit principal residence (Apr 1, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-exactly-happens-when-a-mortgage-lender-checks-my-credit-en-2005/) — Mortgage credit checks within this window count as one inquiry (Aug 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) — Right to cancel a refinance or home equity loan on your principal home (Aug 8, 2024) - [38 U.S.C. 3709](https://www.govinfo.gov/link/uscode/38/3709) — VA IRRRL fixed-to-fixed: new rate at least this much lower (Oct 28, 2026) - [Fannie Mae Selling Guide B2-1.3-02: Limited cash-out refinance transactions](https://selling-guide.fanniemae.com/sel/b2-1.3-02/limited-cash-out-refinance-transactions) - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) - [Freddie Mac My Home: Costs of refinancing](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) _General information, not financial advice._ --- # Refinance closing costs > What refinance closing costs include, what you don’t pay again after buying, your right to cancel, and how to compare Loan Estimates line by line. URL: https://mortgage-math-us.com/refinancing/refinance-closing-costs/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer Refinance closing costs typically run 3%–6% of the loan, according to Freddie Mac — $7,500 to $15,000 on a $250,000 refinance. They cover lender fees, the appraisal, title services, recording and similar charges. You skip the down payment and usually the owner’s title policy and transfer tax you paid when buying. With a new lender, you have 3 business days after signing to cancel. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Typical refinance costs, low end (Freddie Mac) | 3% | [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) | Oct 28, 2026 | | Typical refinance costs, high end (Freddie Mac) | 6% | [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) | Oct 28, 2026 | | Right to cancel (new lender, principal home) | 3 business days | [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) | Aug 8, 2024 | | Money returned after you cancel, within | 20 days | [CFPB; 12 CFR 1026.15(d)(2) and 1026.23(d)(2)](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) | Oct 28, 2026 | | Loan Estimate arrives within (of applying) | 3 business days | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-loan-estimate-en-1995/) | Oct 28, 2026 | | Closing Disclosure arrives before closing | 3 business days | [CFPB](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) | Oct 28, 2026 | ## What refinance closing costs include Freddie Mac lists the usual refinance charges as lender origination and underwriting fees, the appraisal, credit report, tax service and survey fees, title services, attorney fees and government recording costs. Discount points, if you buy them, come on top. On your Loan Estimate they fall into a few sections: *Where refinance costs appear on the Loan Estimate (page 2)* | Section | What’s in it | Can you shop? | |---|---|---| | A. Origination charges | Lender fees and any discount points | Compare lenders — the total matters | | B. Services you cannot shop for | Appraisal, credit report, tax service | No, but compare the total between lenders | | C. Services you can shop for | Title services and survey, when the lender lets you shop | Yes — the lender lists providers, and you can choose others | | E. Taxes and other government fees | Recording fees and, in some states, mortgage taxes | No | | F and G. Prepaids and initial escrow | Interest to the end of the month, insurance, escrow deposit | Not a refinance cost — see below | | J. Lender credits | Money from the lender toward your costs, usually for a higher rate | Ask for the rate options | > **Worked example: Refinance closing costs by loan size, using Freddie Mac’s range** > > | Loan amount | Low end (3%) | High end (6%) | > |---|---:|---:| > | $150,000 | $4,500 | $9,000 | > | $250,000 | $7,500 | $15,000 | > | $400,000 | $12,000 | $24,000 | > > Some costs, such as the appraisal and recording fees, don’t shrink with the loan, so smaller loans tend to land toward the high end in percentage terms. A few states also tax the mortgage itself when it is recorded — about 1% in New York outside New York City and 0.23% in Minnesota, for example — and the rules for refinances vary. Your Loan Estimate shows any such tax in section E. ## What you don’t pay again A refinance is a new loan on a home you already own, so several purchase costs drop away: *Buying vs refinancing — which costs repeat* | Cost | When you bought | When you refinance | |---|---|---| | Down payment | Yes | No | | Lender fees and points | Yes | Yes | | Appraisal | Usually | Usually — not on an FHA Streamline, and sometimes waived on conventional loans | | Lender’s title insurance | Yes | Yes, for the new loan | | Owner’s title insurance | Bought once | Not again | | Transfer tax on the deed | In many states | Generally no — the home doesn’t change hands | | Recording fees | Yes | Yes | | Home inspection | Your choice | Not needed | | Escrow deposit | Yes | Yes — the old escrow balance is usually refunded | The last row explains why the cash you bring to closing can look higher than the costs. Prepaid interest and a new escrow deposit are money you would spend anyway, and the old servicer’s escrow refund comes back after the payoff. Leave them out when you work out your [break-even point](https://mortgage-math-us.com/refinancing/break-even/). ## Your right to cancel > **Rule: Three business days to change your mind** > > When you refinance your principal home with a different lender, federal law gives you 3 business days to cancel — Saturdays count; Sundays and legal public holidays don’t. The clock starts once you have signed, received the Closing Disclosure and received two copies of the rescission notice. You must cancel in writing before midnight of the third business day, and the lender must return the money you paid within 20 days. Because of this window, a refinance with a new lender usually funds a few days after you sign, and interest on the old loan runs until then. The right doesn’t apply to purchase loans. A refinance with your current lender is exempt except for any new money you borrow beyond the balance and the refinance costs. If the required notice or disclosures were never given, the right can last up to 3 years. ## How to compare Loan Estimates Lenders must send a Loan Estimate within 3 business days of your application, in the same format, so offers line up side by side. Our [Loan Estimate and Closing Disclosure](https://mortgage-math-us.com/buying/loan-estimate/) guide walks through every page. **How to compare refinance offers** 1. **Ask for the same loan from each lender** — same term, rate type, loan amount and lock period, on the same day if you can, because rates move daily. 2. **Compare rate, points and credits together.** A lower rate with two points is a different deal from a higher rate with a lender credit. Points are in section A; credits appear as a negative number in section J. 3. **Compare the totals for sections A and B.** You can’t shop these separately, so the total is what counts. 4. **Shop section C.** Title and settlement services can be bought from providers the lender doesn’t list. 5. **Check the Comparisons section on page 3.** The APR and the Total Interest Percentage summarize cost over time. 6. **Watch for changes before closing.** Some charges can’t rise at all; recording fees and services from the lender’s list can rise only 10% in total. You get the Closing Disclosure at least 3 business days before closing, and if the APR rises by more than 0.125%, that wait starts again. ## Ways to keep costs down - **Ask for a lender credit** — or roll the costs into the loan — if cash is tight. Both raise your cost over time; see [no-closing-cost refinances](https://mortgage-math-us.com/refinancing/no-closing-cost-refinance/). - **Skip points you didn’t ask for.** Each one costs 1% of the loan and only pays off if you keep the loan long enough. - **Use a streamline if you qualify.** FHA and VA [streamline refinances](https://mortgage-math-us.com/refinancing/streamline-refinance/) need less paperwork, and FHA’s needs no appraisal. - **Ask your current lender for a quote.** It already knows your loan, and its offer gives you another Loan Estimate to compare. ## Frequently asked questions ### How much are closing costs on a refinance? Freddie Mac puts them at 3%–6% of the loan principal — $7,500 to $15,000 on a $250,000 refinance. Your Loan Estimate shows the exact figures. ### Can I roll closing costs into my refinance? Usually. Conventional loans let you finance closing costs within the loan-to-value limit, and a VA IRRRL can include them. An FHA Streamline can’t: FHA doesn’t let lenders add closing costs to the new loan, though a lender may cover them in exchange for a higher rate. ### Are refinance closing costs tax-deductible? Most aren’t. Points paid to refinance generally have to be deducted over the life of the loan rather than in the year you pay them, with an exception for the part used to substantially improve your main home. IRS Publication 936 has the details. ### Do I get my escrow money back when I refinance? Usually, yes. Your old servicer refunds what is left in the escrow account after the loan is paid off, while you fund a new escrow account at closing. That is why the cash you bring can be higher than the true costs. ### Do I skip a mortgage payment when I refinance? Not really. Mortgage interest is paid in arrears, so the payoff of your old loan includes interest up to the payoff date, and you prepay interest on the new loan at closing. The next due date may feel like a break, but the interest is still paid. ### Can I cancel a refinance after closing? Yes, within 3 business days if you refinanced your principal home with a new lender. Cancel in writing; the lender must return the money you paid within 20 days. Same-lender refinances are exempt except for new money. ## Sources - [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) — Typical refinance closing costs, low end (share of loan principal); Typical refinance closing costs, high end (share of loan principal) (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) — Right to cancel a refinance or home equity loan on your principal home; After you cancel, the lender must return your money and release the lien within (Aug 8, 2024) - [New York Department of Taxation and Finance](https://www.tax.ny.gov/pit/mortgage/mtgidx.htm) — State tax on recording a mortgage (Dec 30, 2025) - [Minnesota Department of Revenue](https://www.revenue.state.mn.us/mortgage-tax-rate) — State tax on recording a mortgage (Oct 28, 2026) - [12 CFR 1026.15(a)(3) and 1026.23(a)(3)](https://www.consumerfinance.gov/rules-policy/regulations/1026/15/) — Right to cancel lasts up to this long if the required notice or disclosures were not given (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-loan-estimate-en-1995/) — Lender must send the Loan Estimate within this many business days of your application (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-my-final-mortgage-costs-increase-from-what-was-on-my-loan-estimate-en-172/) — Cumulative limit on increases for recording fees and lender-listed services (Sep 11, 2024) - [CFPB](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) — You receive the Closing Disclosure at least this many business days before closing (Oct 28, 2026) - [12 CFR 1026.22](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-C/section-1026.22) — APR change that triggers a new 3-business-day wait (regular loans) (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/how-should-i-use-lender-credits-and-points-also-called-discount-points-en-136/) — Cost of one discount point (share of loan amount) (Oct 19, 2023) - [Freddie Mac My Home: Costs of refinancing](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) - [CFPB: Loan Estimate explainer](https://www.consumerfinance.gov/owning-a-home/loan-estimate/) - [12 CFR 1026.23: Right of rescission](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-C/section-1026.23) - [IRS Publication 936: Home mortgage interest deduction](https://www.irs.gov/pub/irs-pdf/p936.pdf) _General information, not financial advice._ --- # Refinance requirements by loan type > What you need to refinance: credit score, equity and LTV limits, debt-to-income, waiting periods by loan type, documents and when an appraisal is skipped. URL: https://mortgage-math-us.com/refinancing/refinance-requirements/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer To refinance you generally need enough equity for your loan type, income that keeps debt-to-income within limits, and a clean recent payment record. Conventional loans allow up to 97% of value on a rate-and-term refinance but only 80% with cash out, and the loan being replaced must be 12 months old for a cash-out. Fannie Mae’s automated approvals allow debt-to-income up to 50%. FHA and VA streamlines need 6 payments and 210 days of seasoning but far less paperwork. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Fannie Mae minimum score, manual underwriting (fixed rate) | 620 | [Fannie Mae Selling Guide B3-5.1-01](https://selling-guide.fanniemae.com/sel/b3-5.1-01/general-requirements-credit-scores) | Apr 22, 2026 | | Fannie Mae maximum DTI (Desktop Underwriter) | 50% | [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) | Apr 2, 2025 | | Max LTV, conventional rate-and-term (one unit) | 97% | [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) | Apr 1, 2026 | | Max LTV, conventional cash-out (one unit) | 80% | [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) | Apr 1, 2026 | | Conventional cash-out: existing loan at least | 12 months | [Fannie Mae Selling Guide B2-1.3-03](https://selling-guide.fanniemae.com/sel/b2-1.3-03/cash-out-refinance-transactions) | Dec 10, 2025 | | FHA Streamline: days since the current loan closed | 210 days | [FDIC Affordable Mortgage Lending Guide (summary of HUD Handbook 4000.1)](https://www.fdic.gov/system/files/2024-07/streamline-refinance.pdf) | Oct 28, 2026 | ## Requirements at a glance *Main refinance requirements by loan type (one-unit principal residence)* | | Conventional (Fannie Mae) | FHA | VA | |---|---|---|---| | Credit score | No set minimum for Desktop Underwriter approvals; 620 for manual underwriting | At least 500; no credit check on a non-credit-qualifying Streamline | VA’s and the lender’s credit standards | | Maximum loan-to-value | 97% rate-and-term (fixed); 80% cash-out | Streamline: no limit; cash-out: 80% | Cash-out: up to 100% in VA’s rules; lenders may set less | | Debt-to-income | Up to 50% through Desktop Underwriter; 36% to 45% manual | 31% / 43% on manual approvals; not calculated on a non-credit-qualifying Streamline | Lender reviews income under VA standards | | Waiting period | Cash-out: loan at least 12 months old, on title 6 months | Streamline: 6 payments and 210 days since closing | Refinancing a VA loan: 6 payments and 210 days from the first due date | | Appraisal | Usually; sometimes replaced by value acceptance | Not on a Streamline | Ordered by the lender on a cash-out | Lenders can add their own requirements on top of these — called overlays — such as a higher minimum score. If one lender says no, another may say yes. ## Credit score Fannie Mae doesn’t set a minimum score for loans run through its Desktop Underwriter; the system weighs your score alongside equity, debts and reserves. Manually underwritten fixed-rate loans need at least 620. In practice most lenders set a floor of their own, and your score drives the rate you are offered, so a few points can matter. FHA accepts scores down to 500, and its non-credit-qualifying Streamline skips the credit check entirely — the lender verifies your mortgage payment history instead. VA asks you to meet VA’s and the lender’s credit standards. Shop lenders within 45 days so the credit checks count as a single inquiry. More in our [credit score guide](https://mortgage-math-us.com/buying/credit-score/). ## Equity and loan-to-value Loan-to-value (LTV) is the new loan divided by the home’s value. It decides whether you can refinance at all, whether you can take cash out, and whether you pay mortgage insurance. > **Worked example: $360,000 home (near the US median value) with $250,000 owed — LTV 69.4%** > > | Limit | Largest loan | What it means | > |---|---:|---| > | Conventional rate-and-term, 97% | $349,200 | Plenty of room to roll in closing costs | > | No PMI on a conventional loan, 80% | $288,000 | Stay at or below this to avoid mortgage insurance | > | Conventional or FHA cash-out, 80% | $288,000 | Up to $38,000 of cash before closing costs | If the value has fallen, a conventional refinance may need PMI or may not be possible. An [FHA Streamline](https://mortgage-math-us.com/refinancing/streamline-refinance/) is the exception: it needs no appraisal and has no LTV limit, because the new loan is based on the FHA balance you already have. ## Debt-to-income Debt-to-income (DTI) is your monthly debt payments — including the new mortgage payment, taxes and insurance — divided by your gross monthly income. Fannie Mae allows up to 50% on Desktop Underwriter approvals; manual underwriting starts at 36% and can reach 45% with strong credit and reserves. FHA’s manual-underwriting benchmarks are 31% for housing and 43% in total without compensating factors. A refinance that lowers your payment also lowers your DTI, which can help. See [debt-to-income ratio](https://mortgage-math-us.com/buying/debt-to-income/). ## Waiting periods and payment history - **Conventional cash-out:** the loan being paid off must be at least 12 months old, measured note date to note date, and a borrower must have been on title for 6 months. - **Conventional rate-and-term:** at least one borrower must be on title when you apply. On either type, a home listed for sale must be off the market by the time the new loan funds. - **FHA Streamline:** 6 payments made, 210 days since closing, the loan current, and very few recent late payments. - **Any refinance of a VA loan:** 6 consecutive monthly payments and 210 days after the first payment due date, whichever is later. ## Documents to gather **Documents most lenders ask for** 1. **Income** — recent pay stubs and W-2s; tax returns if you are self-employed or the lender asks. VA’s cash-out page, for example, lists recent pay stubs, W-2s and, for many lenders, federal tax returns. 2. **Assets** — recent bank and investment statements, especially if you are paying costs in cash. 3. **Your current loan** — the latest mortgage statement, and any second mortgage or HELOC details. 4. **The home** — your homeowners insurance declarations page and, if you have one, HOA contact details. 5. **Identification** — a government ID for each borrower. A non-credit-qualifying FHA Streamline needs far less — no income documentation or debt-to-income calculation — but the lender still checks your payment history. ## Appraisal, and when you can skip it Most refinances need an appraisal, because value sets the LTV. There are exceptions. FHA doesn’t require one on a Streamline. On conventional loans, Fannie Mae’s Desktop Underwriter may offer “value acceptance” on certain limited cash-out and cash-out refinances, in which case no appraisal is required — the system decides, you can’t request it. When there is an appraisal, the lender must give you a copy at least 3 business days before closing. See [appraisal and inspection](https://mortgage-math-us.com/buying/appraisal-and-inspection/), and compare offers with our [refinance closing costs](https://mortgage-math-us.com/refinancing/refinance-closing-costs/) guide. ## Frequently asked questions ### What credit score do I need to refinance? There is no single number. Fannie Mae sets no minimum for loans approved through Desktop Underwriter and 620 for manually underwritten fixed-rate loans; FHA accepts 500 and up, and its non-credit-qualifying Streamline skips the credit check. Most lenders add their own minimums. ### How much equity do I need to refinance? For a conventional rate-and-term refinance, as little as 3% on a one-unit home with a fixed rate (97% LTV), but you will pay PMI above 80%. A cash-out refinance needs you to keep at least 20% (80% LTV) on a conventional loan, and FHA’s limit is 80%. An FHA Streamline has no equity requirement. ### How soon can I refinance after buying? It depends on the loan. A conventional cash-out needs the old loan to be 12 months old; FHA Streamlines and VA refinances need 6 payments and 210 days. Rate-and-term refinances of conventional loans have fewer timing rules, but lenders may set their own. ### Can I refinance with a high debt-to-income ratio? Possibly. Fannie Mae allows up to 50% on Desktop Underwriter approvals, and a refinance that lowers your payment lowers your DTI too. FHA’s non-credit-qualifying Streamline doesn’t calculate DTI at all. ### Do I need an appraisal to refinance? Usually, but not always. FHA Streamlines don’t require one, and Fannie Mae’s Desktop Underwriter may offer value acceptance in place of an appraisal on some conventional refinances. ### Can I refinance if I am behind on my mortgage? It is difficult. An FHA Streamline requires the loan to be current, and lenders generally look for a clean recent payment history on any refinance. If you are struggling, a HUD-approved housing counselor (800-569-4287) can explain your options. ## Sources - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae limited cash-out refinance maximum LTV, one-unit principal residence (fixed rate); Fannie Mae cash-out refinance maximum LTV, one-unit principal residence (Apr 1, 2026) - [Fannie Mae Selling Guide B2-1.3-03](https://selling-guide.fanniemae.com/sel/b2-1.3-03/cash-out-refinance-transactions) — Fannie Mae cash-out: existing first mortgage must be at least; Fannie Mae cash-out: at least one borrower on title for at least (Dec 10, 2025) - [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) — Fannie Mae maximum DTI, Desktop Underwriter loans; Fannie Mae maximum DTI, manually underwritten loans; Fannie Mae maximum DTI, manual underwriting with strong credit and reserves (Apr 2, 2025) - [FDIC Affordable Mortgage Lending Guide (summary of HUD Handbook 4000.1)](https://www.fdic.gov/system/files/2024-07/streamline-refinance.pdf) — FHA Streamline: monthly payments already made; FHA Streamline: days that must pass since the current loan closed (Oct 28, 2026) - [Fannie Mae Selling Guide B3-5.1-01](https://selling-guide.fanniemae.com/sel/b3-5.1-01/general-requirements-credit-scores) — Fannie Mae minimum score, manually underwritten fixed-rate loans (Apr 22, 2026) - [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) — FHA minimum decision credit score (90% LTV cap from 500 to 579); FHA manual underwriting housing ratio (no compensating factors); FHA manual underwriting debt-to-income ratio (no compensating factors) (Oct 8, 2026) - [HUD Mortgagee Letter 2019-11](https://www.hud.gov/sites/dfiles/OCHCO/documents/19-11ml.pdf) — FHA cash-out refinance maximum loan-to-value (Aug 1, 2019) - [38 CFR 36.4306](https://www.ecfr.gov/current/title-38/chapter-I/part-36/subpart-B/section-36.4306) — VA refinance (including cash-out) maximum loan-to-value allowed by VA (Oct 22, 2026) - [38 U.S.C. 3709](https://www.govinfo.gov/link/uscode/38/3709) — VA IRRRL seasoning: consecutive monthly payments made; VA IRRRL seasoning: days after the first payment due date (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-exactly-happens-when-a-mortgage-lender-checks-my-credit-en-2005/) — Mortgage credit checks within this window count as one inquiry (Aug 28, 2026) - [CFPB, Regulation B 1002.14](https://www.consumerfinance.gov/rules-policy/regulations/1002/14) — Lender must give you the appraisal at least this long before closing (or promptly) (Oct 28, 2026) - [HUD](https://www.hud.gov/stat/sfh/housing-counseling) — HUD housing counseling referral line (Oct 28, 2026) - [Fannie Mae Selling Guide B3-5.1-01: Credit scores](https://selling-guide.fanniemae.com/sel/b3-5.1-01/general-requirements-credit-scores) - [Fannie Mae Selling Guide B4-1.4-10: Value acceptance (appraisal waiver)](https://selling-guide.fanniemae.com/sel/b4-1.4-10/value-acceptance-appraisal-waiver) - [FDIC: FHA Streamline Refinance summary](https://www.fdic.gov/system/files/2024-07/streamline-refinance.pdf) - [VA: Cash-out refinance loan](https://www.va.gov/housing-assistance/home-loans/loan-types/cash-out-loan/) _General information, not financial advice._ --- # Refinancing to remove PMI or FHA mortgage insurance > Most conventional borrowers can cancel PMI without refinancing. FHA MIP is different — the rules, and when refinancing FHA to conventional pays off. URL: https://mortgage-math-us.com/refinancing/refinance-to-remove-pmi/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer On a conventional loan you usually don’t need to refinance to drop PMI: you can ask your servicer to cancel it once your balance reaches 80% of the home’s original value, and it ends automatically at 78%. FHA mortgage insurance is different — with a starting loan-to-value above 90%, annual MIP (0.55% a year on a typical 30-year loan with the minimum down payment) lasts for the life of the loan, so refinancing into a conventional loan with at least 20% equity is the usual way out. It pays when the MIP you drop outweighs the closing costs and any rise in your rate. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Request PMI cancellation at (share of original value) | 80% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) | Oct 28, 2026 | | PMI ends automatically at | 78% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) | Oct 28, 2026 | | Fannie Mae current-value cancellation, loan 2–5 years old | 75% | [Fannie Mae Servicing Guide B-8.1-04](https://servicing-guide.fanniemae.com/svc/b-8.1-04/termination-conventional-mortgage-insurance) | May 15, 2019 | | Fannie Mae current-value cancellation, loan over 5 years old | 80% | [Fannie Mae Servicing Guide B-8.1-04](https://servicing-guide.fanniemae.com/svc/b-8.1-04/termination-conventional-mortgage-insurance) | May 15, 2019 | | FHA MIP stops after 11 years only if the starting LTV was at or below | 90% | [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) | Feb 22, 2023 | | FHA annual MIP, 30-year loan, under 5% down | 0.55% | [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) | Feb 22, 2023 | ## Conventional loans: try cancelling PMI first Private mortgage insurance on a conventional loan has an end date built in. Under the federal rules the CFPB describes, you have three routes that cost nothing but a letter: - **Ask at 80%.** You can request cancellation in writing once your balance is scheduled to reach 80% of the original value — or sooner, if extra payments get you there. You need a good payment history, no second mortgage, and possibly an appraisal showing the value hasn’t fallen. - **Automatic at 78%.** If you are current, the servicer must end PMI when the balance is scheduled to hit 78% of original value. - **At the midpoint.** PMI must end the month after the loan reaches the midpoint of its schedule — after 15 years on a 30-year loan — even if the balance is higher. “Original value” is generally the lower of the purchase price and the appraisal when you bought. If your home has risen in value since, there may be a fourth route. Fannie Mae, for example, lets servicers cancel PMI based on current value when the loan is at least 2 years old: at 75% or less of today’s value for loans two to five years old, and 80% or less after five years. You need a clean recent payment record, the servicer orders the valuation, and the request has to come from you. If another investor owns your loan, ask your servicer for its rules. > **Worked example: What a refinance costs next to PMI, on a $300,000 loan** > > | | Amount | > |---|---:| > | PMI at the midpoint of Freddie Mac’s typical range | $150 a month | > | Refinance costs at 3% of the loan | $9,000 | > | Months of PMI those costs would buy | about 60 | > > Freddie Mac puts typical PMI at $30–$70 per $100k a month; your rate depends on your credit and down payment. In other words, refinancing only to drop PMI spends roughly 60 months of premiums up front. It makes sense only when the new loan also brings a better rate, or when you are years away from any of the cancellation routes above. Our [PMI guide](https://mortgage-math-us.com/buying/pmi/) covers the rules in more detail. ## FHA loans: why MIP usually takes a refinance FHA’s annual mortgage insurance premium doesn’t follow the PMI rules. For loans under HUD’s current rules, how long you pay depends on your loan-to-value at the start: *How long FHA annual MIP lasts (HUD Mortgagee Letter 2023-05, terms over 15 years, base loans up to the high-balance threshold)* | Down payment | Annual MIP | How long it lasts | |---|---:|---| | Under 5% | 0.55% | Life of the loan | | 5% to under 10% | 0.5% | Life of the loan | | 10% or more (starting LTV 90% or less) | 0.5% | 11 years | Older FHA loans may follow earlier rules depending on when they were endorsed; your servicer can tell you which apply. Building equity doesn’t end MIP on its own, and an [FHA Streamline](https://mortgage-math-us.com/refinancing/streamline-refinance/) won’t help, because the new loan is FHA-insured too. The way out is a conventional refinance — ideally at 80% of value or less, so the new loan has no PMI at all. ## When refinancing FHA to conventional pays The payoff depends mostly on how your current rate compares with today’s. > **Worked example: $300,000 FHA balance, 26 years left, home now worth $400,000 (75% LTV) — new 25-year conventional loan at 7.24%, no PMI, $9,000 of costs** > > | Current FHA rate | Current P&I + MIP | New P&I | Monthly change | Simple break-even | > |---|---:|---:|---:|---:| > | 8.24% (one point above today’s average) | $2,474 | $2,166 | −$307 | 2 years 6 months | > | 7.24% (equal to today’s average) | $2,275 | $2,166 | −$108 | 7 years | > | 6.24% (one point below today’s average) | $2,083 | $2,166 | +$83 | never — payment rises | > > MIP is approximated at 0.55% a year of the current balance. The new rate is this week’s Freddie Mac average, used for illustration; conventional pricing depends on your credit score. A 25-year term keeps the comparison close to the 26 years you have left. If your FHA rate is above today’s, dropping MIP and the rate together pays back quickly. At today’s rate, the MIP saving alone takes years to cover the costs. If your rate is well below today’s, a refinance trades cheap money for expensive money, and the MIP saving can vanish entirely. In that case, paying down principal or waiting may cost less — and if you started with 10% or more down, MIP ends after 11 years anyway. Compare the months of MIP you have left with the [break-even point](https://mortgage-math-us.com/refinancing/break-even/) of the refinance. > **Tip: Check the appraisal first** > > A conventional refinance with no PMI needs the new loan at or below 80% of the appraised value. If the appraisal comes in low, you could end up with PMI on the new loan — though, unlike FHA MIP, it can later be cancelled. ## Steps to take **How to drop mortgage insurance** 1. **Find your loan type and original value** on your Closing Disclosure or PMI disclosure. 2. **Conventional:** check when your balance reaches 80% of original value and write to your servicer; ask whether current-value cancellation is available. 3. **FHA:** check your starting loan-to-value to see whether MIP ends after 11 years or lasts for the loan’s life. 4. **If refinancing:** estimate your value, get Loan Estimates, and compare the saving with the costs using the [break-even calculator](https://mortgage-math-us.com/tools/refinance-break-even-calculator/). ## Frequently asked questions ### Can I remove PMI without refinancing? Usually, yes. Ask your servicer in writing once your balance reaches 80% of the original value; it ends automatically at 78% if you are current. Some investors, including Fannie Mae, also allow cancellation based on today’s value. ### Can I use my home’s current value to cancel PMI? Sometimes. Fannie Mae allows it on loans at least 2 years old: 75% loan-to-value or less for loans two to five years old, 80% or less after five years, with a clean payment record and a valuation ordered by the servicer. ### Does FHA mortgage insurance ever go away? Under HUD’s current rules, only if your starting loan-to-value was 90% or less, in which case annual MIP ends after 11 years. Otherwise it lasts for the life of the loan, and refinancing into a conventional loan is the usual way to drop it. ### Does an FHA Streamline remove MIP? No. The new loan is still FHA-insured, with upfront and annual MIP. To drop MIP you need a conventional (or other non-FHA) loan. ### How much equity do I need to refinance without PMI? At least 20% on a conventional loan, meaning the new loan is 80% of the appraised value or less. Closing costs rolled into the loan count toward that limit. ### Is it worth refinancing just to get rid of PMI? Rarely on a conventional loan. In our example, $9,000 of refinance costs equals about 60 months of PMI at $150 a month — and cancellation through your servicer is free. It can pay for FHA loans, when MIP would otherwise last for the life of the loan and your rate isn’t far below today’s. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) — Typical refinance closing costs, low end (share of loan principal) (Oct 28, 2026) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA annual MIP, 30-year loan, more than 95% LTV; FHA annual MIP ends after 11 years when the starting LTV is at or below; FHA annual MIP, 30-year loan, 95% LTV or less (Feb 22, 2023) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) — Ask your servicer to cancel PMI at this share of original value; PMI ends automatically at this share of original value; PMI must end the month after the loan reaches the midpoint of its schedule (Oct 28, 2026) - [Fannie Mae Servicing Guide B-8.1-04](https://servicing-guide.fanniemae.com/svc/b-8.1-04/termination-conventional-mortgage-insurance) — Fannie Mae: PMI cancellation on current value needs the loan to be at least; Fannie Mae: PMI cancellation on current value, loan two to five years old, LTV at or below; Fannie Mae: PMI cancellation on current value, loan over five years old, LTV at or below (May 15, 2019) - [CFPB: When can I remove PMI from my loan?](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) - [Fannie Mae Servicing Guide B-8.1-04: Termination of conventional mortgage insurance](https://servicing-guide.fanniemae.com/svc/b-8.1-04/termination-conventional-mortgage-insurance) - [HUD Mortgagee Letter 2023-05: Reduction of FHA annual MIP](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) - [HUD: FHA fact sheet](https://www.hud.gov/hud-partners/housing-fha-fact-sheet) _General information, not financial advice._ --- # Streamline refinances: FHA Streamline and VA IRRRL > FHA Streamline and VA IRRRL side by side: seasoning, cash back, appraisal, fees, the net tangible benefit tests and a worked VA cost-recoupment example. URL: https://mortgage-math-us.com/refinancing/streamline-refinance/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer A streamline refinance replaces an FHA loan with a new FHA loan, or a VA loan with a new VA loan (an Interest Rate Reduction Refinance Loan, or IRRRL), with less documentation than a standard refinance. Both need at least 6 payments and 210 days of seasoning, and both must give you a net tangible benefit. FHA doesn’t require an appraisal and allows no more than $500 cash back; a VA IRRRL from a fixed rate to a fixed rate must cut the rate by at least 0.5% and earn back its costs within 36 months. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | FHA Streamline: payments made on the current loan | 6 | [FDIC Affordable Mortgage Lending Guide (summary of HUD Handbook 4000.1)](https://www.fdic.gov/system/files/2024-07/streamline-refinance.pdf) | Oct 28, 2026 | | FHA Streamline: days since the current loan closed | 210 days | [FDIC Affordable Mortgage Lending Guide (summary of HUD Handbook 4000.1)](https://www.fdic.gov/system/files/2024-07/streamline-refinance.pdf) | Oct 28, 2026 | | FHA Streamline: most cash back | $500 | [HUD: Streamline Refinance](https://hud.gov/hud-partners/single-family-streamline) | Oct 28, 2026 | | VA IRRRL, fixed to fixed: minimum rate cut | 0.5% | [38 U.S.C. 3709](https://www.govinfo.gov/link/uscode/38/3709) | Oct 28, 2026 | | VA IRRRL: costs must be recouped within | 36 months | [38 U.S.C. 3709](https://www.govinfo.gov/link/uscode/38/3709) | Oct 28, 2026 | | VA IRRRL funding fee | 0.5% | [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) | Apr 7, 2023 | ## What makes a refinance “streamline” A streamline refinance stays inside the same program: FHA to FHA, or VA to VA. Because the government already insures or guarantees your loan, the lender can lean on your payment record instead of re-checking everything from scratch. You still pay closing costs, and you still sign a new loan with a new term. **FHA Streamline.** Your existing FHA loan must be current, not delinquent. HUD offers credit-qualifying and non-credit-qualifying versions; in the second, the lender checks your mortgage payment history but doesn’t run a credit check or calculate debt-to-income. No appraisal is required and there is no loan-to-value limit — the new loan is based on the balance of the FHA loan being refinanced, not on today’s value. That makes it one of the few ways to refinance a home that has lost value. **VA IRRRL.** You must already have a VA-backed loan and certify that you live in the home or used to. If there is a second mortgage, its holder must agree to let the new VA loan take first place. Closing costs can be included in the new loan, so you don’t have to pay them up front. ## FHA Streamline vs VA IRRRL *The two streamline programs side by side* | | FHA Streamline | VA IRRRL | |---|---|---| | Loan you must have | FHA-insured, not delinquent | VA-backed | | Seasoning | 6 payments and 210 days since closing | 6 consecutive monthly payments and 210 days after the first payment due date | | Cash back | No more than $500 | Not a cash-out loan — VA has a separate cash-out refinance | | Closing costs | Can’t be added to the loan; pay in cash or through a higher rate | Can be included in the new loan | | Appraisal | Not required | Ask your lender | | Program fee | New upfront MIP of 1.75%, with a credit for part of the old premium if within 3 years | Funding fee of 0.5% | | Rate test | Net tangible benefit; fixed rate to a one-year ARM needs a rate at least 2% lower | Fixed to fixed at least 0.5% lower; fixed to adjustable at least 2% lower; costs recouped within 36 months | Veterans receiving VA disability compensation generally don’t pay the funding fee. On the FHA side, the credit for your old upfront premium only applies when you move into another FHA loan, and none is due after 3 years. ## The net tangible benefit test Both programs exist to lower your cost or risk, not to generate fees, so each has a benefit test. **FHA** requires a tangible benefit through a lower rate, a shorter term or both. The size of the rate cut depends on whether the old and new loans are fixed or adjustable; the full table is in HUD Handbook 4000.1. HUD also cut annual MIP rates for loans endorsed on or after March 20, 2023, and the lower rates apply to most streamline refinances — so an older FHA loan may get a lower premium as well as a lower rate. **VA** sets its tests in law (38 U.S.C. 3709): - A fixed-to-fixed IRRRL must lower the rate by at least 0.5%; fixed to adjustable, by at least 2%. - The lower rate can’t come only from discount points unless you pay the points in cash at closing and the loan stays within VA’s loan-to-value limits for points. - All fees and closing costs — not counting taxes, escrow and the VA funding fee — must be recouped through lower monthly payments within 36 months. ## Worked example: the VA recoupment test > **Worked example: $280,000 VA loan at 7.99% with 28 years left, refinanced into a 30-year IRRRL at 7.24%** > > | Step | Amount | > |---|---:| > | Current principal and interest | $2,089 | > | New loan with the 0.5% funding fee added | $281,400 | > | New principal and interest | $1,918 | > | Monthly saving | $171 | > | Most fees and closing costs recouped within 36 months (saving × 36) | $6,156 | > > The current rate is an example three-quarters of a point above this week’s Freddie Mac 30-year average, which is used as the new rate for illustration; VA quotes can be lower or higher. A three-quarter-point cut passes the 0.5% minimum for a fixed-to-fixed IRRRL. The funding fee doesn’t count toward recoupment, but every other cost does. If the lender’s fees and closing costs come to more than $6,156, this IRRRL can’t be guaranteed — and if you roll those costs into the loan, the saving shrinks and the ceiling falls with it. Ask for a Loan Estimate and divide total costs by the saving yourself, or use our [break-even guide](https://mortgage-math-us.com/refinancing/break-even/). ## Is a streamline right for you? A streamline is usually worth a look when rates have fallen since you borrowed, your payment record is clean and you plan to stay past the break-even point. It is the wrong tool if you want to: - **Take cash out** — see [cash-out refinance](https://mortgage-math-us.com/refinancing/cash-out-refinance/). - **Get rid of FHA mortgage insurance** — a new FHA loan carries MIP too; once you have enough equity, a [conventional refinance](https://mortgage-math-us.com/refinancing/refinance-to-remove-pmi/) is the way out. - **Move soon** — the costs may never come back. See [when not to refinance](https://mortgage-math-us.com/refinancing/when-not-to-refinance/). Lenders can add requirements of their own on top of HUD’s and VA’s, such as a minimum credit score. If one says no, another may not. More on each program: [FHA loans](https://mortgage-math-us.com/loan-types/fha-loans/) and [VA loans](https://mortgage-math-us.com/loan-types/va-loans/). [Open the refinance break even calculator](https://mortgage-math-us.com/tools/refinance-break-even-calculator/) ## Frequently asked questions ### Do I need an appraisal for an FHA Streamline? No. FHA doesn’t require one and sets no loan-to-value limit; the new loan is based on the balance of the FHA loan you are refinancing, and the old loan’s property value is used to set the MIP. ### Can I take cash out with a streamline refinance? Not really. An FHA Streamline allows no more than $500 cash back, and a VA IRRRL is a rate-reduction loan. To borrow against your equity, use an FHA or VA cash-out refinance instead. ### Does an FHA Streamline get rid of mortgage insurance? No. The new loan is still an FHA loan, with upfront MIP of 1.75% (less any credit for your old premium) and annual MIP. To drop MIP, you generally need to refinance into a conventional loan once you have enough equity. ### How soon can I do a VA IRRRL? Once you have made 6 consecutive monthly payments on your current VA loan and 210 days have passed since its first payment due date, whichever comes later. ### Can I do an IRRRL if I no longer live in the home? Yes, if you can certify that you used to live in it. A VA cash-out refinance, by contrast, requires you to live in the home. ### Is there a credit check for a streamline refinance? Not always. FHA’s non-credit-qualifying Streamline skips the credit check but still verifies your mortgage payment history; lenders may set their own credit requirements on either program. ### How much is the VA IRRRL funding fee? 0.5% of the loan amount, which can be included in the new loan. Veterans receiving VA disability compensation are generally exempt. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) — VA funding fee, Interest Rate Reduction Refinance Loan (IRRRL) (Apr 7, 2023) - [38 U.S.C. 3709](https://www.govinfo.gov/link/uscode/38/3709) — VA IRRRL: fees and closing costs must be recouped within; VA IRRRL fixed-to-fixed: new rate at least this much lower; VA IRRRL seasoning: consecutive monthly payments made (Oct 28, 2026) - [FDIC Affordable Mortgage Lending Guide (summary of HUD Handbook 4000.1)](https://www.fdic.gov/system/files/2024-07/streamline-refinance.pdf) — FHA Streamline: monthly payments already made; FHA Streamline: days that must pass since the current loan closed; FHA Streamline fixed-rate to one-year ARM: new rate at least this much lower (Oct 28, 2026) - [HUD: Streamline Refinance](https://hud.gov/hud-partners/single-family-streamline) — FHA Streamline: most cash a borrower can take out (Oct 28, 2026) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA upfront mortgage insurance premium; Lower FHA annual MIP rates apply to loans endorsed on or after (Feb 22, 2023) - [HUD FHA fact sheet](https://www.hud.gov/hud-partners/housing-fha-fact-sheet) — FHA upfront premium is partly refunded on an FHA-to-FHA refinance within (Oct 28, 2026) - [HUD: Streamline refinance](https://hud.gov/hud-partners/single-family-streamline) - [VA: Interest Rate Reduction Refinance Loan](https://www.va.gov/housing-assistance/home-loans/loan-types/interest-rate-reduction-loan/) - [38 U.S.C. 3709: Refinancing of housing loans](https://www.govinfo.gov/link/uscode/38/3709) _General information, not financial advice._ --- # When not to refinance your mortgage > When refinancing loses money: a short stay, restarting a 30-year term, high costs, a prepayment penalty or a loan near payoff — each with worked numbers. URL: https://mortgage-math-us.com/refinancing/when-not-to-refinance/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer Don’t refinance when you are likely to sell or refinance again before the savings repay the costs, which run 3%–6% of the loan. Be wary too when most of the lower payment comes from a longer term, when costs or a prepayment penalty are high, or when the loan is nearly paid off. In the examples below, a $260,000 refinance that cuts the rate by three-quarters of a point still leaves you **$3,949 behind** if you sell after two years. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Typical refinance costs, low end (Freddie Mac) | 3% | [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) | Oct 28, 2026 | | Typical refinance costs, high end (Freddie Mac) | 6% | [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) | Oct 28, 2026 | | A prepayment penalty can’t apply after | 3 years | [12 CFR 1026.43(g)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43) | Oct 28, 2026 | | Largest penalty in the first two years | 2% | [12 CFR 1026.43(g)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43) | Oct 28, 2026 | | Largest penalty in the third year | 1% | [12 CFR 1026.43(g)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43) | Oct 28, 2026 | | 30-year fixed average this week | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | ## Six warning signs at a glance Each example uses costs at the low end of Freddie Mac’s range unless it says otherwise. “Full break-even” is the month you are ahead counting both payments and the balance you still owe. Current rates are examples set above this week’s 7.24% average, which is used as the new rate. *When the numbers say wait* | Warning sign | Example | What happens | |---|---|---| | You may move soon | $260,000 at 7.99% → 7.24%, sold after 2 years | Net position −$3,949 | | The term gets much longer | $160,000 with 15 years left → new 30-year | +$113,310 of lifetime interest | | Costs are high | Same $260,000 loan, costs at 6% | Full break-even after 8 years 9 months | | A prepayment penalty applies | Same loan plus a 2% penalty | Full break-even after 7 years 1 month | | The loan is nearly paid off | $60,000 with 5 years left | Saves $1,717 of interest for $1,800 of costs | | Your credit or home value has slipped | — | A higher rate, or new mortgage insurance | ## 1. You may move or refinance again soon Closing costs are paid on day one; savings arrive a month at a time. Refinancing $260,000 from 7.99% to 7.24% saves $168 a month, but with $7,800 of costs the full break-even takes 4 years 2 months. Sell after two years and you are $3,949 worse off than if you had done nothing. Think about the shortest time you might keep the loan, not the longest — job changes, a growing family and further rate drops all end loans early. The [break-even guide](https://mortgage-math-us.com/refinancing/break-even/) shows how to test several horizons. ## 2. The lower payment comes from a longer term A refinance is a new loan with a new clock. If you have 15 years left on $160,000 at 8.24% and refinance into a new 30-year loan at 7.24%, the payment falls by $461 a month — but you sign up for 15 extra years of payments. > **Worked example: $160,000 balance at 8.24% with 15 years left, $4,800 of costs** > > | | Keep the loan | New 30-year at 7.24% | New 15-year at 6.6% | > |---|---:|---:|---:| > | Monthly principal and interest | $1,551 | $1,090 | $1,403 | > | Interest from here to payoff | $119,233 | $232,543 | $92,465 | > | Net position after 15 years | — | −$41,360 | +$21,968 | The 30-year loan never catches up on the full measure within the 15 years you had left. Matching the term keeps most of the rate benefit. If you need a lower payment for a while, the longer loan can still be a deliberate choice — just compare it honestly, and consider [extra payments](https://mortgage-math-us.com/tools/extra-payment-calculator/) to pull the payoff date back. ## 3. The costs are high Freddie Mac puts refinance costs at 3%–6% of the loan. At the top of that range, the same $260,000 refinance costs $15,600, and the full break-even moves out to 8 years 9 months; after seven years you would still be $2,732 behind. Get several Loan Estimates, question any points you didn’t ask for, and see [refinance closing costs](https://mortgage-math-us.com/refinancing/refinance-closing-costs/) for what can be negotiated. ## 4. Your loan has a prepayment penalty Federal rules keep prepayment penalties narrow. Under the ability-to-repay rule, one is allowed only on a qualified mortgage whose rate can’t rise and that isn’t a higher-priced loan; it can’t apply after 3 years, and it is capped at 2% of the balance prepaid in the first two years and 1% in the third. The lender also had to offer you a version without one. Your Closing Disclosure’s loan terms table says whether your loan has a penalty. If it does, add it to the costs: a 2% penalty on $260,000 is $5,200, which pushes the full break-even from 4 years 2 months to 7 years 1 month. Waiting until the penalty period ends is often the cheaper move. ## 5. The loan is nearly paid off Late in a loan, most of each payment is principal, so a lower rate has little interest left to save. With $60,000 left and five years to go, the remaining interest at 8.24% is $13,409. Even with a five-year loan, if a lender offered one, at a rate one point lower, you would save only $1,717 — less than $1,800 of costs. Stretch it into a new 10-year loan instead and the payment drops by $519 a month, but total interest rises to $24,491. Extra payments usually beat a refinance at this stage. ## 6. Your credit or your home’s value has slipped Rates are priced on your credit score and loan-to-value ratio. If your score has fallen or prices in your area have dropped, the rate you are offered may not beat what you have, and a conventional loan above 80% of value brings back PMI. FHA and VA borrowers can sometimes sidestep this with a [streamline refinance](https://mortgage-math-us.com/refinancing/streamline-refinance/), which doesn’t depend on a new appraisal for FHA. > **Tip: When refinancing can still make sense** > > A refinance that barely breaks even can still be worth it for a reason other than money saved — moving from an adjustable rate to a fixed one before a reset, or removing a co-borrower after a divorce. Know what you are paying for that certainty. ## Frequently asked questions ### Is it worth refinancing if I plan to move in two years? Usually not. In the example above, a three-quarter-point rate cut on $260,000 takes 4 years 2 months to break even and leaves you $3,949 behind after two years. ### Does refinancing into a new 30-year loan cost more? Often, yes, if you already have years paid off. Refinancing $160,000 with 15 years left into a new 30-year loan cuts the payment but adds $113,310 of lifetime interest in our example. Matching the term avoids that. ### How do I know if my mortgage has a prepayment penalty? Check the loan terms table on your Closing Disclosure or your promissory note. Where allowed, a penalty can’t apply after 3 years and is capped at 2% of the amount prepaid in the first two years and 1% in the third. ### Should I refinance if I only have a few years left? Rarely. There is little interest left to save, so closing costs eat most or all of the benefit. Extra principal payments usually do more. ### Is it bad to refinance more than once? Not in itself, but each refinance has its own closing costs and its own break-even point. Refinancing again before the first one has paid off locks in a loss. ### Can I refinance if my home value dropped? A conventional refinance depends on the appraised value, so a lower value can mean PMI or a higher rate. An FHA Streamline doesn’t require an appraisal, which helps FHA borrowers whose homes have lost value. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average; 15-year fixed rate, national weekly average (Week of Oct 29, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) — Typical refinance closing costs, low end (share of loan principal); Typical refinance closing costs, high end (share of loan principal) (Oct 28, 2026) - [12 CFR 1026.43(g)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43) — Maximum prepayment penalty in the first two years (share of balance prepaid); Prepayment penalty may not apply after this many years (qualified mortgages); Maximum prepayment penalty in the third year (share of balance prepaid) (Oct 28, 2026) - [12 CFR 1026.43(g): Prepayment penalties](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43) - [Freddie Mac My Home: Costs of refinancing](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) - [CFPB: How should I use lender credits and points?](https://www.consumerfinance.gov/ask-cfpb/how-should-i-use-lender-credits-and-points-also-called-discount-points-en-136/) _General information, not financial advice._ --- # Home affordability calculator > How much house can you afford? See the home price your income supports at four debt-to-income limits, with taxes, insurance, PMI and today’s rate. URL: https://mortgage-math-us.com/tools/affordability-calculator/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer A comfortable budget keeps the full housing payment under 30% of gross income and all debts under 45%, as Freddie Mac suggests. On $100,000 a year with $500 of other monthly debts, 10% down and the 7.24% average rate, that points to a home of about **$323,000**; lenders’ limits could stretch it to $474,000. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Freddie Mac housing guideline | 30% | [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) | Jan 22, 2026 | | Freddie Mac total-debt guideline | 45% | [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) | Jan 22, 2026 | | Fannie Mae manual underwriting DTI | 36% | [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) | Apr 2, 2025 | | Fannie Mae automated maximum DTI | 50% | [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) | Apr 2, 2025 | | Default rate (30-year average) | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | US median household income | $81,604/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) | 2024 ACS 1-year | ## How the calculator works Lenders size your loan from **gross monthly income** — pay before taxes — and two ratios. The *housing ratio* compares the full monthly housing payment with income; the *debt-to-income ratio* (DTI) adds every other monthly debt payment that shows on your credit report or application: car loans, student loans, minimum card payments, child support. The calculator works backwards from those ratios. For each limit it finds the monthly housing budget, then the highest price whose full payment fits inside it: **How the price is found** 1. **Monthly income** — Annual income ÷ 12. 2. **Housing budget** — The ratio limit × monthly income, minus your other debts when the limit is a total-debt (DTI) cap. The comfortable scenario uses whichever of its two limits is lower. 3. **Full payment per dollar of price** — Principal and interest on the loan, plus property tax, homeowners insurance and PMI (when you put less than 20% down), each expressed per dollar of home price. 4. **Price** — Budget ÷ payment per dollar, after subtracting any HOA dues. ## The four scenarios | Scenario | Limit | Where it comes from | |---|---|---| | Comfortable | Housing ≤ 30%, all debts ≤ 45% | Freddie Mac’s consumer guidance | | Lender, standard | All debts ≤ 36% | Fannie Mae’s manual-underwriting limit | | Lender, strong file | All debts ≤ 45% | Fannie Mae’s manual limit with strong credit and reserves | | Lender maximum | All debts ≤ 50% | Fannie Mae’s automated Desktop Underwriter limit | The lender maximum is what a lender *may* approve, not a target. The higher your DTI, the less room you have for savings, repairs and the costs a lender doesn’t count, such as childcare and commuting. FHA loans use their own benchmarks — 31% for housing and 43% for total debt when a loan is underwritten manually without compensating factors. ## Worked example: $100,000 income > **Worked example: $100,000 a year, $500 a month of other debts, 10% down, 30-year fixed at 7.24%** > > | Scenario | Monthly housing budget | Home price | > |---|---:|---:| > | Comfortable | $2,500 | $323,000 | > | Lender, standard | $2,500 | $323,000 | > | Lender, strong file | $3,250 | $420,000 | > | Lender maximum | $3,667 | $474,000 | > > Taxes at the national ratio of 0.89% a year, insurance at $4.90 per $1,000 of value and PMI at the midpoint of Freddie Mac’s range. Debts matter more than most buyers expect. Without the $500 of other payments, the comfortable price rises to $323,000. Rate matters too: one percentage point lower, at the same debts, supports $350,000. ## What the result does not include - **Cash to close.** You also need the down payment plus closing costs — typically 2% to 5% of the price, according to the CFPB — and a cushion afterwards. The [closing cost estimator](https://mortgage-math-us.com/tools/closing-cost-calculator/) breaks those down by state. - **Your real tax bill and insurance quote.** Pick your state for its average tax ratio, then replace the defaults with the listing’s tax history and an insurance quote. - **Lender overlays.** Lenders can set stricter limits than Fannie Mae, Freddie Mac or FHA, especially with lower credit scores. > **Tip: Use take-home pay as a reality check** > > Lenders work from gross income, but you live on take-home pay. If the comfortable payment would leave less than you need for savings and everyday costs, aim lower. ## Ways to afford more without stretching Paying off a small debt before you apply raises every scenario, because DTI counts the payment, not the balance. A larger down payment cuts the loan and can remove PMI at 20%. Comparing Loan Estimates from several lenders on the same day can lower your rate. Down-payment assistance from your state’s housing finance agency can cover part of the cash you need — see the [first-time buyer guides](https://mortgage-math-us.com/first-time-buyers/). ## Frequently asked questions ### How much house can I afford on my salary? Divide your annual pay by 12, take 30% of that as a comfortable housing payment (minus nothing else) and keep all debts under 45%. The calculator converts that budget into a price at today’s rate, with taxes, insurance and PMI included. ### What debt-to-income ratio do lenders allow? Fannie Mae accepts up to 50% through its automated underwriting system and 36% on manually underwritten loans, rising to 45% with strong credit and reserves. FHA’s manual benchmarks are 31% for housing and 43% for total debt. ### Does the calculator use gross or net income? Gross income — pay before taxes and deductions — because that is what lenders use. Check the result against your take-home pay before you commit. ### Which debts count in debt-to-income? Monthly payments on loans and credit lines that appear on your credit report or application, such as car, student and personal loans, credit card minimums and court-ordered support. Rent you will stop paying, utilities and groceries do not count. ### Why is my pre-approval different from the calculator? Lenders verify income, use your actual credit score and price, and may apply their own limits. Property taxes and insurance for a specific home also differ from state averages. ### How does a lower rate change what I can afford? At the same budget, a lower rate shrinks the principal-and-interest part of each payment, so more of the budget can go to price. In the example above, one percentage point lower raises the comfortable price from $323,000 to $350,000. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income; Freddie Mac guidance: total debt payments below this share of gross income (Jan 22, 2026) - [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) — Fannie Mae maximum DTI, manually underwritten loans; Fannie Mae maximum DTI, manual underwriting with strong credit and reserves; Fannie Mae maximum DTI, Desktop Underwriter loans (Apr 2, 2025) - [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) — FHA manual underwriting housing ratio (no compensating factors); FHA manual underwriting debt-to-income ratio (no compensating factors) (Oct 8, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [Freddie Mac My Home: How much can you afford?](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) - [Fannie Mae Selling Guide B3-6-02: Debt-to-Income Ratios](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) _General information, not financial advice._ --- # Closing cost estimator by state > Estimate closing costs by state: transfer and mortgage taxes, prepaid interest, insurance and escrow, plus the lender fees from your Loan Estimate. URL: https://mortgage-math-us.com/tools/closing-cost-calculator/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer The CFPB puts typical closing costs at 2% to 5% of the purchase price — $8,000 to $20,000 on a $400,000 home. The biggest state-to-state difference is the real estate transfer tax: on a $400,000 sale it is $4,400 in Washington, $4,000 in Pennsylvania and nothing at state level in Texas. Who pays it depends on state law and your contract. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Typical closing costs, low end (CFPB) | 2% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | | Typical closing costs, high end (CFPB) | 5% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | | Largest escrow cushion a lender may require | 2 months | [CFPB, Regulation X 1024.17](https://www.consumerfinance.gov/rules-policy/regulations/1024/17/) | Oct 28, 2026 | | Loan Estimate arrives within | 3 business days | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-loan-estimate-en-1995/) | Oct 28, 2026 | | Closing Disclosure arrives before closing | 3 business days | [CFPB](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) | Oct 28, 2026 | | Cap on increases for recording fees and listed services | 10% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-my-final-mortgage-costs-increase-from-what-was-on-my-loan-estimate-en-172/) | Sep 11, 2024 | ## What the estimate includes | Item | How it is estimated | |---|---| | State transfer tax | Your state’s statewide rate or bracket schedule, times the price, times your share | | State mortgage tax | Applies in a handful of states (for example Florida, Georgia, Minnesota, New York, Tennessee and Virginia) | | Texas title policy | The owner’s policy premium from the Texas Department of Insurance’s promulgated rates | | Prepaid interest | Daily interest from closing to the end of the month | | First-year insurance | Price × Freddie Mac’s average premium per $1,000 of value | | Escrow cushion | Up to 2 months of property tax and insurance — the most Regulation X lets a lender hold back | | Lender and third-party fees | What you enter from sections A, B and C of your Loan Estimate | Local add-ons — county and city transfer taxes, such as New York City’s, and recording fees — are not included because they depend on the exact address. The state note under the result names the ones the source mentions. ## Transfer taxes on a $400,000 home *Statewide transfer tax on a $400,000 sale (before local taxes), from each state’s published rate* | State | Statewide tax | Rate | |---|---:|---:| | Washington | $4,400 | 1.1% base | | New York | $1,600 | 0.4% base | | Pennsylvania | $4,000 | 1% base | | Florida | $2,800 | 0.7% base | | New Jersey | $3,215 | 0.4% base | | Illinois | $400 | 0.1% base | | Texas | $0 | 0% base | | California | $0 | 0% base | Graduated states (Washington, New Jersey, Connecticut and others) charge more on higher prices, and New York adds a buyer-paid 1% tax at $1,000,000 and above. States with no statewide transfer tax on file: Alaska, Arizona, California, Idaho, Indiana, Kansas, Louisiana, Mississippi, Missouri, Montana, New Mexico, North Dakota, Oregon, Texas, Utah, Wyoming. ## Who pays the transfer tax? State law sets who is liable, but the purchase contract can shift it. Michigan, North Carolina and Wisconsin law put the tax on the seller, and Washington’s Department of Revenue says the seller usually pays; Vermont’s falls on the buyer; Maine and New Hampshire charge both sides, and Delaware’s is typically split. Where the source doesn’t say, the calculator assumes a 50/50 split — change it to match your contract. ## Read your Loan Estimate alongside Your lender must send a Loan Estimate within 3 business days of your application and a Closing Disclosure at least 3 business days before closing. Some fees can’t increase between the two; recording fees and services from the lender’s list can rise by no more than 10% in total; prepaid interest, insurance and escrow can change. Comparing the two pages line by line is the best way to catch errors — see [Loan Estimate and Closing Disclosure](https://mortgage-math-us.com/buying/loan-estimate/). > **Tip: Ways to lower closing costs** > > Shop for the services your lender lets you choose, compare Loan Estimates from several lenders on the same day, ask the seller for a credit in the purchase contract, and look for state down-payment and closing-cost assistance through your [state housing finance agency](https://mortgage-math-us.com/first-time-buyers/programs/). ## Frequently asked questions ### How much are closing costs? Typically 2% to 5% of the purchase price according to the CFPB, on top of the down payment. State transfer and mortgage taxes, title insurance, prepaid interest and escrow deposits explain most of the difference between places. ### Which states have no real estate transfer tax? At state level: Alaska, Arizona, California, Idaho, Indiana, Kansas, Louisiana, Mississippi, Missouri, Montana, New Mexico, North Dakota, Oregon, Texas, Utah, Wyoming. Some still allow county or city taxes or small fees. ### Does the buyer or the seller pay transfer tax? It depends on state law and the contract. Some states name the seller, some the buyer and some split it; the calculator sets each state’s default and lets you change it. ### What is an escrow cushion? A reserve your servicer can collect at closing so the escrow account doesn’t run short. Regulation X caps it at one-sixth of a year’s escrow payments — 2 months. ### Can closing costs change after the Loan Estimate? Some can’t increase at all, recording fees and lender-listed services can rise by up to 10% in total, and prepaid items can change. Compare your Closing Disclosure with the Loan Estimate. ### Can closing costs be rolled into the mortgage? On a purchase, usually not directly, but a seller credit or a lender credit (in exchange for a higher rate) can cover part of them. On a refinance, costs are often added to the new loan. ## Sources - [National Association of Realtors](https://narfocus.com/publication-issue/view/2023-07-05-state-and-local-issues-real-estate-transfer-tax) — State real estate transfer tax (Jul 5, 2023) - [Montana Constitution, Art. VIII §17](https://mca.legmt.gov/bills/mca/title_0000/article_0080/part_0010/section_0170/0000-0080-0010-0170.html) — State real estate transfer tax (Oct 28, 2026) - [Minnesota Department of Revenue](https://www.revenue.state.mn.us/deed-tax-rate) — State real estate transfer tax (Oct 28, 2026) - [Illinois Department of Revenue](https://tax.illinois.gov/research/taxrates/other.html) — State real estate transfer tax (Oct 28, 2026) - [Massachusetts Department of Revenue](https://www.mass.gov/info-details/massachusetts-tax-rates) — State real estate transfer tax (Dec 30, 2025) - [ORS 306.815](https://www.oregonlegislature.gov/bills_laws/ors/ors306.html) — State real estate transfer tax (Oct 28, 2026) - [Nevada Department of Taxation](https://tax.nv.gov/tax-types/real-property-transfer-tax/) — State real estate transfer tax (Oct 28, 2026) - [SDCL 43-4-21](https://sdlegislature.gov/api/Statutes/43-4-21.html?all=true) — State real estate transfer tax (Oct 28, 2026) - [Iowa Department of Revenue](https://revenue.iowa.gov/taxes/tax-guidance/general/iowa-taxfee-descriptions-and-rates) — State real estate transfer tax (Oct 5, 2026) - [California Revenue and Taxation Code §11911](https://law.justia.com/codes/california/2009/rtc/11911-11913.html/) — State real estate transfer tax (Oct 28, 2026) - [C.R.S. 39-13-102](https://colorado.public.law/statutes/crs_39-13-102) — State real estate transfer tax (Oct 28, 2026) - [Maryland Tax-Property Article §13-203](https://mgaleg.maryland.gov/2026RS/Statute_Web/gtp/13-203.pdf) — State real estate transfer tax (Jan 21, 2026) - [Arizona Constitution, Art. IX §24](https://www.azleg.gov/viewDocument/?docName=http://www.azleg.gov/const/9/24.htm) — State real estate transfer tax (Oct 28, 2026) - [Arkansas Department of Finance and Administration](https://www.dfa.arkansas.gov/office/taxes/excise-tax-administration/miscellaneous-tax/arkansas-miscellaneous-tax-laws/real-property-transfer/) — State real estate transfer tax (Oct 8, 2026) - [Tennessee Department of Revenue](https://www.tn.gov/revenue/taxes/local-taxes/recordation-taxes/due-date-tax-rate.html) — State real estate transfer tax (May 6, 2024) - [South Carolina Department of Revenue](https://dor.sc.gov/tax-index/deed-recording-fee) — State real estate transfer tax (Oct 28, 2026) - [68 O.S. §1904](https://law.justia.com/codes/oklahoma/title-68/section-68-1904/) — State real estate transfer tax (Nov 1, 2025) - [Alabama Department of Revenue](https://www.revenue.alabama.gov/tax-types/recordation-tax/) — State real estate transfer tax (Aug 14, 2023) - [Texas Constitution, Art. VIII §29](https://capitol.texas.gov/tlodocs/84R/amendments/html/SJ00001H21.HTM) — State real estate transfer tax (Jan 1, 2016) - [Florida Department of Revenue](https://floridarevenue.com/Forms_library/current/gt800014.pdf) — State real estate transfer tax (Dec 1, 2017) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [Maine Revenue Services](https://www.maine.gov/revenue/taxes/property-tax/transfer-tax) — State real estate transfer tax (Oct 28, 2026) - [Wis. Stat. 77.22](https://docs.legis.wisconsin.gov/statutes/statutes/77/ii/22?view=section) — State real estate transfer tax (May 17, 2024) - [Vermont Department of Taxes](https://tax.vermont.gov/property/property-transfer-tax) — State real estate transfer tax (Oct 28, 2026) - [New Hampshire Department of Revenue Administration](https://www.revenue.nh.gov/taxes-glance/real-estate-transfer-tax) — State real estate transfer tax (Oct 28, 2026) - [Washington Department of Revenue](https://dor.wa.gov/taxes-rates/other-taxes/real-estate-excise-tax) — State real estate transfer tax (Oct 28, 2026) - [Michigan Department of Treasury](https://www.michigan.gov/taxes/business-taxes/misc/state-real-estate-transfer-tax-srett) — State real estate transfer tax (Oct 28, 2026) - [New York Department of Taxation and Finance](https://www.tax.ny.gov/bus/transfer/rptidx.htm) — State real estate transfer tax (Jun 1, 2026) - [Ohio Revised Code 322.02](https://codes.ohio.gov/ohio-revised-code/section-322.02) — State real estate transfer tax (Apr 9, 2025) - [Pennsylvania Department of Revenue](https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/realty-transfer-tax) — State real estate transfer tax (Oct 28, 2026) - [New Jersey Division of Taxation](https://www.nj.gov/treasury/taxation/lpt/rtffaqs.shtml) — State real estate transfer tax (Oct 28, 2026) - [Connecticut Department of Revenue Services](https://portal.ct.gov/DRS/Legislative-Summaries/2019-Legislative-Updates/Real-Estate-Conveyance-Tax-Change) — State real estate transfer tax (Jul 9, 2020) - [Rhode Island Division of Taxation](https://tax.ri.gov/sites/g/files/xkgbur541/files/2025-08/NOTICE_2025-05_Conveyance_Tax_Increase.pdf) — State real estate transfer tax (Aug 21, 2025) - [Nebraska Department of Revenue](https://revenue.nebraska.gov/PAD/documentary-stamp-tax/documentary-stamp-tax-rate-history) — State real estate transfer tax (Jul 18, 2026) - [KRS 142.050](https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=43160) — State real estate transfer tax (Jul 15, 2014) - [W. Va. Code 11-22-2](https://code.wvlegislature.gov/pdf/11-22-2/) — State real estate transfer tax (Oct 28, 2026) - [Code of Virginia, Title 58.1, Chapter 8](https://law.lis.virginia.gov/vacodefull/title58.1/chapter8/) — State real estate transfer tax (Oct 28, 2026) - [Delaware Division of Revenue](https://revenue.delaware.gov/first-time-home-buyer-tax-credit/) — State real estate transfer tax (Apr 16, 2024) - [N.C. Gen. Stat. 105-228.30](https://ncleg.gov/EnactedLegislation/Statutes/HTML/ByArticle/Chapter_105/Article_8E.html) — State real estate transfer tax (Oct 28, 2026) - [DC Office of the Chief Financial Officer](https://cfo.dc.gov/page/tax-rates-and-revenues-property-taxes) — District real estate transfer tax (Oct 28, 2026) - [Georgia Department of Revenue](https://dor.georgia.gov/real-estate-transfer-tax) — State real estate transfer tax (Oct 28, 2026) - [Hawaii Department of Taxation, Form P-64A instructions](https://files.hawaii.gov/tax/forms/current/p64ains.pdf) — State real estate transfer tax (Rev. 2025) - [CFPB, Regulation X 1024.17](https://www.consumerfinance.gov/rules-policy/regulations/1024/17/) — Most an escrow account may hold as a cushion (one-sixth of annual escrow payments) (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-loan-estimate-en-1995/) — Lender must send the Loan Estimate within this many business days of your application (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) — You receive the Closing Disclosure at least this many business days before closing (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-my-final-mortgage-costs-increase-from-what-was-on-my-loan-estimate-en-172/) — Cumulative limit on increases for recording fees and lender-listed services (Sep 11, 2024) - [CFPB: Closing costs and the Loan Estimate](https://www.consumerfinance.gov/owning-a-home/loan-estimate/) - [Texas Department of Insurance: 2026 title insurance rates](https://www.tdi.texas.gov/title/titlerates2026.html) - [CFPB Regulation X §1024.17: Escrow accounts](https://www.consumerfinance.gov/rules-policy/regulations/1024/17/) _General information, not financial advice._ --- # Extra payment and amortization calculator > See how extra principal payments cut your mortgage interest and payoff date, with a full amortization schedule and a balance chart that updates live. URL: https://mortgage-math-us.com/tools/extra-payment-calculator/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer Extra principal lowers the balance immediately, so less interest accrues every month after. On a $325,000 30-year loan at 7.24%, paying $200 extra each month saves about **$126,421 in interest** and pays the loan off **6 yr 10 mo early**. Tell your servicer to apply the extra to principal. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | 30-year fixed average (default rate) | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | 15-year fixed average | 6.6% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | PMI ends automatically at | 78% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) | Oct 28, 2026 | | You can ask to cancel PMI at | 80% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) | Oct 28, 2026 | | Longest Qualified Mortgage term | 30 years | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-qualified-mortgage-en-1789/) | Jan 7, 2025 | ## How amortization works Each monthly payment on a fixed-rate loan is the same, but its make-up changes. Interest is charged on the balance still owed, so early payments are mostly interest and later ones mostly principal. In the first year of a $325,000 loan at 7.24%, $23,427 of the $26,578 you pay goes to interest and only $3,152 to principal. An extra payment skips the interest entirely: it lowers the balance the next month’s interest is calculated on. That is why a modest amount early in the loan saves far more than the same amount near the end. ## What different extra payments save *$325,000 loan, 30-year fixed at the 7.24% average — interest saved and time cut versus the regular schedule* | Extra principal | Interest saved | Paid off sooner | |---|---:|---:| | $100 a month | $74,741 | 3 yr 11 mo | | $200 a month | $126,421 | 6 yr 10 mo | | $500 a month | $219,166 | 12 yr 3 mo | | One extra payment a year | $114,954 | 6 yr 2 mo | “One extra payment a year” has the same effect as paying half the monthly amount every two weeks (26 half-payments make 13 full ones), without needing a biweekly plan. ## Before you prepay **Check these first** 1. **Emergency savings** — Money in the house is hard to get back out quickly. Keep a cash cushion first. 2. **Higher-rate debt** — Paying off a credit card at a higher rate saves more than prepaying the mortgage. 3. **Retirement matches** — An employer match on retirement contributions is usually worth more than mortgage interest saved. 4. **Prepayment penalties** — Some lenders charge a fee if you pay off all or part of the loan early, usually within the first few years. Check your loan documents or ask your servicer. 5. **How the servicer applies it** — Ask for extra money to go to principal, not to next month’s payment, and check your statement. > **Tip: Extra payments can end PMI sooner** > > On a conventional loan you can ask to cancel PMI once your balance reaches 80% of the original value, and it ends automatically at 78%. Prepaying reaches those points earlier. ## Extra payments vs a shorter loan A 15-year loan forces the faster payoff and usually carries a lower rate — 6.6% versus 7.24% in Freddie Mac’s latest survey — but the higher required payment leaves no flexibility in a tight month. Prepaying a 30-year loan gets part of the benefit while keeping the lower required payment. The [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/) compares the two terms side by side. ## Frequently asked questions ### How much do extra mortgage payments save? It depends on the balance, rate and how early you start. On a $325,000 30-year loan at the current average, $200 a month extra saves about $126,421 in interest. ### Is it better to pay extra monthly or once a year? Monthly extra saves slightly more because each payment starts reducing interest sooner, but the difference is small. Choose the pattern you can keep up. ### Do biweekly payments pay off a mortgage faster? Yes, because 26 half-payments equal 13 full payments a year — one extra payment. You can get the same result by adding one-twelfth of a payment each month. ### Does paying extra lower my monthly payment? No. On most fixed-rate loans the required payment stays the same and the loan ends earlier. Some servicers offer a recast that re-spreads a large lump sum over the remaining term; ask yours about its terms. ### Should I pay off my mortgage early or invest? Prepaying earns a guaranteed return equal to your mortgage rate. Investing may earn more or less. Many people first build savings and capture any employer retirement match. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average; 15-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) — Ask your servicer to cancel PMI at this share of original value; PMI ends automatically at this share of original value (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-qualified-mortgage-en-1789/) — Longest term allowed on a Qualified Mortgage (Jan 7, 2025) - [CFPB: What is a prepayment penalty?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-prepayment-penalty-en-1957/) _General information, not financial advice._ --- # HELOC payment calculator > Estimate HELOC payments: interest-only during the draw period, the jump when repayment starts, how much you can borrow and what a rate rise would cost. URL: https://mortgage-math-us.com/tools/heloc-payment-calculator/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer During the draw period many HELOCs only require interest: balance × rate ÷ 12. Borrowing $50,000 at 8.00% (prime of 7% plus an example 1-point margin) costs about **$333 a month** while you draw, rising to about **$418** when a 20-year repayment period starts. HELOC rates usually move with an index, so payments can change. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Prime rate (common HELOC index) | 7% | [Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/) | Oct 28, 2026 | | Example draw period (CFPB) | 10 years | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) | Aug 28, 2026 | | Repayment period, often up to (CFPB) | 20 years | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) | Aug 28, 2026 | | Right to cancel a HELOC on your main home | 3 business days | [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) | Aug 8, 2024 | | Texas limit on home equity borrowing | 80% | [Texas Constitution, Art. XVI §50(a)(6)](https://capitol.texas.gov/tlodocs/85R/billtext/pdf/SJ00060E.pdf) | Nov 7, 2017 | | Mortgage debt with deductible interest | $750,000 | [IRS Publication 936](https://www.irs.gov/pub/irs-pdf/p936.pdf) | Tax year 2025 | ## How HELOC payments work A HELOC is a revolving line secured by your home. You borrow what you need during the **draw period** — the CFPB uses 10 years as an example — and repay afterwards, often over ten or 20 years. Most HELOCs have variable rates set as an index plus a margin; common indexes include the US prime rate, currently 7%. **The two phases** 1. **Draw period** — Many plans require only interest on what you’ve borrowed. Payment = balance × annual rate ÷ 12. Paying down principal is optional but lowers later payments. 2. **Repayment period** — You can no longer draw, and the balance is repaid with interest over the remaining years, like an ordinary loan. Some plans instead require a single balloon payment at the end of the draw. ## Worked example > **Worked example: $400,000 home, $200,000 mortgage, 80% lender limit, borrowing $50,000 at 8.00%** > > | | Monthly payment | > |---|---:| > | Draw period (interest only) | $333 | > | Repayment period (20 years) | $418 | > | Draw period if rates rise 2 points | $417 | > | Repayment if rates rise 2 points | $483 | > > Credit available at an 80% combined limit: $120,000. Borrowing $75,000 instead raises the repayment to $627. ## How much can you borrow? Lenders cap the **combined loan-to-value** — your mortgage plus the line, as a share of the home’s value. Each lender sets its own cap; in Texas, the state constitution limits home equity borrowing on a homestead to 80%. Available credit = home value × limit − mortgage balance. Your credit score, income and debts also affect the line you’re offered. > **Watch out: A lender can freeze or cut the line** > > Federal rules let a lender stop further draws or lower the limit if your home’s value falls significantly below its appraised value, or if your finances change materially. Don’t count on unused credit as an emergency fund. ## Before you sign - **Compare the margin and caps**, not just the starting rate. Ask whether there is a lifetime rate cap and whether you can lock part of the balance at a fixed rate. - **Ask about fees**: appraisal, annual fees, inactivity fees and early-closure fees vary. - **You have 3 business days to cancel** a HELOC on your principal home after opening it. - **Interest may not be deductible.** IRS rules allow it only when the money buys, builds or substantially improves the home that secures the loan — see [home equity interest and taxes](https://mortgage-math-us.com/home-equity/home-equity-interest-deduction/). Compare with a [cash-out refinance](https://mortgage-math-us.com/home-equity/cash-out-vs-heloc/) if you need a large lump sum and today’s mortgage rate is close to your current one. ## Frequently asked questions ### How is a HELOC payment calculated? During an interest-only draw period, multiply the balance by the annual rate and divide by 12. In repayment, the balance is amortized over the remaining term like a regular loan, so the payment includes principal. ### What happens when the HELOC draw period ends? You can no longer borrow, and payments switch to principal plus interest — or, on some plans, a balloon payment is due. In the example above the payment rises from $333 to $418 a month. ### What rate do HELOCs use? Usually a variable rate: an index such as the prime rate (7%) plus a margin set by the lender. When the index rises, so does your payment. ### How much equity can I borrow with a HELOC? Lenders limit your combined mortgage and line to a percentage of the home’s value. Multiply the value by that limit and subtract your mortgage balance to estimate the maximum line. ### Can a lender freeze my HELOC? Yes. Federal rules let lenders suspend draws or reduce the limit if the home’s value declines significantly, among other reasons. ### Is HELOC interest tax-deductible? Only if the money is used to buy, build or substantially improve the home that secures it, and within the IRS limit on mortgage debt ($750,000 for loans after December 15, 2017). ## Sources - [Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/) — Bank prime loan rate (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) — Example HELOC draw period (CFPB); HELOC repayment period, often up to (CFPB) (Aug 28, 2026) - [Texas Constitution, Art. XVI §50(a)(6)](https://capitol.texas.gov/tlodocs/85R/billtext/pdf/SJ00060E.pdf) — Maximum combined loan-to-value for Texas home equity loans (Nov 7, 2017) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) — Right to cancel a refinance or home equity loan on your principal home (Aug 8, 2024) - [IRS Publication 936](https://www.irs.gov/pub/irs-pdf/p936.pdf) — Mortgage debt on which interest is deductible (loans after Dec 15, 2017) (Tax year 2025) - [CFPB: What is a home equity line of credit (HELOC)?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) - [CFPB: What you should know about HELOCs (brochure)](https://files.consumerfinance.gov/f/documents/cfpb_heloc-brochure_print.pdf) - [12 CFR 1026.40: Requirements for home equity plans](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.40) _General information, not financial advice._ --- # Mortgage payment calculator > Free mortgage calculator: monthly payment with principal, interest, property tax, insurance, PMI and HOA, plus a live amortization chart and schedule. URL: https://mortgage-math-us.com/tools/mortgage-payment-calculator/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer Your monthly mortgage payment is principal and interest from the loan formula, plus one-twelfth of the yearly property tax and homeowners insurance, plus PMI if you put less than 20% down on a conventional loan, plus any HOA dues. A $400,000 home with 20% down at 7.24% for 30 years costs about **$2,641 a month** at national-average taxes and insurance. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | 30-year fixed average (default rate) | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | 15-year fixed average | 6.6% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | US property tax ratio (default) | 0.89% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) | 2024 ACS 1-year | | Insurance per $1,000 of value (default) | $4.90 per $1,000 | [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) | 2023 data | | PMI ends automatically at | 78% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) | Oct 28, 2026 | ## How the monthly payment is calculated The loan part of the payment uses the standard amortization formula. With **P** the loan amount, **r** the monthly rate (the annual rate ÷ 12) and **n** the number of monthly payments: M = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1) At a 7.24% annual rate, r = 0.006033, and a 30-year loan has n = 360 payments. The calculator then adds the costs that usually travel with the mortgage through an escrow account: | Part | How it is estimated | Default | |---|---|---| | Principal and interest | Formula above | Rate = Freddie Mac weekly average | | Property tax | Price × tax rate ÷ 12 | 0.89% (US), or your state | | Homeowners insurance | Annual premium ÷ 12 | $4.90 per $1,000 of value | | PMI | Loan × PMI rate ÷ 12, only below 20% down | Midpoint of Freddie Mac’s range | | HOA dues | As entered | $0 | ## Example: $400,000 home, 20% down > **Worked example: 30-year vs 15-year on a $320,000 loan** > > | | 30-year at 7.24% | 15-year at 6.6% | > |---|---:|---:| > | Principal and interest | $2,181 | $2,805 | > | Taxes and insurance | $460 | $460 | > | Total monthly | **$2,641** | **$3,265** | > | Total interest over the loan | $465,086 | $184,930 | The 15-year loan costs $624 more a month but saves $280,156 in interest, because the balance falls faster and the rate is lower. ## Reading the amortization chart Early payments are mostly interest. The blue line shows the balance falling slowly at first and faster later; the green line shows interest paid to date. Move the rate slider and both curves reshape instantly: a higher rate flattens the early balance curve and steepens the interest line. The table under the chart lists every year’s interest, principal and ending balance, and you can sort any column. > **Tip: Share a scenario** > > Every change updates the page address. Copy the link to send the exact scenario — price, down payment, rate, term, state and costs — to a co-borrower or loan officer. ## How to lower your monthly payment - **Put more down.** Reaching 20% on a conventional loan removes PMI as well as shrinking the loan. - **Compare lenders.** Rates on the same day differ between lenders; ask at least three for a Loan Estimate. - **Check the tax rate.** Homes in different taxing districts carry different bills; the calculator’s state setting shows the state average, the listing shows the real bill. - **Shop insurance.** Premiums vary by insurer, deductible and coverage — get quotes before you make an offer. - **Choose the term deliberately.** A 30-year term has the lowest payment; a 15-year term has the lowest total cost. > **Watch out: Estimates, not quotes** > > Results are estimates for planning. Your Loan Estimate shows the lender’s actual rate, fees and escrow amounts, which can differ from these defaults. ## Frequently asked questions ### What is included in a mortgage payment? Principal and interest on the loan, plus property tax and homeowners insurance (usually collected through escrow), mortgage insurance if your down payment is under 20% on a conventional loan, and any HOA dues paid separately. ### How is PMI calculated? As a yearly percentage of the loan, divided by 12. Freddie Mac puts typical PMI at $30 to $70 a month for every $100,000 borrowed; the calculator uses the midpoint until you enter your own rate. ### When does PMI stop? You can ask to cancel it when your balance is scheduled to reach 80% of the original value, and it ends automatically at 78% if you are current. The calculator shows that month as “PMI ends”. ### Why is my payment higher than the calculator says? Your real tax bill, insurance premium, HOA dues or rate may differ from the defaults. Enter the numbers from the listing and your Loan Estimate to match. ### Which rate does the calculator use? Freddie Mac’s latest weekly 30-year fixed average (7.24%). It refreshes automatically each week; type your own quote to replace it. ### Is my data saved? No. Calculations run in your browser and on the page itself; nothing you enter is stored. The values only appear in the page address so you can share them. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average; 15-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) — Ask your servicer to cancel PMI at this share of original value; PMI ends automatically at this share of original value (Oct 28, 2026) _General information, not financial advice._ --- # Refinance break-even calculator > Find out when a refinance pays for itself: monthly savings, simple and full break-even, and the net gain over the years you keep the loan. URL: https://mortgage-math-us.com/tools/refinance-break-even-calculator/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer Divide your closing costs by the monthly payment saving to get the simple break-even point. Refinancing a $300,000 balance from 8.24% to today’s 7.24% average saves about **$245 a month**; at $9,000 of costs that pays back in **3 years 1 month**. Freddie Mac puts refinance costs at 3%–6% of the loan. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Today’s 30-year average (default new rate) | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | Refinance costs, low end (Freddie Mac) | 3% | [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) | Oct 28, 2026 | | Refinance costs, high end (Freddie Mac) | 6% | [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) | Oct 28, 2026 | | Right to cancel a refinance with a new lender | 3 business days | [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) | Aug 8, 2024 | | Fannie Mae cash-out limit (one-unit home) | 80% | [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) | Apr 1, 2026 | | VA streamline: costs must be recouped within | 36 months | [38 U.S.C. 3709](https://www.govinfo.gov/link/uscode/38/3709) | Oct 28, 2026 | ## Two ways to measure break-even **Simple break-even** is the rule most people use: total closing costs ÷ monthly saving = months until the refinance has paid for itself. It is quick and easy to check against a Loan Estimate. **Full break-even** answers a tougher question: at what point are you actually better off? It adds up everything you would pay on each loan — payments to date plus the balance still owed — and includes costs paid in cash. That catches two traps the simple method misses: - **Restarting the clock.** If you have 20 years left and refinance into a new 30-year loan, the lower payment partly comes from stretching the debt over ten more years. You pay less each month but owe more for longer. - **Rolling costs into the loan.** Financing the closing costs means no cash today, but you pay interest on them and start with a bigger balance. The chart shows the full measure year by year: below the line you are behind, above it you are ahead. ## Worked examples > **Worked example: $300,000 balance at 8.24%, refinancing to 7.24% with $9,000 of costs paid in cash** > > | Situation | Monthly saving | Simple break-even | Full break-even | > |---|---:|---:|---:| > | 28 years left → new 30-year loan | $245 | 3 years 1 month | 3 years 1 month | > | 20 years left → new 30-year loan | $510 | 1 year 6 months | 3 years 9 months | > | 20 years left → new 20-year loan | $185 | 4 years 1 month | 3 years 1 month | > > The current rate is an example one percentage point above today’s average. Costs use the low end of Freddie Mac’s range. The second row is the classic trap: stretching 20 remaining years into 30 makes the monthly saving look large, but the full comparison takes much longer to turn positive. Matching the new term to the years you have left — the third row — keeps the comparison honest. ## What counts as closing costs Use section D (“Total loan costs”) of your Loan Estimate plus any points, and leave out prepaid items such as interest and the escrow deposit — those you would pay anyway, and your old escrow balance is usually refunded. Freddie Mac’s consumer site puts typical refinance costs at 3% to 6% of the principal. A “no-closing-cost” refinance doesn’t remove them; the lender covers them in exchange for a higher rate, or adds them to the loan. > **Rule: Your right to cancel** > > When you refinance your principal residence with a new lender, federal law gives you 3 business days after signing to cancel. It does not apply to purchase loans or to a same-lender refinance without new money. ## Streamline refinances have their own tests FHA and VA streamline refinances skip much of the paperwork but must leave you better off. A VA Interest Rate Reduction Refinance Loan must recoup its fees within 36 months and, fixed to fixed, cut the rate by at least 0.5%. An FHA Streamline needs at least 210 days since closing and 6 payments, and a net tangible benefit. ## When the numbers say wait If the full break-even comes after the year you expect to move or refinance again, the refinance loses money even if the monthly payment drops. The same is true if most of the saving comes from a longer term that you would not otherwise choose. See [when not to refinance](https://mortgage-math-us.com/refinancing/when-not-to-refinance/). ## Frequently asked questions ### How do I calculate my refinance break-even point? Divide total closing costs by the monthly saving in principal and interest. With $9,000 of costs and a $245 saving, that is 3 years 1 month. The calculator also shows a full break-even that accounts for the balance left on each loan. ### How much does it cost to refinance? Freddie Mac’s consumer site puts it at 3% to 6% of the loan principal. Your Loan Estimate lists the exact charges; compare offers from several lenders. ### Is it worth refinancing for 1% lower? It depends on your costs, balance and how long you will keep the loan. On a $300,000 balance, one point lower saves about $245 a month on a new 30-year loan; whether that is worth it comes down to the break-even month versus your plans. ### Should I roll closing costs into the new loan? It saves cash today but adds to the balance you pay interest on, which pushes the full break-even later. Tick the box in the calculator to compare. ### Does refinancing restart my loan? Yes — a refinance is a new loan with a new term. Choosing a term close to the years you have left avoids stretching the debt. ### Can I cancel a refinance after signing? For a refinance of your principal residence with a new lender, yes: you have 3 business days to cancel under the federal right of rescission. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) — Typical refinance closing costs, low end (share of loan principal); Typical refinance closing costs, high end (share of loan principal) (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) — Right to cancel a refinance or home equity loan on your principal home (Aug 8, 2024) - [38 U.S.C. 3709](https://www.govinfo.gov/link/uscode/38/3709) — VA IRRRL: fees and closing costs must be recouped within; VA IRRRL fixed-to-fixed: new rate at least this much lower (Oct 28, 2026) - [FDIC Affordable Mortgage Lending Guide (summary of HUD Handbook 4000.1)](https://www.fdic.gov/system/files/2024-07/streamline-refinance.pdf) — FHA Streamline: days that must pass since the current loan closed; FHA Streamline: monthly payments already made (Oct 28, 2026) - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae cash-out refinance maximum LTV, one-unit principal residence (Apr 1, 2026) - [Freddie Mac My Home: Costs of refinancing](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) - [CFPB: Is there such a thing as a no-cost loan or refinancing?](https://www.consumerfinance.gov/ask-cfpb/is-there-such-a-thing-as-a-no-cost-or-no-closing-loan-or-refinancing-en-141/) _General information, not financial advice._ --- # Rent vs buy calculator > Compare the true cost of renting and buying over the years you plan to stay, with sourced rent growth, home price growth, taxes and selling costs. URL: https://mortgage-math-us.com/tools/rent-vs-buy-calculator/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer Buying beats renting once the home’s price gain plus the rent you no longer pay outweigh the costs you can’t get back: mortgage interest, taxes, insurance, upkeep, buying and selling costs and the return your down payment could have earned. With national figures — a $360,000 home, $1,487 rent, the 7.24% average rate — buying breaks even in **year 24**. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | US median home value | $360,600 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) | 2024 ACS 1-year | | US median gross rent | $1,487/mo | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) | 2024 ACS 1-year | | Home prices, 12-month change (FHFA) | 2.4% | [FHFA House Price Index](https://www.fhfa.gov/news/news-release/fhfa-house-price-index-up-0.3-percent-in-august-up-2.4-percent-from-last-year) | August 2026 | | Rents, 12-month change (BLS) | 2.8% | [Bureau of Labor Statistics](https://www.bls.gov/news.release/cpi.nr0.htm) | September 2026 | | 30-year fixed average | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | Buying costs, high end (CFPB) | 5% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | ## Comparing like with like Comparing rent with a mortgage payment misleads in both directions. Part of each mortgage payment is principal, which you get back when you sell; on the other hand, owners pay costs renters never see. The calculator compares **unrecoverable costs** — money that is gone either way: | Owning | Renting | |---|---| | Mortgage interest (not principal) | Rent, rising each year | | Property tax, insurance, maintenance, HOA dues, PMI | — | | Buying costs up front and selling costs when you leave | — | | Return your down payment and buying costs could have earned | — | | **minus** the home’s price gain | — | Each line on the chart is the running total of those costs. Where the owning line drops below the renting line, buying has become the cheaper choice. ## The defaults and where they come from - **Home price and rent** — median home value and median gross rent from the Census Bureau’s American Community Survey for the US or the state you pick. - **Home price growth** — the latest 12-month change in the FHFA House Price Index (2.4%). - **Rent growth** — the latest 12-month change in the BLS rent index (2.8%). - **Buying costs** — the midpoint of the CFPB’s 2%–5% closing-cost range. - **Your assumptions** — maintenance (1% of value a year), selling costs (6%) and the return on cash you don’t put into the house (4% a year) are starting points, not sourced figures. Change them to match your situation. Twelve months of growth is a snapshot, not a forecast. Try lower and higher values to see how sensitive the answer is. ## Worked example with national figures > **Worked example: $360,000 home, 10% down at 7.24%, rent $1,487 a month** > > | After 7 years | Amount | > |---|---:| > | Net cost of owning | $224,401 | > | Rent paid | $135,904 | > | Owning, first month (payment, taxes, insurance, PMI, upkeep) | $3,084 | > | Cash to buy (down payment and buying costs) | $48,600 | > > Break-even: year 24. With rent 50% higher, it moves to year 10; with no price growth at all, not within 30 years. ## What moves the answer most - **How long you stay.** Buying and selling costs are paid once, so every extra year spreads them thinner. Short stays almost always favour renting. - **The rent-to-price ratio.** Where rents are high relative to prices, owning breaks even sooner. - **Price growth.** Appreciation is the owner’s biggest potential gain — and the biggest uncertainty. - **The rate.** Interest is the largest unrecoverable cost in the early years of a loan; see the [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/) for the split. > **Note: Things the model leaves out** > > Income-tax effects (most households take the standard deduction), the return on principal you repay, and renters insurance. They usually move the result by less than the assumptions above. ## Frequently asked questions ### Is it cheaper to rent or buy a house? It depends on how long you stay, local rents versus prices, the rate and price growth. With national figures and the calculator’s defaults, buying breaks even in year 24; enter your own numbers to see your break-even year. ### How long do you need to stay for buying to make sense? Long enough for price gains and saved rent to cover buying and selling costs. The calculator marks the year the owning line drops below the renting line. ### Why doesn’t the calculator count my whole mortgage payment as a cost? Principal repays your own loan and comes back to you as equity when you sell, so only the interest part is a cost. The opportunity cost of your down payment is counted separately. ### What home price growth should I assume? The default is the latest 12-month change in the FHFA House Price Index (2.4%). Local markets differ, so try a lower figure to stress-test the decision. ### Where do the rent figures come from? The Census Bureau’s American Community Survey median gross rent for the US or your state; rent growth comes from the Bureau of Labor Statistics rent index. ## Sources - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [Bureau of Labor Statistics](https://www.bls.gov/news.release/cpi.nr0.htm) — Rent of primary residence, 12-month change (CPI-U) (September 2026) - [FHFA House Price Index](https://www.fhfa.gov/news/news-release/fhfa-house-price-index-up-0.3-percent-in-august-up-2.4-percent-from-last-year) — US house prices, 12-month change (FHFA HPI) (August 2026) - [FHFA House Price Index](https://www.fhfa.gov/data/hpi) - [BLS Consumer Price Index](https://www.bls.gov/cpi/) _General information, not financial advice._ --- # Alabama mortgages: low property taxes, recording taxes and AHFA help > Alabama mortgage numbers: a 0.38% effective property tax rate, the deed and mortgage recording taxes, and AHFA Step Up help of up to $10,000. URL: https://mortgage-math-us.com/location/alabama/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median Alabama home is worth $233,300, and with 10% down at the 7.24% national average rate it costs about **$1,705 a month** — property tax adds only $74 of that, because Alabama’s effective rate of 0.38% is the 2nd-lowest in the country. What you pay instead comes at closing: a deed tax of 0.1% of the price and a mortgage tax of 0.15% of the loan. AHFA’s Step Up program adds up to $10,000 toward the down payment. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in Alabama | $233,300 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US01) | 2024 ACS 1-year | | Effective property tax rate | 0.38% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US01) | 2024 ACS 1-year | | Median property tax bill | $890/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US01) | 2024 ACS 1-year | | Median household income | $66,659/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US01) | 2024 ACS 1-year | | Mortgage recording tax | 0.15% | [Alabama Department of Revenue](https://www.revenue.alabama.gov/tax-types/recordation-tax/) | Aug 14, 2023 | | Homestead exemption, state taxes (assessed value) | $4,000 | [Alabama Department of Revenue: Homestead Exemptions](https://www.revenue.alabama.gov/property-tax/homestead-exemptions/) | Oct 20, 2025 | | AHFA Step Up help, up to | $10,000 | [Alabama Housing Finance Authority: Step Up](https://www.ahfa.com/programs/homeownership/available-programs/step-up) | Oct 29, 2026 | ## Alabama property tax: the 2nd-lowest rate in the US The Census Bureau puts the median Alabama homeowner’s property tax bill at $890 a year, which is 0.38% of the median home value. Nationally the ratio is 0.89%, and among the states and DC only one comes in lower. On the median home, Alabama’s rate works out to $74 a month; the same home taxed at the national ratio would carry $173. Rates still vary by county and city, because local millage is layered on top of the state’s share. Two discounts are worth knowing about before you buy: - **Regular homestead exemption (H-1).** If you own and live in the home, you can exempt up to $4,000 of assessed value from state property taxes and $2,000 from county taxes. Counties, cities and other taxing authorities may grant more. Owners who are 65 or older or disabled qualify for larger exemptions. - **Apply locally.** The exemption is not automatic. You claim it at your county’s revenue commissioner or tax assessor office, usually once you have moved in. > **Tip: Ask what the exemption is worth on this house** > > The exemption is set in assessed value, and the county decides how that relates to market value. Ask the county office, or check the current tax notice, to see what the bill looks like with the homestead exemption applied. ## A monthly payment where taxes barely register Homes in Alabama are cheaper than in most states — the median value is the 8th-lowest among the states and DC, below the US median of $360,600. That keeps principal and interest modest, and the low tax rate does the rest. > **Worked example: Median Alabama home ($233,300), 10% down, 30-year fixed at 7.24%** > > | Monthly cost | Amount | > |---|---:| > | Principal and interest on $209,970 | $1,431 | > | Property tax at 0.38% | $74 | > | Homeowners insurance (national average per $1,000 of value) | $95 | > | PMI (midpoint of Freddie Mac’s typical range) | $105 | > | **Total** | **$1,705** | > > Insurance is estimated with Freddie Mac’s national average of $4.90 per $1,000 of home value, so treat it as a placeholder until you have quotes — expect more near the Gulf. Change the inputs in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=233000&down=10&tax=0.38&state=AL); it opens with Alabama’s median price and tax rate. ## Recording costs: Alabama’s deed tax and mortgage tax Alabama is one of 8 states that charge both a statewide tax on the deed and a separate tax on recording the mortgage. Both are paid at closing, when the documents go to the county probate office. | Tax | Rate | On the median home with 10% down | |---|---:|---:| | Deed tax (on the price) | 0.1% | $233 | | Mortgage tax (on the loan) | 0.15% | $315 | | **Both** | | **$548** | The purchase contract decides who pays the deed tax. The mortgage tax follows your loan, so it shows up among the buyer’s costs on the Loan Estimate — and a larger loan means a larger tax. Add lender, title and prepaid items and the CFPB’s typical range of 2%–5% of the price puts total closing costs on the median home at roughly $4,666–$11,665. The [closing cost estimator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=AL) adds both Alabama taxes automatically. ## AHFA Step Up and First Step The Alabama Housing Finance Authority (AHFA) runs its programs through participating lenders. Two cover most buyers: | | Step Up | First Step | |---|---|---| | What it is | Down-payment help for moderate-income buyers who can afford a payment but lack savings | Below-market 30-year fixed rates funded by mortgage revenue bonds | | Help available | 4% of the sales price, up to $10,000 | Same down-payment help available | | How it is repaid | Second mortgage over 10 years | Second mortgage over 10 years | | Income limit | $172,800, any household size or county | Federal limits by area | | Minimum credit score | 640 | 640 | | Buyer type | First-time or repeat | First-time or repeat | Step Up borrowers must complete a homeownership education course. AHFA’s Affordable Income Subsidy Grant can add help with closing costs for eligible borrowers. > **Worked example: Step Up on the median Alabama home** > > $233,300 × 4% = $9,332, capped at $10,000 → **$9,332** of help. Paired with an FHA loan, that covers the whole $8,166 minimum FHA down payment and leaves about $1,167 toward closing costs. Compare these with federal options in the [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/). ## What Alabama’s median income buys On the state’s median household income of $66,659, Freddie Mac’s guideline of keeping housing under 30% of gross income allows $1,666 a month. At today’s average rate with 10% down and Alabama’s tax rate, that supports a home of about **$228,000** — $5,300 less than the median home value. Owning is the norm here: 71% of occupied homes are lived in by their owners, above the national share of 65.3%. If you are deciding between renting at the state’s median of $1,077/mo and buying, the [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=AL&price=233000&rent=1077) runs both paths with Alabama’s numbers, and the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=AL&income=66659) shows the price your own income supports. ## Insurance and flood risk on the coast Low taxes can be offset by insurance in Mobile and Baldwin counties, where wind and hurricane exposure push premiums up and some policies carry separate wind deductibles. Standard homeowners policies don’t cover flooding. If a home sits in a FEMA Special Flood Hazard Area and the loan is federally backed or from a regulated lender, flood insurance is required. Get quotes during your inspection period, before the earnest money is at risk. ## Frequently asked questions ### What is the property tax rate in Alabama? Census figures put Alabama’s effective rate at 0.38% of home value, with a median bill of $890 a year — the 2nd-lowest rate among the states and DC. Your bill depends on county and city millage and on exemptions such as the homestead exemption. ### Does Alabama have a mortgage tax? Yes. Alabama charges 0.15% of the loan amount when the mortgage is recorded, plus a deed tax of 0.1% of the price. On the median home with 10% down the two add up to about $548. ### How much is the homestead exemption in Alabama? The regular H-1 exemption removes up to $4,000 of assessed value from state property taxes and $2,000 from county taxes for owners under 65 who are not disabled. Apply at your county office. ### Does Alabama have first-time home buyer programs? AHFA’s Step Up and First Step programs are open to first-time and repeat buyers. Step Up gives 4% of the price, up to $10,000, as a second mortgage over 10 years for households earning up to $172,800. ### What credit score do I need for AHFA? AHFA sets a minimum credit score of 640 for all of its programs, and Step Up borrowers must complete a homeownership education course. ### How much do I need to earn to buy a house in Alabama? To keep housing under 30% of income on the median $233,300 home with 10% down at today’s average rate, you need about $68,200 a year, assuming few other debts. The median Alabama household earns $66,659. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US01) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US01) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US01) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US01) — Median gross rent (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Alabama Department of Revenue](https://www.revenue.alabama.gov/tax-types/recordation-tax/) — State real estate transfer tax; State tax on recording a mortgage (Aug 14, 2023) - [Alabama Housing Finance Authority: Step Up](https://www.ahfa.com/programs/homeownership/available-programs/step-up) — AHFA Step Up down payment assistance (share of the sales price); AHFA Step Up down payment assistance, up to; AHFA Step Up second mortgage term (Oct 29, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment; Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Alabama Department of Revenue: Homestead Exemptions](https://www.revenue.alabama.gov/property-tax/homestead-exemptions/) — Alabama regular homestead exemption (H-1), state taxes (assessed value); Alabama regular homestead exemption (H-1), county taxes (assessed value) (Oct 20, 2025) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US01) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=010XX00US) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [Alabama Housing Finance Authority: Step Up](https://www.ahfa.com/programs/homeownership/available-programs/step-up) - [Alabama Department of Revenue: Homestead exemptions](https://www.revenue.alabama.gov/property-tax/homestead-exemptions/) - [AHFA: First Step mortgage revenue bonds](https://www.ahfa.com/programs/homeownership/available-programs/first-step-mortgage-revenue-bonds) _General information, not financial advice._ --- # Alaska mortgages: higher loan limits, AHFC loans and local taxes > Alaska mortgage numbers: a $1,249,125 conforming limit in every borough, AHFC first-time and veterans loans, local property taxes and no transfer tax. URL: https://mortgage-math-us.com/location/alaska/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer A median-value Alaska home ($376,500) costs about **$2,965 a month** with 10% down at the 7.24% national average rate, including property tax at the state’s effective rate of 1.06%. Alaska’s conforming loan limit is $1,249,125 for a one-unit home — the high-cost ceiling everywhere else — and FHA’s ceiling here reaches $1,873,625. There is no state transfer tax, and the Alaska Housing Finance Corporation (AHFC) offers lower-rate loans for first-time buyers and veterans. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | 2026 conforming limit in Alaska | $1,249,125 | [FHFA: Conforming Loan Limit Values for 2026](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) | 2026 | | 2026 FHA ceiling in Alaska | $1,873,625 | [HUD Mortgagee Letter 2025-23: 2026 Nationwide Forward Mortgage Loan Limits](https://www.hud.gov/sites/dfiles/hudclips/documents/2025-23hsgml.pdf) | 2026 | | Median home value in Alaska | $376,500 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US02) | 2024 ACS 1-year | | Median household income | $95,665/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US02) | 2024 ACS 1-year | | Effective property tax rate | 1.06% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US02) | 2024 ACS 1-year | | AHFC veterans rate cut (first $50,000) | 1% | [Alaska Housing Finance Corporation: Loan Options](https://www.ahfc.us/buy/add-options) | Oct 29, 2026 | ## Why loan limits are higher in Alaska Federal law treats Alaska, Hawaii, Guam and the U.S. Virgin Islands as special areas because building and buying there costs more. Both loan-limit systems reflect that: *2026 one-unit loan limits, Alaska vs most of the US* | Limit | Most of the US | Alaska | |---|---:|---:| | Conforming baseline (Fannie Mae, Freddie Mac) | $832,750 | $1,249,125 | | Conforming ceiling | $1,249,125 | $1,873,675 | | FHA floor / ceiling | $541,287 / $1,249,125 | Up to $1,873,625 | The Alaska figure is $416,375 higher than the standard baseline, and because it is Alaska’s baseline rather than a high-cost exception, it applies in every borough. In practice, a buyer putting 10% down can stay within conforming limits up to a price of about $1,388,000 in Alaska, against about $925,000 in a standard-cost county in the lower 48. That matters for larger homes in Anchorage, the Mat-Su and Juneau: a loan that would be a [jumbo loan](https://mortgage-math-us.com/loan-types/jumbo-loans/) elsewhere — with stricter credit and reserve rules — can be an ordinary conforming loan here. FHA limits are set county by county (borough by borough in Alaska). HUD lets limits in the four special areas rise to $1,873,625 for a one-unit home to account for construction costs, but each borough’s actual limit may be lower, so look up the specific borough on HUD’s FHA limits page before you shop. ## Monthly cost of the median Alaska home The median Alaska home is above the national median of $360,600, while household incomes rank 12th-highest among the states and DC. That combination puts Alaska’s price-to-income ratio at 3.9, lower than the US ratio of 4.4. > **Worked example: $376,500 home, 10% down, 30-year fixed at 7.24%** > > | Monthly cost | Amount | > |---|---:| > | Principal and interest on $338,850 | $2,309 | > | Property tax at 1.06% | $333 | > | Homeowners insurance (national average, $4.90 per $1,000) | $154 | > | PMI (midpoint of Freddie Mac’s typical range) | $169 | > | **Total** | **$2,965** | > > Heating, snow removal and, off the road system, higher shipping costs aren’t in this total but weigh on Alaska budgets. Census puts median monthly owner costs for Alaska homes with a mortgage at $2,253/mo. Try other prices and down payments in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=377000&down=10&tax=1.06&state=AK). ## AHFC: Alaska’s state housing lender The Alaska Housing Finance Corporation works through approved Alaska lenders: you apply with a participating lender, which closes the loan under AHFC’s programs and rate discounts. - **First-Time Homebuyer Program.** For buyers who haven’t owned a primary residence in 3 years. The First Home Limited version has the lowest rates, with federal income and acquisition-cost limits; the requirement to be a first-time buyer is waived in targeted areas and for qualified veterans. The First Home version has no income or price limits and still carries a reduced rate. - **State Veterans Interest Rate Preference.** Qualified veterans who meet the program’s income limits get a 1% rate reduction on the first $50,000 of the loan. - **97% loan-to-value option.** Lowers the down payment to about 3% of the price. - **Energy and low-income options.** Further rate reductions for energy-efficient homes and for lower-income households, and secondary financing from public and nonprofit partners under the Affordable Housing Enhanced option. > **Worked example: Veterans rate preference on the median home** > > On the $338,850 loan above, the first $50,000 at 6.24% and the remaining $288,850 at 7.24% cost $2,276 a month in principal and interest, against $2,309 at a single rate — about **$33 a month** saved, or $399 a year. The national average stands in for AHFC’s actual rate, which is posted daily. Compare these with federal programs in the [VA loans guide](https://mortgage-math-us.com/loan-types/va-loans/) and the [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/). ## Borough and city property taxes Property taxes on Alaska homes are levied by boroughs and cities, not by the state, so the rate depends heavily on where you buy; communities outside an organized borough may have little or no property tax. Statewide, Census data put the median bill at $3,976 a year, or 1.06% of value — the 16th-highest effective rate among the states and DC and above the US ratio of 0.89%. Ask for the latest tax statement on any home you are considering and check the borough assessor’s mill rate. If your lender escrows taxes, a change in the local rate shows up at the annual escrow review. ## Closing costs without a transfer tax Alaska charges no state real estate transfer tax (0%), and it has no state mortgage recording tax. Your closing costs are lender fees, title insurance, recording fees and prepaid items. At the CFPB’s typical range of 2%–5% of the price, the median home would need roughly $7,530–$18,825 at closing on top of the down payment. The [closing cost estimator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=AK) builds the list line by line. ## What a median Alaska income buys Alaska’s median household income of $95,665 is above the national median. Keeping housing under Freddie Mac’s 30% guideline allows $2,392 a month, which supports a home of about **$304,000** with 10% down at today’s average rate — $72,500 below the median home value. The [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=AK&income=95665) runs your own income against four debt-to-income limits. ## Frequently asked questions ### What is the conforming loan limit in Alaska? For 2026 the one-unit conforming limit in Alaska is $1,249,125, compared with $832,750 in most of the country. Federal law sets a higher baseline for Alaska, Hawaii, Guam and the U.S. Virgin Islands. ### What is the FHA loan limit in Alaska? HUD lets FHA limits in Alaska reach $1,873,625 for a one-unit home in 2026, above the national ceiling of $1,249,125. Each borough has its own limit, so check HUD’s lookup for the area where you are buying. ### Does Alaska have a first-time home buyer program? Yes. AHFC’s First-Time Homebuyer Program offers reduced rates to buyers who haven’t owned a primary residence in 3 years, through participating lenders. The First Home Limited option has income and price limits; First Home does not. ### What benefits does AHFC offer veterans? Qualified veterans who meet AHFC’s income limits can get a 1% rate reduction on the first $50,000 of the loan. On a loan of $338,850 at today’s average rate, that saves about $33 a month. ### What is the property tax rate in Alaska? The state doesn’t levy property tax on homes; boroughs and cities set their own. Census data put the statewide effective rate at 1.06% of home value, with a median bill of $3,976 a year. ### Does Alaska have a real estate transfer tax? No. Alaska has no state transfer tax and no state mortgage recording tax, so closing costs are mainly lender, title and recording fees plus prepaid items. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US02) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US02) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US02) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US02) — Median gross rent (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [FHFA: Conforming Loan Limit Values for 2026](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) — 2026 conforming loan limit in Alaska (one-unit baseline); 2026 baseline conforming loan limit (one-unit); 2026 conforming loan limit ceiling in Alaska (one-unit) (2026) - [HUD Mortgagee Letter 2025-23: 2026 Nationwide Forward Mortgage Loan Limits](https://www.hud.gov/sites/dfiles/hudclips/documents/2025-23hsgml.pdf) — 2026 FHA one-unit limit ceiling in Alaska (special exception area) (2026) - [HUD](https://www.hud.gov/news/hud-no-25-145) — 2026 FHA loan limit floor (one-unit, low-cost areas); 2026 FHA loan limit ceiling (one-unit, high-cost areas) (2026 limit) - [Alaska Housing Finance Corporation: Loan Options](https://www.ahfc.us/buy/add-options) — AHFC State Veterans Interest Rate Preference: rate reduction on the first $50,000 of the loan; AHFC State Veterans Interest Rate Preference applies to the first; AHFC 97% loan-to-value option (maximum loan as a share of value) (Oct 29, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=040XX00US02) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [Alaska Housing Finance Corporation: First-Time Homebuyer Program](https://www.ahfc.us/buy/loan-programs/first-time-loans) — AHFC First-Time Homebuyer Program: no primary residence owned in the past (Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [National Association of Realtors](https://narfocus.com/publication-issue/view/2023-07-05-state-and-local-issues-real-estate-transfer-tax) — State real estate transfer tax (Jul 5, 2023) - [FHFA: Conforming loan limit values for 2026](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) - [HUD Mortgagee Letter 2025-23: 2026 FHA forward mortgage limits](https://www.hud.gov/sites/dfiles/hudclips/documents/2025-23hsgml.pdf) - [Alaska Housing Finance Corporation: First-Time Homebuyer Program](https://www.ahfc.us/buy/loan-programs/first-time-loans) - [Alaska Housing Finance Corporation: Loan options](https://www.ahfc.us/buy/add-options) _General information, not financial advice._ --- # Arizona mortgages: home prices, property tax limits and buyer programs > Arizona mortgage numbers: median prices against incomes, a 0.43% property tax rate under constitutional limits, no transfer tax and down-payment help. URL: https://mortgage-math-us.com/location/arizona/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median Arizona home is worth $426,000, which costs about **$3,131 a month** with 10% down at the 7.24% national average rate. Property tax is a small part of that — Arizona’s effective rate of 0.43% is the 4th-lowest in the US — but the median home costs 5.2 times the median household income, more than the national ratio. State programs help: Arizona Is Home offers up to $30,000 and HOME Plus up to 4% for down payment and closing costs. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in Arizona | $426,000 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US04) | 2024 ACS 1-year | | Median household income | $81,486/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US04) | 2024 ACS 1-year | | Effective property tax rate | 0.43% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US04) | 2024 ACS 1-year | | Median year homes were built | 1994 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US04) | 2024 ACS 1-year | | Yearly cap on taxable value growth | 5% | [Arizona Constitution, Article 9, Section 18](https://www.azleg.gov/viewDocument/?docName=https%3A%2F%2Fwww.azleg.gov%2Fconst%2F9%2F18.htm) | Oct 29, 2026 | | Arizona Is Home help, up to | $30,000 | [Arizona Department of Housing: Programs for Homebuyers](https://housing.az.gov/general-public/programs-homebuyers) | Oct 29, 2026 | | HOME Plus help, up to | 4% | [Arizona Industrial Development Authority: HOME Plus](https://homeplusaz.com/) | Oct 29, 2026 | ## Prices vs paychecks in Arizona Arizona’s median home value ranks 16th-highest among the states and DC and sits above the US median of $360,600. Incomes haven’t kept the same pace: the median household earns $81,486, just below the national $81,604 and 21st-highest in the country. That leaves a typical home at 5.2 times income, against 4.4 nationally. The housing itself is unusually young. Half of Arizona homes were built in 1994 or later — the 3rd-newest housing stock in the country and 13 years newer than the US median of 1981. Newer homes tend to need fewer big repairs in the first years, but many sit in planned communities with homeowners association dues, which count in your debt-to-income ratio just like the mortgage. Renting isn’t cheap either: the median gross rent of $1,672/mo is the 11th-highest among the states and DC. The [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=AZ&price=426000&rent=1672) compares both paths with Arizona’s median price and rent. ## What the median Arizona home costs each month > **Worked example: $426,000 home, 10% down, 30-year fixed at 7.24%** > > | Monthly cost | Amount | > |---|---:| > | Principal and interest on $383,400 | $2,613 | > | Property tax at 0.43% | $153 | > | Homeowners insurance (national average, $4.90 per $1,000) | $174 | > | PMI (midpoint of Freddie Mac’s typical range) | $192 | > | **Total** | **$3,131** | > > At the US tax ratio the property tax line would be $316 instead of $153. Add HOA dues if the home has them. To keep that payment within Freddie Mac’s 30% guideline, a household would need about $125,200 a year. At the state median income, the same guideline allows $2,037 a month, enough for about **$277,000** — $149,000 short of the median home value. The [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=AZ&income=81486) runs your own income at four debt-to-income limits, and the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=426000&down=10&tax=0.43&state=AZ) opens with Arizona’s median price and tax rate. ## Arizona Is Home and HOME Plus Two state-run programs offer down-payment help through participating lenders: | | Arizona Is Home (Arizona Department of Housing) | HOME Plus (Arizona Industrial Development Authority) | |---|---|---| | Help available | Up to $30,000 at or below 80% of area median income; up to $20,000 above that, to 120% | Up to 4% for down payment and closing costs | | Form | Silent second mortgage, due on sale | Forgivable and non-forgivable options | | Can pay for | Down payment, closing costs or an interest rate buydown | Down payment and closing costs | | Buyer rules | First-time buyers (no real estate owned in 3 years); 8 hours of homebuyer education and a one-on-one session with a HUD-certified advisor | Statewide, every county; available year-round | Arizona Is Home also has a mortgage program with below-market rates for lower-income buyers, offered outside Maricopa and Pima counties. Ask a participating lender which option fits — and whether funds are available — before you lock a rate. > **Worked example: Arizona Is Home on the median home** > > An FHA loan on $426,000 needs $14,910 down (at 3.5%), and closing costs start around $8,520 at the low end of the CFPB’s range. The maximum Arizona Is Home award of $30,000 covers both, with about $6,570 left that could go toward an interest rate buydown. HOME Plus at 4% of the same FHA loan would be about $16,444. See how these compare with federal programs in the [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/). ## Arizona’s constitutional limits on property tax Census data put the median Arizona property tax bill at $1,828 a year, or 0.43% of home value. Two rules in Article 9, Section 18 of the Arizona Constitution help keep it there: - **A cap on the tax itself.** Taxes on residential property generally can’t exceed 1% of the property’s limited value. - **A cap on the taxable value.** The limited value used for taxes can rise no more than 5% a year, and never above full cash value — so even when market prices jump, the taxable value catches up gradually. Because the cap applies to the limited value, a home whose market value has outrun it can carry a tax bill well below what the price suggests. When you budget, use the current bill from the county treasurer rather than applying a rate to your purchase price. County assessors also handle exemptions for widows, widowers and people with total and permanent disabilities, subject to value and income limits. ## Closing costs without a transfer tax The Arizona Constitution prohibits new taxes on the sale or transfer of real property, so there is no state transfer tax (0%) and no state mortgage tax. Closing costs come down to lender fees, title insurance, escrow and recording fees, and prepaid taxes and insurance; in planned communities, HOA transfer or capital-contribution fees are common. The [closing cost estimator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=AZ) lays out a typical list. For the Phoenix market — prices, taxes and city programs inside the state’s largest city — see the [Phoenix guide](https://mortgage-math-us.com/location/phoenix-az/). ## Frequently asked questions ### What is the property tax rate in Arizona? Census data put Arizona’s effective rate at 0.43% of home value, the 4th-lowest among the states and DC, with a median bill of $1,828 a year. The state constitution caps the yearly growth in a home’s taxable (limited) value at 5%. ### Does Arizona have first-time home buyer programs? Yes. The Arizona Department of Housing’s Arizona Is Home program offers up to $30,000 to first-time buyers at or below 80% of area median income, and the Arizona IDA’s HOME Plus program offers up to 4% statewide. ### Is there a transfer tax when buying a house in Arizona? No. The Arizona Constitution prohibits new real property sale or transfer taxes, so closing costs are mainly lender, title, escrow and recording fees plus prepaid items. ### How much income do you need to buy a house in Arizona? To keep housing under 30% of gross income on the median $426,000 home with 10% down at today’s average rate, you need about $125,200 a year, assuming few other debts. The median Arizona household earns $81,486. ### How old are homes in Arizona? Half of Arizona homes were built in 1994 or later, the 3rd-newest housing stock among the states and DC. Many newer homes are in communities with HOA dues, which lenders count in your debt-to-income ratio. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US04) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US04) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US04) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US04) — Median gross rent (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [Arizona Department of Housing: Programs for Homebuyers](https://housing.az.gov/general-public/programs-homebuyers) — Arizona Is Home down payment assistance (ADOH), buyers at or below 80% of area median income, up to; Arizona Is Home down payment assistance, buyers at 81–120% of area median income, up to; Arizona Is Home: the larger award goes to buyers at or below this share of area median income (Oct 29, 2026) - [Arizona Industrial Development Authority: HOME Plus](https://homeplusaz.com/) — HOME Plus (Arizona IDA) down payment and closing cost assistance, up to (Oct 29, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment; Typical closing costs, low end (share of purchase price) (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US04) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=010XX00US) — Median year homes were built (2024 ACS 1-year) - [Arizona Constitution, Article 9, Section 18](https://www.azleg.gov/viewDocument/?docName=https%3A%2F%2Fwww.azleg.gov%2Fconst%2F9%2F18.htm) — Arizona constitutional cap on residential property taxes (share of limited value); Arizona: most a property’s limited (taxable) value can rise in a year (Oct 29, 2026) - [Arizona Constitution, Art. IX §24](https://www.azleg.gov/viewDocument/?docName=http://www.azleg.gov/const/9/24.htm) — State real estate transfer tax (Oct 28, 2026) - [Arizona Department of Housing: Programs for homebuyers](https://housing.az.gov/general-public/programs-homebuyers) - [Arizona Industrial Development Authority: HOME Plus](https://homeplusaz.com/) - [Arizona Constitution, Article 9, Section 18](https://www.azleg.gov/viewDocument/?docName=https%3A%2F%2Fwww.azleg.gov%2Fconst%2F9%2F18.htm) _General information, not financial advice._ --- # Arkansas mortgages: low housing costs, ADFA help and the homestead credit > Arkansas mortgage numbers: a $215,600 median home, ADFA down-payment help up to $15,000, the $600 homestead credit and the state transfer tax. URL: https://mortgage-math-us.com/location/arkansas/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median Arkansas home is worth $215,600 and costs about **$1,601 a month** with 10% down at the 7.24% national average rate, including property tax at 0.52%. Homeowners can take a homestead property tax credit of up to $600 a year, and the Arkansas Development Finance Authority (ADFA) adds $1,000–$15,000 in down-payment help. The state transfer tax is 0.33% of the price — about $711 on the median home. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in Arkansas | $215,600 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US05) | 2024 ACS 1-year | | Median owner costs with a mortgage | $1,375/mo | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=040XX00US05) | 2024 ACS 1-year | | Median household income | $62,106/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US05) | 2024 ACS 1-year | | Effective property tax rate | 0.52% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US05) | 2024 ACS 1-year | | Homestead property tax credit, up to | $600 | [Arkansas DFA Assessment Coordination Division: Property Tax Relief](https://www.dfa.arkansas.gov/office/arkansas-assessment-coordination-division/real-property/property-tax-relief/) | 2026 tax bills | | ADFA down-payment help, up to | $15,000 | [Arkansas Development Finance Authority: Down Payment Assistance Program](https://adfa.arkansas.gov/programs/homeloans/down-payment-assistance-program/) | Sep 11, 2026 | | State real estate transfer tax | 0.33% | [Arkansas Department of Finance and Administration](https://www.dfa.arkansas.gov/office/taxes/excise-tax-administration/miscellaneous-tax/arkansas-miscellaneous-tax-laws/real-property-transfer/) | Oct 8, 2026 | ## Arkansas housing costs, ranked On almost every housing cost the Census Bureau tracks, Arkansas sits near the bottom of the list — good news for buyers, with one caveat about incomes. *Arkansas compared with the US (Census ACS 2024 1-year; rank among the states and DC, lowest first)* | | Arkansas | United States | Arkansas rank | |---|---:|---:|---| | Median home value | $215,600 | $360,600 | 3rd-lowest | | Median owner costs with a mortgage | $1,375/mo | $2,035/mo | 2nd-lowest | | Median gross rent | $982/mo | $1,487/mo | 4th-lowest | | Effective property tax rate | 0.52% | 0.89% | 12th-lowest | | Median household income | $62,106 | $81,604 | 4th-lowest | Lower incomes offset some of that advantage, but not all of it: the median home costs 3.5 times the median household income in Arkansas, lower than the US ratio of 4.4. Prices vary widely between Northwest Arkansas, central Arkansas and the Delta, so local figures can look very different from the statewide median. ## Monthly payment on a median Arkansas home > **Worked example: $215,600 home, 10% down, 30-year fixed at 7.24%** > > | Monthly cost | Amount | > |---|---:| > | Principal and interest on $194,040 | $1,322 | > | Property tax at 0.52% | $93 | > | Homeowners insurance (national average, $4.90 per $1,000) | $88 | > | PMI (midpoint of Freddie Mac’s typical range) | $97 | > | **Total** | **$1,601** | > > The insurance line uses Freddie Mac’s national average because there is no official Arkansas average in our data; get real quotes, especially for older roofs. The [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=216000&down=10&tax=0.52&state=AR) opens with these inputs so you can change the price, down payment or rate. ## ADFA StartSmart, Move-Up and down-payment help ADFA lends through participating lenders. Its down-payment assistance only comes paired with one of its two first mortgages: | | StartSmart | Move-Up | |---|---|---| | Who it’s for | First-time buyers — no principal residence owned in 3 years (waived in targeted counties and for veterans) | First-time or repeat buyers; the home must be your primary residence | | Loan types | FHA, VA, USDA Rural Development, Freddie Mac conventional (HFA Advantage) | FHA, VA, conventional, USDA Rural Development | | Limits | Purchase price up to $500,000; income limits by county and household size | Qualifying income up to $142,000; price within the conforming loan limit | | Minimum credit score | 640 | 640 | | Down-payment assistance | $1,000–$15,000 second mortgage over 10 years | Same | The StartSmart price cap is about 2.3× the state’s median home value, so it rarely gets in the way outside the most expensive neighborhoods. > **Worked example: ADFA help on the median home** > > An FHA loan on $215,600 needs $7,546 down at 3.5%. Add closing costs at the low end of the CFPB’s 2%–5% range and you need about $11,858 in cash. The maximum ADFA second mortgage of $15,000 is enough to cover both, leaving nothing to bring at the low end of closing costs. It is a loan repaid over 10 years, not a grant, so ask the lender what its payment will be and include it in your budget. For federal options that work alongside ADFA, see [FHA loans](https://mortgage-math-us.com/loan-types/fha-loans/) and [USDA loans](https://mortgage-math-us.com/loan-types/usda-loans/), which cover much of rural Arkansas. ## The homestead credit and Amendment 79 Arkansas cuts the property tax bill on your primary home in two ways, both claimed through the county assessor: 1. **Homestead property tax credit.** Up to $600 a year off the bill, starting with 2026 tax bills. Each owner can claim one homestead credit a year. On the median home, where the tax at the state’s effective rate is about $1,121 a year, the full credit would cover about 54% of it — but your actual bill depends on the local millage, so check it first. 2. **Assessment caps.** Under Amendment 79, the taxable value of a homestead can rise no more than 5% a year until it reaches full assessed value. New construction and major improvements are added on top. Owners who are 65 or older or disabled can freeze the taxable value of their homestead; the freeze ends when the home is sold. Apply for the credit with your county assessor as soon as the home becomes your primary residence. ## Arkansas’s real estate transfer tax Arkansas charges a state transfer tax of 0.33% of the consideration when a deed is recorded — about $711 on the median home and $990 on a $300,000 sale. The contract usually says who pays it. There is no state mortgage tax. The [closing cost estimator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=AR) adds the transfer tax to lender, title and prepaid costs. ## What Arkansas’s median income buys At the median household income of $62,106, Freddie Mac’s guideline of keeping housing under 30% of gross income allows $1,553 a month. With 10% down at today’s average rate and the state tax ratio, that supports about **$209,000** — $6,600 below the median home value. The [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=AR&income=62106) runs your own income, and the [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=AR&price=216000&rent=982) compares buying with renting at the state’s median rent. ## Frequently asked questions ### What is the homestead credit in Arkansas? Arkansas homeowners can get a homestead property tax credit of up to $600 a year on their primary residence, starting with 2026 tax bills. Apply through your county assessor. ### Does Arkansas have first-time home buyer programs? Yes. ADFA’s StartSmart program serves first-time buyers (no principal residence owned in 3 years, with exceptions for targeted counties and veterans) and can be paired with $1,000–$15,000 in down-payment assistance. ### What credit score do I need for ADFA? Both StartSmart and Move-Up require a credit score of at least 640. StartSmart caps the purchase price at $500,000; Move-Up caps qualifying income at $142,000. ### How much is the transfer tax in Arkansas? The state transfer tax is 0.33% of the sale price, about $711 on the median Arkansas home. There is no state mortgage tax. ### What is the property tax rate in Arkansas? Census data put the effective rate at 0.52% of home value, with a median bill of $1,113 a year. Amendment 79 limits increases in a homestead’s taxable value to 5% a year. ### How much house can I afford in Arkansas? At the state’s median household income of $62,106, keeping housing under 30% of income supports a home of about $209,000 with 10% down at today’s average rate. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US05) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US05) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US05) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US05) — Median gross rent (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Arkansas Development Finance Authority: Down Payment Assistance Program](https://adfa.arkansas.gov/programs/homeloans/down-payment-assistance-program/) — ADFA Down Payment Assistance Program, up to; ADFA Down Payment Assistance Program, from; ADFA Down Payment Assistance second mortgage term (Sep 11, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment; Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [Arkansas Development Finance Authority: StartSmart First-Time Home Buyer Program](https://adfa.arkansas.gov/programs/homeloans/startsmart-first-time-home-buyer-program/) — ADFA StartSmart purchase price limit; ADFA StartSmart: no principal residence owned in the past; ADFA minimum credit score (StartSmart and Move-Up) (Jul 28, 2026) - [Arkansas Department of Finance and Administration](https://www.dfa.arkansas.gov/office/taxes/excise-tax-administration/miscellaneous-tax/arkansas-miscellaneous-tax-laws/real-property-transfer/) — State real estate transfer tax (Oct 8, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [Arkansas DFA Assessment Coordination Division: Property Tax Relief](https://www.dfa.arkansas.gov/office/arkansas-assessment-coordination-division/real-property/property-tax-relief/) — Arkansas homestead property tax credit, up to (per year); Arkansas: most a homestead’s taxable value can rise in a year (Amendment 79) (2026 tax bills) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=040XX00US05) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=010XX00US) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [Arkansas Development Finance Authority: Move-Up Loan Program](https://adfa.arkansas.gov/programs/homeloans/move-up-loan-program) — ADFA Move-Up qualifying income limit (Jul 28, 2026) - [ADFA: Down Payment Assistance Program](https://adfa.arkansas.gov/programs/homeloans/down-payment-assistance-program/) - [ADFA: StartSmart first-time homebuyer program](https://adfa.arkansas.gov/programs/homeloans/startsmart-first-time-home-buyer-program/) - [Arkansas Assessment Coordination Division: Property tax relief](https://www.dfa.arkansas.gov/office/arkansas-assessment-coordination-division/real-property/property-tax-relief/) _General information, not financial advice._ --- # California mortgages: Prop 13 taxes, CalHFA help and the FAIR Plan > California mortgage numbers: a $759,500 median home, how Prop 13 sets a new buyer’s tax, CalHFA MyHome help and when you may need the FAIR Plan. URL: https://mortgage-math-us.com/location/california/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median California home is worth $759,500 — 7.6 times the median household income. With 10% down at the 7.24% national average rate it costs about **$5,943 a month**, with property tax figured at Proposition 13’s 1% base rate on the purchase price (local bonds come on top). CalHFA’s MyHome program lends up to 3.5% of the price for the down payment, and homes that private insurers decline can get fire coverage from the California FAIR Plan. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in California | $759,500 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US06) | 2024 ACS 1-year | | Median household income | $100,149/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US06) | 2024 ACS 1-year | | Prop 13 base property tax rate | 1% | [California State Board of Equalization: California Property Tax, An Overview (Publication 29)](https://www.boe.ca.gov/proptaxes/pdf/pub29.pdf) | Mar 1, 2025 | | Yearly cap on assessed value growth | 2% | [California State Board of Equalization: California Property Tax, An Overview (Publication 29)](https://www.boe.ca.gov/proptaxes/pdf/pub29.pdf) | Mar 1, 2025 | | Homeowners’ exemption (assessed value) | $7,000 | [California State Board of Equalization: Homeowners’ Exemption (Publication 800-6)](https://boe.ca.gov/pdf/pub800-6.pdf) | Jun 1, 2023 | | CalHFA MyHome help, up to (FHA) | 3.5% | [CalHFA: MyHome Assistance Program](https://www.calhfa.ca.gov/homebuyer/programs/myhome.htm) | Oct 29, 2026 | | FAIR Plan dwelling limit per location | $3,000,000 | [California Department of Insurance: California FAIR Plan](https://www.insurance.ca.gov/01-consumers/200-wrr/California-FAIR-Plan.cfm) | Oct 29, 2026 | ## California’s price problem in one ratio The median owner-occupied home in California is worth $759,500, the 2nd-highest among the states and DC and 2.1 times the national median of $360,600. Incomes are high too — $100,149 for the median household — but not high enough to close the gap. The median home costs 7.6 times the median income, the 2nd-highest ratio in the country, against 4.4 nationally. Only a modest majority of California households own: 55.8% of occupied homes are owner-occupied, the 3rd-lowest share among the states and DC. Renting isn’t an escape from high costs either — the median gross rent of $2,104/mo is the highest in the country. The [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=CA&price=760000&rent=2104) compares both with California’s median price and rent. ## Proposition 13: why the seller’s tax bill isn’t yours Proposition 13 limits the general property tax to 1% of a home’s assessed value, plus whatever is needed to repay voter-approved bonds. The assessed value starts at the purchase price and can then rise by no more than 2% a year until the home sells again or new construction is completed. That is why Census figures understate what a new buyer pays. The median California tax bill is $5,369 a year — 0.71% of median value — because many owners bought long ago at lower assessed values. A buyer of the median home is reassessed at the purchase price and starts at $7,595 a year at the base rate alone, $2,226 more than the median bill, before bonds and special assessments. > **Worked example: Prop 13 on the median home** > > Base tax: $759,500 × 1% = **$7,595 a year**. Even if the market value climbs faster, the assessed value can grow by at most 2% a year — at the maximum, about $925,826 after ten years. The homeowners’ exemption removes $7,000 of assessed value, which saves about $70 a year at the base rate. File the homeowners’ exemption claim with the county assessor once you move in; claims filed by February 15 get the full exemption for that year. Ask the title company or the county tax collector for the full rate in the home’s tax rate area, since bonds and Mello-Roos or other special assessments can add meaningfully to the 1% base. ## Monthly payment on the median California home > **Worked example: $759,500 home, 10% down, 30-year fixed at 7.24%** > > | Monthly cost | Amount | > |---|---:| > | Principal and interest on $683,550 | $4,658 | > | Property tax at the 1% base rate | $633 | > | Homeowners insurance (national average, $4.90 per $1,000) | $310 | > | PMI (midpoint of Freddie Mac’s typical range) | $342 | > | **Total** | **$5,943** | > > The $683,550 loan is within the $832,750 baseline conforming limit; many coastal counties have higher limits, up to $1,249,125. Change the inputs in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=760000&down=10&tax=1&state=CA). To keep this payment within Freddie Mac’s 30% guideline, a household would need about $237,700 a year. At the state median income, the guideline supports about **$320,000** — $439,500 short of the median home. The [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=CA&income=100149) runs your own figures. ## Wildfire, insurance and the California FAIR Plan Lenders require homeowners insurance before they fund a loan, and in high wildfire-risk areas some buyers can’t get a policy from a regular insurer. The California FAIR Plan exists for them. According to the California Department of Insurance, it was created by the Governor and Legislature but is a private association run by insurance companies, and it is meant for people who cannot get coverage elsewhere. - **What it covers.** A limited fire policy, with residential limits of up to $3,000,000 per location. Homeowners who harden their property against wildfire can get a discount on the wildfire part of the premium. - **What it doesn’t.** Water damage, liability, theft and additional living expenses require a separate difference-in-conditions (DIC) policy from another insurer. - **How to apply.** The Department recommends shopping the regular market first, then applying through a licensed agent or broker — ideally one registered to sell FAIR Plan coverage. > **Watch out: Price insurance before you remove contingencies** > > If quotes come back from the FAIR Plan only, you will be paying for two policies. Get both quotes during your inspection period so the cost is in your payment before you commit. ## CalHFA MyHome and Dream For All The California Housing Finance Agency (CalHFA) lends through approved loan officers. Its programs pair a CalHFA first mortgage with a deferred junior loan: | | MyHome Assistance | Dream For All Shared Appreciation | |---|---|---| | Help | Up to 3.5% of the price or appraised value with FHA; 3% with conventional | Up to 20% of the price, capped at $150,000 | | On the median home | Up to $26,583 (FHA) or $22,785 (conventional) | — | | Repayment | Deferred until you sell, refinance or pay off the first mortgage | Repay the loan plus a share of the home’s appreciation | | Who qualifies | First-time buyers within CalHFA income limits; homebuyer education for one borrower | First-generation buyers within income limits, chosen by drawing | Dream For All runs in rounds. CalHFA’s page says the latest application period closed March 16, 2026, so check its status before counting on it. Compare these with federal and local programs in the [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/). ## Transfer taxes are local in California California has no statewide transfer tax (0%) and no state mortgage tax. Counties charge a documentary transfer tax, and some cities add their own, which can be larger than the county’s. Check the city and county where you are buying; our [Los Angeles](https://mortgage-math-us.com/location/los-angeles-ca/) and [San Diego](https://mortgage-math-us.com/location/san-diego-ca/) guides cover those markets, and the [closing cost estimator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=CA) adds lender, title, escrow and prepaid costs. ## Frequently asked questions ### How are property taxes calculated when you buy a home in California? Under Proposition 13, the home is reassessed at the purchase price and taxed at 1% plus voter-approved bonds and special assessments. After that, the assessed value can rise by no more than 2% a year until the next sale. On the median home the base tax is about $7,595 a year. ### What is the homeowners’ exemption in California? It removes $7,000 from the assessed value of your primary residence, saving about $70 a year at the base rate. File with the county assessor by February 15 for the full exemption. ### Does California have a first-time home buyer program? CalHFA’s MyHome Assistance program offers a deferred loan of up to 3.5% of the price with an FHA loan or 3% with a conventional loan. Dream For All, for first-generation buyers, opens in rounds; check CalHFA for the current status. ### What is the California FAIR Plan? It is the insurer for Californians who can’t get coverage from a regular insurer, created by the Governor and Legislature and run as a private association. It sells a limited fire policy with residential limits up to $3,000,000 per location; other coverage needs a separate difference-in-conditions policy. ### How much income do you need to buy a house in California? To keep housing under 30% of gross income on the median $759,500 home with 10% down at today’s average rate, you need about $237,700 a year, assuming few other debts. The median California household earns $100,149. ### Is there a transfer tax in California? There is no state transfer tax, but counties charge a documentary transfer tax and some cities add their own. The amount depends on where the home is. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US06) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US06) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US06) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US06) — Median gross rent (2024 ACS 1-year) - [California State Board of Equalization: California Property Tax, An Overview (Publication 29)](https://www.boe.ca.gov/proptaxes/pdf/pub29.pdf) — Proposition 13: general property tax rate (before voter-approved debt); Proposition 13: most a property’s base-year value can rise in a year (Mar 1, 2025) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) — 2026 baseline conforming loan limit (one-unit); 2026 high-cost area conforming ceiling (one-unit) (2026 limit) - [California State Board of Equalization: Homeowners’ Exemption (Publication 800-6)](https://boe.ca.gov/pdf/pub800-6.pdf) — California homeowners’ exemption (assessed value) (Jun 1, 2023) - [CalHFA: MyHome Assistance Program](https://www.calhfa.ca.gov/homebuyer/programs/myhome.htm) — CalHFA MyHome Assistance with an FHA loan, up to (share of price or appraised value); CalHFA MyHome Assistance with a conventional loan, up to (share of price or appraised value) (Oct 29, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US06) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [California Department of Insurance: California FAIR Plan](https://www.insurance.ca.gov/01-consumers/200-wrr/California-FAIR-Plan.cfm) — California FAIR Plan residential coverage limit per location (Oct 29, 2026) - [CalHFA: Dream For All](https://www.calhfa.ca.gov/dream/index.htm) — CalHFA Dream For All shared appreciation loan, up to (share of price); CalHFA Dream For All shared appreciation loan, capped at (Oct 29, 2026) - [California Revenue and Taxation Code §11911](https://law.justia.com/codes/california/2009/rtc/11911-11913.html/) — State real estate transfer tax (Oct 28, 2026) - [CalHFA: MyHome Assistance Program](https://www.calhfa.ca.gov/homebuyer/programs/myhome.htm) - [California State Board of Equalization: California Property Tax, An Overview](https://www.boe.ca.gov/proptaxes/pdf/pub29.pdf) - [California Department of Insurance: California FAIR Plan](https://www.insurance.ca.gov/01-consumers/200-wrr/California-FAIR-Plan.cfm) - [CalHFA: Dream For All](https://www.calhfa.ca.gov/dream/index.htm) _General information, not financial advice._ --- # Colorado mortgages: high prices, low tax rates and CHFA assistance > Colorado mortgage numbers: a $574,600 median home, a 0.49% effective tax rate, CHFA grants or second loans up to $25,000 and the senior exemption. URL: https://mortgage-math-us.com/location/colorado/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median Colorado home is worth $574,600 and costs about **$4,252 a month** with 10% down at the 7.24% national average rate. Property tax is a small share of that — Colorado’s effective rate of 0.49% is the 10th-lowest among the states and DC. CHFA offers a down-payment grant of up to 3% of the first mortgage or a deferred second mortgage of up to 4%, each capped at $25,000. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in Colorado | $574,600 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US08) | 2024 ACS 1-year | | Median household income | $97,113/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US08) | 2024 ACS 1-year | | Effective property tax rate | 0.49% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US08) | 2024 ACS 1-year | | CHFA grant, up to (share of first mortgage) | 3% | [CHFA: Down Payment Assistance](https://www.chfainfo.com/homeownership/down-payment-assistance) | Oct 29, 2026 | | CHFA second mortgage, up to | 4% | [CHFA: Down Payment Assistance](https://www.chfainfo.com/homeownership/down-payment-assistance) | Oct 29, 2026 | | Senior exemption: share of first $200,000 exempt | 50% | [Colorado Division of Property Taxation: Senior Property Tax Exemption](https://dpt.colorado.gov/senior-property-tax-exemption) | Oct 29, 2026 | | State documentary fee | 0.01% | [C.R.S. 39-13-102](https://colorado.public.law/statutes/crs_39-13-102) | Oct 28, 2026 | ## High prices, low tax rates: Colorado’s trade-off Colorado’s median home value ranks 6th-highest among the states and DC, well above the US median of $360,600. Household incomes are high as well ($97,113, 9th-highest), and the median home costs 5.9 times the median income, higher than the national ratio of 4.4. The offset is property tax. Census data put Colorado’s effective rate at 0.49% of home value, against 0.89% nationally. Even with expensive homes, the median bill of $2,828 is only the 29th-highest in dollars, and on the median home the Colorado rate costs $192 a month less than the national ratio would. ## What the median Colorado home costs each month > **Worked example: $574,600 home, 10% down, 30-year fixed at 7.24%** > > | Monthly cost | Amount | > |---|---:| > | Principal and interest on $517,140 | $3,524 | > | Property tax at 0.49% | $235 | > | Homeowners insurance (national average, $4.90 per $1,000) | $235 | > | PMI (midpoint of Freddie Mac’s typical range) | $259 | > | **Total** | **$4,252** | > > Hail and wildfire exposure can push insurance quotes in parts of the state above the national average used here, and many newer neighborhoods add HOA dues or metro district taxes. Keeping that payment within Freddie Mac’s 30% guideline takes an income of about $170,100. The median household’s budget of $2,428 a month supports about **$328,000** — $246,600 below the median home value. Try your own numbers in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=575000&down=10&tax=0.49&state=CO) or the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=CO&income=97113). ## CHFA’s grant or second mortgage: which to choose The Colorado Housing and Finance Authority (CHFA) offers down-payment assistance with its first mortgages, through participating lenders. You pick one of two forms: | | Down Payment Assistance Grant | Second mortgage loan | |---|---|---| | Amount | Up to 3% of the first mortgage | Up to 4% of the first mortgage | | Cap | $25,000 | $25,000 | | Repayment | None | Deferred until you pay off the first mortgage, sell, refinance or move out | | Trade-off | Smaller amount | Larger amount; CHFA notes higher interest rates apply | Buyers with a permanent disability and first-generation homebuyers can get up to $25,000 through specific programs regardless of the first mortgage amount. CHFA calls a homebuyer education class early in the process essential. > **Worked example: CHFA help on the median home with an FHA loan** > > First mortgage: $574,600 − $20,111 down (3.5%) = $554,489. Cash needed with low-end closing costs: about $31,603. > - Grant at 3%: **$16,635**, leaving about $14,968 to bring, never repaid. > - Second mortgage at 4%: **$22,180**, leaving about $9,423 to bring, repaid when you sell or refinance. The grant costs nothing later, so it is the better deal when it covers enough of your cash gap. The larger second mortgage helps most when cash is the binding constraint, but it comes due when you sell or refinance. Either way, compare the CHFA first-mortgage rate with what you’d get without assistance. More options are in the [down-payment grants guide](https://mortgage-math-us.com/first-time-buyers/grants/). ## Colorado property tax and the senior exemption Colorado taxes residential property on a share of its actual value set by the state’s residential assessment rate, which the legislature has changed several times in recent years; local mill levies then apply to that assessed value. That makes a single statewide rate a rough guide. Use the county assessor’s valuation and the latest tax bill on the home you are considering. Older buyers should know about the **senior property tax exemption**: owners who are 65 or older and have owned and lived in the home for 10 years in a row can exempt 50% of the first $200,000 of actual value — up to $100,000 of value off the tax roll. Because the ownership clock restarts with a new purchase, a buyer won’t qualify on a newly bought home right away. Applications run from January 1 to July 15 through the county assessor. ## A documentary fee instead of a transfer tax Colorado has no large statewide transfer tax. Instead, the county clerk collects a documentary fee of 0.01% of the price — about $57 on the median home. Several mountain resort towns levy their own real estate transfer taxes, so check locally if you are buying in one. Closing costs otherwise run the CFPB’s typical 2%–5% of the price, or $11,492–$28,730 on the median home; the [closing cost estimator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=CO) itemizes them. For prices, taxes and city programs in the capital, see the [Denver guide](https://mortgage-math-us.com/location/denver-co/). ## Frequently asked questions ### What is the property tax rate in Colorado? Census data put Colorado’s effective rate at 0.49% of home value, the 10th-lowest among the states and DC, with a median bill of $2,828 a year. Your bill depends on the residential assessment rate and the local mill levies where the home sits. ### Does Colorado have down payment assistance? Yes. CHFA offers a grant of up to 3% of the first mortgage or a deferred second mortgage of up to 4%, each capped at $25,000, through participating lenders. ### Do you have to repay CHFA down payment assistance? The grant is never repaid. The second mortgage is repaid when you pay off the first mortgage, sell, refinance or stop living in the home. ### What is the senior property tax exemption in Colorado? Owners 65 or older who have owned and lived in the home for 10 years in a row can exempt 50% of the first $200,000 of actual value. Apply with the county assessor by July 15. ### Does Colorado have a transfer tax? Not a large one. The state documentary fee is 0.01% of the price, about $57 on the median home, though some mountain towns levy their own transfer taxes. ### How much income do you need to buy a house in Colorado? To keep housing under 30% of income on the median $574,600 home with 10% down at today’s average rate, you need about $170,100 a year, assuming few other debts. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US08) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US08) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US08) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US08) — Median gross rent (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment; Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [CHFA: Down Payment Assistance](https://www.chfainfo.com/homeownership/down-payment-assistance) — CHFA Down Payment Assistance Grant, up to (share of the first mortgage); CHFA second mortgage loan, up to (share of the first mortgage); CHFA down payment assistance grant or second mortgage, capped at (Oct 29, 2026) - [Colorado Division of Property Taxation: Senior Property Tax Exemption](https://dpt.colorado.gov/senior-property-tax-exemption) — Colorado senior property tax exemption: share of the first $200,000 of actual value exempt; Colorado senior property tax exemption applies to the first (actual value); Colorado senior exemption: years the owner must have owned and lived in the home (Oct 29, 2026) - [C.R.S. 39-13-102](https://colorado.public.law/statutes/crs_39-13-102) — State real estate transfer tax (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [CHFA: Down payment assistance](https://www.chfainfo.com/homeownership/down-payment-assistance) - [Colorado Division of Property Taxation: Senior property tax exemption](https://dpt.colorado.gov/senior-property-tax-exemption) _General information, not financial advice._ --- # Connecticut mortgages: property taxes, CHFA Time To Own and older homes > Connecticut mortgage numbers: a 1.66% property tax rate, the seller’s conveyance tax, CHFA’s forgivable $25,000 Time To Own loan and foundation risks. URL: https://mortgage-math-us.com/location/connecticut/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median Connecticut home is worth $396,900, and with 10% down at the 7.24% national average rate it costs about **$3,324 a month** — $549 of it property tax, because Connecticut’s effective rate of 1.66% is the 3rd-highest in the country. Sellers, not buyers, normally pay the state and municipal conveyance tax. First-time buyers can borrow up to $25,000 through CHFA’s Time To Own program, forgiven over 10 years. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Effective property tax rate | 1.66% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US09) | 2024 ACS 1-year | | Median property tax bill | $6,573/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US09) | 2024 ACS 1-year | | Median home value in Connecticut | $396,900 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US09) | 2024 ACS 1-year | | Median year homes were built | 1967 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US09) | 2024 ACS 1-year | | CHFA Time To Own, up to | $25,000 | [Connecticut Housing Finance Authority: Time To Own](https://www.chfa.org/TimeToOwn) | Oct 26, 2026 | | CHFA foundation repair loan, up to | $75,000 | [Connecticut Housing Finance Authority: Supplemental Collapsing Foundation Loan Program](https://www.chfa.org/homebuyers/supplemental-collapsing-foundations/) | Oct 29, 2026 | ## Property tax: the biggest line after the loan Connecticut has no county government, so property tax is set town by town: each municipality applies its own mill rate to an assessment based on a share of market value. The statewide result is steep. Census data put the median bill at $6,573 a year — the 3rd-highest in the country — and the effective rate at 1.66% of value, against a national ratio of 0.89%. On the median home that is $549 a month, about 17% of the total payment below. At the national ratio the same house would carry $294. Rates differ so much between neighboring towns that the tax bill can decide which town you can afford, so compare the current bill — not just the price — on every home you look at. The town assessor’s office and the latest tax statement are the best sources. ## What the median Connecticut home costs > **Worked example: $396,900 home, 10% down, 30-year fixed at 7.24%** > > | Monthly cost | Amount | > |---|---:| > | Principal and interest on $357,210 | $2,434 | > | Property tax at 1.66% | $549 | > | Homeowners insurance (national average, $4.90 per $1,000) | $162 | > | PMI (midpoint of Freddie Mac’s typical range) | $179 | > | **Total** | **$3,324** | At the median household income of $96,049, Freddie Mac’s 30% guideline allows $2,401 a month, which supports a price of about **$287,000** with 10% down — $109,900 less than the median home value. At the national tax ratio the same budget would stretch to about $310,000, which shows how much of Connecticut’s affordability question is really a tax question. Run your own numbers in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=397000&down=10&tax=1.66&state=CT) and the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=CT&income=96049). ## The conveyance tax sellers pay Connecticut’s real estate conveyance tax has a state portion that rises with the price plus a municipal portion, and by law the seller pays it. Buyers still pay recording fees, title insurance, lender charges and prepaid taxes, which together typically run 2%–5% of the price ($7,938–$19,845 on the median home). *State plus municipal conveyance tax, paid by the seller* | Sale price | Conveyance tax | Share of price | |---|---:|---:| | $397,000 | $3,970 | 1.00% | | $800,000 | $8,000 | 1.00% | | $1,200,000 | $14,000 | 1.17% | The effective share climbs at higher prices because the state rate steps up on the part of the price above $800,000. If you are selling one Connecticut home to buy another, budget for the tax on your sale; the [closing cost estimator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=CT) shows both sides. ## CHFA Time To Own The Connecticut Housing Finance Authority (CHFA) offers below-market first mortgages for first-time buyers and people who haven’t owned a home recently, through participating lenders. Its **Time To Own** program adds a forgivable down-payment loan: - **Amount:** up to $25,000, at 0% with no monthly payment. - **Forgiveness:** a tenth of the principal is forgiven on each closing anniversary, so the loan is gone after 10 years. - **Who qualifies:** buyers who meet CHFA’s first-mortgage rules and Time To Own income limits; buyers who aren’t first-time can qualify in targeted areas, but you can’t own any other property at closing. - **Funding:** CHFA reported money available for new reservations in late October 2026; check the current balance before you apply. > **Worked example: Time To Own on the median home** > > An FHA loan on $396,900 needs $13,892 down at 3.5%; with low-end closing costs you need about $21,830. Time To Own could supply $21,830, covering the full amount. If you sold after 5 years, about $10,915 would still be unforgiven. See how this stacks up against federal options in the [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/). ## Older homes and crumbling foundations Half of Connecticut homes were built in 1967 or earlier — the 6th-oldest housing stock among the states and DC and about 14 years older than the national median of 1981. Older homes bring older roofs, systems and sometimes lead paint, so a thorough inspection matters more here. One Connecticut-specific risk is a deteriorating concrete foundation, often linked to the mineral pyrrhotite and concentrated in the northeastern part of the state. The Connecticut Foundation Solutions Indemnity Company (CFSIC), a captive insurance company set up for the problem, helps qualifying owners pay to replace affected foundations, and CHFA’s Supplemental Collapsing Foundation Loan lends up to $75,000 for related repair costs once CFSIC has approved the owner. If you are buying an older home in an affected area, ask whether the foundation has been tested and make the purchase contingent on the results. ## Frequently asked questions ### What is the property tax rate in Connecticut? Census data put Connecticut’s effective rate at 1.66% of home value, the 3rd-highest among the states and DC, with a median bill of $6,573 a year. Each town sets its own mill rate, so bills vary widely. ### Who pays the conveyance tax in Connecticut? The seller. On the median-priced home the state and municipal conveyance tax comes to about $3,969. Buyers pay recording, title, lender and prepaid costs. ### Does Connecticut have first-time home buyer programs? Yes. CHFA offers below-market first mortgages and the Time To Own program, a 0% forgivable loan of up to $25,000 that is fully forgiven after 10 years. ### Is CHFA Time To Own forgivable? Yes. A tenth of the principal is forgiven on each anniversary of the closing, and the loan is fully forgiven after 10 years. There is no interest and no monthly payment. ### What help is there for crumbling foundations in Connecticut? Owners approved by the Connecticut Foundation Solutions Indemnity Company (CFSIC) can get help replacing the foundation, and CHFA’s Supplemental Collapsing Foundation Loan lends up to $75,000 for related repair costs. ### How much house can I afford in Connecticut? At the median household income of $96,049, keeping housing under 30% of income supports about $287,000 with 10% down at today’s average rate and Connecticut’s tax rate. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US09) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US09) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US09) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Connecticut Housing Finance Authority: Time To Own](https://www.chfa.org/TimeToOwn) — CHFA Time To Own forgivable down payment assistance, up to; CHFA Time To Own: fully forgiven after (10% a year) (Oct 26, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment; Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US09) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=010XX00US) — Median year homes were built (2024 ACS 1-year) - [Connecticut Housing Finance Authority: Supplemental Collapsing Foundation Loan Program](https://www.chfa.org/homebuyers/supplemental-collapsing-foundations/) — CHFA Supplemental Collapsing Foundation Loan, up to (Oct 29, 2026) - [CHFA: Time To Own](https://www.chfa.org/TimeToOwn) - [CHFA: Supplemental Collapsing Foundation Loan Program](https://www.chfa.org/homebuyers/supplemental-collapsing-foundations/) - [Connecticut Foundation Solutions Indemnity Company](https://crumblingfoundations.org) _General information, not financial advice._ --- # Delaware mortgages: the realty transfer tax, low property taxes and DSHA loans > Delaware mortgage numbers: the 2.5% state realty transfer tax and first-time buyer cut, a 0.47% property tax rate and DSHA 0% second mortgages. URL: https://mortgage-math-us.com/location/delaware/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median Delaware home ($371,600) costs about **$2,744 a month** with 10% down at the 7.24% national average rate, helped by a low 0.47% effective property tax rate. The catch is at closing: the state realty transfer tax of 2.5% — 3% where no local tax applies — is the highest statewide rate in the country, on top of any county or town tax, and is usually split with the seller. First-time buyers get up to $2,000 off their share, and DSHA adds 0% second mortgages of up to 5% of the loan. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | State realty transfer tax | 2.5% | [Delaware Division of Revenue](https://revenue.delaware.gov/first-time-home-buyer-tax-credit/) | Apr 16, 2024 | | First-time buyer reduction, up to | $2,000 | [Delaware Division of Revenue: First-Time Home Buyer Tax Credit](https://revenue.delaware.gov/first-time-home-buyer-tax-credit/) | Oct 29, 2026 | | Effective property tax rate | 0.47% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US10) | 2024 ACS 1-year | | Homes lived in by their owners | 73.8% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US10) | 2024 ACS 1-year | | Median home value in Delaware | $371,600 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US10) | 2024 ACS 1-year | | DSHA second mortgage, up to | 5% | [Delaware State Housing Authority: Homeownership Loans](https://www.destatehousing.com/homeownership-loans/) | Sep 23, 2026 | | DSHA minimum credit score | 620 | [Delaware State Housing Authority: Homeownership Loans](https://www.destatehousing.com/homeownership-loans/) | Sep 23, 2026 | ## Delaware’s realty transfer tax Delaware’s state realty transfer tax is 2.5% of the price where a county or municipality also charges a transfer tax, and 3% where none does. Local taxes come on top, so the combined rate depends on the town. Buyer and seller typically split the total equally, although the contract can say otherwise. *State realty transfer tax on the median home ($371,600)* | | Amount | |---|---:| | State tax at 2.5% | $9,290 | | Buyer’s half | $4,645 | | First-time buyer reduction | −$1,858 | | **First-time buyer’s share of the state tax** | **$2,787** | | State tax at 3% (no local tax) | $11,148 | Add the county or town tax and the CFPB’s typical 2%–5% of the price for lender, title and prepaid costs. The [closing cost estimator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=DE) splits the state tax for you. ## The first-time buyer transfer tax cut If you have never held a direct legal interest in residential real estate and will make this home your principal residence, Delaware cuts your share of the state transfer tax by 0.5% of the price — for most buyers from 1.25% to 0.75% of the price. The reduction applies to the first $400,000 of value, so it is capped at $2,000; on the median home it is worth $1,858. You claim it at closing; eligible buyers who paid the full rate can ask the Division of Revenue for a refund. Delaware’s definition is stricter than the “no home in 3 years” rule many loan programs use: owning a home at any point disqualifies you. See [who counts as a first-time buyer](https://mortgage-math-us.com/first-time-buyers/who-counts-as-first-time/). ## Low property taxes in a state of owners Census data put the median Delaware property tax bill at $1,750 a year, an effective rate of 0.47% — the 8th-lowest among the states and DC. On the median home that is about $1,747 a year, against $3,307 at the national ratio of 0.89%. Delaware also stands out for ownership: 73.8% of occupied homes are owner-occupied, the 2nd-highest share in the country and above the US share of 65.3%. Bills come from the county, the school district and, in towns, the municipality, so ask for the latest tax statement on any home you consider. ## Payment on a median Delaware home > **Worked example: $371,600 home, 10% down, 30-year fixed at 7.24%** > > | Monthly cost | Amount | > |---|---:| > | Principal and interest on $334,440 | $2,279 | > | Property tax at 0.47% | $146 | > | Homeowners insurance (national average, $4.90 per $1,000) | $152 | > | PMI (midpoint of Freddie Mac’s typical range) | $167 | > | **Total** | **$2,744** | On the median household income of $87,534, Freddie Mac’s 30% guideline allows $2,188 a month — enough for about **$296,000** with 10% down, $75,600 below the median home value. Test other prices in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=372000&down=10&tax=0.47&state=DE) or start from your income in the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=DE&income=87534). ## DSHA Welcome Home, Open Door and the 0% seconds The Delaware State Housing Authority (DSHA) offers 30-year fixed first mortgages through participating lenders, each with a minimum credit score of 620; borrowers at 659 or below must complete housing counseling. | Option | What it is | Works with | |---|---|---| | Welcome Home | First mortgage for first-time buyers, below-market rate | — | | Open Door | First mortgage for first-time and repeat buyers | — | | First State | 0% second mortgage of 3% of the first mortgage | Welcome Home, Open Door | | Keys4You | 0% second mortgage of 4% | Welcome Home, Open Door | | Take5 | 0% second mortgage of 5% | Welcome Home only | | Diamond in the Rough | 0% second of 5% for homes needing minor repairs (FHA 203(k) limited) | Welcome Home only | The seconds have no monthly payment; you repay them when you sell, refinance or transfer the home, or stop living in it. In New Castle County, Welcome Home is limited to household incomes of $122,700 for one or two people (Open Door: $147,240), and to prices of $659,385; Kent and Sussex limits are lower, and targeted areas allow more. The median Delaware home is below the New Castle price limit. > **Worked example: DSHA second mortgage on the median home** > > FHA first mortgage: $358,594. First State would add $10,758, Keys4You $14,344 and Take5 $17,930. A first-time buyer needs about $23,225 for the FHA down payment, low-end closing costs and their share of the state transfer tax — Take5 alone would cover about 77% of it. Compare Delaware’s options with federal ones in the [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/). ## Frequently asked questions ### How much is the transfer tax in Delaware? The state realty transfer tax is 2.5% of the price where a local transfer tax also applies and 3% where none does, plus any county or town tax. Buyer and seller typically split it. On the median home the state portion at 2.5% is about $9,290. ### Do first-time home buyers pay less transfer tax in Delaware? Yes. Buyers who have never owned a home get their share of the state tax cut by 0.5% of the price on the first $400,000 of value, worth up to $2,000. It is claimed at closing. ### What is the property tax rate in Delaware? Census data put Delaware’s effective rate at 0.47% of home value, with a median bill of $1,750 a year — the 8th-lowest rate among the states and DC. ### Does Delaware have down payment assistance? DSHA offers 0% second mortgages of 3%, 4% or 5% of the first mortgage with its Welcome Home and Open Door loans. They have no monthly payment and are repaid when you sell or refinance. ### What credit score do I need for a DSHA loan? At least 620. Borrowers with scores of 659 or below must also complete housing counseling. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US10) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US10) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US10) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Delaware Division of Revenue: First-Time Home Buyer Tax Credit](https://revenue.delaware.gov/first-time-home-buyer-tax-credit/) — Delaware first-time buyer cut in the buyer’s share of the state realty transfer tax (share of the price); Delaware first-time buyer transfer tax reduction, capped at; Delaware state realty transfer tax where no local transfer tax applies (Oct 29, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment; Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [Delaware State Housing Authority: Homeownership Loans](https://www.destatehousing.com/homeownership-loans/) — DSHA First State 0% second mortgage (share of the first mortgage); DSHA Keys4You 0% second mortgage (share of the first mortgage); DSHA Take5 0% second mortgage (share of the first mortgage) (Sep 23, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [42 U.S.C. 12704(14)](https://www.law.cornell.edu/uscode/text/42/12704) — First-time homebuyer: has not owned a home in the past (HUD/HOME statute) (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US10) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=010XX00US) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [Delaware Division of Revenue: First-time home buyer tax credit](https://revenue.delaware.gov/first-time-home-buyer-tax-credit/) - [Delaware State Housing Authority: Homeownership loans](https://www.destatehousing.com/homeownership-loans/) _General information, not financial advice._ --- # DC mortgages: recordation tax, homestead deduction and HPAP > DC mortgage rules: recordation and transfer taxes, the reduced first-time buyer rate, the $91,950 homestead deduction and HPAP help of up to $202,000. URL: https://mortgage-math-us.com/location/district-of-columbia/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer Buying the median DC home ($733,400) means a recordation tax of about **$10,634** for the buyer, with the seller paying a matching transfer tax. DC’s base combined rate of 2.2% is the 2nd-highest among the states and DC, and it rises on homes priced at $400,000 or more. Qualifying first-time DC homebuyers pay 0.725% instead, on homes up to $777,000. Once you own, the homestead deduction cuts $91,950 from your assessed value, and DHCD’s HPAP lends income-qualified first-time buyers up to $202,000. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Recordation plus transfer tax (under the threshold) | 2.2% | [DC Office of the Chief Financial Officer](https://cfo.dc.gov/page/tax-rates-and-revenues-property-taxes) | Oct 28, 2026 | | First-time homebuyer recordation rate | 0.725% | [DC Office of Tax and Revenue: Form ROD 11, Reduced Recordation Tax Rate for First-Time Homebuyers (FY2026)](https://otr.cfo.dc.gov/sites/default/files/dc/sites/otr/publication/attachments/ROD%2011%20-%20Reduced%20Recordation%20Tax%20Rate%20for%20First-Time%20Homebuyers%20FY2026.pdf) | Oct 29, 2026 | | First-time rate price ceiling | $777,000 | [DC Office of Tax and Revenue: Notice of Oct. 1, 2025 Tax Changes](https://otr.cfo.dc.gov/release/notice-oct-1-2025-tax-changes) | Tax year 2026 | | Homestead deduction (assessed value) | $91,950 | [DC Office of Tax and Revenue: Real Property Tax Reliefs, Credits, and Deductions](https://otr.cfo.dc.gov/page/real-property-tax-reliefs-credits-and-deductions) | Tax year 2026 | | HPAP gap financing, up to | $202,000 | [DC Department of Housing and Community Development: Home Purchase Assistance Program](https://dhcd.dc.gov/service/home-purchase-assistance-program) | FY2027 | | Homes lived in by their owners | 40.9% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US11) | 2024 ACS 1-year | ## Recordation and transfer taxes in DC When a deed is recorded in the District, two taxes apply at the same rate: the **recordation tax**, which is the buyer’s, and the **transfer tax**, which is the seller’s. On residential sales below $400,000 each is 1.1% of the price (2.2% combined); at $400,000 or more each rises to 1.45%. The higher rate applies to the whole price, not just the part above the threshold. *DC recordation and transfer taxes at three prices* | Price | Recordation (buyer) | Transfer (seller) | Total | |---|---:|---:|---:| | $350,000 | $3,850 | $3,850 | $7,700 | | $733,000 | $10,629 | $10,629 | $21,257 | | $1,000,000 | $14,500 | $14,500 | $29,000 | For many DC buyers the recordation tax is the largest single closing cost. The [closing cost estimator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=DC) shows them alongside the CFPB’s typical 2%–5% of other costs. ## The reduced recordation rate for first-time DC homebuyers DC residents buying their first District home can record the deed at 0.725% instead of the full buyer rate, if household income is within the limits on the Office of Tax and Revenue’s form and the price is no more than $777,000 for tax year 2026. “First-time DC homebuyer” means you have never owned a house, condo or co-op interest in the District that received the homestead deduction (with an exception for a home given up in a divorce). Co-op buyers get reduced rates too. The seller’s transfer tax doesn’t change. The median home falls under the ceiling, so a qualifying buyer would pay about $5,317 in recordation tax instead of $10,634 — a saving of about $5,317. > **Tip: File the paperwork with your settlement agent** > > The reduced rate is claimed on the Recorder of Deeds form when the deed is recorded, so tell your settlement agent early that you expect to qualify and have income documents ready. ## The homestead deduction and assessment cap If the home is your principal residence, the homestead deduction removes $91,950 from its assessed value for tax year 2026, which the Office of Tax and Revenue says saves $781.58 a year. Apply online through MyTax.DC.gov: applications filed from October 1 to March 31 get the full year’s benefit; later filings get half. Homesteaded owners are also protected by the assessment cap, which limits the taxable assessment increase to 10% a year even when values jump. Seniors and people with disabilities who qualify can have their tax cut in half. Census data put the median DC tax bill at $4,594 a year, an effective rate of 0.63%. ## HPAP and DCHFA: DC’s buyer programs | Program | Run by | Help | Main rules | |---|---|---|---| | Home Purchase Assistance Program (HPAP) | DC Department of Housing and Community Development | Up to $202,000 in gap financing plus up to $4,000 for closing costs, as a 0% deferred loan | First-time buyers (no ownership interest in 3 years); income up to 110% of median family income; first-come, first-served | | DC Open Doors | DC Housing Finance Agency | 0% deferred loan for the minimum down payment, with a below-market first mortgage | First-time or repeat buyers; minimum score 640; borrower income up to $275,400; no price limit | | DC4ME | DC Housing Finance Agency | VA loan with DCHFA help for closing costs or prepaid items | Eligible veterans and service members | HPAP repayment depends on income: for lower-income households the loan is deferred until you sell, refinance to take out equity or move out, while moderate-income households start principal-only payments after a deferral period. Funds for the current fiscal year opened October 1, 2026; once you receive a notice to proceed you have a limited window to sign a contract and close. DCHFA also offers a Mortgage Credit Certificate — see [mortgage credit certificates](https://mortgage-math-us.com/first-time-buyers/mortgage-credit-certificates/). ## What the median DC home costs > **Worked example: $733,400 home, 10% down, 30-year fixed at 7.24%** > > | Monthly cost | Amount | > |---|---:| > | Principal and interest on $660,060 | $4,498 | > | Property tax at 0.63% | $385 | > | Homeowners insurance (national average, $4.90 per $1,000) | $299 | > | PMI (midpoint of Freddie Mac’s typical range) | $330 | > | **Total** | **$5,513** | > > Condo and co-op fees, common in DC, come on top. DC households have the highest median income in the country ($109,707), and that income, at Freddie Mac’s 30% guideline, supports about **$365,000** with 10% down — $368,400 below the median home value. Median owner costs for homes with a mortgage, $3,181/mo, are the highest among the states and DC. Try other numbers in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=733000&down=10&tax=0.63&state=DC). ## A city of renters and older homes Most DC households rent: only 40.9% of occupied homes are owner-occupied, the lowest share in the country (US: 65.3%). The housing is old, too — the median home was built in 1960, the 2nd-oldest stock among the states and DC — which makes rowhouse inspections, condo reserve studies and co-op board approvals part of the process. Renters weighing a purchase against the median rent of $1,931/mo can use the [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=DC&price=733000&rent=1931). For neighborhood prices and the local market, see the [Washington, DC market guide](https://mortgage-math-us.com/location/washington-dc/). ## Frequently asked questions ### How much is the recordation tax in DC? The buyer’s recordation tax is 1.1% of the price on homes under $400,000 and 1.45% at $400,000 or more, applied to the whole price. On the median DC home that is about $10,634. The seller pays a matching transfer tax. ### Do first-time homebuyers pay less recordation tax in DC? Yes. Qualifying first-time DC homebuyers pay 0.725% on houses and condos priced up to $777,000 (tax year 2026), if household income is within the Office of Tax and Revenue’s limits. ### What is the DC homestead deduction? For tax year 2026 it removes $91,950 from the assessed value of your principal residence, saving $781.58 a year. Homesteaded owners also get the assessment cap, which limits taxable increases to 10% a year. ### How much is HPAP in DC? DHCD’s Home Purchase Assistance Program offers up to $202,000 in gap financing plus up to $4,000 for closing costs to first-time buyers earning up to 110% of median family income. Funds are first-come, first-served. ### What credit score do I need for DC Open Doors? DCHFA requires a minimum score of 640. DC Open Doors is open to first-time and repeat buyers with income up to $275,400 and has no maximum sales price. ### Who pays the transfer tax in DC? The seller pays the transfer tax and the buyer pays the recordation tax; both use the same rate. Contracts can shift costs, so check yours. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US11) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US11) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US11) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US11) — Median gross rent (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [DC Office of Tax and Revenue: Form ROD 11, Reduced Recordation Tax Rate for First-Time Homebuyers (FY2026)](https://otr.cfo.dc.gov/sites/default/files/dc/sites/otr/publication/attachments/ROD%2011%20-%20Reduced%20Recordation%20Tax%20Rate%20for%20First-Time%20Homebuyers%20FY2026.pdf) — DC reduced recordation tax rate for first-time DC homebuyers (houses and condos) (Oct 29, 2026) - [DC Office of Tax and Revenue: Notice of Oct. 1, 2025 Tax Changes](https://otr.cfo.dc.gov/release/notice-oct-1-2025-tax-changes) — Price ceiling for DC’s reduced first-time homebuyer recordation rate, tax year 2026 (Tax year 2026) - [DC Office of Tax and Revenue: Real Property Tax Reliefs, Credits, and Deductions](https://otr.cfo.dc.gov/page/real-property-tax-reliefs-credits-and-deductions) — DC homestead deduction (reduction in assessed value), tax year 2026; Annual tax saving from the DC homestead deduction, tax year 2026; DC assessment cap: most a home’s taxable assessment can rise in a year (Tax year 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [DC Office of the Chief Financial Officer](https://cfo.dc.gov/page/tax-rates-and-revenues-property-taxes) — District real estate transfer tax (Oct 28, 2026) - [DC Department of Housing and Community Development: Home Purchase Assistance Program](https://dhcd.dc.gov/service/home-purchase-assistance-program) — DC Home Purchase Assistance Program (HPAP) gap financing, up to; HPAP closing cost assistance, up to; HPAP income limit (share of median family income) (FY2027) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [42 U.S.C. 12704(14)](https://www.law.cornell.edu/uscode/text/42/12704) — First-time homebuyer: has not owned a home in the past (HUD/HOME statute) (Oct 28, 2026) - [DC Housing Finance Agency: DC Open Doors](https://dchfa.org/homeownership/dc-open-doors/) — DCHFA DC Open Doors minimum credit score; DCHFA DC Open Doors income limit (Dec 4, 2025) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=040XX00US11) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US11) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=010XX00US) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US11) — Median year homes were built (2024 ACS 1-year) - [DC Office of Tax and Revenue: Real property tax reliefs, credits and deductions](https://otr.cfo.dc.gov/page/real-property-tax-reliefs-credits-and-deductions) - [DC Office of Tax and Revenue: Reduced recordation tax rate for first-time homebuyers (ROD 11)](https://otr.cfo.dc.gov/sites/default/files/dc/sites/otr/publication/attachments/ROD%2011%20-%20Reduced%20Recordation%20Tax%20Rate%20for%20First-Time%20Homebuyers%20FY2026.pdf) - [DC DHCD: Home Purchase Assistance Program](https://dhcd.dc.gov/service/home-purchase-assistance-program) - [DC Housing Finance Agency: DC Open Doors](https://dchfa.org/homeownership/dc-open-doors/) _General information, not financial advice._ --- # Florida mortgages: insurance, doc stamps, homestead savings and buyer help > Florida mortgage numbers: insurance and Citizens, doc stamp and intangible taxes, the $50,000 homestead exemption and Florida Housing down-payment help. URL: https://mortgage-math-us.com/location/florida/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median Florida home ($396,900) costs about **$3,023 a month** with 10% down at the 7.24% national average rate — using the national insurance average; your quote may differ a lot, and at twice that average the total would be $3,185. At closing, Florida taxes the deed at 0.7% of the price and the new mortgage at 0.55% of the loan. Once you live in the home, the homestead exemption cuts up to $50,000 from its taxable value and Save Our Homes caps yearly assessment increases at 3%. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in Florida | $396,900 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US12) | 2024 ACS 1-year | | Homestead exemption, up to | $50,000 | [Florida Department of Revenue: Homestead Exemption (PT-113)](https://www.floridarevenue.com/property/Documents/pt113.pdf) | Aug 1, 2025 | | Save Our Homes yearly cap | 3% | [Florida Department of Revenue: Save Our Homes Assessment Limitation and Portability (PT-112)](https://www.floridarevenue.com/property/Documents/pt112.pdf) | Aug 1, 2024 | | Documentary stamp tax on deeds | 0.7% | [Florida Department of Revenue](https://floridarevenue.com/Forms_library/current/gt800014.pdf) | Dec 1, 2017 | | Taxes on a new mortgage | 0.55% | [Florida Statutes 199.133; Florida DOR GT-800014](https://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0100-0199/0199/Sections/0199.133.html) | Oct 28, 2026 | | Florida Assist, up to | $10,000 | [Florida Housing Finance Corporation: Homebuyer Loan Programs](https://www.floridahousing.org/programs/homebuyer-loan-program-wizards) | Oct 29, 2026 | | Citizens eligibility threshold | 20% | [Citizens Property Insurance Corporation: Clearinghouse](https://www.citizensfla.com/clearinghouse) | Oct 29, 2026 | ## Homeowners insurance and Citizens Your lender will require a homeowners policy before closing, and in Florida it is often the hardest cost to predict. Wind exposure, roof age and distance from the coast all move the price, and some insurers are reluctant to cover older roofs. If private insurers won’t offer coverage at a reasonable price, Florida law provides **Citizens Property Insurance Corporation** as an option. Its eligibility rules keep it a fallback: - You are generally eligible only if no private insurer offers comparable coverage, or if the private premium is more than 20% higher than Citizens’ premium for comparable coverage. - At renewal, an offer from a private insurer that is not more than 20% above the Citizens renewal premium leads to nonrenewal of the Citizens policy. Its Clearinghouse, required by state law, checks private offers. - Through depopulation, private insurers approved by the Office of Insurance Regulation can take policies out of Citizens. - Citizens warns that its policyholders can be assessed if it lacks the money to pay claims after a major hurricane or series of storms. Flood is separate. Standard policies don’t cover flood damage, and a home in a FEMA Special Flood Hazard Area with a federally backed or regulated loan needs flood insurance — so price it during your inspection period too. ## What the median Florida home costs each month > **Worked example: $396,900 home, 10% down, 30-year fixed at 7.24%** > > | Monthly cost | National insurance average | Insurance at twice that | > |---|---:|---:| > | Principal and interest on $357,210 | $2,434 | $2,434 | > | Property tax at 0.75% | $248 | $248 | > | Homeowners insurance | $162 | $324 | > | PMI (midpoint of Freddie Mac’s typical range) | $179 | $179 | > | **Total** | **$3,023** | **$3,185** | > > The insurance column on the right is a sensitivity test, not a Florida average; flood insurance and HOA or condo fees are extra. The median home is above the US median and Florida’s median household income ($77,735) is below the national figure, so the median home costs 5.1 times income, higher than the US ratio of 4.4. At Freddie Mac’s 30% guideline the median income supports about **$255,000** with 10% down — $141,900 below the median home value; buying the median home takes about $120,900 a year. Use the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=397000&down=10&tax=0.75&state=FL) with your own insurance quote, or the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=FL&income=77735). ## Documentary stamp and intangible taxes Florida charges three state taxes when a purchase closes, and two of them are tied to the mortgage: *Florida’s closing taxes on the median home with 10% down* | Tax | Rate | Amount | |---|---:|---:| | Documentary stamp tax on the deed | 0.7% of the price | $2,778 | | Documentary stamp tax on the note plus nonrecurring intangible tax on the mortgage | 0.55% of the loan combined | $1,965 | | **Total** | | **$4,743** | Florida’s deed tax rate is the 9th-highest statewide rate among the states and DC. Miami-Dade County applies a different deed rate to single-family homes — see the [Miami guide](https://mortgage-math-us.com/location/miami-fl/). Who pays the deed stamps is set by the contract; the mortgage taxes follow the loan, so a buyer who borrows less pays less. The [closing cost estimator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=FL) includes all three. ## Homestead exemption and Save Our Homes Florida’s homestead exemption can reduce the taxable value of your permanent residence by up to $50,000. The first $25,000 applies to all property taxes, including school taxes; the additional exemption applies to assessed value above $50,000 and only to non-school taxes, and that part is now adjusted for inflation each January. File Form DR-501 with your county property appraiser by March 1 of the first tax year you own and live in the home. The exemption also starts **Save Our Homes**: after the first year, the assessed value of a homestead can rise by no more than 3% a year, or the change in the Consumer Price Index if that is lower. If an example home assessed at $300,000 rose 10% in market value in a year, its assessed value could rise only 3% — about $21,000 less taxable value than without the cap. When you move, you can usually transfer (“port”) some or all of that built-up difference to a new Florida homestead if you establish it in time; the deadline runs from January 1 of the year you left the old one. > **Tip: The seller’s tax bill isn’t yours** > > A long-time owner’s bill reflects years of Save Our Homes caps. When you buy, the home is reassessed at market value the next January, so estimate taxes from the price, not the seller’s bill. ## Florida Housing programs The Florida Housing Finance Corporation lends through participating lenders. Its programs require a minimum score of 640 and, for most, that you haven’t owned and lived in a primary residence in 3 years; income and price limits are set by county. | Program | Help | Terms | |---|---|---| | Florida Assist | Up to $10,000 | 0% deferred second mortgage, not forgivable; with FHA, VA, USDA or conventional loans | | HFA Preferred/Advantage PLUS | 5% or less of the loan | Forgiven at 20% a year over 5 years; conventional first mortgages only | | Florida Hometown Heroes | Up to 5% of the first mortgage, capped at $35,000 | 0% deferred 30-year second, not forgivable; for eligible full-time workers such as school staff, health care workers, first responders, and military members and veterans | > **Worked example: Florida Housing help on the median home** > > A conventional loan with 3% down is $384,993; the top HFA PLUS second would be $19,250, forgiven after 5 years if you stay. A Hometown Heroes buyer with an FHA loan of $383,009 could get $19,150, repaid when you sell or refinance. Florida Housing’s Hometown Heroes page doesn’t show funding status, so confirm availability with a participating lender before you count on it. Many counties and cities add their own help through the state’s SHIP program; see the [Tampa guide](https://mortgage-math-us.com/location/tampa-fl/) for one example, and compare all options in the [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/). ## Frequently asked questions ### How much is the homestead exemption in Florida? Up to $50,000. The first $25,000 applies to all property taxes, including school taxes; the additional exemption applies to assessed value above $50,000 for non-school taxes and is adjusted for inflation. File with your county property appraiser by March 1. ### What is Save Our Homes? It limits yearly increases in a homestead’s assessed value to 3% or the change in the Consumer Price Index, whichever is lower, starting the year after you receive the homestead exemption. ### How much are doc stamps in Florida? The documentary stamp tax on a deed is 0.7% of the price, about $2,778 on the median home. A new mortgage adds 0.55% of the loan in documentary stamp and intangible taxes — about $1,965 with 10% down. ### When can I get insurance from Citizens in Florida? Generally when no private insurer offers comparable coverage, or when the private premium is more than 20% above Citizens’ premium for comparable coverage. Citizens checks private offers through its Clearinghouse. ### Does Florida have first-time home buyer programs? Yes. Florida Housing offers Florida Assist (up to $10,000, deferred), HFA PLUS seconds of up to 5% of the loan forgiven over 5 years, and Hometown Heroes for eligible workers, through participating lenders. ### What credit score do I need for Florida Housing programs? Florida Housing requires a minimum credit score of 640, along with county income and purchase price limits. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US12) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US12) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US12) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US12) — Median gross rent (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Florida Department of Revenue](https://floridarevenue.com/Forms_library/current/gt800014.pdf) — State real estate transfer tax (Dec 1, 2017) - [Florida Statutes 199.133; Florida DOR GT-800014](https://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0100-0199/0199/Sections/0199.133.html) — State tax on recording a mortgage (Oct 28, 2026) - [Florida Department of Revenue: Homestead Exemption (PT-113)](https://www.floridarevenue.com/property/Documents/pt113.pdf) — Florida homestead exemption, up to (Aug 1, 2025) - [Florida Department of Revenue: Save Our Homes Assessment Limitation and Portability (PT-112)](https://www.floridarevenue.com/property/Documents/pt112.pdf) — Save Our Homes: most a homestead’s assessed value can rise in a year (or the CPI change, if lower) (Aug 1, 2024) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment; Minimum down payment on some conventional loans (Oct 28, 2026) - [Florida Housing Finance Corporation: Homebuyer Loan Programs](https://www.floridahousing.org/programs/homebuyer-loan-program-wizards) — Florida Housing HFA Preferred/Advantage PLUS second mortgage, up to (share of the loan); Florida Housing HFA PLUS second mortgage forgiven over (20% a year); Florida Housing homebuyer programs minimum credit score (Oct 29, 2026) - [Florida Housing Finance Corporation: Hometown Heroes](https://www.floridahousing.org/hometown-heroes) — Florida Hometown Heroes assistance, up to (share of the first mortgage); Florida Hometown Heroes assistance, capped at (Oct 29, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [Citizens Property Insurance Corporation: Clearinghouse](https://www.citizensfla.com/clearinghouse) — Citizens Property Insurance: a homeowner is generally ineligible if a private offer is no more than this much above Citizens’ premium (Oct 29, 2026) - [Florida Housing Finance Corporation: Homebuyer loan programs](https://www.floridahousing.org/programs/homebuyer-loan-program-wizards) - [Florida Department of Revenue: Homestead exemption (PT-113)](https://www.floridarevenue.com/property/Documents/pt113.pdf) - [Citizens Property Insurance Corporation: Clearinghouse](https://www.citizensfla.com/clearinghouse) - [Florida Housing: Hometown Heroes](https://www.floridahousing.org/hometown-heroes) _General information, not financial advice._ --- # Georgia mortgages: closing taxes, Georgia Dream and homestead relief > Georgia mortgage costs: the 0.3% intangible tax on your loan, Georgia Dream help up to $10,000, homestead relief and the payment on a median home. URL: https://mortgage-math-us.com/location/georgia/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer A median-value Georgia home ($343,300) costs about **$2,612 a month** with 10% down at the 7.24% national average rate, including property tax at the state’s effective rate of 0.74%. At closing, Georgia adds an intangible recording tax of 0.3% of the loan — $927 on that home — on top of a 0.1% tax on the sale. First-time buyers can get up to $10,000 through Georgia Dream, or $12,500 for protectors, educators, nurses and some other households. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in Georgia | $343,300 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US13) | 2024 ACS 1-year | | Effective property tax rate | 0.74% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US13) | 2024 ACS 1-year | | Median household income | $79,991/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US13) | 2024 ACS 1-year | | Intangible recording tax on the loan | 0.3% | [Georgia Department of Revenue](https://dor.georgia.gov/intangible-recording-tax) | Oct 28, 2026 | | State transfer tax on the sale | 0.1% | [Georgia Department of Revenue](https://dor.georgia.gov/real-estate-transfer-tax) | Oct 28, 2026 | | Georgia Dream assistance, up to | $10,000 | [Georgia DCA: Georgia Dream](https://dca.georgia.gov/affordable-housing/home-ownership/georgia-dream-mortgage-products/georgia-dream) | Jul 8, 2026 | | 2026 homestead relief grant (assessed value) | $18,000 | [Georgia Department of Revenue: 2026 Property Tax Relief Grant](https://dor.georgia.gov/2026-property-tax-relief-grant) | May 12, 2026 | ## Two state taxes at a Georgia closing Many states tax a home sale. Georgia taxes both the sale and the loan. The real estate transfer tax is 0.1% of the price, and the legal default is that the seller pays it, although a purchase contract can shift it. The intangible recording tax is charged when the security deed for a long-term loan is recorded, at 0.3% of the amount borrowed — so it grows with your loan, not with the price, and a bigger down payment shrinks it. > **Worked example: Both taxes on the median Georgia home ($343,300)** > > | | 10% down | 20% down | > |---|---:|---:| > | Loan amount | $308,970 | $274,640 | > | Intangible recording tax on the loan | $927 | $824 | > | Transfer tax on the sale | $343 | $343 | > | **Both taxes** | **$1,270** | **$1,167** | > > Putting 20% down instead of 10% saves $103 in intangible tax — small next to the PMI it also avoids, but it shows the tax follows the loan. These taxes sit inside the CFPB’s usual range for total closing costs of 2%–5% of the price, which on the median home is $6,866–$17,165. The [closing cost estimator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=GA) applies both Georgia taxes to your own price and loan, and the [closing costs guide](https://mortgage-math-us.com/buying/closing-costs/) explains each line of the Loan Estimate. ## Georgia Dream: amounts, limits and who qualifies Georgia Dream is the homeownership program of the Georgia Department of Community Affairs. It pairs a 30-year fixed-rate first mortgage from a participating lender with a down payment loan: | Option | Assistance | Who it is for | |---|---|---| | Standard | 5% of the price, up to $10,000 | First-time buyers — no ownership interest in a primary residence in the last 3 years — or buyers in certain areas | | PEN | Up to $12,500 | Public protectors, educators, nurses and other healthcare workers, and active military | | Choice | Up to $12,500 | Households with a family member living with a disability | On the median $343,300 home, 5% would be $17,165, so the dollar cap, not the percentage, sets the standard amount at $10,000. Price limits depend on the county: $625,000 in the Atlanta metro counties and $475,000 in counties outside the Atlanta and Athens metros. The statewide median value fits under even the lowest county price limit. Income limits follow the same map — $137,555 for a one- or two-person household in the Atlanta metro, more for larger households and less in the rest of the state. Georgia Dream also caps the liquid assets you can keep after closing. Repeat buyers and higher earners can look at DCA’s Peach Plus and Peach Advantage loans, which have higher limits. Compare the options with the national programs in the [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/). ## What the median Georgia home costs a month > **Worked example: $343,300 home, 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $308,970 | $2,106 | > | Property tax at 0.74% a year | $212 | > | Homeowners insurance at $4.90 per $1,000 (Freddie Mac national average) | $140 | > | PMI (midpoint of Freddie Mac’s range) | $154 | > | **Total** | **$2,612** | The insurance line uses Freddie Mac’s national figure, not a Georgia average; get real quotes, especially near the coast. On Georgia’s median household income of $79,991, Freddie Mac’s guideline of keeping housing under 30% of gross income allows $2,000 a month — enough for about **$263,000** with 10% down, $80,300 less than the median home value. Try your own figures in the [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=343000&down=10&tax=0.74&state=GA) or the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=GA&income=79991). ## Georgia’s homestead exemption and the 2026 relief grant Georgia’s effective property tax rate of 0.74% is below the national ratio of 0.89% — the 24th-lowest among the 50 states and DC. Bills are figured on assessed value, which Georgia sets at 40% of fair market value, times the local millage rate (one mill is $1 per $1,000 of assessed value). The standard homestead exemption takes $2,000 off the assessed value for county and school taxes — the same as $5,000 of market value. For 2026 only, the state’s Homeowner Tax Relief Grant cuts a homestead’s assessed value by a further $18,000, equal to $45,000 of market value, and shows up as a credit on the tax bill. The statewide effective rate works out to about 18.5 mills on assessed value; at that rate the grant is worth roughly $333 and the standard exemption about $37 a year. Your county’s millage decides the real figure. > **Tip: Claim the homestead exemption by April 1** > > Both the exemption and the grant depend on a homestead filed with your county by April 1 of the tax year, for a home you owned and lived in on January 1. If you close later in the year, file for the next year — it is not automatic. ## Georgia’s housing next to the US *Georgia compared with the US (Census ACS 2024 1-year)* | | Georgia | United States | |---|---:|---:| | Median home value | $343,300 | $360,600 | | Median household income | $79,991 | $81,604 | | Effective property tax rate | 0.74% | 0.89% | | Median gross rent | $1,506/mo | $1,487/mo | | Median owner costs with a mortgage | $1,909/mo | $2,035/mo | | Median year built | 1993 | 1981 | | Homes lived in by their owners | 66.3% | 65.3% | Georgia’s median home value is below the US figure — the 25th-highest of the 50 states and DC. Its housing is young: a median build year of 1993 makes it the 8th-newest stock in the country, which matters for inspections, insurance and the repairs you budget for. ## Atlanta and the rest of Georgia Inside the City of Atlanta the median owner-occupied home is worth $462,200, $118,900 above the state median, and the city’s effective tax rate is 1.01%. That median is still under Georgia Dream’s Atlanta metro price limit of $625,000. The [Atlanta market guide](https://mortgage-math-us.com/location/atlanta-ga/) covers city programs and costs. Wherever you buy, compare a payment with your rent in the [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=GA&price=343000&rent=1506). ## Frequently asked questions ### Does Georgia have a mortgage tax? Yes. Georgia’s intangible recording tax is 0.3% of a long-term loan, paid when the security deed is recorded. On a 10% down loan for the median $343,300 home that is about $927. ### Who pays the transfer tax in Georgia? The state transfer tax is 0.1% of the price. The legal default is that the seller pays it, but the purchase contract can say otherwise. ### How much is Georgia Dream down payment assistance? Standard assistance is 5% of the price up to $10,000. Protectors, educators, nurses, active military and households with a family member with a disability can get up to $12,500. Price limits run from $475,000 to $625,000 depending on the county. ### What is the property tax rate in Georgia? Census data put the median Georgia homeowner’s bill at $2,554 a year, about 0.74% of median home value. Bills are based on 40% of market value times local millage, minus exemptions. ### What is the homestead exemption in Georgia? The standard exemption takes $2,000 off a homestead’s assessed value for county and school taxes. For 2026, the Homeowner Tax Relief Grant removes another $18,000 of assessed value for homesteads filed by April 1. ### How much income do you need to buy a median-priced home in Georgia? To keep the $2,612 monthly cost of the median home with 10% down under 30% of gross income, you need about $104,500 a year, assuming few other debts. The median Georgia household earns $79,991. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US13) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US13) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US13) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [Georgia Department of Revenue](https://dor.georgia.gov/intangible-recording-tax) — State tax on recording a mortgage (Oct 28, 2026) - [Georgia DCA: Georgia Dream](https://dca.georgia.gov/affordable-housing/home-ownership/georgia-dream-mortgage-products/georgia-dream) — Georgia Dream standard assistance, up to (share of the purchase price); Georgia Dream down payment assistance (standard), up to; Georgia Dream purchase price limit, counties outside the Atlanta and Athens metros (Jul 8, 2026) - [Georgia Department of Revenue: Property Tax Homestead Exemptions](https://dor.georgia.gov/property-tax-homestead-exemptions) — Georgia standard homestead exemption (assessed value, county and school taxes); Georgia assessed value as a share of fair market value (Oct 29, 2026) - [Georgia Department of Revenue: 2026 Property Tax Relief Grant](https://dor.georgia.gov/2026-property-tax-relief-grant) — Georgia 2026 Homeowner Tax Relief Grant: reduction in a homestead’s assessed value (May 12, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US1304000) — Median value of owner-occupied homes (2024 ACS 1-year) - [Georgia Department of Revenue](https://dor.georgia.gov/real-estate-transfer-tax) — State real estate transfer tax (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US13) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=040XX00US13) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=010XX00US) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US13) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=010XX00US) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US13) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=010XX00US) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US1304000) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Georgia Department of Community Affairs: Georgia Dream](https://dca.georgia.gov/affordable-housing/home-ownership/georgia-dream-mortgage-products/georgia-dream) - [Georgia Department of Revenue: Property Tax Homestead Exemptions](https://dor.georgia.gov/property-tax-homestead-exemptions) - [Georgia Department of Revenue: 2026 Property Tax Relief Grant](https://dor.georgia.gov/2026-property-tax-relief-grant) _General information, not financial advice._ --- # Hawaii mortgages: loan limits, payments and state help > Hawaii mortgage numbers: $1,249,125 conforming limit, 0.27% effective property tax, the payment on a median home and HHFDC’s Hale Kamaʻāina loans. URL: https://mortgage-math-us.com/location/hawaii/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median owner-occupied home in Hawaii is worth $875,900. With 10% down at the 7.24% national average rate it costs about **$6,321 a month**, and principal and interest are 85% of that because property tax runs only 0.27% of value. Conforming loans go up to $1,249,125 in Hawaii ($1,299,500 in Maui and Kalawao counties), and FHA limits can reach $1,873,625, against $832,750 and $1,249,125 for most of the mainland. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in Hawaii | $875,900 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US15) | 2024 ACS 1-year | | Median household income | $100,745/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US15) | 2024 ACS 1-year | | Effective property tax rate | 0.27% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US15) | 2024 ACS 1-year | | 2026 conforming limit (most counties) | $1,249,125 | [FHFA: 2026 conforming loan limits by county](https://www.fhfa.gov/document/d/cll/fullcountyloanlimitlist2026_hera-based_final_flat.pdf) | 2026 limit | | 2026 conforming limit, Maui and Kalawao | $1,299,500 | [FHFA: 2026 conforming loan limits by county](https://www.fhfa.gov/document/d/cll/fullcountyloanlimitlist2026_hera-based_final_flat.pdf) | 2026 limit | | 2026 FHA limit ceiling in Hawaii | $1,873,625 | [HUD Mortgagee Letter 2025-23: 2026 Nationwide Forward Mortgage Loan Limits](https://www.hud.gov/sites/dfiles/hudclips/documents/2025-23hsgml.pdf) | 2026 limit | | Hale Kamaʻāina price limit, Honolulu | $866,346 | [HHFDC: Hale Kamaʻāina eligibility, income and purchase price requirements](https://dbedt.hawaii.gov/hhfdc/hale-kama%ca%bbaina-mortgage-program-eligibility-income-and-purchase-price-requirements/) | Jun 13, 2026 | ## Hawaii prices against Hawaii incomes Hawaii’s median home value is the highest of the 50 states and DC, and its median household income of $100,745 is above the national figure. Incomes do not close the gap: the median home costs 8.7 times the median income, against 4.4 for the US — the widest ratio in the country. *Hawaii compared with the US (Census ACS 2024 1-year)* | | Hawaii | United States | |---|---:|---:| | Median home value | $875,900 | $360,600 | | Median household income | $100,745 | $81,604 | | Home value ÷ income | 8.7× | 4.4× | | Effective property tax rate | 0.27% | 0.89% | | Median gross rent | $1,942/mo | $1,487/mo | | Median owner costs with a mortgage | $2,937/mo | $2,035/mo | | Homes lived in by their owners | 61.6% | 65.3% | Fewer households own here than in most states — Hawaii’s owner share is the 6th-lowest in the country — and the median rent is the 2nd-highest. ## Property tax and the Hawaii payment > **Worked example: $875,900 home (Hawaii’s median value), 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | Share | > |---|---:|---:| > | Principal and interest on $788,310 | $5,372 | 85% | > | Property tax at 0.27% a year | $197 | 3% | > | Homeowners insurance at $4.90 per $1,000 (Freddie Mac national average) | $358 | 6% | > | PMI (midpoint of Freddie Mac’s range) | $394 | 6% | > | **Total** | **$6,321** | | Hawaii’s effective property tax rate is the lowest in the country. At the national ratio of 0.89%, the same home would carry $650 a month in tax instead of $197. With principal and interest at 85% of the payment, the price and the rate do most of the work. Each $10,000 borrowed adds about $68 a month at today’s average rate. The insurance line uses Freddie Mac’s national figure; Hawaii quotes depend on the island, the building and hazards such as hurricanes and lava zones. Test your own price in the [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=876000&down=10&tax=0.27&state=HI). ## Hawaii’s higher conforming and FHA loan limits Federal law sets special loan limits for Alaska, Hawaii, Guam and the US Virgin Islands. For 2026 they look like this for a one-unit home: | Loan type | Most of the mainland | Hawaii | |---|---:|---:| | Conforming (Fannie Mae, Freddie Mac) | $832,750 | $1,249,125 in Hawaii, Honolulu and Kauai counties; $1,299,500 in Maui and Kalawao | | FHA ceiling | $1,249,125 in high-cost areas | Up to $1,873,625, set county by county | With 10% down, a conforming loan stretches to a price of about $1,387,917 on Oahu, Kauai and Hawaii Island and $1,443,889 in Maui County, against $925,278 at the mainland baseline. Even with the minimum 3% down, the median Hawaii home needs a loan of $849,623 — more than the mainland baseline, so it would be a jumbo loan in most of the country, but well inside Hawaii’s limit. Above these limits you are in [jumbo loan](https://mortgage-math-us.com/loan-types/jumbo-loans/) territory, with stricter rules. Check your county’s FHA figure on HUD’s limits lookup before choosing an [FHA loan](https://mortgage-math-us.com/loan-types/fha-loans/). ## What a Hawaii median income can buy Freddie Mac suggests keeping housing costs under 30% of gross income. On Hawaii’s median household income that is $2,519 a month, which supports a home of about **$349,000** with 10% down at today’s average rate — $526,900 below the median value. Owning the median home on those terms takes an income of roughly $252,800. Buyers bridge that gap with two incomes, family help, a smaller home or condo, or a leasehold property, where you buy the building but lease the land. The [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=HI&income=100745) shows what your own income supports. ## HHFDC’s Hale Kamaʻāina Mortgage Program The Hawaii Housing Finance and Development Corporation (HHFDC) funds 30-year fixed-rate loans through participating lenders, using tax-exempt bonds to price them below the market. The main rules: - **First-time buyers.** You and your spouse must not have owned or held an interest in a principal residence in the past 3 years; exceptions may apply for veterans and targeted areas. - **Income and price limits by county.** In Honolulu County the limits are $154,805 for a household of one or two and a price of $866,346 outside targeted areas. Price limits are lower on Hawaii Island and higher on Kauai and Maui. The statewide median value is above the Honolulu limit. - **Counseling.** Every borrower completes homeownership counseling with a HUD-approved agency — see the [homebuyer education guide](https://mortgage-math-us.com/first-time-buyers/homebuyer-education/). HHFDC also lists a second mortgage for down payment help, but says its terms are waiting on rule changes under a 2026 state law, so don’t plan around it until HHFDC publishes them. Loans financed with tax-exempt bonds can carry a federal recapture tax if you sell within the first years at a gain while your income has risen; ask the lender for the recapture notice. ## Hawaii’s conveyance tax and closing costs Hawaii’s conveyance tax is a single rate applied to the whole price, picked by price band, and the legal default is that the seller pays it. The rates are higher when the buyer can’t claim a homeowner exemption — typically investment and second-home purchases. *Conveyance tax rate on the whole price, buyer eligible for a homeowner exemption* | Price | Rate | Tax at the top of the band | |---|---:|---:| | Under $600,000 | 0.1% | $600 | | $600,000 to under $1,000,000 | 0.2% | $2,000 | | $1,000,000 to under $2,000,000 | 0.3% | $6,000 | | $2,000,000 to under $4,000,000 | 0.5% | $20,000 | On the median $875,900 home the tax is about $1,752. Total closing costs usually run 2%–5% of the price according to the CFPB, or $17,518–$43,795 here. Estimate yours with the [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=HI). ## Renting vs owning in Hawaii The median Hawaii renter pays $1,942 a month, $4,379 less than the full monthly cost of owning the median home with 10% down. Owning catches up only through principal paydown and price growth over time, so the number of years you plan to stay matters. Run your own numbers in the [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=HI&price=876000&rent=1942). ## Frequently asked questions ### What is the conforming loan limit in Hawaii? For 2026 the one-unit conforming limit is $1,249,125 in Hawaii, Honolulu and Kauai counties and $1,299,500 in Maui and Kalawao counties. Most of the mainland’s baseline is $832,750. ### What is the FHA loan limit in Hawaii? HUD sets FHA limits by county. Because Hawaii is a special exception area, county limits can go up to $1,873,625 for a one-unit home in 2026, compared with a mainland ceiling of $1,249,125. Check your county on HUD’s lookup. ### What is the property tax rate in Hawaii? Census data put the median Hawaii homeowner’s bill at $2,385 a year, about 0.27% of median home value. Each county sets its own rates and home exemptions. ### Does Hawaii have a first-time home buyer program? Yes. HHFDC’s Hale Kamaʻāina Mortgage Program offers below-market 30-year fixed loans to buyers who haven’t owned a principal residence in 3 years, within county income and price limits — $866,346 in Honolulu outside targeted areas. ### Who pays the conveyance tax in Hawaii? The legal default is the seller. The rate depends on the price and on whether the buyer can claim a homeowner exemption; on the median $875,900 home it is about $1,752. ### How much income do you need to buy a house in Hawaii? Owning the median $875,900 home with 10% down costs about $6,321 a month at today’s average rate. Keeping that under 30% of gross income takes roughly $252,800 a year. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US15) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US15) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US15) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US15) — Median gross rent (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [FHFA: 2026 conforming loan limits by county](https://www.fhfa.gov/document/d/cll/fullcountyloanlimitlist2026_hera-based_final_flat.pdf) — 2026 conforming loan limit in Hawaii, Honolulu and Kauai counties (one-unit); 2026 conforming loan limit in Maui and Kalawao counties (one-unit) (2026 limit) - [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) — 2026 baseline conforming loan limit (one-unit) (2026 limit) - [HUD Mortgagee Letter 2025-23: 2026 Nationwide Forward Mortgage Loan Limits](https://www.hud.gov/sites/dfiles/hudclips/documents/2025-23hsgml.pdf) — 2026 FHA one-unit limit ceiling in Hawaii (special exception area) (2026 limit) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum down payment on some conventional loans; Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [HHFDC: Hale Kamaʻāina eligibility, income and purchase price requirements](https://dbedt.hawaii.gov/hhfdc/hale-kama%ca%bbaina-mortgage-program-eligibility-income-and-purchase-price-requirements/) — HHFDC Hale Kamaʻāina Mortgage Program purchase price limit, Honolulu County (non-targeted); Hale Kamaʻāina first-time buyer: no interest in a principal residence in the past; Hale Kamaʻāina income limit, Honolulu County, 1–2 person household (non-targeted) (Jun 13, 2026) - [HUD](https://www.hud.gov/news/hud-no-25-145) — 2026 FHA loan limit ceiling (one-unit, high-cost areas) (2026 limit) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=040XX00US15) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=010XX00US) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US15) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=010XX00US) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [FHFA: 2026 conforming loan limits by county](https://www.fhfa.gov/document/d/cll/fullcountyloanlimitlist2026_hera-based_final_flat.pdf) - [HUD Mortgagee Letter 2025-23: 2026 forward mortgage limits](https://www.hud.gov/sites/dfiles/hudclips/documents/2025-23hsgml.pdf) - [HHFDC: Hale Kamaʻāina eligibility, income and price limits](https://dbedt.hawaii.gov/hhfdc/hale-kama%ca%bbaina-mortgage-program-eligibility-income-and-purchase-price-requirements/) - [HHFDC: Hale Kamaʻāina Mortgage Program FAQ](https://dbedt.hawaii.gov/hhfdc/2026/06/16/hale-kama%ca%bbaina-mortgage-program-for-homebuyers-frequently-asked-questions/) _General information, not financial advice._ --- # Idaho mortgages: the homeowner’s exemption, payments and Idaho Housing help > Idaho mortgage numbers: a $125,000 homeowner’s exemption, 0.43% effective property tax, no transfer tax and Idaho Housing loans of up to 8%. URL: https://mortgage-math-us.com/location/idaho/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer A median-value Idaho home ($446,400) costs about **$3,281 a month** with 10% down at the 7.24% national average rate. Property tax is light at 0.43% of value, helped by a homeowner’s exemption that removes 50% of your home’s value, up to $125,000, from the tax roll, and Idaho has no real estate transfer tax. Idaho Housing and Finance Association lends up to 8% of the price for down payment and closing costs to households earning up to $170,000. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in Idaho | $446,400 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US16) | 2024 ACS 1-year | | Median household income | $81,166/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US16) | 2024 ACS 1-year | | Effective property tax rate | 0.43% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US16) | 2024 ACS 1-year | | Homeowner’s exemption, up to | $125,000 | [Idaho State Tax Commission: Property Tax Homeowner’s Exemption](https://tax.idaho.gov/taxes/property/homeowners/exemption/) | Jul 24, 2023 | | Idaho Housing assistance, up to (share of price) | 8% | [Idaho Housing and Finance Association: Down payment and closing cost assistance](https://www.idahohousing.com/homebuyers/down-payment-closing-cost-assistance/) | Nov 20, 2025 | | Idaho Housing assistance income limit | $170,000 | [Idaho Housing and Finance Association: Down payment and closing cost assistance](https://www.idahohousing.com/homebuyers/down-payment-closing-cost-assistance/) | Nov 20, 2025 | | Median year homes were built | 1993 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US16) | 2024 ACS 1-year | ## The Idaho homeowner’s exemption Idaho’s biggest property tax break is the homeowner’s exemption. If you own and live in the home as your primary residence, the county leaves 50% of the value of the house and up to one acre of land off the taxable value, up to $125,000. Once the county assessor approves it, the exemption stays in place until the home changes hands or stops being your primary residence. The cap matters once a home is worth more than $250,000. On the median $446,400 home, the dollar cap applies, so the exemption is $125,000, and you pay tax on $321,400 — 72% of the value. With the exemption counted, Idaho’s effective property tax rate of 0.43% is below the US ratio of 0.89% and the 3rd-lowest of the 50 states and DC. Local levies still set the final bill, so look up the property’s current taxes and confirm whether the seller’s exemption is on it — a new owner must apply. > **Tip: Apply as soon as you move in** > > The exemption is not automatic for a new owner. File with the county assessor once the home is your primary residence; the [property tax guide](https://mortgage-math-us.com/blog/how-property-taxes-change-your-payment/) shows how a change in the bill moves your escrow payment. ## Two ways to look at an Idaho payment Idaho’s median home value is above the national median — the 14th-highest in the country — while its median household income of $81,166 is below the US figure. The table compares the median home with the price that income supports under Freddie Mac’s guideline of keeping housing under 30% of gross income. > **Worked example: 10% down, 30-year fixed at 7.24%, Idaho’s effective tax rate** > > | | Median home | Price the median income supports | > |---|---:|---:| > | Price | $446,400 | $276,000 | > | Principal and interest | $2,738 | $1,693 | > | Property tax at 0.43% | $160 | $99 | > | Insurance at $4.90 per $1,000 (Freddie Mac national average) | $182 | $113 | > | PMI (midpoint of Freddie Mac’s range) | $201 | $124 | > | **Monthly total** | **$3,281** | **$2,029** | > > The median income supports a price $170,400 below the median value. Buying the median home on these terms takes an income of about $131,200. Your own numbers will differ with your rate, insurance quote and debts. Start with the [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=446000&down=10&tax=0.43&state=ID) and the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=ID&income=81166). ## Idaho Housing’s down payment and closing cost loan Idaho Housing and Finance Association (IHFA) offers a second mortgage of up to 8% of the sales price that can pay the down payment, closing costs or both. A few things set it apart: - **Open to repeat buyers.** You don’t have to be a first-time buyer. - **Income limit.** Household income must be at or below $170,000 — about 2.1 times Idaho’s median household income — and some IHFA loans set lower limits. - **Your own money.** You put in at least $500 of your own funds. - **Education.** Every buyer completes IHFA’s Finally Home! homebuyer education course. - **Repayment.** It is a loan, not a grant. You repay it in monthly payments alongside the first mortgage, so count that second payment in your budget. On the median $446,400 home, 8% is $35,712. An [FHA loan](https://mortgage-math-us.com/loan-types/fha-loans/) needs at least 3.5% down ($15,624), and closing costs at the low end of the CFPB’s 2%–5% range add about $8,928, so the assistance more than covers both, leaving $11,160 of room. Borrowing the maximum is not always wise — a smaller second loan means a smaller second payment. Compare it with grants and other options in the [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/). ## No transfer tax at an Idaho closing Idaho has no state real estate transfer tax, so neither side pays a tax based on the price. Closing costs come down to lender fees, title insurance, recording fees, prepaid interest and the first deposits into escrow — on the median home, the CFPB’s typical range works out to $8,928–$22,320. Your Loan Estimate lists the actual figures, and the [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=ID) gives a state-specific estimate before you apply. ## Idaho’s housing stock and ownership *Idaho compared with the US (Census ACS 2024 1-year)* | | Idaho | United States | |---|---:|---:| | Median home value | $446,400 | $360,600 | | Median household income | $81,166 | $81,604 | | Effective property tax rate | 0.43% | 0.89% | | Median gross rent | $1,384/mo | $1,487/mo | | Median owner costs with a mortgage | $1,769/mo | $2,035/mo | | Median year built | 1993 | 1981 | | Homes lived in by their owners | 71.7% | 65.3% | Idaho’s homes are the 5th-newest in the country by median build year, and its owner share is the 8th-highest. Newer construction can mean fewer surprises in the inspection, but rural properties with a private well or septic system deserve their own checks. If you are weighing whether to keep renting, the [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=ID&price=446000&rent=1384) opens with Idaho’s median price and rent. ## Frequently asked questions ### What is the property tax rate in Idaho? Census data put the median Idaho homeowner’s bill at $1,912 a year, about 0.43% of median home value. Your bill depends on local levies and on whether you have the homeowner’s exemption. ### What is the Idaho homeowner’s exemption? It removes 50% of the value of your primary home and up to one acre from taxable value, up to $125,000. You apply with the county assessor, and it lasts until the ownership or use of the home changes. ### Does Idaho have down payment assistance? Yes. Idaho Housing and Finance Association offers a second mortgage of up to 8% of the sales price for down payment and closing costs, repaid monthly, for households earning up to $170,000. You contribute at least $500 and take a homebuyer course. ### Do I have to be a first-time buyer to get Idaho Housing assistance? No. IHFA’s down payment and closing cost assistance is open to eligible Idaho buyers whether or not they have owned a home before, as long as they meet the income limit and loan requirements. ### Does Idaho have a real estate transfer tax? No. Idaho has no statewide transfer tax, so closing costs are lender fees, title, recording fees, prepaid interest and escrow deposits. ### How much house can I afford in Idaho on the median income? On the median household income of $81,166, keeping housing under 30% of income supports about $276,000 with 10% down at today’s average rate and Idaho’s tax rate — a price $170,400 below the median value. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US16) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US16) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US16) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [Idaho State Tax Commission: Property Tax Homeowner’s Exemption](https://tax.idaho.gov/taxes/property/homeowners/exemption/) — Idaho homeowner’s exemption, up to; Idaho homeowner’s exemption (share of the value of the home and up to one acre) (Jul 24, 2023) - [Idaho Housing and Finance Association: Down payment and closing cost assistance](https://www.idahohousing.com/homebuyers/down-payment-closing-cost-assistance/) — Idaho Housing down payment and closing cost assistance, up to (share of the sales price); Idaho Housing down payment assistance household income limit; Idaho Housing down payment assistance: minimum buyer contribution from own funds (Nov 20, 2025) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment; Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US16) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=040XX00US16) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=010XX00US) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US16) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=010XX00US) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US16) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=010XX00US) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [Idaho Housing and Finance Association: Down payment and closing cost assistance](https://www.idahohousing.com/homebuyers/down-payment-closing-cost-assistance/) - [Idaho State Tax Commission: Homeowner’s exemption](https://tax.idaho.gov/taxes/property/homeowners/exemption/) _General information, not financial advice._ --- # Illinois mortgages: property taxes, exemptions and IHDA help > Illinois mortgage numbers: a 1.92% effective property tax rate, homestead exemptions up to $10,000 of EAV, IHDA help up to $15,000 and transfer taxes. URL: https://mortgage-math-us.com/location/illinois/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median Illinois home is worth $280,700 and costs about **$2,412 a month** with 10% down at the 7.24% national average rate — $449 of it property tax. At 1.92% of value, Illinois’s effective property tax rate is 2.2 times the US ratio, so claiming the homestead exemptions matters. IHDA offers first-time buyers up to $15,000 in deferred down payment assistance, with a 640 minimum credit score. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Effective property tax rate | 1.92% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US17) | 2024 ACS 1-year | | Median property tax paid | $5,399/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US17) | 2024 ACS 1-year | | Median home value in Illinois | $280,700 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US17) | 2024 ACS 1-year | | Median household income | $83,211/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US17) | 2024 ACS 1-year | | General homestead exemption (EAV, most counties) | $6,000 | [Illinois Department of Revenue: Property tax relief](https://tax.illinois.gov/localgovernments/property/taxrelief.html) | Oct 29, 2026 | | IHDA deferred assistance, up to | $15,000 | [IHDA Mortgage: Homebuyer programs](https://www.ihdamortgage.org/homebuyers) | Oct 29, 2026 | | State transfer tax | 0.1% | [Illinois Department of Revenue](https://tax.illinois.gov/research/taxrates/other.html) | Oct 28, 2026 | ## Illinois property taxes by the numbers The Census Bureau’s ratio of median taxes paid to median home value puts Illinois at 1.92%, the highest of the 50 states and DC, against 0.89% nationally. The median Illinois homeowner pays $5,399 a year, even though the median home is worth less than the national median. On a home at the state’s median value, that ratio means about $5,389 a year, or $449 a month. The same home taxed at the US ratio would owe $2,498 — a difference of $2,891 a year. Bills are set locally: counties, townships, school districts, municipalities and special districts each levy on the equalized assessed value (EAV), so rates vary sharply even within one county. Ask for the last two tax bills on any home you consider, because the current owner’s exemptions are built into them. ## How property tax shrinks an Illinois budget > **Worked example: Median Illinois home ($280,700), 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $252,630 | $1,722 | > | Property tax at 1.92% a year | $449 | > | Homeowners insurance at $4.90 per $1,000 (Freddie Mac national average) | $115 | > | PMI (midpoint of Freddie Mac’s range) | $126 | > | **Total** | **$2,412** | Now work backward from income. Illinois’s median household income of $83,211 is above the US figure, and Freddie Mac’s guideline of keeping housing under 30% of gross income gives $2,080 a month. At Illinois’s tax ratio that budget supports about **$242,000** with 10% down — $38,700 below the median home value. At the national ratio, the same budget would stretch to $269,000. The higher tax costs a median-income buyer about $27,000 of buying power. Buying the median home on these terms takes an income of roughly $96,500. The [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=IL&income=83211) shows the effect for your own income, and the [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=281000&down=10&tax=1.92&state=IL) lets you enter the actual tax bill of a home you are considering. ## Illinois homestead exemptions you need to claim Illinois exemptions reduce the EAV your tax rate is applied to, so their value depends on your local rate. The main ones for buyers: | Exemption | Reduction in EAV | Who qualifies | |---|---|---| | General Homestead Exemption | Up to $6,000 in most counties; up to $10,000 in Cook County (more in the counties next to Cook) | Owner-occupied principal residence | | Senior Citizens Homestead Exemption | Up to $5,000 outside Cook and its neighbors (more inside) | Owners 65 or older | | Low-income Senior Citizens Assessment Freeze | Freezes the EAV | Owners 65 or older under the income limit | At an example combined rate of 7% of EAV, the $6,000 general exemption saves $420 a year and Cook County’s $10,000 saves $700. The Illinois Department of Revenue also lists exemptions for veterans with disabilities, people with disabilities and homes rebuilt after a natural disaster. Apply through your county assessor’s office after you close, and check the first bill to confirm they were applied. ## IHDA down payment assistance The Illinois Housing Development Authority offers several down payment assistance options with its first mortgages through participating lenders. All of them require a 640 minimum credit score and homebuyer education, and income and price limits vary by county. | Option | Assistance | How it is repaid | |---|---|---| | First-time buyer deferred | 6% of the price, up to $15,000 | No monthly payment; due when you sell or refinance | | Opening Doors | $9,000 | Forgiven monthly over 5 years; open to some repeat buyers | | Forgivable | Up to $6,000 | Forgiven after 10 years unless you sell or refinance first | | Deferred | Up to $7,500 | No monthly payment; due when you sell or refinance | | Repayable | Up to $10,000 | 0% interest, monthly payments over 10 years | On the median $280,700 home, 6% works out to $16,842, above the $15,000 cap, so the assistance tops out at $15,000 — enough to cover the 3.5% minimum down payment on an [FHA loan](https://mortgage-math-us.com/loan-types/fha-loans/) ($9,825) with the rest going to closing costs. IHDA notes that funding can change at any time and is not guaranteed until a lender reserves it. Compare these with grants and tax credits in the [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/). ## Transfer taxes: state, county and city Illinois charges a state real estate transfer tax of 0.1% of the price — about $281 on the median home. Counties can add their own transfer tax, and home-rule municipalities can add more on top, so the total depends on the address — Chicago, for one, adds its own. Who pays each piece depends on the ordinance and your contract. Together with lender, title and recording costs, closing costs usually fall in the CFPB’s 2%–5% range — $5,614–$14,035 on the median home. The [closing cost estimator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=IL) starts from the state tax. ## Housing age, and Chicago next to the state *Illinois, the City of Chicago and the US (Census ACS 2024 1-year)* | | Illinois | Chicago | United States | |---|---:|---:|---:| | Median home value | $280,700 | $341,200 | $360,600 | | Effective property tax rate | 1.92% | 1.51% | 0.89% | | Median gross rent | $1,322/mo | $1,486/mo | $1,487/mo | | Median year built | 1971 | 1954 | 1981 | | Homes lived in by their owners | 67.6% | 46.5% | 65.3% | Illinois has the 7th-oldest housing in the country by median build year, so budget for inspections of roofs, wiring, plumbing and basements. In Chicago the median value is above the state median, the effective tax rate is lower than the state ratio, and most Chicago households rent. The [Chicago market guide](https://mortgage-math-us.com/location/chicago-il/) covers the city’s transfer tax and local programs. ## Frequently asked questions ### Does Illinois have the highest property taxes in the US? By the Census ratio of median taxes paid to median home value, Illinois ranks first among the 50 states and DC at 1.92%, against 0.89% nationally. The median homeowner paid $5,399 a year. ### What is the homestead exemption in Illinois? The General Homestead Exemption reduces a principal residence’s equalized assessed value by up to $6,000 in most counties and up to $10,000 in Cook County. Owners 65 and older can add the Senior Citizens Homestead Exemption. ### What down payment assistance does IHDA offer? IHDA’s options include deferred assistance of 6% of the price up to $15,000 for first-time buyers, $9,000 through Opening Doors, a forgivable option up to $6,000 and a 0% repayable option up to $10,000. ### What credit score do I need for IHDA? IHDA’s assistance programs require a minimum score of 640, using the middle of your three bureau scores, plus a homebuyer education course before closing. ### How much is the transfer tax in Illinois? The state tax is 0.1% of the price, about $281 on the median $280,700 home. Counties and home-rule cities such as Chicago can add their own. ### How much income do you need to buy a home in Illinois? Keeping the $2,412 monthly cost of the median home with 10% down under 30% of gross income takes about $96,500 a year. The median Illinois household earns $83,211. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US17) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US17) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US17) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [Illinois Department of Revenue: Property tax relief](https://tax.illinois.gov/localgovernments/property/taxrelief.html) — Illinois General Homestead Exemption, maximum reduction in equalized assessed value (most counties); Illinois General Homestead Exemption in Cook County, maximum reduction in equalized assessed value; Illinois Senior Citizens Homestead Exemption (65+), maximum EAV reduction outside Cook and its contiguous counties (Oct 29, 2026) - [IHDA Mortgage: Homebuyer programs](https://www.ihdamortgage.org/homebuyers) — IHDA deferred down payment assistance for first-time buyers, up to (share of the purchase price); IHDA deferred down payment assistance for first-time buyers, up to; IHDA down payment assistance programs minimum credit score (Oct 29, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment; Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [Illinois Department of Revenue](https://tax.illinois.gov/research/taxrates/other.html) — State real estate transfer tax (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US1714000) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US1714000) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US17) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=160XX00US1714000) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US17) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=160XX00US1714000) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=010XX00US) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US17) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US1714000) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=010XX00US) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [IHDA Mortgage: Homebuyer programs](https://www.ihdamortgage.org/homebuyers) - [Illinois Department of Revenue: Property tax relief](https://tax.illinois.gov/localgovernments/property/taxrelief.html) _General information, not financial advice._ --- # Indiana mortgages: the 1% tax cap, IHCDA help and what a home costs > Indiana mortgage numbers: the 1% homestead property tax cap, IHCDA down payment help of up to 5%, no transfer tax and the payment on a median home. URL: https://mortgage-math-us.com/location/indiana/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median Indiana home is worth $243,500 and costs about **$1,853 a month** with 10% down at the 7.24% national average rate. Property tax on a homestead is capped at 1% of gross assessed value, and the statewide effective rate is 0.74%. IHCDA’s First Step program lends 5% of the price toward the down payment for first-time buyers, and Next Home offers up to 3.5% to repeat buyers too. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in Indiana | $243,500 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US18) | 2024 ACS 1-year | | Median household income | $71,959/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US18) | 2024 ACS 1-year | | Effective property tax rate | 0.74% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US18) | 2024 ACS 1-year | | Homestead property tax cap | 1% | [Indiana DLGF: Citizen’s guide to property tax](https://www.in.gov/dlgf/understanding-your-tax-bill/citizens-guide-to-property-tax) | Sep 21, 2026 | | IHCDA First Step assistance (share of price) | 5% | [IHCDA Homeownership Program Guide](https://www.in.gov/ihcda/files/HOD-Universal-Program-Guide-Final%2010.16.26.pdf) | Oct 16, 2026 | | IHCDA Next Home assistance, up to | 3.5% | [IHCDA: Homeownership programs](https://www.in.gov/ihcda/homebuyers/programs) | Oct 16, 2026 | | Homes lived in by their owners | 70.7% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US18) | 2024 ACS 1-year | ## Indiana’s property tax cap on homesteads Indiana law limits property tax on a homestead — the home you own and live in — to 1% of its gross assessed value. If the combined local rates would produce a larger bill, a circuit breaker credit cuts it back to the cap. Rentals, second homes and other property have higher caps, which matters if you buy to rent out. On a home at the state’s median value, the cap works out to $2,435 a year. The median Indiana homeowner actually pays $1,798, below that ceiling, partly because homestead deductions shrink the assessed value before rates apply. The statewide effective rate of 0.74% is below the national ratio of 0.89%. > **Tip: File the homestead deduction once** > > Homestead treatment — the deductions and the lower cap — depends on filing a homestead deduction form with your county auditor. You don’t need to refile each year — only if the property is sold or the title changes. Check the seller’s tax bill and assume it will change once their deductions come off. ## What the median Indiana home costs a month Indiana’s median home value is below the national figure — the 11th-lowest of the 50 states and DC — and its median household income of $71,959 is below the US figure. > **Worked example: $243,500 home: 10% down conventional vs FHA with IHCDA First Step** > > | Monthly cost at 7.24%, 30-year fixed | 10% down conventional | FHA, 3.5% down | > |---|---:|---:| > | Loan amount | $219,150 | $239,090 (upfront premium financed) | > | Principal and interest | $1,494 | $1,629 | > | Property tax at 0.74% | $150 | $150 | > | Insurance at $4.90 per $1,000 (Freddie Mac national average) | $99 | $99 | > | PMI or FHA annual premium (0.55%) | $110 | $108 | > | **Total** | **$1,853** | **$1,987** | > > On the FHA side, First Step’s 5% assistance ($12,175) covers the $8,523 down payment and leaves $3,653 toward closing costs. The conventional route needs $24,350 of your own money for the down payment alone. The FHA payment is $134 higher a month here, and the assistance has to be repaid when you sell, refinance or pay off the loan — the trade for keeping your savings. The [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=244000&down=10&tax=0.74&state=IN) opens with Indiana’s median price and tax rate. ## IHCDA First Step and Next Home The Indiana Housing and Community Development Authority (IHCDA) runs its purchase programs through participating lenders, with FHA or conventional 30-year fixed-rate first mortgages: | Program | Assistance | Who can use it | |---|---|---| | First Step | 5% of the purchase price | First-time buyers (no ownership interest in a principal residence in the last 3 years), buyers in targeted areas and eligible veterans | | Next Home | Up to 3.5% of the lesser of price or appraised value | First-time and repeat buyers | | Step Down | Rate only, no assistance | Same buyers as First Step | In both programs the assistance is a non-forgivable second lien: it comes due when the first mortgage ends — at a sale, refinance or payoff — or when the home stops being your primary residence. IHCDA sets income and purchase price limits by county and family size, and the credit score and debt-to-income limits come from IHCDA and its master servicer, so ask a participating lender for the current figures. Each occupying borrower needs a homebuyer education certificate; IHCDA accepts Fannie Mae’s and Freddie Mac’s online courses. See the [homebuyer education guide](https://mortgage-math-us.com/first-time-buyers/homebuyer-education/) and the [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/) for how this compares with other help. ## Closing costs without a transfer tax Indiana has no state real estate transfer tax, so the main closing costs are lender fees, title insurance, recording fees, prepaid interest and escrow deposits. The CFPB puts typical closing costs at 2%–5% of the price — $4,870–$12,175 on the median home. Your Loan Estimate gives the real numbers; the [closing cost estimator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=IN) gives a first look. ## Indiana incomes and Indiana prices Prices and paychecks line up better here than in most states. The median home costs 3.4 times the median household income, against 4.4 for the US — the 8th-lowest ratio of the 50 states and DC. On the median income, Freddie Mac’s guideline of keeping housing under 30% of gross income allows $1,799 a month, enough for about **$236,000** with 10% down at today’s average rate — $7,500 less than the median home value. Owning the median home on those terms takes an income of about $74,100; test your own in the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=IN&income=71959). *Indiana compared with the US (Census ACS 2024 1-year)* | | Indiana | United States | |---|---:|---:| | Median home value | $243,500 | $360,600 | | Median household income | $71,959 | $81,604 | | Home value ÷ income | 3.4× | 4.4× | | Effective property tax rate | 0.74% | 0.89% | | Median gross rent | $1,104/mo | $1,487/mo | | Median owner costs with a mortgage | $1,466/mo | $2,035/mo | | Median year built | 1977 | 1981 | | Homes lived in by their owners | 70.7% | 65.3% | Indiana’s owner share is the 14th-highest in the country. If you rent now, the [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=IN&price=244000&rent=1104) opens with Indiana’s median price and rent so you can see how long it takes owning to come out ahead. ## Frequently asked questions ### What is the property tax cap in Indiana? Property tax on a homestead is capped at 1% of gross assessed value. Other residential property and other real estate have higher caps. You must file a homestead deduction with your county auditor for the home to be treated as a homestead. ### What is the property tax rate in Indiana? Census data put the median Indiana homeowner’s bill at $1,798 a year, about 0.74% of median home value, compared with 0.89% nationally. ### Does Indiana have first-time homebuyer assistance? Yes. IHCDA’s First Step program gives first-time buyers, buyers in targeted areas and eligible veterans 5% of the purchase price as a second lien that is repaid when the first mortgage ends. ### Can repeat buyers get help from IHCDA? Yes. Next Home has no first-time buyer requirement and provides up to 3.5% of the lesser of the price or appraised value, also as a repayable second lien. ### Does Indiana have a real estate transfer tax? No. Indiana has no statewide transfer tax, so buyers mainly pay lender, title, recording and escrow costs at closing. ### How much do you need to earn to buy a median home in Indiana? The median $243,500 home with 10% down costs about $1,853 a month at today’s average rate. Keeping that under 30% of gross income takes about $74,100 a year. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US18) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US18) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US18) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Indiana DLGF: Citizen’s guide to property tax](https://www.in.gov/dlgf/understanding-your-tax-bill/citizens-guide-to-property-tax) — Indiana property tax cap on a homestead (share of gross assessed value) (Sep 21, 2026) - [IHCDA Homeownership Program Guide](https://www.in.gov/ihcda/files/HOD-Universal-Program-Guide-Final%2010.16.26.pdf) — IHCDA First Step down payment assistance (share of the purchase price) (Oct 16, 2026) - [IHCDA: Homeownership programs](https://www.in.gov/ihcda/homebuyers/programs) — IHCDA Next Home down payment assistance, up to (share of the lesser of price or appraised value) (Oct 16, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment; Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA upfront mortgage insurance premium; FHA annual MIP, 30-year loan, more than 95% LTV (Feb 22, 2023) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [26 U.S.C. 143(d)](https://www.govinfo.gov/link/uscode/26/143) — MCC and mortgage revenue bond loans: no ownership interest in a principal residence in the past (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US18) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=040XX00US18) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=010XX00US) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US18) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=010XX00US) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US18) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=010XX00US) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [IHCDA: Homeownership programs](https://www.in.gov/ihcda/homebuyers/programs) - [IHCDA Homeownership Program Guide](https://www.in.gov/ihcda/files/HOD-Universal-Program-Guide-Final%2010.16.26.pdf) - [Indiana DLGF: Citizen’s guide to property tax](https://www.in.gov/dlgf/understanding-your-tax-bill/citizens-guide-to-property-tax) - [Indiana DLGF: Deductions and credits](https://www.in.gov/dlgf/deductions-and-credits) _General information, not financial advice._ --- # Iowa mortgages: Title Guaranty, the new homestead exemption and FirstHome > Iowa mortgage numbers: 1.29% effective property tax, the 2026 homestead exemption, Iowa Title Guaranty and IFA loans with up to 5% down payment help. URL: https://mortgage-math-us.com/location/iowa/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median Iowa home is worth $227,300 and costs about **$1,834 a month** with 10% down at the 7.24% national average rate; property tax at 1.29% of value is 13% of that. From 2026 a homestead exemption of 10% of taxable value, up to $20,000, replaces the old homestead credit. The Iowa Finance Authority’s FirstHome and Homes for Iowans loans come with a second loan of up to 5% of the price, and service members and veterans can add a $5,000 grant. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in Iowa | $227,300 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US19) | 2024 ACS 1-year | | Effective property tax rate | 1.29% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US19) | 2024 ACS 1-year | | Median household income | $75,501/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US19) | 2024 ACS 1-year | | Homestead exemption, up to (taxable value) | $20,000 | [Iowa Department of Revenue: Homestead Tax Credit and Exemption](https://revenue.iowa.gov/taxes/tax-guidance/property-tax/homestead-tax-credit-and-exemption) | Jun 16, 2026 | | IFA second loan, up to (share of price) | 5% | [Iowa Finance Authority: Down payment and closing cost programs](https://opportunityiowa.gov/housing/homeownership-programs/down-payment-and-closing-costs-programs) | Sep 25, 2026 | | Military Homeownership Assistance grant | $5,000 | [Iowa Finance Authority: Down payment and closing cost programs](https://opportunityiowa.gov/housing/homeownership-programs/down-payment-and-closing-costs-programs) | Sep 25, 2026 | | State transfer tax | 0.16% | [Iowa Department of Revenue](https://revenue.iowa.gov/taxes/tax-guidance/general/iowa-taxfee-descriptions-and-rates) | Oct 5, 2026 | ## Iowa Title Guaranty instead of title insurance Iowa handles title coverage its own way. Iowa Title Guaranty, a state program, is Iowa’s exclusive provider of title coverage, so the lender’s and owner’s protection you would buy as title insurance elsewhere comes as title guaranty coverage here. For buyers, owner coverage is often available at no additional cost when the lender’s coverage is issued — ask your lender or closing agent to confirm it is included rather than assuming it. Iowa Title Guaranty describes its coverage as low-cost and has added protection aimed at title theft for homeowners. The [Loan Estimate guide](https://mortgage-math-us.com/buying/loan-estimate/) shows where title charges appear on your disclosures. ## Iowa’s new homestead exemption A 2026 law (SF 2472) replaced Iowa’s homestead tax credit with a homestead exemption, starting with assessment year 2026. Instead of a credit worth the tax on a fixed slice of value, the exemption removes 10% of a homestead’s taxable value, with a floor and a ceiling: | Taxable value of the homestead | Exemption | |---|---| | Up to $55,000 | The minimum, $5,500 | | $55,000 to $200,000 | 10% of taxable value | | Above $200,000 | The maximum, $20,000 | The maximum is indexed to inflation from assessment year 2027. Owners who already had the homestead credit don’t need to refile; as a new buyer, ask your city or county assessor how and when to apply, because the exemption doesn’t carry over from the seller. ## Property tax on an Iowa home Iowa’s effective property tax rate of 1.29% is above the national ratio of 0.89% — the 9th-highest of the 50 states and DC. On a lower-priced home that still adds up: > **Worked example: $227,300 home (Iowa’s median value), 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $204,570 | $1,394 | > | Property tax at 1.29% a year | $244 | > | Homeowners insurance at $4.90 per $1,000 (Freddie Mac national average) | $93 | > | PMI (midpoint of Freddie Mac’s range) | $102 | > | **Total** | **$1,834** | > > At the US tax ratio the same home would owe $169 a month in property tax instead of $244. Iowa’s housing is also older than in most states — the 11th-oldest by median build year — so set money aside for repairs as well as taxes. The [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=227000&down=10&tax=1.29&state=IA) opens with these inputs. ## FirstHome, Homes for Iowans and the military grant The Iowa Finance Authority (IFA) offers two purchase programs through participating lenders, both with a 640 minimum credit score and required homebuyer education: | Program | Who it is for | Down payment help | |---|---|---| | FirstHome | First-time buyers (no home owned in the last 3 years), eligible veterans and buyers in targeted areas | Second loan up to 5% of the lower of price or appraised value | | Homes for Iowans | First-time and repeat buyers | Second loan up to 5%, on the same terms | | Military Homeownership Assistance | Eligible service members and veterans | $5,000 grant, combinable with either program | The second loans have no monthly payment; they are repaid when you sell, refinance or pay off the first mortgage. FirstHome’s purchase price limit is $566,000 outside targeted areas, and income limits vary by county and household size. IFA has announced changes for reservations made on or after November 2, 2026: the 5% loan will be capped at $15,000, a new, smaller second-loan option will be added and the Plus grant will end. Ask a participating lender which terms apply on the day you reserve. On the median $227,300 home, 5% is $11,365, under the $15,000 cap. With a 3% down conventional loan, that covers the $6,819 down payment and leaves $4,546 for closing costs; a veteran using the military grant would have $5,000 more. The [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/) compares this with national options. ## Iowa prices and paychecks The median Iowa home costs 3.0 times the median household income, against 4.4 nationally — the 2nd-lowest ratio in the country. On the median income of $75,501, Freddie Mac’s 30% guideline allows $1,888 a month, enough for about **$234,000** with 10% down at today’s average rate — $6,700 more than the median home value. Check your own figures in the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=IA&income=75501). Rent matters too: the median rent of $981 a month is the 3rd-lowest in the country, and owning the median home costs $853 more than that each month. Whether buying pays off depends on how long you stay; the [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=IA&price=227000&rent=981) runs the comparison. ## Iowa’s transfer tax at closing Iowa charges a real estate transfer tax of about 0.16% of the price — roughly $364 on the median home. With lender fees, the title guaranty, recording and prepaid items, the CFPB’s typical 2%–5% range comes to $4,546–$11,365 on the median home. The [closing cost estimator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=IA) applies the Iowa tax for you. ## Frequently asked questions ### Does Iowa have title insurance? Iowa Title Guaranty, a state program, is Iowa’s exclusive title coverage provider. Lenders and owners get title guaranty coverage instead of title insurance policies, and owner coverage is often available at no additional cost. ### What is the homestead exemption in Iowa? From assessment year 2026, the homestead exemption removes 10% of a homestead’s taxable value, with a minimum of $5,500 and a maximum of $20,000. It replaced the homestead tax credit. ### What is the property tax rate in Iowa? Census data put the median Iowa homeowner’s bill at $2,937 a year, about 1.29% of median home value, compared with 0.89% nationally. ### Does Iowa have first-time home buyer assistance? Yes. The Iowa Finance Authority’s FirstHome program pairs a first mortgage with a second loan of up to 5% of the price, repaid when you sell, refinance or pay off the loan. Homes for Iowans offers the same help to repeat buyers, and service members and veterans can add a $5,000 grant. ### What credit score do I need for an Iowa Finance Authority loan? FirstHome and Homes for Iowans loans require a minimum score of 640. Borrowers without a score may qualify with nontraditional credit under agency guidelines. ### How much is the transfer tax in Iowa? About 0.16% of the price, or roughly $364 on the median $227,300 home. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US19) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US19) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US19) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US19) — Median gross rent (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Iowa Department of Revenue: Homestead Tax Credit and Exemption](https://revenue.iowa.gov/taxes/tax-guidance/property-tax/homestead-tax-credit-and-exemption) — Iowa homestead tax exemption (share of taxable value); Iowa homestead tax exemption, maximum (taxable value); Iowa homestead tax exemption, minimum (taxable value) (Jun 16, 2026) - [Iowa Finance Authority: Down payment and closing cost programs](https://opportunityiowa.gov/housing/homeownership-programs/down-payment-and-closing-costs-programs) — Iowa Finance Authority FirstHome and Homes for Iowans second loan, up to (share of the lower of sale price or appraised value); Iowa Military Homeownership Assistance grant (Sep 25, 2026) - [Iowa Finance Authority bulletin, Sept 17, 2026 (linked from the down payment programs page)](https://t.e2ma.net/message/iojn2j/upsggnsd) — Iowa Finance Authority 5% second loan cap for reservations made on or after Nov 2, 2026 (Sep 17, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum down payment on some conventional loans; Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [Iowa Finance Authority: FirstHome](https://opportunityiowa.gov/housing/homeownership-programs/firsthome-program) — Iowa FirstHome purchase price limit (outside targeted areas); Iowa Finance Authority FirstHome and Homes for Iowans minimum credit score (2026 limits) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [Iowa Department of Revenue](https://revenue.iowa.gov/taxes/tax-guidance/general/iowa-taxfee-descriptions-and-rates) — State real estate transfer tax (Oct 5, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [42 U.S.C. 12704(14)](https://www.law.cornell.edu/uscode/text/42/12704) — First-time homebuyer: has not owned a home in the past (HUD/HOME statute) (Oct 28, 2026) - [Iowa Title Guaranty: Residential programs](https://opportunityiowa.gov/housing/iowa-title-guaranty/residential-programs) - [Iowa Department of Revenue: Homestead Tax Credit and Exemption](https://revenue.iowa.gov/taxes/tax-guidance/property-tax/homestead-tax-credit-and-exemption) - [Iowa Finance Authority: Down payment and closing cost programs](https://opportunityiowa.gov/housing/homeownership-programs/down-payment-and-closing-costs-programs) - [Iowa Finance Authority: FirstHome](https://opportunityiowa.gov/housing/homeownership-programs/firsthome-program) _General information, not financial advice._ --- # Kansas mortgages: forgivable buyer loans, property tax and rural guarantees > Kansas mortgage numbers: a 0% Kansas Housing loan of up to 20% of the price, 1.25% effective property tax, no transfer tax and the cost of a median home. URL: https://mortgage-math-us.com/location/kansas/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median Kansas home is worth $238,700 and costs about **$1,918 a month** with 10% down at the 7.24% national average rate, including property tax at 1.25% of value. Income-qualified first-time buyers outside Johnson County and the largest cities can borrow up to 20% of the price at 0% from Kansas Housing, forgiven after 10 years in the home. Kansas has no state real estate transfer tax. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in Kansas | $238,700 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US20) | 2024 ACS 1-year | | Median household income | $75,514/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US20) | 2024 ACS 1-year | | Effective property tax rate | 1.25% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US20) | 2024 ACS 1-year | | Kansas Housing 0% loan, up to (share of price) | 20% | [Kansas Housing Resources Corporation: First Time Homebuyer fact sheet](https://kshousingcorp.org/wp-content/uploads/2026/03/FTHB-Fact-Sheet-3-19-26.pdf) | Mar 19, 2026 | | Forgiven after | 10 years | [Kansas Housing Resources Corporation: First Time Homebuyer fact sheet](https://kshousingcorp.org/wp-content/uploads/2026/03/FTHB-Fact-Sheet-3-19-26.pdf) | Mar 19, 2026 | | Income limit (share of area median) | 80% | [Kansas Housing Resources Corporation: First Time Homebuyer fact sheet](https://kshousingcorp.org/wp-content/uploads/2026/03/FTHB-Fact-Sheet-3-19-26.pdf) | Mar 19, 2026 | | Rural home loan guarantee, up to | $100,000 | [Kansas Housing Resources Corporation: Home Loan Guarantee for Rural Kansas](https://kshousingcorp.org/homeowners/home-loan-guarantee-for-rural-kansas/) | Oct 29, 2026 | ## Kansas Housing’s First Time Homebuyer loan Kansas Housing Resources Corporation (KHRC) funds its First Time Homebuyer program with federal HOME money and offers it through participating lenders. You take a regular first mortgage at a market rate, and KHRC adds a soft second mortgage: - **Amount.** A 0% loan of up to 20% of the purchase price (KHRC lists two tiers), for the down payment and closing costs. - **Forgiveness.** No monthly payments. The loan is forgiven if you stay in the home for 10 years; sell sooner and you repay the unforgiven part. - **Income.** Household income at or below 80% of the area median income for your county and household size. - **Your money.** At least 1% of the price from your own funds; inspection costs count toward it, and a gift can help with the rest of the purchase. - **Where.** Homes outside Johnson County and outside the city limits of Kansas City, Lawrence, Topeka and Wichita. - **Which homes.** Existing homes, or new homes once the certificate of occupancy is issued. The home must pass inspection, so fixer-uppers generally don’t work unless the seller finishes repairs first. There is no program minimum credit score, but you need to qualify for the first mortgage. A HUD-approved housing counselor can help if your credit needs work; the [homebuyer education guide](https://mortgage-math-us.com/first-time-buyers/homebuyer-education/) explains what counseling covers. ## The payment with and without the Kansas Housing loan > **Worked example: $238,700 home (Kansas median value), 30-year fixed at 7.24%** > > | | 10% down conventional | 1% of your own + 20% KHRC loan | > |---|---:|---:| > | Your cash toward the price | $23,870 | $2,387 | > | First mortgage | $214,830 | $188,573 | > | Principal and interest | $1,464 | $1,285 | > | Property tax at 1.25% | $249 | $249 | > | Insurance at $4.90 per $1,000 (Freddie Mac national average) | $97 | $97 | > | PMI | $107 | $0 | > | **Monthly total** | **$1,918** | **$1,631** | > > With the KHRC loan, the first mortgage is under 80% of the price, so PMI generally isn’t required, and the monthly cost is $286 less than the 10% down option. The $47,740 second mortgage has no payment and disappears after 10 years in the home. The program is for buyers under the income limit and outside the largest metros, so your own price and figures will differ. Plug them into the [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=239000&down=10&tax=1.25&state=KS). ## Property tax in Kansas Kansas’s effective property tax rate of 1.25% is above the national ratio of 0.89%, the 11th-highest of the 50 states and DC. The median Kansas homeowner pays $2,983 a year. On a home at the median value, the state ratio means about $2,984 a year against $2,124 at the US ratio — $72 a month more in escrow. County, city, school district and other local levies set the real bill, so check the last tax statement for any home you consider, and read [how property taxes change your payment](https://mortgage-math-us.com/blog/how-property-taxes-change-your-payment/). ## Rural Kansas and the Home Loan Guarantee Building or renovating in a small Kansas town can run into an appraisal gap: the home costs more to build than nearby sales say it is worth, so a lender won’t lend the full cost. KHRC’s Home Loan Guarantee for Rural Kansas lets lenders in rural counties lend into that gap. KHRC guarantees the part of the loan above 80% of the appraised value, on loans up to 125% of appraised value, with each guarantee capped at $100,000. > **Worked example: KHRC’s own illustration** > > A home appraises at $200,000 and the loan is $250,000. The loan is within 125% of value ($250,000), so KHRC guarantees everything above $160,000: **$90,000**. The guarantee goes to the lender, not to you, so ask local banks and credit unions whether they participate before you plan a rural build or purchase. ## What Kansas incomes buy The median Kansas home is below the US median — the 9th-lowest value of the 50 states and DC — and the median household income of $75,514 is below the national figure. Keeping housing under Freddie Mac’s 30% of gross income gives $1,888 a month, enough for about **$235,000** with 10% down at today’s average rate — $3,700 less than the median home value. Owning the median home takes about $76,700 a year in income. See your own range in the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=KS&income=75514), or compare with renting in the [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=KS&price=239000&rent=1079). ## Kansas closing costs Kansas has no state real estate transfer tax, so closing costs come from lender fees, title insurance, recording fees, prepaid interest and escrow deposits. The CFPB’s typical range of 2%–5% of the price is $4,774–$11,935 on the median home. The KHRC loan can cover closing costs as well as the down payment. Get a state estimate from the [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=KS) and compare it line by line with your Loan Estimate. ## Frequently asked questions ### Does Kansas have first-time home buyer assistance? Yes. Kansas Housing Resources Corporation’s First Time Homebuyer program offers a 0% loan of up to 20% of the purchase price for down payment and closing costs, forgiven after 10 years in the home, for households at or below 80% of area median income. ### Where can I use the Kansas Housing First Time Homebuyer program? Anywhere in Kansas except Johnson County and the city limits of Kansas City, Lawrence, Topeka and Wichita. The home must be your primary residence and pass inspection. ### What is the property tax rate in Kansas? Census data put the median Kansas homeowner’s bill at $2,983 a year, about 1.25% of median home value, compared with 0.89% nationally. ### Does Kansas have a real estate transfer tax? No. Kansas has no state transfer tax, so closing costs are mainly lender, title, recording and escrow charges. ### What is the Home Loan Guarantee for Rural Kansas? A KHRC guarantee that lets lenders in rural counties lend more than a home appraises for. It covers the part of the loan above 80% of appraised value, on loans up to 125% of value, capped at $100,000 per loan. ### How much income do you need to buy a home in Kansas? The median $238,700 home with 10% down costs about $1,918 a month at today’s average rate. Keeping that under 30% of gross income takes about $76,700 a year. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US20) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US20) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US20) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Kansas Housing Resources Corporation: First Time Homebuyer fact sheet](https://kshousingcorp.org/wp-content/uploads/2026/03/FTHB-Fact-Sheet-3-19-26.pdf) — Kansas Housing First Time Homebuyer 0% forgivable loan, up to (share of the purchase price); Kansas Housing First Time Homebuyer: minimum buyer contribution from own funds (share of the sale price); Kansas Housing First Time Homebuyer loan is forgiven if you stay in the home (Mar 19, 2026) - [Kansas Housing Resources Corporation: Home Loan Guarantee for Rural Kansas](https://kshousingcorp.org/homeowners/home-loan-guarantee-for-rural-kansas/) — Kansas Home Loan Guarantee for Rural Kansas, cap per guarantee; Kansas Home Loan Guarantee covers loans up to (share of appraised value); Kansas Home Loan Guarantee covers the part of the loan above (share of appraised value) (Oct 29, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Kansas Housing Resources Corporation: First Time Homebuyer](https://kshousingcorp.org/first-time-homebuyer/) - [KHRC First Time Homebuyer fact sheet](https://kshousingcorp.org/wp-content/uploads/2026/03/FTHB-Fact-Sheet-3-19-26.pdf) - [KHRC: Home Loan Guarantee for Rural Kansas](https://kshousingcorp.org/homeowners/home-loan-guarantee-for-rural-kansas/) _General information, not financial advice._ --- # Kentucky mortgages: payments, KHC down payment help and the deed tax > Kentucky mortgage numbers: KHC down payment loans up to $12,500, a 0.71% effective property tax rate, the deed transfer tax and payments on a median home. URL: https://mortgage-math-us.com/location/kentucky/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median Kentucky home is worth $226,000 and costs about **$1,714 a month** with 10% down at the 7.24% national average rate, including property tax at the state’s effective rate of 0.71%. Kentucky Housing Corporation lends up to $12,500 for the down payment and closing costs with its first mortgages, repaid over 15 years. The state deed transfer tax is 0.1% of the price, and owners 65 or older or totally disabled can exempt $49,100 of assessed value. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in Kentucky | $226,000 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US21) | 2024 ACS 1-year | | Median household income | $64,526/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US21) | 2024 ACS 1-year | | Effective property tax rate | 0.71% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US21) | 2024 ACS 1-year | | KHC down payment assistance, up to | $12,500 | [Kentucky Housing Corporation: Down Payment Assistance](https://www.kyhousing.org/page/down-payment-assistance) | Oct 29, 2026 | | KHC minimum score (FHA, VA, RHS) | 620 | [Kentucky Housing Corporation: Eligibility](https://www.kyhousing.org/page/eligibility) | Oct 29, 2026 | | Deed transfer tax | 0.1% | [KRS 142.050](https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=43160) | Jul 15, 2014 | | Homestead exemption, 65+ or disabled | $49,100 | [Kentucky Department of Revenue: Homestead Exemption](https://revenue.ky.gov/Property/Residential-Farm-Commercial-Property/pages/homestead-exemption.aspx) | 2025–2026 assessment years | ## Kentucky prices and paychecks Kentucky’s median home value is the 6th-lowest of the 50 states and DC, and its median household income of $64,526 is the 5th-lowest. Together they leave the median home at 3.5 times the median income, lower than the US figure of 4.4. *Kentucky compared with the US (Census ACS 2024 1-year)* | | Kentucky | United States | |---|---:|---:| | Median home value | $226,000 | $360,600 | | Median household income | $64,526 | $81,604 | | Effective property tax rate | 0.71% | 0.89% | | Median gross rent | $998/mo | $1,487/mo | | Median owner costs with a mortgage | $1,453/mo | $2,035/mo | | Homes lived in by their owners | 68.1% | 65.3% | The median Kentucky owner with a mortgage spends $1,453 a month on housing, $455 more than the median renter’s $998. Those owner costs include loans taken out years ago at other prices and rates, so they can differ a lot from buying today: the example below comes to $261 more than that median. ## The monthly cost at the median price and at the median income > **Worked example: 10% down, 30-year fixed at 7.24%** > > | | Median Kentucky home | Price the median income supports | > |---|---:|---:| > | Price | $226,000 | $213,000 | > | Principal and interest | $1,386 | $1,306 | > | Property tax at 0.71% | $134 | $126 | > | Insurance at $4.90 per $1,000 (Freddie Mac national average) | $92 | $87 | > | PMI (midpoint of Freddie Mac’s range) | $102 | $96 | > | **Monthly total** | **$1,714** | **$1,615** | > > The second column keeps housing at Freddie Mac’s guideline of 30% of the median household income. That price is $13,000 below the median home value; owning the median home on these terms takes about $68,600 a year. Kentucky’s effective property tax rate of 0.71% is below the US ratio of 0.89% — the 21st-lowest in the country — so tax adds less to a payment here than the national ratio would. Your own rate, insurance quote and debts will move the numbers; use the [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=226000&down=10&tax=0.71&state=KY) and the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=KY&income=64526). ## Kentucky Housing Corporation’s down payment loan Kentucky Housing Corporation (KHC) makes first mortgages through participating lenders and pairs them with down payment assistance: - **Amount.** Up to $12,500 for the down payment and closing costs. - **Repayment.** It is a second loan, paid back to KHC over 15 years, so it adds a second monthly payment. - **Who can use it.** Anyone who gets a KHC first mortgage and meets KHC’s income and purchase price limits. On the median $226,000 home, the full $12,500 equals 5.5% of the price. It covers the $7,910 FHA down payment with $4,590 left for closing costs. Taking less than the maximum keeps the second payment smaller, so borrow what you need rather than what you can. ## KHC loan rules and limits KHC’s minimum credit score is 620 for [FHA](https://mortgage-math-us.com/loan-types/fha-loans/), [VA](https://mortgage-math-us.com/loan-types/va-loans/) and USDA Rural Housing loans, and its purchase price limit is $566,354 — about 2.5 times the state’s median home value. Income limits vary by program and county; KHC publishes a grid, and a participating lender can tell you which programs your household qualifies for. The [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/) explains how these state loans compare with conventional options. ## Kentucky’s deed transfer tax Kentucky charges a real estate transfer tax of 0.1% of the value when a deed is recorded — about $226 on the median home. The legal default is that the seller pays it, but your contract can divide it differently. Lender fees, title insurance, recording and escrow deposits make up most of the rest; the CFPB’s typical 2%–5% range is $4,520–$11,300 on the median home. The [closing cost estimator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=KY) includes the Kentucky tax. ## Homestead exemption for owners 65 and older or disabled Kentucky’s homestead exemption applies to owners who are at least 65 or have been classified as totally disabled. For the 2025–2026 assessment years it removes $49,100 from the assessed value — 22% of the median home’s value. At the statewide effective rate that is worth roughly $349 a year; your local rates decide the real figure. > **Tip: Apply with your county PVA** > > File the application with the Property Valuation Administrator in the county where the home is. Owners who qualify through disability generally reapply each year unless their disability is classified as permanent or service-connected. If you still rent, the [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=KY&price=226000&rent=998) compares the two paths with Kentucky’s median figures. ## Frequently asked questions ### What is the property tax rate in Kentucky? Census data put the median Kentucky homeowner’s bill at $1,611 a year, about 0.71% of median home value, compared with 0.89% nationally. ### Does Kentucky have down payment assistance? Yes. Kentucky Housing Corporation lends up to $12,500 for down payment and closing costs to buyers who use a KHC first mortgage and meet its income and price limits. It is repaid over 15 years. ### What credit score do I need for a KHC loan? KHC’s minimum is 620 for FHA, VA and USDA Rural Housing loans. Other KHC programs have their own credit requirements. ### How much is the transfer tax in Kentucky? The state real estate transfer tax is 0.1% of the value, about $226 on the median $226,000 home. The legal default is that the seller pays it. ### What is the homestead exemption in Kentucky? Homeowners who are 65 or older or totally disabled can exempt $49,100 of assessed value for the 2025–2026 assessment years. Apply with your county Property Valuation Administrator. ### How much income do you need to buy a house in Kentucky? The median $226,000 home with 10% down costs about $1,714 a month at today’s average rate. Keeping that under 30% of gross income takes about $68,600 a year. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US21) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US21) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US21) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [Kentucky Housing Corporation: Down Payment Assistance](https://www.kyhousing.org/page/down-payment-assistance) — KHC Down Payment Assistance, up to; KHC Down Payment Assistance repayment term (Oct 29, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment; Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [Kentucky Housing Corporation: Eligibility](https://www.kyhousing.org/page/eligibility) — KHC purchase price limit; KHC minimum credit score, FHA, VA and RHS loans (Oct 29, 2026) - [Kentucky Department of Revenue: Homestead Exemption](https://revenue.ky.gov/Property/Residential-Farm-Commercial-Property/pages/homestead-exemption.aspx) — Kentucky homestead exemption, age 65+ or totally disabled (assessed value exempt) (2025–2026 assessment years) - [KRS 142.050](https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=43160) — State real estate transfer tax (Jul 15, 2014) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US21) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=040XX00US21) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=010XX00US) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US21) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=010XX00US) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [Kentucky Housing Corporation: Down Payment Assistance](https://www.kyhousing.org/page/down-payment-assistance) - [Kentucky Housing Corporation: Eligibility](https://www.kyhousing.org/page/eligibility) - [Kentucky Department of Revenue: Homestead Exemption](https://revenue.ky.gov/Property/Residential-Farm-Commercial-Property/pages/homestead-exemption.aspx) _General information, not financial advice._ --- # Louisiana mortgages: insurance, flood risk, homestead and LHC help > Louisiana mortgage numbers: Louisiana Citizens, Fortify Homes roof grants up to $10,000, flood insurance, a $75,000 homestead exemption and LHC buyer help. URL: https://mortgage-math-us.com/location/louisiana/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median Louisiana home is worth $223,200 and costs about **$1,659 a month** with 10% down at the 7.24% national average rate — if insurance costs what it does nationally. Get local quotes early: each doubling of the premium adds about $91 a month. The state helps on both sides: Fortify Homes grants of up to $10,000 for a storm-resistant roof, a homestead exemption of $7,500 of assessed value, and LHC HomeStart Assist, a forgivable 4% second mortgage for first-time buyers. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in Louisiana | $223,200 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US22) | 2024 ACS 1-year | | Median household income | $60,986/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US22) | 2024 ACS 1-year | | Effective property tax rate | 0.53% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US22) | 2024 ACS 1-year | | Fortify Homes roof grant, up to | $10,000 | [Louisiana Department of Insurance: Fortify Homes FAQ](https://ldi.la.gov/fortifyhomesfaq) | Oct 29, 2026 | | Homestead exemption (assessed value) | $7,500 | [Louisiana Legislature: Résumé digest, Act 274 (HB 514) of 2026](https://www.legis.la.gov/Legis/ViewDocument.aspx?d=1485493) | Oct 29, 2026 | | LHC HomeStart Assist (share of the loan) | 4% | [Louisiana Housing Corporation: HomeStart Assist](https://www.lhc.la.gov/homestartassist) | Sep 10, 2026 | | HomeStart Assist forgiven after | 5 years | [Louisiana Housing Corporation: HomeStart Assist](https://www.lhc.la.gov/homestartassist) | Sep 10, 2026 | ## Homeowners insurance and Louisiana Citizens Lenders require homeowners insurance before they fund a loan, so the premium is part of whether a Louisiana home is affordable. Get quotes as soon as you are under contract — before the inspection period ends — because they vary widely with the parish, the home’s age, its roof and its distance from the coast. If no private insurer will write a policy, the fallback is Louisiana Citizens Property Insurance Corporation, which the Louisiana Department of Insurance describes as the state’s insurer of last resort. By law (R.S. 22:2303), Citizens must charge at least as much as the most expensive insurer with a significant share of policies in the parish, so it is designed not to be the cheap option. A Citizens quote is a signal to keep shopping, to ask about roof and wind mitigation credits and to budget for a higher premium. ## Fortify Homes grants and FORTIFIED roof discounts The Department of Insurance’s Louisiana Fortify Homes Program pays up to $10,000 toward upgrading a roof to the FORTIFIED standard set by the Insurance Institute for Business & Home Safety. Owners pay permits, inspections and any cost above the grant. To qualify, the home must be your primary residence with a homestead exemption and an active policy with wind coverage, plus flood insurance if it sits in a FEMA high-risk zone. Grants are awarded through lottery rounds that open periodically, and you can sign up in advance. State law (R.S. 22:1483) requires insurers to offer actuarially justified discounts for homes that meet the FORTIFIED standard, and separate wind mitigation discounts based on a qualified inspection. When you buy, ask the seller for any FORTIFIED certificate or wind mitigation form and pass it to your insurer. ## Flood zones and flood insurance Most homeowners policies exclude flood damage. If the home is in a high-risk flood zone on FEMA’s maps (zones beginning with A or V) and you have a government-backed mortgage, you must buy flood insurance. Look the address up on FEMA’s flood maps, ask the seller about past flooding and claims, and price flood coverage before you commit. The [homeowners insurance guide](https://mortgage-math-us.com/blog/homeowners-insurance-and-your-mortgage/) explains how premiums flow through escrow. ## The median Louisiana home under three insurance budgets This example starts from Freddie Mac’s national insurance figure of $4.90 per $1,000, then doubles and triples it to show how much the premium alone can move the payment. > **Worked example: $223,200 home (Louisiana’s median value), 10% down, 30-year fixed at 7.24%** > > | Monthly | Insurance at the national rate | 2× | 3× | > |---|---:|---:|---:| > | Principal and interest on $200,880 | $1,369 | $1,369 | $1,369 | > | Property tax at 0.53% | $99 | $99 | $99 | > | Homeowners insurance | $91 | $182 | $273 | > | PMI (midpoint of Freddie Mac’s range) | $100 | $100 | $100 | > | **Total** | **$1,659** | **$1,750** | **$1,841** | > > Flood insurance, if needed, is extra. Louisiana’s median home value is the 5th-lowest in the country and its median household income of $60,986 the 3rd-lowest. Under Freddie Mac’s 30% guideline, that income supports about **$205,000** with 10% down at the national insurance rate — $18,200 below the median value — but only about $185,000 if insurance runs three times as high. Plug in your real quote with the [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=223000&down=10&tax=0.53&state=LA) and the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=LA&income=60986). ## Louisiana’s homestead exemption The Louisiana Constitution exempts the first $7,500 of assessed value on a homestead. Homes are assessed at 10% of market value, so that equals $75,000 of value — about 34% of the median home’s value. Statewide, the effective property tax rate is 0.53%, below the national ratio of 0.89% and the 13th-lowest of the 50 states and DC. Apply with your parish assessor once you own and live in the home; the exemption is also a requirement for Fortify Homes grants. ## LHC HomeStart Assist for first-time buyers The Louisiana Housing Corporation’s HomeStart Assist pairs a 30-year fixed first mortgage with a second mortgage of 4% of the first mortgage amount. The second mortgage carries no interest and is fully forgiven after 5 years if you meet the program terms. The main rules: - First-time buyers: no principal residence owned in the past 3 years. - A minimum credit score of 640. - Household income up to 115% of area median income outside targeted areas, higher in targeted areas. - At least one buyer completes an approved [homebuyer education](https://mortgage-math-us.com/first-time-buyers/homebuyer-education/) course. With an [FHA loan](https://mortgage-math-us.com/loan-types/fha-loans/) on the median $223,200 home, 4% of the $215,388 base loan is about $8,616, which covers the $7,812 down payment with about $804 to spare for closing costs. Louisiana has no state real estate transfer tax, so the rest of the cash to close is lender, title, recording and escrow costs — the CFPB’s 2%–5% range is $4,464–$11,160 on the median home. Estimate yours with the [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=LA). ## Frequently asked questions ### What is Louisiana Citizens Property Insurance? Louisiana Citizens Property Insurance Corporation is the state’s insurer of last resort for homeowners who can’t get coverage from a private insurer. By law its rates must be at least as high as the most expensive insurer with a significant share of the market in each parish. ### How much is the Louisiana Fortify Homes grant? The Louisiana Fortify Homes Program pays up to $10,000 toward a roof that meets the FORTIFIED standard. You need a homestead exemption and wind coverage, and grants are awarded through periodic lotteries. ### Do I need flood insurance in Louisiana? If the home is in a FEMA high-risk flood zone and you have a government-backed mortgage, yes. Elsewhere it is optional, but most homeowners policies exclude flood damage, so price it before you buy. ### What is the homestead exemption in Louisiana? The first $7,500 of a homestead’s assessed value is exempt, which equals $75,000 of market value at Louisiana’s 10% residential assessment level. Apply with your parish assessor. ### Does Louisiana have first-time home buyer assistance? Yes. LHC HomeStart Assist adds a 0% second mortgage of 4% of the first mortgage, forgiven after 5 years, for first-time buyers with a 640 or higher score who meet the income limits. ### What is the property tax rate in Louisiana? Census data put the median Louisiana homeowner’s bill at $1,187 a year, about 0.53% of median home value, compared with 0.89% nationally. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US22) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US22) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US22) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [Louisiana Legislature: Résumé digest, Act 274 (HB 514) of 2026](https://www.legis.la.gov/Legis/ViewDocument.aspx?d=1485493) — Louisiana homestead exemption (assessed value; equal to $75,000 of fair market value); Louisiana residential assessed value as a share of fair market value (Oct 29, 2026) - [Louisiana Housing Corporation: HomeStart Assist](https://www.lhc.la.gov/homestartassist) — LHC HomeStart Assist forgivable second mortgage (share of the first mortgage); LHC HomeStart Assist second mortgage is fully forgiven after; LHC HomeStart Assist minimum credit score (Sep 10, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment; Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [Louisiana Department of Insurance: Fortify Homes FAQ](https://ldi.la.gov/fortifyhomesfaq) — Louisiana Fortify Homes Program grant for a FORTIFIED roof, up to (Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [42 U.S.C. 12704(14)](https://www.law.cornell.edu/uscode/text/42/12704) — First-time homebuyer: has not owned a home in the past (HUD/HOME statute) (Oct 28, 2026) - [Louisiana Department of Insurance: Fortify Homes FAQ](https://ldi.la.gov/fortifyhomesfaq) - [Louisiana Department of Insurance: Fortify Homes Program informational report (Louisiana Citizens, R.S. 22:2303 and 22:1483)](https://www.ldi.la.gov/docs/default-source//documents/fortifyhomes/3-7-25-lfhp-informational-report.pdf) - [FEMA FloodSmart: What is my flood risk?](https://www.floodsmart.gov/flood-zones-and-maps/what-is-my-flood-risk) - [Louisiana Housing Corporation: HomeStart Assist](https://www.lhc.la.gov/homestartassist) _General information, not financial advice._ --- # Maine mortgages: the shared transfer tax, MaineHousing loans and the homestead exemption > Maine mortgage numbers: a 0.44% transfer tax split by buyer and seller, MaineHousing help up to $10,000 and a $25,000 homestead exemption. URL: https://mortgage-math-us.com/location/maine/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median Maine home is worth $341,900 and costs about **$2,650 a month** with 10% down at the 7.24% national average rate, including property tax at 0.91% of value. Maine’s 0.44% transfer tax is split between buyer and seller — about $752 each on that home. MaineHousing’s First Home Loan comes with up to $5,000 through Advantage, or $10,000 for first-generation buyers, and the homestead exemption takes up to $25,000 off your home’s taxable value. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in Maine | $341,900 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US23) | 2024 ACS 1-year | | Homes lived in by their owners | 73.3% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US23) | 2024 ACS 1-year | | Effective property tax rate | 0.91% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US23) | 2024 ACS 1-year | | Transfer tax (split buyer and seller) | 0.44% | [Maine Revenue Services](https://www.maine.gov/revenue/taxes/property-tax/transfer-tax) | Oct 28, 2026 | | MaineHousing Advantage, up to | $5,000 | [MaineHousing: First Home Loan Program](https://www.mainehousing.org/programs-services/homebuyer/homebuyerdetail/first-home-loan-program) | Oct 29, 2026 | | First Generation assistance | $10,000 | [MaineHousing: First Generation Program](https://www.mainehousing.org/programs-services/homebuyer/homebuyerdetail/first-generation-program) | Oct 29, 2026 | | Homestead exemption, up to | $25,000 | [Maine Revenue Services: Homestead Exemption Program FAQ](https://www.maine.gov/revenue/faq/homestead-exemption-program) | Oct 29, 2026 | ## Maine’s transfer tax, split between buyer and seller Maine’s real estate transfer tax is 0.44% of the price, and the law splits it equally: half from the buyer, half from the seller. As a buyer, budget for your share rather than assuming the seller covers it. > **Worked example: Transfer tax on the median Maine home ($341,900)** > > Total tax: $1,504 → buyer’s half **$752**, seller’s half $752. The buyer’s half sits alongside lender fees, title insurance, recording fees, prepaid interest and escrow deposits. The CFPB’s typical range of 2%–5% of the price works out to $6,838–$17,095 on the median home. The [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=ME) applies Maine’s split for you. ## MaineHousing First Home Loan and Advantage MaineHousing’s First Home Loan Program offers fixed-rate mortgages through participating lenders, with or without discount points, combined with FHA, USDA Rural Development or VA backing or private mortgage insurance. You qualify if you have not held an ownership interest in your principal home within the past 3 years, have a credit score of at least 640 and fit the income and purchase price limits for your area — limits most Maine households and homes meet, according to MaineHousing. **Advantage** adds up to $5,000 toward the down payment and closing costs. You put in at least 1% of the loan amount yourself (the homebuyer class fee counts) and complete a hoMEworks-approved homebuyer class before closing. > **Worked example: FHA First Home Loan with Advantage on the median $341,900 home** > > The 3.5% FHA down payment is $11,967. Advantage covers $5,000, your required 1% contribution on the $329,934 loan is $3,299, and the remaining $3,667 also comes from you (or other help). ## First Generation and SaluteME Two MaineHousing options target specific buyers: - **First Generation** provides $10,000 toward the cash needed to close for buyers who have never owned a home and never lived in a home owned by their parents or guardians, or who spent time in foster care. You take a financial literacy class and a homebuyer education class first, meet the same 640 score minimum and contribute 1% of the loan. - **SaluteME** cuts the rate on a 30-year First Home Loan by 0.5% for active duty, veteran and retired military buyers. On a $307,710 loan, a cut of that size from today’s national average would lower principal and interest by about $103 a month — $1,239 a year. MaineHousing’s own rates differ from the national average, so ask a lender for the actual figures. Veterans can also compare a [VA loan](https://mortgage-math-us.com/loan-types/va-loans/), and every buyer can use the [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/) to line these up against other help. ## Maine’s homestead exemption If you have owned a home in Maine for the past 12 months and it is your permanent residence, your town takes up to $25,000 off its taxable value. The amount is scaled by the town’s certified ratio — in a town at 80%, the exemption is $20,000. At the statewide effective rate, the full exemption is worth roughly $228 a year; your town’s rate decides the real figure. > **Tip: Apply with your town by April 1** > > File the application with the municipality where the home is on or before April 1; later filings count for the next year. You don’t need to reapply each year while ownership and residency stay the same. If you just moved to Maine, you qualify once you reach the ownership period above. Maine’s effective property tax rate of 0.91% is slightly above the national ratio of 0.89% — the 22nd-highest of the 50 states and DC. ## Owning in Maine: the monthly cost Maine’s owner share is the 4th-highest in the country: 73.3% of occupied homes are lived in by their owners. The median home value is below the US median and the median household income of $76,442 is below the national figure. > **Worked example: $341,900 home (Maine’s median value), 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $307,710 | $2,097 | > | Property tax at 0.91% a year | $259 | > | Homeowners insurance at $4.90 per $1,000 (Freddie Mac national average) | $140 | > | PMI (midpoint of Freddie Mac’s range) | $154 | > | **Total** | **$2,650** | Under Freddie Mac’s 30% guideline, the median income supports about **$247,000** with 10% down — $94,900 below the median value. Owning the median home on these terms takes about $106,000 a year. Maine’s housing stock is the 19th-oldest by median build year (1978), so have heating systems, roofs and insulation inspected with care. Run your numbers in the [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=342000&down=10&tax=0.91&state=ME), the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=ME&income=76442) or the [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=ME&price=342000&rent=1210). ## Frequently asked questions ### Who pays the transfer tax in Maine? Both sides. Maine’s transfer tax is 0.44% of the price, split equally between buyer and seller — about $752 each on the median $341,900 home. ### What is the homestead exemption in Maine? Up to $25,000 of your home’s value, scaled by your town’s certified ratio, if it is your permanent residence and you have owned a home in Maine for the past 12 months. Apply with your town by April 1. ### Does MaineHousing offer down payment assistance? Yes. Advantage gives First Home Loan borrowers up to $5,000 toward the down payment and closing costs, with a 1% borrower contribution and a homebuyer class. ### What is MaineHousing’s First Generation program? It provides $10,000 toward closing for buyers who have never owned a home and never lived in a home owned by their parents or guardians, or who were in foster care as children. ### What credit score do I need for a MaineHousing loan? The First Home Loan Program requires a minimum credit score of 640, including with Advantage and First Generation assistance. ### What is the property tax rate in Maine? Census data put the median Maine homeowner’s bill at $3,103 a year, about 0.91% of median home value, compared with 0.89% nationally. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US23) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US23) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US23) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price); Minimum FHA down payment (Oct 28, 2026) - [MaineHousing: First Home Loan Program](https://www.mainehousing.org/programs-services/homebuyer/homebuyerdetail/first-home-loan-program) — MaineHousing First Home Advantage down payment and closing cost assistance, up to; MaineHousing Advantage: minimum borrower contribution (share of the loan); MaineHousing SaluteME rate discount on a 30-year First Home Loan (active duty, veterans, retired military) (Oct 29, 2026) - [MaineHousing: First Generation Program](https://www.mainehousing.org/programs-services/homebuyer/homebuyerdetail/first-generation-program) — MaineHousing First Generation program assistance (Oct 29, 2026) - [Maine Revenue Services: Homestead Exemption Program FAQ](https://www.maine.gov/revenue/faq/homestead-exemption-program) — Maine homestead exemption, up to (scaled by the town’s certified ratio); Maine homestead exemption: owned a home in Maine for at least the past (Oct 29, 2026) - [Maine Revenue Services](https://www.maine.gov/revenue/taxes/property-tax/transfer-tax) — State real estate transfer tax (Oct 28, 2026) - [42 U.S.C. 12704(14)](https://www.law.cornell.edu/uscode/text/42/12704) — First-time homebuyer: has not owned a home in the past (HUD/HOME statute) (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US23) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US23) — Median year homes were built (2024 ACS 1-year) - [MaineHousing: First Home Loan Program](https://www.mainehousing.org/programs-services/homebuyer/homebuyerdetail/first-home-loan-program) - [MaineHousing: First Generation Program](https://www.mainehousing.org/programs-services/homebuyer/homebuyerdetail/first-generation-program) - [Maine Revenue Services: Homestead Exemption Program FAQ](https://www.maine.gov/revenue/faq/homestead-exemption-program) _General information, not financial advice._ --- # Maryland mortgages: closing taxes, first-time buyer breaks and MMP loans > Maryland home buying in numbers: 0.5% state transfer tax (0.25% for first-time buyers), county recordation tax, 0.95% property tax and MMP aid. URL: https://mortgage-math-us.com/location/maryland/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer A median-value Maryland home ($436,300) costs about **$3,396 a month** with 10% down at the 7.24% national average rate, including property tax at the state’s effective rate of 0.95%. What sets Maryland apart is the stack of taxes on the deed: a 0.5% state transfer tax plus county recordation and transfer taxes. First-time Maryland buyers get the state rate cut to 0.25%, paid entirely by the seller, and the Maryland Mortgage Program lends up to 5% of the first mortgage for the down payment at 0%. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in Maryland | $436,300 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US24) | 2024 ACS 1-year | | Median household income | $102,905/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US24) | 2024 ACS 1-year | | Effective property tax rate | 0.95% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US24) | 2024 ACS 1-year | | State transfer tax | 0.5% | [Maryland Tax-Property Article §13-203](https://mgaleg.maryland.gov/2026RS/Statute_Web/gtp/13-203.pdf) | Jan 21, 2026 | | State transfer tax, first-time Maryland buyers | 0.25% | [Maryland Code, Tax-Property § 13-203](https://mgaleg.maryland.gov/2026RS/Statute_Web/gtp/13-203.pdf) | Oct 29, 2026 | | MMP down payment loan, up to (share of first mortgage) | 5% | [Maryland Mortgage Program: MMP 1st Time Advantage](https://mmp.maryland.gov/home-loans/mmp-1st-time-advantage) | Sep 4, 2026 | | Homestead Tax Credit cap on yearly assessment growth | 10% | [Maryland SDAT: Homestead Tax Credit](https://dat.maryland.gov/realproperty/Pages/Maryland-Homestead-Tax-Credit.aspx) | Oct 29, 2026 | ## Maryland’s closing-day tax stack Maryland can tax the same deed three times: once for the state and up to twice more locally. Its state transfer tax ranks 11th of 51 among the states and DC, and the local layers are set county by county. *Taxes on recording a Maryland home purchase* | Tax | Set by | Rate | On the median home | |---|---|---|---:| | State transfer tax | State law (Tax-Property § 13-203) | 0.5% of the price | $2,182 | | State transfer tax, first-time Maryland buyer | State law | 0.25%, paid entirely by the seller | $1,091 | | Recordation tax | Each county and Baltimore City | A local rate charged on each $500 of the price | Varies by county | | Local transfer tax | Counties and Baltimore City that levy one | A local percentage | Varies by county | Because each county and Baltimore City sets its own recordation rate, ask your title company for the exact local figures early. Your purchase loan generally isn’t taxed a second time: Maryland exempts a purchase-money mortgage recorded as part of the same transaction from recordation tax, so the tax falls on the deed. Outside the first-time buyer rule, the state statute doesn’t say who pays, so your sales contract decides. The [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=MD) splits the state tax evenly by default. ## What the first-time buyer rule is worth To qualify, every buyer must sign a sworn statement that they have never owned a home in Maryland that they lived in as a principal residence, and that they will live in this one. Buying your first Maryland home after owning in another state still counts. > **Worked example: State transfer tax on the median Maryland home ($436,300)** > > | | Regular sale, split evenly | First-time Maryland buyer | > |---|---:|---:| > | State transfer tax | $2,182 at 0.5% | $1,091 at 0.25% | > | Buyer pays | $1,091 | $0 | > | Seller pays | $1,091 | $1,091 | > > Under an even split, the first-time rule removes the buyer’s share entirely, while the seller’s cost stays the same. The county recordation and transfer taxes are separate: state law lets a county exempt first-time buyers from part or all of its recordation tax, but not every county does, so check your county’s rules. ## A Maryland Mortgage Program purchase, step by step The Maryland Mortgage Program (MMP), run by the state’s Department of Housing and Community Development, works through approved lenders. Its 1st Time Advantage loans are for first-time buyers, with exceptions for buyers who haven’t owned a principal residence recently, buyers in targeted areas and eligible veterans. Every option requires an approved homebuyer education class. | MMP option | Down payment help | How it works | |---|---|---| | 1st Time Advantage 6000 | $6,000 | 0% second lien, no payments while the first mortgage is in place | | 1st Time Advantage percentage loans | A set share of the first mortgage, up to 5% | 0% deferred second lien | | HomeStart | 6% of the first mortgage | 0%, 30-year deferred; for the lowest-income tier of buyers | | Partner Match | Up to $2,500 more | Matches help from an approved employer or partner on the 6000 loans | > **Worked example: First-time buyer, median home, 3% down with the 5% MMP loan** > > | | Amount | > |---|---:| > | Price | $436,300 | > | Down payment at 3% | $13,089 | > | First mortgage | $423,211 | > | MMP loan at 5% of the first mortgage | $21,161 | > | Monthly payment (principal, interest, tax, insurance, PMI) | $3,619 | > > The MMP loan covers the down payment and leaves $8,072 toward closing costs. Because it is deferred at 0%, it adds nothing to the monthly payment; it comes due when the first mortgage is paid off, including through a sale or refinance. Closing costs at the CFPB’s typical range would run $8,726–$21,815. ## The median home with 10% down, and the income check Maryland’s median household income of $102,905 ranks 4th of 51, above the US median, while the median home value ranks 15th. Homes cost 4.2 times income here, less than the US ratio of 4.4. > **Worked example: $436,300 home, 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $392,670 | $2,676 | > | Property tax at 0.95% | $345 | > | Homeowners insurance at the national $4.90 per $1,000 | $178 | > | PMI (midpoint of Freddie Mac’s range) | $196 | > | **Total** | **$3,396** | Keeping housing under Freddie Mac’s 30% guideline, the median income supports a budget of $2,573 a month — enough for about **$331,000** with 10% down, $105,300 less than the median home value. The [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=MD&income=102905) runs the same test on your own income, and the [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=436000&down=10&tax=0.95&state=MD) opens with these Maryland inputs. ## Property tax and the Homestead Tax Credit At 0.95% of value, Maryland’s effective property tax rate is above the national 0.89% and ranks 21st of 51. Bills combine the state rate with county and, in some places, municipal rates on the value set by the State Department of Assessments and Taxation (SDAT). The Homestead Tax Credit limits how fast the taxable assessment on your principal residence can rise: no more than 10% a year for the state tax, and every county and municipality must use a cap at that level or lower. You file once, through SDAT, and the credit stays as long as you own and live in the home. New owners are mailed an application after the deed is recorded. Because the credit depends on the home not having changed hands in the prior tax year, its protection usually begins after your first full year of ownership. > **Tip: Budget from the assessment, not the seller’s bill** > > If the seller’s bill reflects years of capped growth, yours may rise once the cap resets after the sale. Look up the current assessment on SDAT’s real property search. ## Frequently asked questions ### How much is the transfer tax in Maryland? The state transfer tax is 0.5% of the price — $2,182 on the median $436,300 home. Counties and Baltimore City add a recordation tax charged on each $500 of the price, and some add their own transfer tax, so the total depends on where you buy. ### Do first-time home buyers pay transfer tax in Maryland? A first-time Maryland home buyer who will live in the home pays no state transfer tax: the rate drops to 0.25% and state law puts the whole amount on the seller. County taxes may still apply, although counties can exempt first-time buyers from part or all of the recordation tax. ### What down payment help does the Maryland Mortgage Program offer? MMP 1st Time Advantage loans come with a $6,000 0% second loan or a deferred 0% loan worth a set share of the first mortgage, up to 5%. HomeStart offers 6% for lower-income buyers, and Partner Match adds up to $2,500. ### What is the property tax rate in Maryland? Census figures put the median Maryland homeowner’s tax bill at $4,144 a year, an effective rate of about 0.95% of home value. Your county’s rate and any municipal rate decide the actual bill. ### How does the Maryland Homestead Tax Credit work? It caps yearly increases in the taxable assessment of your principal residence at 10% for the state tax, with local caps at that level or lower. You apply once with SDAT and the credit continues while you own and occupy the home. ### How much income do you need to buy a house in Maryland? To keep housing under 30% of gross income on the median $436,300 home with 10% down at today’s average rate, you would need about $135,837 a year, before other debts. The median Maryland household earns $102,905. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US24) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US24) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US24) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price); Minimum down payment on some conventional loans (Oct 28, 2026) - [Maryland Tax-Property Article §13-203](https://mgaleg.maryland.gov/2026RS/Statute_Web/gtp/13-203.pdf) — State real estate transfer tax; Maryland state transfer tax for a first-time Maryland home buyer (paid entirely by the seller) (Jan 21, 2026) - [Maryland Mortgage Program: MMP 1st Time Advantage](https://mmp.maryland.gov/home-loans/mmp-1st-time-advantage) — MMP 1st Time Advantage down payment loan, up to (share of the first mortgage); MMP 1st Time Advantage 6000 down payment loan; MMP HomeStart down payment loan for households at or below 50% of area median income (share of the first mortgage) (Sep 4, 2026) - [Maryland Mortgage Program: Down Payment Assistance](https://mmp.maryland.gov/home-loans/down-payment-assistance) — MMP Partner Match: partner assistance matched, up to (Mar 17, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Maryland SDAT: Homestead Tax Credit](https://dat.maryland.gov/realproperty/Pages/Maryland-Homestead-Tax-Credit.aspx) — Maryland Homestead Tax Credit: yearly cap on taxable assessment increases (state tax, local caps can be lower) (Oct 29, 2026) - [Maryland Mortgage Program: MMP 1st Time Advantage](https://mmp.maryland.gov/home-loans/mmp-1st-time-advantage) - [Maryland Code, Tax-Property § 13-203 (state transfer tax)](https://mgaleg.maryland.gov/2026RS/Statute_Web/gtp/13-203.pdf) - [Maryland Code, Tax-Property § 12-103 (recordation tax)](https://mgaleg.maryland.gov/2026RS/Statute_Web/gtp/12-103.pdf) - [Maryland SDAT: Homestead Tax Credit](https://dat.maryland.gov/realproperty/Pages/Maryland-Homestead-Tax-Credit.aspx) _General information, not financial advice._ --- # Buying a home in Massachusetts: prices, the deeds excise and MassHousing help > Massachusetts mortgage math: a $607,400 median home, $4,753 a month with 10% down, the deeds excise, homestead protection and MassHousing aid. URL: https://mortgage-math-us.com/location/massachusetts/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median Massachusetts home is worth $607,400, the 4th-highest value among the states and DC. With 10% down at the 7.24% national average rate it costs about **$4,753 a month**, including property tax at 1% of value. The median household income of $104,828 supports roughly $335,000, which is why down payment help matters: MassHousing lends first-time buyers up to $30,000 for the down payment. Each sale also carries a deeds excise of 0.456% of the price. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in Massachusetts | $607,400 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US25) | 2024 ACS 1-year | | Median household income | $104,828/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US25) | 2024 ACS 1-year | | Effective property tax rate | 1% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US25) | 2024 ACS 1-year | | Deeds excise (state transfer tax) | 0.456% | [Massachusetts Department of Revenue](https://www.mass.gov/info-details/massachusetts-tax-rates) | Dec 30, 2025 | | Median year homes were built | 1965 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US25) | 2024 ACS 1-year | | MassHousing down payment assistance, up to | $30,000 | [MassHousing: Down Payment Assistance](https://www.masshousing.com/buy-a-home/programs/downpayment-assistance/) | Oct 29, 2026 | | Declared homestead protection, up to | $1,000,000 | [Secretary of the Commonwealth: Homestead FAQ](https://www.sec.state.ma.us/divisions/registry-of-deeds/download/homestead-faq-en.pdf) | Sep 16, 2024 | ## Massachusetts prices against Massachusetts paychecks Massachusetts has the 2nd-highest median household income in the country, yet the median home costs 5.8 times that income — higher than the US ratio of 4.4. Owner-occupancy is below the national rate: 62.4% of occupied homes are lived in by their owners, the 8th-lowest share among the states and DC, and the median renter pays $1,848 a month. Inside the City of Boston the median value is $722,800, above the statewide figure; the [Boston market page](https://mortgage-math-us.com/location/boston-ma/) breaks the city down further. ## The monthly bill on the median home > **Worked example: $607,400 home, 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $546,660 | $3,725 | > | Property tax at 1% | $506 | > | Homeowners insurance at the national $4.90 per $1,000 | $248 | > | PMI (midpoint of Freddie Mac’s range) | $273 | > | **Total** | **$4,753** | > > The insurance line uses Freddie Mac’s national average per $1,000 of value; coastal and older homes can cost more to insure. The $546,660 loan leaves $286,090 of headroom under the 2026 baseline conforming limit of $832,750. Where FHFA designates a county as high-cost, the limit is higher, up to $1,249,125; above the local limit you are in [jumbo loan](https://mortgage-math-us.com/loan-types/jumbo-loans/) territory. Try other prices in the [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=607000&down=10&tax=1&state=MA). ## What the median income actually buys Freddie Mac suggests keeping housing costs under 30% of gross income. For the median Massachusetts household that is $2,621 a month, and here is the home it supports at today’s average rate: > **Worked example: Buying at the price $104,828 supports, 10% down** > > | | Amount | > |---|---:| > | Price | $335,000 | > | Monthly payment (principal, interest, tax, insurance, PMI) | $2,621 | > | Down payment | $33,500 | > | Deeds excise at 0.456% | $1,528 | > | Closing costs at the CFPB’s typical range | $6,700–$16,750 | > > That price is $272,400 short of the state median — a gap you can close with a second income, a smaller or older home, a town farther out, or help with the down payment. ## MassHousing’s down payment loan MassHousing, the state’s housing finance agency, pairs its own first mortgages with down payment assistance for income-eligible first-time buyers. You buy a single-family home, condo or two- to four-family property as your primary residence, use an affordable MassHousing mortgage through an approved lender, and complete homebuyer education. | MassHousing assistance | Amount | Repayment | |---|---|---| | Option 1 | Up to $30,000 | 0% interest, no payments; repaid when you sell, refinance or pay off the first mortgage | | Options 2 and 3 | Smaller maximum | Repaid in fixed monthly installments at a low fixed rate | Even the full $30,000 covers 4.9% of the median price, so expect to bring savings for part of the down payment and closing costs. MassHousing’s online eligibility check tells you whether you might qualify. More options are compared in the [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/). ## The deeds excise at closing Massachusetts taxes recorded deeds at $2.28 per $500 of the sale price, less any mortgage the buyer assumes — 0.456% of the price, which ranks 12th of 51 among state transfer taxes. On the median home that is $2,770. The Department of Revenue doesn’t name a payer on its rate page, so check your purchase and sale agreement. The [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=MA) adds the excise to your other closing costs. ## An older housing stock Half of Massachusetts homes were built before 1965, which makes the state’s housing the 4th-oldest in the country (the US median is 1981). Older homes can mean original heating systems, aging roofs and wiring, and lead paint, so put a thorough inspection in your offer and keep a repair reserve on top of the mortgage payment. Ask for the property’s past utility bills too; heating an older house through a New England winter can add noticeably to monthly costs. ## Protect your equity with a declared homestead Massachusetts homeowners get $125,000 of automatic protection against many creditors. Recording a declaration of homestead at the Registry of Deeds for your county raises it to $1,000,000 per home, and older or disabled owners can each protect that amount. The protection doesn’t shield you from your mortgage lender or a home equity lender, and you can record it right after closing. Property tax is the cost that follows you every year: at 1% of value, the state’s effective rate is above the national 0.89% and ranks 19th of 51, though each city and town sets its own rate. Compare renting and buying over your time horizon in the [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=MA&price=607000&rent=1848). ## Frequently asked questions ### How much is the transfer tax in Massachusetts? Massachusetts charges a deeds excise of $2.28 per $500 of the price, or 0.456% — $2,770 on the median $607,400 home. Your purchase and sale agreement says who pays it. ### What is the median home price in Massachusetts? The Census Bureau’s 2024 American Community Survey puts the median value of owner-occupied homes at $607,400, compared with $360,600 nationally. In the City of Boston the median is $722,800. ### Does Massachusetts have first-time home buyer programs? Yes. MassHousing offers income-eligible first-time buyers up to $30,000 in down payment assistance, with a 0% deferred option, when paired with a MassHousing mortgage and homebuyer education. ### What is the property tax rate in Massachusetts? The median Massachusetts homeowner pays $6,080 a year in property tax, an effective rate of about 1% of value. Each city and town sets its own rate. ### What is a declared homestead in Massachusetts? It is a document recorded at the Registry of Deeds that raises the protection of your home’s equity from $125,000 to $1,000,000 against many creditors. It does not protect against mortgage or home equity lenders. ### How much income do you need to buy a house in Massachusetts? To keep housing under 30% of gross income on the median $607,400 home with 10% down at today’s average rate, you would need about $190,120 a year before other debts. The median household earns $104,828. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US25) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US25) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US25) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US25) — Median gross rent (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [Massachusetts Department of Revenue](https://www.mass.gov/info-details/massachusetts-tax-rates) — State real estate transfer tax (Dec 30, 2025) - [MassHousing: Down Payment Assistance](https://www.masshousing.com/buy-a-home/programs/downpayment-assistance/) — MassHousing down payment assistance, up to (Oct 29, 2026) - [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) — 2026 baseline conforming loan limit (one-unit); 2026 high-cost area conforming ceiling (one-unit) (2026 limit) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US25) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US2507000) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US25) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=010XX00US) — Median year homes were built (2024 ACS 1-year) - [Secretary of the Commonwealth: Homestead FAQ](https://www.sec.state.ma.us/divisions/registry-of-deeds/download/homestead-faq-en.pdf) — Massachusetts automatic homestead protection (no declaration filed); Massachusetts declared homestead protection, up to (Sep 16, 2024) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [MassHousing: Down Payment Assistance](https://www.masshousing.com/buy-a-home/programs/downpayment-assistance/) - [Massachusetts Department of Revenue: Massachusetts tax rates](https://www.mass.gov/info-details/massachusetts-tax-rates) - [Secretary of the Commonwealth: Homestead FAQ (updated Sept 2024)](https://www.sec.state.ma.us/divisions/registry-of-deeds/download/homestead-faq-en.pdf) _General information, not financial advice._ --- # Buying a home in Michigan: uncapped taxes, the PRE and MSHDA help > Michigan home buying: a $254,200 median home, why taxes jump after a sale, the Principal Residence Exemption, seller-paid transfer tax and MI 10K. URL: https://mortgage-math-us.com/location/michigan/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer A median-value Michigan home ($254,200) costs about **$2,027 a month** with 10% down at the 7.24% national average rate, with property tax at the state’s effective rate of 1.18%. Budget for a higher tax bill than the seller’s: the year after a sale, the home’s taxable value is reset to 50% of market value. Claim the Principal Residence Exemption to avoid up to 18 mills of school taxes, and look at MSHDA’s MI 10K loan of up to $10,000 for the down payment. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in Michigan | $254,200 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US26) | 2024 ACS 1-year | | Homes lived in by their owners | 73.5% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US26) | 2024 ACS 1-year | | Effective property tax rate | 1.18% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US26) | 2024 ACS 1-year | | Yearly cap on taxable value growth | 5% | [Michigan State Tax Commission: Transfer of Ownership Guidelines](https://www.michigan.gov/taxes/-/media/Project/Websites/taxes/STC/TransferOwnershipGuidelines.pdf?rev=adadcab40aed4a6687c992bc54162095&hash=51B779B1E461FCD1C080DC370276348C) | Feb 25, 2025 | | School mills exempted by the PRE, up to | 18 | [Michigan Department of Treasury: Principal Residence Exemption](https://www.michigan.gov/taxes/property/principal) | Oct 29, 2026 | | State and county transfer tax (seller pays) | 0.86% | [Michigan Department of Treasury](https://www.michigan.gov/taxes/business-taxes/misc/state-real-estate-transfer-tax-srett) | Oct 28, 2026 | | MSHDA MI 10K down payment loan, up to | $10,000 | [Michigan State Housing Development Authority: MI 10K DPA Loan](https://www.michigan.gov/mshda/pathway-to-housing/mi-10k-dpa-loan) | Oct 29, 2026 | ## A state of homeowners 73.5% of occupied Michigan homes are lived in by their owners, above the national 65.3% and the 3rd-highest share among the states and DC. Prices help: the median value of $254,200 is below the US median and the 12th-lowest in the country, and homes cost 3.5 times the median household income of $72,389 — lower than the US ratio of 4.4. The catch is the property tax rate, which ranks 13th of 51, and how it resets when a home changes hands. ## Why the seller’s tax bill isn’t yours: uncapping Michigan taxes a home on its **taxable value**, not its market value. While an owner keeps the home, taxable value can rise each year by no more than 5% or the rate of inflation, whichever is less — even when market values climb faster. A long-time owner’s taxable value can therefore sit well below the home’s state equalized value (SEV), which is 50% of its true cash value. A sale removes that cap. For the calendar year after the transfer, the assessor sets taxable value equal to SEV, and capped growth starts again from there. > **Worked example: Uncapping on the median Michigan home** > > | | Value | > |---|---:| > | Market value | $254,200 | > | SEV at 50% | $127,100 | > | Seller’s taxable value (example: capped at three-quarters of SEV) | $95,325 | > | Your taxable value the year after you buy | $127,100 | > > At the same millage, your bill would be about 33% higher than the seller’s. Ask for the property’s SEV, not just last year’s tax bill, and price your payment on that. Because the statewide effective rate of 1.18% averages long-time owners with recent buyers, a new buyer’s bill can run above it. The Treasury’s online property tax estimator lets you test a specific local millage. ## Claim the Principal Residence Exemption The Principal Residence Exemption (PRE) exempts the home you live in from local school operating taxes, up to 18 mills. A mill is $1 of tax per $1,000 of taxable value, so on the median home’s SEV the full exemption is worth about **$2,288 a year**. File the PRE affidavit with your city or township assessor as soon as you move in; Treasury audits claims and denies exemptions on homes that aren’t the owner’s principal residence. It is separate from the Homestead Property Tax Credit, which is claimed on the state income tax return. ## Michigan’s median home, month by month > **Worked example: $254,200 home, 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $228,780 | $1,559 | > | Property tax at 1.18% | $250 | > | Homeowners insurance at the national $4.90 per $1,000 | $104 | > | PMI (midpoint of Freddie Mac’s range) | $114 | > | **Total** | **$2,027** | On the median income, Freddie Mac’s 30% guideline gives a budget of $1,810 a month, which supports a price of about **$227,000** with 10% down — $27,200 less than the median home value. Rerun it with your own income in the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=MI&income=72389) or adjust the inputs in the [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=254000&down=10&tax=1.18&state=MI). ## MSHDA’s MI 10K down payment loan The Michigan State Housing Development Authority offers the MI 10K DPA loan statewide: up to $10,000 for the down payment, closing costs and prepaid items, with no interest and no monthly payments. It is repaid when you sell or refinance, pay off the first mortgage, or stop living in the home. You must pair it with an MSHDA MI Home Loan from a participating lender and complete a housing education class. Income and price limits apply, so ask the lender for the figures in your county. > **Worked example: MI 10K with an FHA loan on the median home** > > | | Amount | > |---|---:| > | FHA down payment at 3.5% | $8,897 | > | MI 10K loan | $10,000 | > | FHA loan with the 1.75% upfront premium financed | $249,596 | > | Monthly: principal and interest | $1,701 | > | Monthly: FHA annual premium at 0.55% | $112 | > | Monthly: property tax and insurance | $354 | > | **Monthly total** | **$2,167** | > > The MI 10K loan covers the whole down payment and leaves $1,103 toward closing costs. Compare FHA with conventional options in the [FHA loans guide](https://mortgage-math-us.com/loan-types/fha-loans/). ## Transfer tax: the seller’s line Michigan charges a state real estate transfer tax, and counties add their own at recording, for a combined 0.86% of value — the 7th-highest statewide rate in the country. On the median home that comes to $2,186. The law makes the seller responsible for it, although a buyer can agree to pay it, and some sellers of a principal residence qualify for an exemption or refund of the state portion. Buyers still pay recording fees, title costs and lender charges; the [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=MI) shows them together. ## Frequently asked questions ### Why do property taxes go up after you buy a house in Michigan? While an owner holds a home, taxable value can rise by no more than 5% or inflation each year. A sale “uncaps” it: the year after you buy, taxable value is reset to the state equalized value, 50% of market value, so your bill can be well above the seller’s. ### What is the Principal Residence Exemption in Michigan? It exempts the home you live in from up to 18 mills of local school operating taxes — about $2,288 a year on the median home’s SEV. You file an affidavit with your local assessor. ### Who pays the transfer tax in Michigan? The seller is legally responsible for the state real estate transfer tax, and the county tax is collected with it at recording, for a combined 0.86% of value. A buyer can agree to pay it in the contract. ### What is the MI 10K DPA loan? MSHDA’s MI 10K is a 0% loan of up to $10,000 for the down payment and closing costs, with no monthly payments. It is paired with an MI Home Loan and repaid when you sell, refinance, pay off the first mortgage or move out. ### What is the property tax rate in Michigan? Census data put the median Michigan homeowner’s bill at $2,988 a year, an effective rate of about 1.18% of value. New buyers can pay more than that average because their taxable value is uncapped after the sale. ### How much house can you afford in Michigan on the median income? On $72,389 a year, keeping housing under 30% of income supports about $227,000 with 10% down at today’s average rate, counting Michigan’s average tax rate and typical insurance and PMI. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US26) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US26) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US26) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [Michigan State Tax Commission: Transfer of Ownership Guidelines](https://www.michigan.gov/taxes/-/media/Project/Websites/taxes/STC/TransferOwnershipGuidelines.pdf?rev=adadcab40aed4a6687c992bc54162095&hash=51B779B1E461FCD1C080DC370276348C) — Michigan state equalized value (SEV) as a share of true cash value; Michigan cap on yearly taxable value increases (or the inflation rate, if lower) (Feb 25, 2025) - [Michigan Department of Treasury: Principal Residence Exemption](https://www.michigan.gov/taxes/property/principal) — Michigan Principal Residence Exemption: school operating millage exempted, up to (mills) (Oct 29, 2026) - [Michigan State Housing Development Authority: MI 10K DPA Loan](https://www.michigan.gov/mshda/pathway-to-housing/mi-10k-dpa-loan) — MSHDA MI 10K DPA loan, up to (Oct 29, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment (Oct 28, 2026) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA upfront mortgage insurance premium; FHA annual MIP, 30-year loan, more than 95% LTV (Feb 22, 2023) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US26) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=010XX00US) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [Michigan Department of Treasury](https://www.michigan.gov/taxes/business-taxes/misc/state-real-estate-transfer-tax-srett) — State real estate transfer tax (Oct 28, 2026) - [MSHDA: MI 10K DPA Loan](https://www.michigan.gov/mshda/pathway-to-housing/mi-10k-dpa-loan) - [Michigan Department of Treasury: Principal Residence Exemption](https://www.michigan.gov/taxes/property/principal) - [Michigan State Tax Commission: Transfer of Ownership Guidelines](https://www.michigan.gov/taxes/-/media/Project/Websites/taxes/STC/TransferOwnershipGuidelines.pdf?rev=adadcab40aed4a6687c992bc54162095&hash=51B779B1E461FCD1C080DC370276348C) - [Michigan Department of Treasury: State Real Estate Transfer Tax](https://www.michigan.gov/taxes/business-taxes/misc/state-real-estate-transfer-tax-srett) _General information, not financial advice._ --- # Minnesota mortgages: the deed tax, the mortgage registry tax and Start Up loans > Minnesota home loans: 0.33% deed tax, 0.23% mortgage registry tax, a $344,600 median home and Minnesota Housing Start Up help. URL: https://mortgage-math-us.com/location/minnesota/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer A median-value Minnesota home ($344,600) costs about **$2,702 a month** with 10% down at the 7.24% national average rate, including property tax at 1.02% of value. At closing, Minnesota charges a deed tax of 0.33% of the price and a mortgage registry tax of 0.23% of your loan, which the borrower owes. First-time buyers who use Minnesota Housing’s Start Up program can add a 0% deferred loan of up to $18,000 for the down payment and closing costs. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in Minnesota | $344,600 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US27) | 2024 ACS 1-year | | Median household income | $87,117/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US27) | 2024 ACS 1-year | | Effective property tax rate | 1.02% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US27) | 2024 ACS 1-year | | Deed tax | 0.33% | [Minnesota Department of Revenue](https://www.revenue.state.mn.us/deed-tax-rate) | Oct 28, 2026 | | Mortgage registry tax | 0.23% | [Minnesota Department of Revenue](https://www.revenue.state.mn.us/mortgage-tax-rate) | Oct 28, 2026 | | Deferred Payment Loan Plus, up to | $18,000 | [Minnesota Housing: Buy a Home and Refinance](https://www.mnhousing.gov/home/homeownership/buy-home-refinance) | Oct 29, 2026 | | Start Up income limit, up to | $156,100 | [Minnesota Housing: Buy a Home and Refinance](https://www.mnhousing.gov/home/homeownership/buy-home-refinance) | Oct 29, 2026 | ## Minnesota’s deed tax and mortgage registry tax Minnesota taxes the mortgage itself as well as the deed — one of 8 states in our closing cost data with a statewide mortgage tax. The **deed tax** is 0.33% of the net consideration — the price, less any mortgage the buyer takes over. The **mortgage registry tax** is 0.23% of the debt the mortgage secures, and the Department of Revenue makes the borrower liable for it. Both are a little higher in Hennepin and Ramsey counties, which add a small environmental response fund tax. > **Worked example: Recording taxes on the median home, 10% down** > > | Tax | Based on | Amount | > |---|---|---:| > | Deed tax at 0.33% | $344,600 price | $1,137 | > | Mortgage registry tax at 0.23% | $310,140 loan | $713 | > | **Both** | | **$1,851** | > > The registry tax follows the loan, so a larger down payment lowers it. The state doesn’t say who pays the deed tax; your purchase agreement does. The [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=MN) adds both taxes to the lender, title and prepaid costs on your own price and loan. ## Start Up or Step Up: which lane you are in Minnesota Housing doesn’t lend directly; participating lenders make its loans. Which program you use depends on whether you are a first-time buyer — no ownership interest in a principal residence in the last 3 years — and on your income and price. *Minnesota Housing first mortgage programs* | | Start Up | Step Up | |---|---|---| | Who | First-time buyers | Repeat buyers, or first-time buyers above Start Up limits | | Income limit | Up to $156,100, by county | Up to $196,600, by county | | Price limit | $515,200 in the 11-county Metro, $472,030 elsewhere | $515,200 in the Metro; a separate limit elsewhere | | Down payment loans | Deferred Payment Loan, DPL Plus, Monthly Payment Loan | Monthly Payment Loan | | Homebuyer education | At least one borrower | If all borrowers are first-time buyers | The statewide median home is below both Start Up price limits, so a median-priced home fits the caps anywhere in the state; your income and county decide the rest. Minnesota Housing’s separate First-Generation Homebuyer Loan Program has closed after its one-time funds ran out. ## Deferred or monthly: picking a Minnesota Housing down payment loan Minnesota Housing’s help is a loan, not a grant, and it only comes with a Minnesota Housing first mortgage. - **Deferred Payment Loan Plus (Start Up):** up to $18,000 with no interest and no monthly payments. The whole amount comes due at the end of the mortgage term, or sooner if you sell, move out, refinance outside Step Up or pay off the first mortgage. The standard Deferred Payment Loan works the same way with a lower maximum. - **Monthly Payment Loan (Start Up or Step Up):** up to $14,000, repaid over 15 years at the same rate as your first mortgage. It raises your monthly payment but disappears long before the first mortgage does. > **Worked example: Start Up buyer, median home, 3% down with DPL Plus** > > Cash needed: the $10,338 down payment, closing costs from $6,892 at the low end of the CFPB range, and a $769 mortgage registry tax on the $334,262 loan — about $17,999 in all. A full $18,000 DPL Plus would cover roughly all of it, though closing costs toward the high end of the range would leave a gap to fill from savings. The monthly payment on the first mortgage, with PMI, tax and insurance, comes to about $2,879; the deferred loan adds nothing to it. ## A month of payments on Minnesota’s median home > **Worked example: $344,600 home, 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $310,140 | $2,114 | > | Property tax at 1.02% | $293 | > | Homeowners insurance at the national $4.90 per $1,000 | $141 | > | PMI (midpoint of Freddie Mac’s range) | $155 | > | **Total** | **$2,702** | Open the [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=345000&down=10&tax=1.02&state=MN) with these Minnesota inputs to try other prices or down payments. ## Income against price Minnesota’s median household income of $87,117 ranks 15th of 51 and sits above the US median; the median home value ranks 24th and is below the national figure. At Freddie Mac’s 30% guideline, that income supports $2,178 a month — about **$278,000** with 10% down at today’s average rate, which falls $66,600 short of the median home value. Check your own numbers in the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=MN&income=87117). Ownership runs high: 71.6% of occupied homes are owner-occupied, the 10th-highest share in the country. Property tax takes 1.02% of value a year on average, above the national 0.89% and 17th of 51 — your bill depends on the city, county and school district levies where you buy. ## Frequently asked questions ### What is the mortgage registry tax in Minnesota? It is a state tax of 0.23% on the debt a mortgage secures, due when the mortgage is recorded. The borrower is liable for it — about $713 on a 10%-down loan for the median $344,600 home. ### How much is the deed tax in Minnesota? The deed tax is 0.33% of the net consideration, slightly more in Hennepin and Ramsey counties. On the median home that is about $1,137. Your purchase agreement decides who pays it. ### What are the income limits for Minnesota Housing Start Up? Start Up income limits vary by county and go up to $156,100. Purchase prices are capped at $515,200 in the 11-county Metro area and $472,030 elsewhere. ### How much down payment assistance can you get in Minnesota? With a Start Up first mortgage, Minnesota Housing’s Deferred Payment Loan Plus offers up to $18,000 at 0% with no monthly payments. The Monthly Payment Loan, available with Start Up or Step Up, offers up to $14,000. ### What is the property tax rate in Minnesota? Census figures put the median Minnesota homeowner’s bill at $3,501 a year, an effective rate of about 1.02% of home value. ### Is Minnesota’s First-Generation Homebuyer Loan Program still open? No. Minnesota Housing says the program’s one-time funds have been used up and it no longer accepts loan commitments. Start Up and its down payment loans remain available through participating lenders. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US27) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US27) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US27) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [Minnesota Department of Revenue](https://www.revenue.state.mn.us/deed-tax-rate) — State real estate transfer tax (Oct 28, 2026) - [Minnesota Department of Revenue](https://www.revenue.state.mn.us/mortgage-tax-rate) — State tax on recording a mortgage (Oct 28, 2026) - [Minnesota Housing: Buy a Home and Refinance](https://www.mnhousing.gov/home/homeownership/buy-home-refinance) — Minnesota Housing Deferred Payment Loan Plus (Start Up), up to; Minnesota Housing Start Up purchase price limit, 11-county Metro area; Minnesota Housing Start Up purchase price limit, counties outside the Metro area (Oct 29, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum down payment on some conventional loans; Typical closing costs, low end (share of purchase price) (Oct 28, 2026) - [42 U.S.C. 12704(14)](https://www.law.cornell.edu/uscode/text/42/12704) — First-time homebuyer: has not owned a home in the past (HUD/HOME statute) (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US27) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Minnesota Housing: Buy a Home and Refinance](https://www.mnhousing.gov/home/homeownership/buy-home-refinance) - [Minnesota Department of Revenue: Mortgage Registry Tax rate](https://www.revenue.state.mn.us/mortgage-tax-rate) - [Minnesota Department of Revenue: Deed Tax rate](https://www.revenue.state.mn.us/deed-tax-rate) _General information, not financial advice._ --- # Mississippi home loans: low prices, MHC second mortgages and the homestead credit > Mississippi mortgage numbers: a $186,500 median home, no transfer tax, the homestead credit and MHC’s Smart7, Easy8 and Trusty10 down payment loans. URL: https://mortgage-math-us.com/location/mississippi/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median Mississippi home is worth $186,500 and costs about **$1,405 a month** with 10% down at the 7.24% national average rate, including property tax at 0.65% of value. There is no statewide transfer tax, and homeowners who apply can get a homestead tax credit of up to $300 a year. Mississippi Home Corporation pairs its 30-year loans with second mortgages of $7,000, $8,000 or $10,000 for the down payment. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in Mississippi | $186,500 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US28) | 2024 ACS 1-year | | Median household income | $59,127/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US28) | 2024 ACS 1-year | | Effective property tax rate | 0.65% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US28) | 2024 ACS 1-year | | Statewide transfer tax | 0% | [National Association of Realtors](https://narfocus.com/publication-issue/view/2023-07-05-state-and-local-issues-real-estate-transfer-tax) | Jul 5, 2023 | | Homestead tax credit, up to | $300 | [Mississippi Department of Revenue: Homestead Exemption](https://www.dor.ms.gov/county-services/homestead-exemption) | Oct 29, 2026 | | MHC Easy8 0% second mortgage | $8,000 | [Mississippi Home Corporation: Easy8](https://www.mshomecorp.com/programs/easy8/) | Oct 29, 2026 | | Teacher homebuyer grant, up to | $6,000 | [Mississippi Home Corporation: MHC Mortgage Products](https://www.mshomecorp.com/mhc-programs/) | Oct 29, 2026 | ## Low prices, and incomes to match Mississippi’s median home value of $186,500 ranks 2nd-lowest among the states and DC, against $360,600 nationally. Its median household income of $59,127 ranks lowest, so cheap homes don’t automatically mean easy ones. Still, the median home costs 3.2 times the median income — the 3rd-lowest ratio in the country, against 4.4 for the US. Homes are also newer than the US median: the typical Mississippi home was built in 1987 (US: 1981), which ranks 15th of 51 for newest housing. ## What the median home costs each month > **Worked example: $186,500 home, 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $167,850 | $1,144 | > | Property tax at 0.65% | $101 | > | Homeowners insurance at the national $4.90 per $1,000 | $76 | > | PMI (midpoint of Freddie Mac’s range) | $84 | > | **Total** | **$1,405** | > > The insurance line uses Freddie Mac’s national average; quotes vary widely, especially for homes near the Gulf Coast, so get one before you commit. The median renter pays $990 a month — $415 less than the owner’s payment above, before maintenance. The [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=MS&price=187000&rent=990) shows how long you would need to stay for buying to pay off. ## Smart7, Easy8 or Trusty10? Mississippi Home Corporation (MHC), the state’s housing finance agency, sells its 30-year fixed-rate mortgages through participating lenders, each with an optional second mortgage for the down payment, closing costs or prepaid items. You generally need to be a first-time buyer (no ownership in the past 3 years) unless you buy in a targeted area or are a veteran, stay within the county income limit, live in the home and complete homebuyer education. > **Worked example: The three MHC seconds on an FHA purchase of the median home (3.5% down = $6,528)** > > | Second mortgage | Amount | Terms | Against the down payment | > |---|---:|---|---| > | Smart7 | $7,000 | 0%, no payments; due on sale, payoff or maturity | $473 left for closing costs | > | Easy8 | $8,000 | 0%, no payments; due on refinance, payoff or move-out | $1,473 left for closing costs | > | Trusty10 | $10,000 | 2% over 15 years: $64 a month | $3,473 left for closing costs | > > Trusty10 gives you the most cash but costs $1,583 in interest over its term, and its monthly payment counts toward your debt-to-income ratio. Ask the lender for the first-mortgage rate that comes with each option and compare the full package. ## MHC’s HAT grant for teachers MHC’s Housing Assistance for Teachers (HAT) program offers a grant of up to $6,000 to Mississippi-certified public school teachers buying in select areas, and MHC announced funding for the 2026–2027 cycle in August 2026. Funding is limited and only some areas qualify, so confirm with MHC before you shop. ## No transfer tax at closing Mississippi is one of 16 states with no statewide real estate transfer tax, so the deed is recorded for a recording fee rather than a percentage of the price. Your closing costs are mostly lender charges, title insurance, prepaid interest and the escrow deposit — at the CFPB’s typical range, $3,730–$9,325 on the median home. The [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=MS) itemizes them. ## Claim the homestead exemption by April 1 At 0.65% of value, Mississippi’s effective property tax rate is below the national 0.89% and the 18th-lowest in the country. The homestead exemption trims it further: - **Regular homestead:** a tax credit of up to $300 a year, based on the property’s value — up to 25% of the estimated tax on the median home. - **Age 65 or older, or totally disabled:** no tax on the first $7,500 of assessed value, with protection that can grow as the value rises. You must own the home and live in it as your primary residence on January 1, with the deed already recorded with the chancery clerk, and apply at the county tax assessor’s office between January 1 and April 1. Close on a home in, say, March of one year and you can usually apply the following January. ## What the median income supports With housing at Freddie Mac’s 30% guideline, the median income of $59,127 supports $1,478 a month — a price of about **$196,000** with 10% down at today’s average rate, $9,500 above the median home value. Run your own figures in the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=MS&income=59127) or the [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=187000&down=10&tax=0.65&state=MS). Outside the larger cities, a [USDA loan](https://mortgage-math-us.com/loan-types/usda-loans/) with no down payment may also be worth comparing. ## Frequently asked questions ### Does Mississippi have a real estate transfer tax? No. Mississippi has no statewide transfer tax on home sales; buyers and sellers pay recording fees, title costs and lender charges instead. ### What is the homestead exemption in Mississippi? Homeowners who own and live in their home on January 1 can get a tax credit of up to $300 a year. Owners 65 or older or totally disabled are exempt from tax on the first $7,500 of assessed value. Apply at the county tax assessor between January 1 and April 1. ### What down payment assistance does Mississippi Home Corporation offer? MHC offers Smart7 ($7,000) and Easy8 ($8,000) as 0% second mortgages with no monthly payments, and Trusty10 ($10,000) repaid at 2% over 15 years, each paired with an MHC 30-year fixed-rate mortgage. ### Is there a home buying program for teachers in Mississippi? Yes. MHC’s Housing Assistance for Teachers grant offers up to $6,000 to Mississippi-certified public school teachers buying in select areas, subject to available funding. ### What is the property tax rate in Mississippi? Census data put the median Mississippi homeowner’s tax bill at $1,221 a year, an effective rate of about 0.65% of home value, before any homestead credit you claim. ### How much income do you need to buy the median home in Mississippi? To keep housing under 30% of gross income on the median $186,500 home with 10% down at today’s average rate, you would need about $56,200 a year before other debts. The median household earns $59,127. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US28) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US28) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US28) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US28) — Median gross rent (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price); Minimum FHA down payment (Oct 28, 2026) - [Mississippi Home Corporation: MHC Mortgage Products](https://www.mshomecorp.com/mhc-programs/) — MHC Smart7 second mortgage (0%, deferred); MHC Trusty10 second mortgage; MHC Trusty10 second mortgage interest rate (Oct 29, 2026) - [Mississippi Home Corporation: Easy8](https://www.mshomecorp.com/programs/easy8/) — MHC Easy8 second mortgage (0%, deferred) (Oct 29, 2026) - [Mississippi Department of Revenue: Homestead Exemption](https://www.dor.ms.gov/county-services/homestead-exemption) — Mississippi regular homestead exemption, tax credit up to; Mississippi homestead exemption, age 65+ or disabled: assessed value exempt (Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US28) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=010XX00US) — Median year homes were built (2024 ACS 1-year) - [42 U.S.C. 12704(14)](https://www.law.cornell.edu/uscode/text/42/12704) — First-time homebuyer: has not owned a home in the past (HUD/HOME statute) (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [National Association of Realtors](https://narfocus.com/publication-issue/view/2023-07-05-state-and-local-issues-real-estate-transfer-tax) — State real estate transfer tax (Jul 5, 2023) - [Mississippi Home Corporation: MHC Mortgage Products](https://www.mshomecorp.com/mhc-programs/) - [Mississippi Home Corporation: Easy8](https://www.mshomecorp.com/programs/easy8/) - [Mississippi Department of Revenue: Homestead Exemption](https://www.dor.ms.gov/county-services/homestead-exemption) _General information, not financial advice._ --- # Missouri home loans: how homes are taxed and how MHDC’s cash assistance works > Missouri home buying: a $254,400 median home, the 19% assessment rule, no transfer tax and MHDC cash assistance forgiven over 10 years. URL: https://mortgage-math-us.com/location/missouri/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer A median-value Missouri home ($254,400) costs about **$1,946 a month** with 10% down at the 7.24% national average rate, including property tax at 0.79% of value. Missouri has no statewide transfer tax, and homes are taxed on an assessed value of 19% of market value. The Missouri Housing Development Commission’s Next Step program offers buyers with a score of 640 or more cash assistance worth 4% of the mortgage, forgiven in full after 10 years. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in Missouri | $254,400 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US29) | 2024 ACS 1-year | | Median household income | $71,589/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US29) | 2024 ACS 1-year | | Effective property tax rate | 0.79% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US29) | 2024 ACS 1-year | | Homes are assessed at this share of market value | 19% | [State Tax Commission of Missouri: Assessor Manual, General Information](https://stc.mo.gov/wp-content/uploads/sites/5/2026/06/Chapter-2-Final-Revised-06-01-2026.pdf) | Jun 1, 2026 | | Statewide transfer tax | 0% | [National Association of Realtors](https://narfocus.com/publication-issue/view/2023-07-05-state-and-local-issues-real-estate-transfer-tax) | Jul 5, 2023 | | MHDC cash assistance (share of mortgage) | 4% | [Missouri Housing Development Commission: Next Step Learn More](https://mhdc.com/media/wf2onuss/next-step-learn-more_11182025.pdf) | Oct 29, 2026 | | MHDC minimum credit score | 640 | [Missouri Housing Development Commission: Next Step Learn More](https://mhdc.com/media/wf2onuss/next-step-learn-more_11182025.pdf) | Oct 29, 2026 | ## How Missouri turns a price into a tax bill Missouri taxes homes in two steps. First the local assessor sets the home’s market value and multiplies it by 19%, the assessment ratio state law sets for residential property. Then each local taxing district — school district, county, city, library, fire and others — applies its levy, stated per $100 of assessed value. > **Worked example: The median Missouri home on the tax roll** > > | Step | Figure | > |---|---:| > | Market value | $254,400 | > | Assessed value at 19% | $48,336 | > | Combined levy implied by the state’s effective tax rate | $4.16 per $100 | > | Yearly tax | $2,010 | > > The levy line is an average backed out of Census data; your actual levy depends on the districts where the home sits, so ask for the latest tax receipt. Assessments are updated every odd-numbered year, so the next statewide reassessment falls in 2027. At 0.79% of value, Missouri’s effective rate is below the national 0.89% and ranks 24th of 51. ## MHDC’s First Place and Next Step loans The Missouri Housing Development Commission (MHDC) sets the rates and allowable closing costs on 30-year loans made by its certified lenders anywhere in the state. There is no minimum down payment or loan amount. *MHDC homebuyer programs* | | First Place | Next Step | |---|---|---| | Who | First-time buyers and qualified veterans | First-time and repeat buyers above First Place income limits | | Cash assistance | Optional, for down payment and closing costs | Optional: 4% of the total mortgage, forgivable | | Income and price limits | Lower | Higher | Next Step loans are 30-year FHA, VA, USDA or HFA conventional purchase loans, with a minimum credit score of 640 (lenders may ask for more). MHDC publishes the income and purchase price limits for each area on its lender resources page; ask a certified lender for current rates with and without cash assistance. ## How MHDC cash assistance is forgiven The Next Step cash assistance is a second loan you never make payments on. It is fully forgiven after 10 years if you stay in the home and keep the original first mortgage. For the first half of that period the whole amount stays on the books; after that it shrinks a little each month until nothing is left. > **Worked example: Median home, FHA with 3.5% down and MHDC cash assistance** > > The FHA loan with its 1.75% upfront premium financed is $249,792, so 4% cash assistance is **$9,992** — enough to cover the $8,904 down payment and put $1,088 toward closing costs. The monthly payment, with FHA mortgage insurance, tax and insurance, is about $2,086. > > | If you sell or refinance | Assistance still owed | > |---|---:| > | After 3 years | $9,992 | > | After 5 years | $9,992 | > | After 6 years | $7,993 | > | After 8 years | $3,997 | > | After 10 years | $0 | > Selling or refinancing early isn’t a penalty — you simply repay what hasn’t been forgiven yet — but it is worth knowing before you refinance when rates fall. ## A closing without a transfer tax Missouri is one of 16 states with no statewide real estate transfer tax, so the deed records for a fee instead of a percentage of the price. At the CFPB’s typical range of 2%–5% of the price, closing costs on the median home would run $5,088–$12,720, mostly lender, title and prepaid items. The [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=MO) breaks them out. ## The median-home payment and the income behind it > **Worked example: $254,400 home, 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $228,960 | $1,560 | > | Property tax at 0.79% | $167 | > | Homeowners insurance at the national $4.90 per $1,000 | $104 | > | PMI (midpoint of Freddie Mac’s range) | $114 | > | **Total** | **$1,946** | Missouri’s median home value is below the US median and the 13th-lowest in the country, while the median household income of $71,589 is the 9th-lowest. Homes cost 3.6 times income, lower than the US ratio of 4.4. Spending Freddie Mac’s 30% guideline of that income — $1,790 a month — supports about **$234,000** with 10% down, about $20,400 less than the median home value. Test your own income in the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=MO&income=71589), change the inputs in the [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=254000&down=10&tax=0.79&state=MO), or compare owning with the median rent of $1,067 in the [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=MO&price=254000&rent=1067). ## Frequently asked questions ### How are property taxes calculated in Missouri? Homes are assessed at 19% of market value, and each local taxing district applies a levy per $100 of that assessed value. The median Missouri homeowner pays $2,021 a year, about 0.79% of home value. ### Does Missouri have a real estate transfer tax? No. Missouri has no statewide transfer tax, so buyers and sellers pay recording fees, title insurance and lender charges but no tax based on the price. ### What is MHDC’s First Place program? First Place is the Missouri Housing Development Commission’s 30-year loan for first-time buyers and qualified veterans, made through certified lenders, with optional cash assistance for the down payment and closing costs. Next Step serves first-time and repeat buyers with higher incomes. ### Do you have to repay MHDC cash assistance? Not if you stay. Next Step cash assistance of 4% of the mortgage is fully forgiven after 10 years in the home with the original loan. Sell or refinance earlier and you repay the part not yet forgiven. ### What credit score do you need for an MHDC loan? MHDC’s Next Step program sets a minimum score of 640, and participating lenders may require more. ### How much house can you afford in Missouri? On the median income of $71,589, keeping housing under 30% of income supports about $234,000 with 10% down at today’s average rate, using Missouri’s average property tax rate. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US29) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US29) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US29) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US29) — Median gross rent (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price); Minimum FHA down payment (Oct 28, 2026) - [State Tax Commission of Missouri: Assessor Manual, General Information](https://stc.mo.gov/wp-content/uploads/sites/5/2026/06/Chapter-2-Final-Revised-06-01-2026.pdf) — Missouri residential property is assessed at (share of market value) (Jun 1, 2026) - [Missouri Housing Development Commission: Next Step Learn More](https://mhdc.com/media/wf2onuss/next-step-learn-more_11182025.pdf) — MHDC Next Step cash assistance, forgivable second loan (share of the mortgage); MHDC Next Step cash assistance is fully forgiven after; MHDC Next Step minimum credit score (Oct 29, 2026) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA upfront mortgage insurance premium; FHA annual MIP, 30-year loan, more than 95% LTV (Feb 22, 2023) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [National Association of Realtors](https://narfocus.com/publication-issue/view/2023-07-05-state-and-local-issues-real-estate-transfer-tax) — State real estate transfer tax (Jul 5, 2023) - [MHDC: Next Step Learn More (PDF)](https://mhdc.com/media/wf2onuss/next-step-learn-more_11182025.pdf) - [MHDC: First Place](https://mhdc.com/services/homebuyer-programs/first-place/) - [State Tax Commission of Missouri: Assessor Manual, General Information](https://stc.mo.gov/wp-content/uploads/sites/5/2026/06/Chapter-2-Final-Revised-06-01-2026.pdf) _General information, not financial advice._ --- # Montana home buying: the price-to-income gap, the homestead rate and MBOH loans > Montana mortgage numbers: home values 5.6 times income, the homestead tax rate you apply for, no transfer tax and Board of Housing aid of up to $15,000. URL: https://mortgage-math-us.com/location/montana/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median Montana home is worth $425,400, 5.6 times the state’s median household income, the 8th-highest ratio in the country. With 10% down at the 7.24% national average rate it costs about **$3,219 a month**, including property tax at 0.69% of value. Montana bars transfer taxes, and the Montana Board of Housing lends up to 5% of the price, capped at $15,000, for the down payment. After you buy, apply for the homestead reduced tax rate or the home is taxed at the full residential rate. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in Montana | $425,400 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US30) | 2024 ACS 1-year | | Median household income | $75,340/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US30) | 2024 ACS 1-year | | Effective property tax rate | 0.69% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US30) | 2024 ACS 1-year | | Real estate transfer tax | 0% | [Montana Constitution, Art. VIII §17](https://mca.legmt.gov/bills/mca/title_0000/article_0080/part_0010/section_0170/0000-0080-0010-0170.html) | Oct 28, 2026 | | Board of Housing down payment help, up to | $15,000 | [Montana Board of Housing: Down Payment Assistance](https://commerce.mt.gov/Housing/Homeownership/Down-Payment-Assistance) | Oct 29, 2026 | | Minimum credit score for that help | 620 | [Montana Board of Housing: Down Payment Assistance](https://commerce.mt.gov/Housing/Homeownership/Down-Payment-Assistance) | Oct 29, 2026 | | Residential tax rate without the homestead rate | 1.9% | [Montana Department of Revenue: 2026 Homestead Reduced Tax Rate FAQs](https://revenue.mt.gov/property/property-tax-changes/homestead-faqs) | Oct 29, 2026 | ## Montana’s price-to-income gap Montana’s median home value of $425,400 ranks 17th among the states and DC, above the US median of $360,600. Its median household income of $75,340 ranks only 36th. Divide one by the other and Montana homes cost 5.6 times income — the 8th-highest ratio in the country, against 4.4 for the US. That gap shapes everything below: at today’s rates, a median local income doesn’t stretch to a median local home without help, a second earner or a cheaper house. ## The monthly cost of a median Montana home > **Worked example: $425,400 home, 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $382,860 | $2,609 | > | Property tax at 0.69% | $245 | > | Homeowners insurance at the national $4.90 per $1,000 | $174 | > | PMI (midpoint of Freddie Mac’s range) | $191 | > | **Total** | **$3,219** | Property tax is the lighter part: Montana’s effective rate of 0.69% is below the national 0.89% and the 19th-lowest in the country. The weight is in principal and interest, because prices are high relative to pay. Adjust the inputs in the [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=425000&down=10&tax=0.69&state=MT). ## Shopping at the price a Montana income supports Freddie Mac suggests keeping housing under 30% of gross income. For the median Montana household that is $1,884 a month, which supports a home of about **$249,000** with 10% down at today’s rate — $176,400 below the state median. > **Worked example: A first-time buyer at $249,000 with a low down payment and Board of Housing help** > > | | Amount | > |---|---:| > | Down payment at 3.5% (the FHA minimum) | $8,715 | > | Closing costs at the low end of the CFPB range | $4,980 | > | Board of Housing assistance (5% of the price, up to $15,000) | $12,450 | > | **Cash you bring** (at least $1,000) | **$1,245** | > > The assistance turns a down payment and closing bill into a much smaller check, but it doesn’t lower the price your income supports. The [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=MT&income=75340) shows that price at several debt-to-income limits. ## Montana Board of Housing down payment loans The Montana Board of Housing (MBOH), part of the Department of Commerce, offers two down payment and closing cost loans. Both require you to qualify first for an MBOH Regular Bond Program first mortgage through a participating lender, a credit score of at least 620 for every borrower, a cash investment of at least $1,000 (gifts allowed) and homebuyer education. *Montana Board of Housing down payment assistance* | | Bond Advantage DPA | MBOH Plus | |---|---|---| | Amount | Up to 5% of the price, max $15,000 | Up to 5% of the price, max $15,000 | | Interest | Same fixed rate as the first mortgage | 0% | | Repayment | 15-year amortizing loan | No payments; due when you sell, transfer, refinance or pay off the first loan | | Income limit | Regular Bond Program limits | $80,000 for 1–2 people, $90,000 for 3 or more | At the median price, the $15,000 cap is lower than 5% of the price, so the dollar cap is the limit that binds. On the median home, the full Bond Advantage amount would add about $137 a month for 15 years at a rate equal to today’s national average (the actual rate matches your MBOH first mortgage); MBOH Plus adds nothing monthly but has lower income limits. Compare both in the [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/). ## Apply for the homestead tax rate after you buy Montana now taxes a principal residence at a reduced homestead rate — but only if you apply. Homes without it are taxed at the residential rate of 1.9% of market value (the share that local mill levies are applied to). To qualify, you must own the home as an individual or through a revocable trust and live in it at least 7 months of the year. **Getting the homestead rate as a new Montana owner** 1. **Move in** — Close on the home and make it your principal residence. 2. **Apply** — File the Department of Revenue’s homestead application online or by mail. For 2026 the window ran from December 1, 2025, to March 1, 2026; check the department’s dates for the next tax year. 3. **Stay current** — Pay your property taxes on time; you must be current by the deadline for the application to be approved. 4. **Reapply when you move** — If you sell and buy another Montana home, file a new application for the new address. A separate homestead declaration, filed with your county, protects home equity from unsecured creditors up to a limit set in state law — $350,000 in 2021, rising 4% each year since. It doesn’t change your tax bill. ## No transfer tax, by constitution Montana’s constitution bars both state and local governments from taxing the transfer of real property, so no transfer or deed tax appears on your closing statement — only recording fees. Closing costs on the median home, at the CFPB’s typical range, would run $8,508–$21,270. The [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=MT) itemizes them. ## Frequently asked questions ### Does Montana have a real estate transfer tax? No. Montana’s constitution prohibits state and local transfer taxes on real property, so buyers and sellers pay recording fees but no tax based on the price. ### How do you get the homestead property tax rate in Montana? Apply to the Department of Revenue online or by mail after you buy; for 2026 the deadline was March 1. You must live in the home at least 7 months of the year; without the reduced rate it is taxed at 1.9% of market value. ### What down payment assistance does the Montana Board of Housing offer? Bond Advantage DPA and MBOH Plus each lend up to 5% of the price, capped at $15,000. Bond Advantage is repaid over 15 years; MBOH Plus is 0% and deferred, for households earning up to $80,000 (1–2 people) or $90,000 (3 or more). ### What credit score do you need for Montana Board of Housing assistance? Every borrower needs a score of at least 620, and you must put in at least $1,000 of your own money, which can be a gift. ### What is the property tax rate in Montana? Census figures put the median Montana homeowner’s bill at $2,939 a year, about 0.69% of home value. Your bill depends on local mill levies and on whether you have the homestead reduced rate. ### How much income do you need to buy a house in Montana? To keep housing under 30% of gross income on the median $425,400 home with 10% down at today’s average rate, you would need about $128,757 a year before other debts, against a median household income of $75,340. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US30) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US30) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US30) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price); Minimum FHA down payment (Oct 28, 2026) - [Montana Board of Housing: Down Payment Assistance](https://commerce.mt.gov/Housing/Homeownership/Down-Payment-Assistance) — Montana Board of Housing down payment assistance, up to; Montana Board of Housing down payment assistance, up to (share of the sales price); Montana Board of Housing down payment assistance: minimum buyer cash investment (may be gifted) (Oct 29, 2026) - [Montana Department of Revenue: 2026 Homestead Reduced Tax Rate FAQs](https://revenue.mt.gov/property/property-tax-changes/homestead-faqs) — Montana tax rate for residential property without the homestead reduced rate (share of market value); Montana homestead reduced tax rate: owner must live in the home at least this many months of the year (Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Montana Code Annotated 70-32-104](https://archive.legmt.gov/bills/MCA/title_0700/chapter_0320/part_0010/section_0040/0700-0320-0010-0040.html) — Montana homestead value limit protected from unsecured creditors, 2021 (rises 4% a year) (Jan 1, 2021) - [Montana Constitution, Art. VIII §17](https://mca.legmt.gov/bills/mca/title_0000/article_0080/part_0010/section_0170/0000-0080-0010-0170.html) — State real estate transfer tax (Oct 28, 2026) - [Montana Board of Housing: Down Payment Assistance](https://commerce.mt.gov/Housing/Homeownership/Down-Payment-Assistance) - [Montana Department of Revenue: 2026 Homestead Reduced Tax Rate FAQs](https://revenue.mt.gov/property/property-tax-changes/homestead-faqs) _General information, not financial advice._ --- # Nebraska home loans: what property tax does to your payment, and NIFA help > Nebraska mortgage numbers: a 1.42% effective property tax, the seller-paid documentary stamp tax, a $263,100 median home and NIFA down payment loans. URL: https://mortgage-math-us.com/location/nebraska/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer A median-value Nebraska home ($263,100) costs about **$2,151 a month** with 10% down at the 7.24% national average rate, and property tax at 1.42% of value is 14% of that. Sellers pay Nebraska’s documentary stamp tax of 0.332% of the price. For cash at closing, NIFA’s Homebuyer Assistance lends up to 5% of the purchase price as a second loan at 1%, repaid over 10 years. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Effective property tax rate | 1.42% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US31) | 2024 ACS 1-year | | Median property tax paid | $3,739/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US31) | 2024 ACS 1-year | | Median home value in Nebraska | $263,100 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US31) | 2024 ACS 1-year | | Median household income | $76,376/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US31) | 2024 ACS 1-year | | Documentary stamp tax (seller pays) | 0.332% | [Nebraska Department of Revenue](https://revenue.nebraska.gov/PAD/documentary-stamp-tax/documentary-stamp-tax-rate-history) | Jul 18, 2026 | | NIFA Homebuyer Assistance, up to (share of price) | 5% | [Nebraska Investment Finance Authority: Homebuyer Assistance](https://www.nifa.org/homebuyers-renters/homebuyer-assistance) | Oct 26, 2026 | ## Property tax: the cost that sets Nebraska apart At 1.42% of value, Nebraska’s effective property tax rate is above the national 0.89% and ranks 7th of 51. The median value of $263,100 is below the US median and the 14th-lowest in the country, while the median owner’s tax bill of $3,739 a year is the 16th-highest among the states and DC. Bills come from local levies: school districts, counties, cities and other districts, applied to the county assessor’s valuation. > **Worked example: What Nebraska’s tax rate costs in buying power** > > On the median home, property tax runs $311 a month, $116 more than the same home would pay at the US ratio. At today’s average rate, $116 a month would carry about **$17,051** of mortgage principal. Put another way, the median Nebraska income supports a price of about $234,000 at Nebraska’s tax rate, against $247,000 at the national ratio — $13,000 of buying power that goes to the tax bill instead. Look up the actual levy and valuation for any home on the county assessor’s site before you offer, and budget from that rather than from the statewide average. Nebraska also offers a refundable state income tax credit for community college property taxes paid, claimed on Form PTC with your Nebraska return — the Department of Revenue explains which years and taxes qualify. ## Paying for a median-priced Nebraska home > **Worked example: $263,100 home, 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $236,790 | $1,614 | > | Property tax at 1.42% | $311 | > | Homeowners insurance at the national $4.90 per $1,000 | $107 | > | PMI (midpoint of Freddie Mac’s range) | $118 | > | **Total** | **$2,151** | > > The insurance line uses Freddie Mac’s national average per $1,000 of value. Quotes vary with the roof’s age, hail and wind exposure and the deductible you choose, so get one before you commit. Open the [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=263000&down=10&tax=1.42&state=NE) with these inputs, then swap in the home’s real tax bill. ## NIFA’s Homebuyer Assistance second loan The Nebraska Investment Finance Authority (NIFA) sells its first mortgages through participating lenders. Its **Homebuyer Assistance (HBA)** program adds a second loan for the down payment and closing costs, capped at 5% of the purchase price, at 1% interest over 10 years. The first mortgage can be conventional, FHA, USDA or VA, and you must meet NIFA’s first-time homebuyer rules. > **Worked example: HBA on the median Nebraska home** > > | | Amount | > |---|---:| > | Maximum HBA second loan (5% of $263,100) | $13,155 | > | Monthly payment at 1% over 10 years | $115 | > | Total interest over the term | $674 | > > The second loan is cheap, but NIFA prices the first mortgage that comes with HBA above its standard First Home rate — that is how the assistance is paid for. Compare the total monthly cost of HBA with a plain First Home loan and your own down payment. Repeat buyers aren’t shut out: NIFA’s Welcome Home program is open to first-time and repeat buyers, with its own assistance option, and NIFA also lists a Military Home program. Rates on all NIFA programs change often, so ask a participating lender for the current sheet. More on how these programs compare in the [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/). ## The documentary stamp tax Nebraska charges a documentary stamp tax of $3.32 per $1,000 of value when a deed is recorded — 0.332%, or $873 on the median home. The seller pays it. As a buyer, your closing costs are the lender’s fees, title insurance, recording fees, prepaid interest and the escrow deposit; the [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=NE) adds them up. ## Can the median income buy the median home? On the median household income of $76,376, Freddie Mac’s 30% guideline allows $1,909 a month — about **$234,000** with 10% down at today’s rate and Nebraska’s tax ratio, $29,100 less than the median home value. Homes cost 3.4 times income here, against 4.4 nationally. Owner-occupancy, at 66.7%, is above the US rate of 65.3%. Run the numbers on your own income with the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=NE&income=76376), or compare owning with the median rent of $1,102 in the [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=NE&price=263000&rent=1102). ## Frequently asked questions ### How high are property taxes in Nebraska? Census figures put the median Nebraska homeowner’s bill at $3,739 a year, an effective rate of 1.42% of home value against 0.89% nationally. Your bill depends on the school district, county and city levies where the home sits. ### Who pays the documentary stamp tax in Nebraska? The seller. The tax is 0.332% of the value — $3.32 per $1,000 — and is collected when the deed is recorded. ### What is NIFA Homebuyer Assistance? It is a second loan of up to 5% of the purchase price for the down payment and closing costs, at 1% interest over 10 years, paired with a NIFA first mortgage. You must meet NIFA’s first-time homebuyer rules. ### Does Nebraska have a property tax credit for homeowners? Nebraska offers a refundable income tax credit for community college property taxes paid, claimed on Form PTC with your state income tax return. Check the Department of Revenue for the years and taxes that qualify. ### Can repeat buyers get NIFA loans? Yes. NIFA’s Welcome Home program is open to first-time and repeat buyers and has its own assistance option, while Homebuyer Assistance requires first-time buyer status. ### How much house can you afford in Nebraska? On the median income of $76,376, keeping housing under 30% of income supports about $234,000 with 10% down at today’s average rate, counting Nebraska’s average property tax rate. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US31) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US31) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US31) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US31) — Median gross rent (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [Nebraska Investment Finance Authority: Homebuyer Assistance](https://www.nifa.org/homebuyers-renters/homebuyer-assistance) — NIFA Homebuyer Assistance second loan, up to (share of the purchase price); NIFA Homebuyer Assistance second loan interest rate; NIFA Homebuyer Assistance second loan term (Oct 26, 2026) - [Nebraska Department of Revenue](https://revenue.nebraska.gov/PAD/documentary-stamp-tax/documentary-stamp-tax-rate-history) — State real estate transfer tax (Jul 18, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US31) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=010XX00US) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [NIFA: Homebuyer Assistance](https://www.nifa.org/homebuyers-renters/homebuyer-assistance) - [NIFA: Homebuyer programs and rates](https://www.nifa.org/homebuyers-renters) - [Nebraska Department of Revenue: Nebraska Property Tax Credit](https://revenue.nebraska.gov/about/nebraska-property-tax-credit-general-information) _General information, not financial advice._ --- # Nevada mortgages: the property tax cap, the transfer tax and Home Is Possible > Nevada home buying: a $455,500 median home, a 3% yearly cap on a homeowner’s tax bill, the transfer tax and Home Is Possible down payment help. URL: https://mortgage-math-us.com/location/nevada/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer A median-value Nevada home ($455,500) costs about **$3,363 a month** with 10% down at the 7.24% national average rate. Property tax is only $178 of that — the effective rate is 0.47% of value — and state law caps the yearly increase on the tax bill of an owner’s primary residence at 3%. The statewide transfer tax is 0.39% of value before county add-ons, and the Nevada Housing Division’s Home Is Possible program offers first-time buyers up to 4% of the loan for the down payment. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in Nevada | $455,500 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US32) | 2024 ACS 1-year | | Median year homes were built | 1997 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US32) | 2024 ACS 1-year | | Effective property tax rate | 0.47% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US32) | 2024 ACS 1-year | | Yearly cap on a primary residence tax bill | 3% | [Clark County Assessor: Tax Abatement (NRS 361.4723)](https://www.clarkcountynv.gov/government/assessor/general_information/tax-abatement) | Oct 29, 2026 | | Statewide transfer tax (before county add-ons) | 0.39% | [Nevada Department of Taxation](https://tax.nv.gov/tax-types/real-property-transfer-tax/) | Oct 28, 2026 | | Home Is Possible first-time buyer help (share of loan) | 4% | [Nevada Housing Division: Home Is Possible for First-Time Homebuyers](https://www.homeispossiblenv.org/home-possible-program) | Oct 29, 2026 | | Homes lived in by their owners | 60.1% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US32) | 2024 ACS 1-year | ## Nevada’s young housing stock Half of Nevada’s homes were built in 1997 or later, against 1981 for the US — the newest housing among the states and DC. For a buyer that often means newer roofs, systems and building codes. One tax wrinkle comes with new homes: they don’t get the property tax cap in their first fiscal year on the roll, only from the following year. ## Nevada’s cap on a homeowner’s tax bill Nevada’s property tax abatement (NRS 361.4723) limits how much a tax bill can grow each year. For the owner’s primary residence the cap is 3%; homes that aren’t owner-occupied, land and commercial property get a cap of up to 8%. Only one Nevada property can be your primary residence. In Clark County, the assessor mails eligible owners a postcard to sign and return to keep the lower cap — return it. > **Worked example: Five years of caps on the median home’s tax bill** > > | | Yearly tax | > |---|---:| > | Starting bill at 0.47% of $455,500 | $2,141 | > | Most it can reach after five years as your primary residence (3% cap) | $2,482 | > | Most it can reach after five years as a rental (up to 8% cap) | $3,146 | > > The cap limits the bill, not the home’s value, so a fast-rising market doesn’t pass straight through to an owner-occupant’s taxes. Statewide, Nevada’s effective rate of 0.47% is below the national 0.89% and the 7th-lowest in the country. ## The median Nevada payment > **Worked example: $455,500 home, 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $409,950 | $2,794 | > | Property tax at 0.47% | $178 | > | Homeowners insurance at the national $4.90 per $1,000 | $186 | > | PMI (midpoint of Freddie Mac’s range) | $205 | > | **Total** | **$3,363** | > > If the home is in a homeowners association, its dues come on top of this total. On the state’s median household income of $81,134, Freddie Mac’s 30% guideline allows $2,028 a month — about **$275,000** with 10% down at today’s rate, $180,500 less than the median home value. Homes cost 5.6 times income here, against 4.4 for the US. Check your own income in the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=NV&income=81134) or adjust the [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=456000&down=10&tax=0.47&state=NV). ## Home Is Possible: Nevada’s down payment programs The Nevada Housing Division runs its homebuyer programs under the Home Is Possible (HIP) name, through participating lenders. | Program | Help | Key rules | |---|---|---| | HIP for First-Time Homebuyers | Up to 4% of the total loan | Interest-free, non-forgivable for 30 years; no home owned in the past 3 years; minimum score 640; homebuyer education | | Home Is Possible (repeat buyers) | Up to 5% of the loan | For buyers who aren’t first-time buyers | | HIP for Teachers | Teacher-specific program | Ask the Housing Division for current terms | County income and purchase price limits apply. Because the first-time help is non-forgivable, you will repay it — ask the lender exactly when it comes due — so treat it as a 0% loan, not a gift. > **Worked example: HIP first-time help with an FHA loan on the median home** > > An FHA loan with 3.5% down and the 1.75% upfront premium financed comes to $447,250. HIP’s 4% of that is **$17,890**, which covers the down payment and leaves $1,947 toward closing costs. Compare it with conventional options in the [FHA loans guide](https://mortgage-math-us.com/loan-types/fha-loans/). ## Transfer tax: the state base and Clark County Nevada’s real property transfer tax is $1.95 for every $500 of value statewide — 0.39%, or $1,776 on the median home. Clark, Washoe and Churchill counties add their own amounts on top, and the county recorder collects the tax when the deed is recorded. The state doesn’t say who pays, so your purchase agreement does. For Clark County figures and the local market, see the [Las Vegas page](https://mortgage-math-us.com/location/las-vegas-nv/); the [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=NV) totals the rest. ## Renting or buying in Nevada 60.1% of occupied Nevada homes are owner-occupied, below the national 65.3% and the 4th-lowest share among the states and DC. The median renter pays $1,709 a month — $1,654 less than owning the median home with 10% down. In the City of Las Vegas, the median home value is $458,300, above the statewide figure. Test how long you would need to stay for buying to win in the [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=NV&price=456000&rent=1709). ## Frequently asked questions ### What is the property tax cap in Nevada? Under NRS 361.4723, the tax bill on an owner’s primary residence can rise by no more than 3% a year. Other property, including rentals, gets a cap of up to 8%. New construction gets the cap starting in its second fiscal year. ### How much is the transfer tax in Nevada? The statewide real property transfer tax is $1.95 per $500 of value, or 0.39% — $1,776 on the median home. Clark, Washoe and Churchill counties add more on top. ### What is Home Is Possible in Nevada? It is the Nevada Housing Division’s homebuyer program. First-time buyers can get up to 4% of the loan as interest-free help that must be repaid; buyers who aren’t first-time buyers can get up to 5%. There is also a program for teachers. ### What credit score do you need for Home Is Possible? HIP for First-Time Homebuyers requires a minimum score of 640, with a higher minimum for manufactured homes, plus homebuyer education. ### What is the property tax rate in Nevada? Census figures put the median Nevada homeowner’s bill at $2,143 a year, an effective rate of 0.47% of home value, against 0.89% nationally. ### How much income do you need to buy a house in Nevada? To keep housing under 30% of gross income on the median $455,500 home with 10% down at today’s average rate, you would need about $134,527 a year before other debts. The median household earns $81,134. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US32) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US32) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US32) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US32) — Median gross rent (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [Clark County Assessor: Tax Abatement (NRS 361.4723)](https://www.clarkcountynv.gov/government/assessor/general_information/tax-abatement) — Nevada property tax abatement: yearly cap on the tax bill of an owner's primary residence; Nevada property tax abatement: yearly cap on the tax bill of other property, up to (Oct 29, 2026) - [Nevada Housing Division: Home Is Possible for First-Time Homebuyers](https://www.homeispossiblenv.org/home-possible-program) — Home Is Possible for First-Time Homebuyers down payment assistance, up to (share of the loan); Home Is Possible for First-Time Homebuyers minimum credit score (Oct 29, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment (Oct 28, 2026) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA upfront mortgage insurance premium (Feb 22, 2023) - [Nevada Department of Taxation](https://tax.nv.gov/tax-types/real-property-transfer-tax/) — State real estate transfer tax (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US32) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=010XX00US) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [42 U.S.C. 12704(14)](https://www.law.cornell.edu/uscode/text/42/12704) — First-time homebuyer: has not owned a home in the past (HUD/HOME statute) (Oct 28, 2026) - [Nevada Housing Division: Home Is Possible](https://www.homeispossiblenv.org/) — Home Is Possible (buyers who are not first-time) assistance, up to (share of the loan) (Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US32) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=010XX00US) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US3240000) — Median value of owner-occupied homes (2024 ACS 1-year) - [Nevada Housing Division: HIP for First-Time Homebuyers](https://www.homeispossiblenv.org/home-possible-program) - [Clark County Assessor: Tax abatement (NRS 361.4723)](https://www.clarkcountynv.gov/government/assessor/general_information/tax-abatement) - [Nevada Department of Taxation: Real Property Transfer Tax](https://tax.nv.gov/tax-types/real-property-transfer-tax/) _General information, not financial advice._ --- # New Hampshire mortgages: property tax, a two-sided transfer tax and NH Housing help > New Hampshire home buying: a 1.46% effective property tax, a transfer tax charged to buyer and seller, the $458,800 median home and NH Housing aid. URL: https://mortgage-math-us.com/location/new-hampshire/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer A median-value New Hampshire home ($458,800) costs about **$3,766 a month** with 10% down at the 7.24% national average rate, and 15% of that is property tax at the state’s effective rate of 1.46%. At closing, the real estate transfer tax is charged to the buyer and to the seller at $0.75 per $100 each — $3,441 apiece on the median home. NH Housing offers up to $15,000 for the down payment and closing costs as a 0% second mortgage with no monthly payments. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in New Hampshire | $458,800 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US33) | 2024 ACS 1-year | | Median property tax paid | $6,707/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US33) | 2024 ACS 1-year | | Effective property tax rate | 1.46% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US33) | 2024 ACS 1-year | | Transfer tax, buyer and seller combined | 1.5% | [New Hampshire Department of Revenue Administration](https://www.revenue.nh.gov/taxes-glance/real-estate-transfer-tax) | Oct 28, 2026 | | Median household income | $99,782/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US33) | 2024 ACS 1-year | | NH Housing downpayment assistance, up to | $15,000 | [New Hampshire Housing: Mortgage Programs](https://www.nhhousing.org/homeownership/build-your-team/mortgage-programs/) | Sep 16, 2026 | | Home Flex Plus income limit, up to | $184,500 | [New Hampshire Housing: Mortgage Programs](https://www.nhhousing.org/homeownership/build-your-team/mortgage-programs/) | Sep 16, 2026 | ## New Hampshire’s property tax bill comes first New Hampshire’s effective property tax rate of 1.46% is above the national 0.89% and ranks 4th of 51. With home values that rank 10th, that adds up: the median owner pays $6,707 a year, the 2nd-largest bill among the states and DC. That bill equals 6.7% of the median household income, against 3.9% for the US. Bills are set town by town, combining municipal, school and county rates, so they can differ sharply between neighboring communities. Before you make an offer, ask for the home’s current assessment and the town’s latest tax rate and multiply them yourself, rather than relying on the statewide average. ## What the median New Hampshire home costs monthly > **Worked example: $458,800 home, 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $412,920 | $2,814 | > | Property tax at 1.46% | $558 | > | Homeowners insurance at the national $4.90 per $1,000 | $187 | > | PMI (midpoint of Freddie Mac’s range) | $206 | > | **Total** | **$3,766** | Property tax is the biggest line after principal and interest. If your lender escrows it, a town rate increase shows up at the annual escrow review. Try other prices and tax bills in the [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=459000&down=10&tax=1.46&state=NH). ## New Hampshire’s two-sided transfer tax New Hampshire’s Department of Revenue Administration imposes the real estate transfer tax on **both the buyer and the seller**, each at $0.75 per $100 of the price. Combined, that is 1.5% — the 3rd-highest statewide transfer tax in the country — but each side’s share is half. *Transfer tax on the median New Hampshire home ($458,800)* | | Rate | Amount | |---|---|---:| | Buyer’s share | $0.75 per $100 | $3,441 | | Seller’s share | $0.75 per $100 | $3,441 | | **Total** | 1.5% | **$6,882** | Your share is cash due at closing on top of the down payment, lender fees and prepaid items. The [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=NH) splits it the same way. ## NH Housing downpayment and closing cost help New Hampshire Housing, the state’s housing finance agency, works through approved lenders. Its assistance comes as cash of up to **$15,000**, secured by a 0% second mortgage with no periodic payments and a 30-year term. The full amount is due if you sell, refinance, stop living in the home or reach the end of the term. You must complete NH Housing’s homebuyer education. | NH Housing program | What it is | Income limit | |---|---|---| | Home Flex Plus | NH Housing mortgage paired with the assistance | Up to $184,500 | | Home Preferred Plus | Conventional loan with discounted mortgage insurance | A share of area median income | | Home First / First Plus | Bond-financed, below-market rate; no home owned in the past 3 years, a targeted area or a qualified veteran | Varies by town | > **Worked example: Cash to close on the median home with 3% down and the full assistance** > > | | Amount | > |---|---:| > | Down payment at 3% | $13,764 | > | Closing costs at the low end of the CFPB range | $9,176 | > | Your share of the transfer tax | $3,441 | > | NH Housing assistance | −$15,000 | > > The assistance leaves about **$11,381** to bring from savings. The first mortgage payment, with PMI, tax and insurance, would be about $4,001 a month; the deferred second adds nothing to it. NH Housing also runs **1stGenHomeNH**, a pilot offering $10,000 to first-generation buyers — people who, like their parents or guardians, have never owned a home — with face-to-face education. Funding is limited and the pilot can close at any time, so ask an approved lender whether it is open. ## Income against the median price New Hampshire’s median household income of $99,782 ranks 7th, and homes cost 4.6 times that income, higher than the US ratio of 4.4. Under Freddie Mac’s 30% guideline, the median income allows $2,495 a month — about **$304,000** with 10% down at today’s rate and the state’s tax ratio, $154,800 less than the median home value. Owners are the norm: 72.6% of occupied homes are owner-occupied, the 6th-highest share in the country. Test your own income in the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=NH&income=99782). ## Frequently asked questions ### Who pays the transfer tax in New Hampshire? Both sides. The Department of Revenue Administration imposes the real estate transfer tax on the buyer and on the seller, each at $0.75 per $100 of the price — about $3,441 each on the median home. ### How much is the real estate transfer tax in New Hampshire? The combined rate is 1.5% of the price, split evenly between buyer and seller. On the median $458,800 home that is $6,882 in total. ### What is the property tax rate in New Hampshire? Census figures put the median New Hampshire homeowner’s bill at $6,707 a year, an effective rate of 1.46% of home value. Each town sets its own rate, so bills vary widely between communities. ### What downpayment assistance does NH Housing offer? Up to $15,000 in cash for the down payment and closing costs, as a 0% second mortgage with no monthly payments, due when you sell, refinance or move out, or after 30 years. Homebuyer education is required. ### Is there help for first-generation homebuyers in New Hampshire? NH Housing’s 1stGenHomeNH pilot offers $10,000 to buyers who, like their parents or guardians, have never owned a home, alongside an NH Housing mortgage. Funding is limited, so check availability with an approved lender. ### How much income do you need to buy a house in New Hampshire? To keep housing under 30% of gross income on the median $458,800 home with 10% down at today’s average rate, you would need about $150,642 a year before other debts. The median household earns $99,782. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US33) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US33) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US33) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Minimum down payment on some conventional loans (Oct 28, 2026) - [New Hampshire Department of Revenue Administration](https://www.revenue.nh.gov/taxes-glance/real-estate-transfer-tax) — State real estate transfer tax (Oct 28, 2026) - [New Hampshire Housing: Mortgage Programs](https://www.nhhousing.org/homeownership/build-your-team/mortgage-programs/) — NH Housing downpayment and closing cost assistance, up to; NH Housing downpayment assistance second mortgage term; NH Housing Home Flex Plus and Home Preferred income limit, up to (Sep 16, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [42 U.S.C. 12704(14)](https://www.law.cornell.edu/uscode/text/42/12704) — First-time homebuyer: has not owned a home in the past (HUD/HOME statute) (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US33) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [New Hampshire Housing: Mortgage Programs](https://www.nhhousing.org/homeownership/build-your-team/mortgage-programs/) - [NH Department of Revenue Administration: Real Estate Transfer Tax](https://www.revenue.nh.gov/taxes-glance/real-estate-transfer-tax) _General information, not financial advice._ --- # New Jersey mortgages: property taxes, transfer fees and NJHMFA help > New Jersey homeowners pay the highest property tax bills in the US. See the monthly cost, what income it takes, transfer fees and NJHMFA help. URL: https://mortgage-math-us.com/location/new-jersey/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median New Jersey home is valued at $496,000, and with 10% down at the 7.24% national average rate it costs about **$4,249 a month** — $781 of that is property tax, because New Jersey owners pay the highest median property tax bill of any state ($9,358 a year). Sellers, not buyers, pay the state’s realty transfer fee, and first-time buyers can get $10,000–$15,000 in forgivable down-payment help from NJHMFA, plus $7,000 more for first-generation buyers. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median property tax bill | $9,358/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US34) | 2024 ACS 1-year | | Effective property tax rate | 1.89% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US34) | 2024 ACS 1-year | | Median home value | $496,000 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US34) | 2024 ACS 1-year | | Median household income | $104,294/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US34) | 2024 ACS 1-year | | NJHMFA down-payment help, up to | $15,000 | [NJHMFA: Homebuyers](https://www.nj.gov/dca/hmfa/homebuyers-and-renters/homebuyers/) | Oct 29, 2026 | | First-generation add-on | $7,000 | [NJHMFA First Generation Homebuyer fact sheet](https://www.nj.gov/dca/hmfa/homebuyers-and-renters/docs/SmartStartPlus_FirstGenerationHomeBuyer_Program_FactSheet.pdf) | Oct 4, 2023 | | ANCHOR homeowner benefit, up to | $1,500 | [NJ Division of Taxation: How ANCHOR benefits are calculated](https://www.nj.gov/treasury/taxation/anchor/calculated.shtml) | Jul 16, 2026 | ## Why property tax drives the New Jersey payment The Census Bureau puts the median New Jersey homeowner’s tax bill at $9,358 a year, the highest median property tax bill of any state; the national median is $3,211. Measured against home values, the effective rate of 1.89% is the 2nd-highest effective rate among the states and DC, above the US ratio of 0.89%. There is no statewide property tax rate in New Jersey. Each municipality sets a general tax rate that combines the town, the county and the school district, so two similar homes a few miles apart can carry very different bills. Budget from the property’s latest tax bill, not a statewide average. On the median-value home, property tax comes to $781 a month — about 18% of the full payment in the example below. At the national tax ratio, the same house would carry $368 a month, $413 less. **ANCHOR** is the state’s main relief for homeowners. It pays $1,500 to homeowners with income up to $150,000 and $1,000 up to $250,000; above that, owners don’t qualify. The full benefit would offset about 16% of the median bill. Eligibility is based on an earlier year’s residency and income, so check when you first qualify. Owners 65 and older use the combined PAS-1 application, which also covers the Stay NJ credit. ## The monthly cost of a median New Jersey home > **Worked example: $496,000 home, 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $446,400 | $3,042 | > | Property tax at 1.89% a year | $781 | > | Homeowners insurance at the national $4.90 per $1,000 (Freddie Mac) | $203 | > | PMI (midpoint of Freddie Mac’s range) | $223 | > | **Total** | **$4,249** | > > The insurance line uses Freddie Mac’s national figure. Shore homes in a FEMA flood zone may also need flood insurance, which is extra. Census data show a median of $2,797 a month for New Jersey owners who already have a mortgage. It is lower because it includes owners who bought years ago at lower prices or rates. Test your own price and down payment in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=496000&down=10&tax=1.89&state=NJ). ## What a New Jersey median income buys New Jersey has the 3rd-highest median household income among the states and DC, $104,294 a year. Keeping housing under Freddie Mac’s 30% guideline gives that household $2,607 a month — enough for about **$304,000** with 10% down at today’s average rate and New Jersey’s tax ratio. That is $192,000 less than the median home value. Property tax is a big part of the gap. With the national tax ratio instead, the same budget would stretch to roughly $337,000, so New Jersey’s taxes alone cost this household about $33,000 of buying power. The [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=NJ&income=104294) shows how far your income goes at higher debt-to-income limits. ## NJHMFA down-payment help, county by county The New Jersey Housing and Mortgage Finance Agency (NJHMFA) pairs its first mortgages — the First-Time Homebuyer Mortgage Program (FHA, VA or USDA, 30-year fixed) and the conventional HFA Advantage loan — with a Down Payment Assistance Program for first-time buyers, generally people who haven’t owned a home in the past 3 years. *NJHMFA down payment assistance by county (interest-free second loan)* | Award | Counties | |---|---| | $15,000 | Bergen, Essex, Hudson, Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Union | | $10,000 | Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Salem, Sussex, Warren | | Extra for first-generation buyers | $7,000 on top, in any county | There are no monthly payments, and the loan is forgiven after 5 years if you keep the home as your main residence and don’t refinance the first mortgage. First-generation status generally means your parents don’t currently own a home, or you were in foster care in New Jersey. Income and price limits apply and vary by area. For scale: the 3.5% minimum FHA down payment on the median home is $17,360. The top award covers about 86% of that, leaving $2,360 of the minimum down payment to cover yourself. Active members of the Police and Firemen’s Retirement System have a separate NJHMFA mortgage program. Compare these options with national ones in our [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/). ## Realty transfer fee and the Graduated Percent Fee New Jersey’s realty transfer fee is charged to the **seller** when the deed is recorded. It is graduated: the rate per $500 rises in steps with the price, and a higher schedule applies once the price is above $350,000. On the median-value home it comes to about $4,137, or 0.83% of the price. Above $1,000,000, a **Graduated Percent Fee** applies to the whole price, starting at 1% and reaching 3.5% on the most expensive sales. This replaced the old “mansion tax” that buyers paid; since July 10, 2025 it is legally the seller’s. On a $1,200,000 sale, the seller would owe about $11,995 in transfer fee plus $12,000 in Graduated Percent Fee. That leaves buyers with lender charges, title insurance, recording fees and prepaid taxes and insurance. The CFPB’s rule of thumb of 2%–5% of the price works out to $9,920–$24,800 on the median home. Itemize yours with the [closing cost estimator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=NJ). ## Before you bid on an older New Jersey house Half of New Jersey’s homes were built before 1971, the 9th-oldest housing stock among the states and DC. Older houses can mean aging roofs, oil tanks, knob-and-tube wiring or lead paint, any of which can change your repair budget or what an insurer will cover. Make your offer contingent on a full inspection — see [appraisal and inspection](https://mortgage-math-us.com/buying/appraisal-and-inspection/) — and price repairs before you settle on a down payment. ## Frequently asked questions ### What is the average property tax in New Jersey? The Census Bureau’s 2024 survey puts the median New Jersey homeowner’s bill at $9,358 a year, about 1.89% of median home value — the highest median property tax bill of any state. Your bill depends on the municipality’s combined rate for town, county and school district. ### Who pays the realty transfer fee in New Jersey? The seller. The fee is graduated by price, and on the median-value home it comes to about $4,137. Buyers pay recording fees and their own closing costs but no state transfer fee on a typical sale. ### Does New Jersey still have a mansion tax? Not in its old form. Since July 10, 2025, sales above $1,000,000 carry a Graduated Percent Fee of 1% to 3.5% of the price, and the law places it on the seller rather than the buyer. ### How much down-payment assistance can I get in New Jersey? NJHMFA offers $10,000 or $15,000, depending on the county, as an interest-free loan forgiven after 5 years. First-generation buyers can add $7,000. You need an NJHMFA first mortgage and must meet income and price limits. ### How much income do you need to buy a house in New Jersey? For the median $496,000 home with 10% down at today’s average rate, keeping housing under 30% of gross income takes roughly $170,000 a year, before any other debts. The median New Jersey household earns $104,294 a year. ### What is the ANCHOR program? New Jersey’s property tax relief benefit: $1,500 for homeowners with income up to $150,000 and $1,000 up to $250,000. Apply through the Division of Taxation. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US34) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US34) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US34) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [NJHMFA: Homebuyers](https://www.nj.gov/dca/hmfa/homebuyers-and-renters/homebuyers/) — NJHMFA Down Payment Assistance Program, up to (depends on county); NJHMFA down payment assistance is forgiven after (Oct 29, 2026) - [NJHMFA First Generation Homebuyer fact sheet](https://www.nj.gov/dca/hmfa/homebuyers-and-renters/docs/SmartStartPlus_FirstGenerationHomeBuyer_Program_FactSheet.pdf) — NJHMFA Down Payment Assistance in the nine lower-cost counties; NJHMFA First Generation Down Payment Assistance, added to the DPA award (Oct 4, 2023) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment; Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [NJ Division of Taxation: Property Sale Realty Transfer Fee](https://www.nj.gov/treasury/taxation/realty.shtml) — New Jersey Graduated Percent Fee, lowest bracket (share of the whole price, paid by the seller); New Jersey Graduated Percent Fee applies when the price is above; New Jersey Graduated Percent Fee, top bracket (prices above $3.5 million) (Sep 28, 2026) - [NJ Division of Taxation: How ANCHOR benefits are calculated](https://www.nj.gov/treasury/taxation/anchor/calculated.shtml) — ANCHOR benefit for homeowners with income up to $150,000; ANCHOR: the full homeowner benefit goes to incomes up to; ANCHOR benefit for homeowners with income above $150,000 up to $250,000 (Jul 16, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Median real estate taxes paid by homeowners; Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=040XX00US34) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [42 U.S.C. 12704(14)](https://www.law.cornell.edu/uscode/text/42/12704) — First-time homebuyer: has not owned a home in the past (HUD/HOME statute) (Oct 28, 2026) - [NJ Division of Taxation: Realty Transfer Fee FAQs](https://www.nj.gov/treasury/taxation/lpt/rtffaqs.shtml) — New Jersey realty transfer fee: the higher rate schedule applies when the price is above (Oct 28, 2025) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US34) — Median year homes were built (2024 ACS 1-year) - [NJHMFA: Homebuyer programs](https://www.nj.gov/dca/hmfa/homebuyers-and-renters/homebuyers/) - [NJ Division of Taxation: Realty Transfer Fee and Graduated Percent Fee](https://www.nj.gov/treasury/taxation/realty.shtml) - [NJ Division of Taxation: ANCHOR program](https://www.nj.gov/treasury/taxation/anchor/index.shtml) _General information, not financial advice._ --- # New Mexico mortgages: the valuation reset, monthly costs and FirstHome help > New Mexico home buying numbers: the median home’s payment, why taxes reset when a home sells, no transfer tax, and Housing New Mexico’s FirstDown help. URL: https://mortgage-math-us.com/location/new-mexico/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median New Mexico home is valued at $279,900 and costs about **$2,104 a month** with 10% down at the 7.24% national average rate. Property tax is light at 0.63% of value, and there is no transfer tax — but a home’s taxable value, capped at 3% growth a year for the owner, resets to market value when it sells, so your bill can start higher than the seller’s. First-time buyers can pair Housing New Mexico’s FirstHome loan with FirstDown help of up to 4% of the price. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value | $279,900 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US35) | 2024 ACS 1-year | | Median household income | $67,816/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US35) | 2024 ACS 1-year | | Homes lived in by their owners | 71.1% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US35) | 2024 ACS 1-year | | Effective property tax rate | 0.63% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US35) | 2024 ACS 1-year | | Yearly cap on taxable value growth | 3% | [New Mexico Legislative Finance Committee: Property Taxes in New Mexico](https://www.nmlegis.gov/Entity/LFC/Documents/Revenue_Reports/Property%20Taxes%20in%20NM%20brief_FINAL.pdf) | May 15, 2024 | | FirstDown, up to (share of price) | 4% | [Housing New Mexico: Programs for Individuals and Families brochure](https://housingnm.org/uploads/documents/%28WEB-READY%29_Programs_for_Individual_and_Families_Brochure_8-25-26.pdf) | Aug 25, 2026 | | Housing New Mexico minimum score | 620 | [Housing New Mexico: Mortgage Programs](https://housingnm.org/individuals-and-families/homebuyers/mortgage-programs) | Oct 29, 2026 | ## More owners, smaller incomes 71.1% of New Mexico’s occupied homes are lived in by their owners, the 12th-highest among the states and DC. Incomes are another story: the median household earns $67,816, the 8th-lowest among the states and DC. The median home is worth 4.1 times that income, lower than the national ratio of 4.4. For buyers, one rule matters more than the averages: a home that hasn’t changed hands in years can carry a tax bill well below what a new owner will pay. ## Why your tax bill may start higher than the seller’s New Mexico limits how fast a home’s taxable value can rise: by no more than 3% a year while the same owner keeps it. When the home sells, the valuation resets to market value. If prices have risen faster than the cap, the buyer’s first bill can be noticeably larger than the seller’s last one. *Effect of the reset if market values rose 5% a year (example)* | Seller owned the home | Seller’s taxable base per $100 of market value | Your first bill vs the seller’s | |---|---:|---:| | 5 years | $91 | about 10% higher | | 10 years | $83 | about 21% higher | | 15 years | $75 | about 33% higher | The growth rate is an illustration, not a forecast. Ask the county assessor what the home’s value would be at your price, and build that number — not the seller’s current bill — into your payment and escrow. The **head-of-household exemption** takes $2,000 off the taxable value of a primary home; apply with the county assessor once you own and live there. Overall, the state’s effective rate of 0.63% is the 16th-lowest among the states and DC and below the national 0.89%; the median owner pays $1,776 a year. ## Paying for the median New Mexico home > **Worked example: $279,900 home, 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $251,910 | $1,717 | > | Property tax at 0.63% a year | $147 | > | Homeowners insurance at the national $4.90 per $1,000 (Freddie Mac) | $114 | > | PMI (midpoint of Freddie Mac’s range) | $126 | > | **Total** | **$2,104** | > > The tax line uses the statewide ratio, which includes many owners whose values are still capped; at a recent purchase price, expect it to be higher. At the median income, Freddie Mac’s 30% guideline allows $1,695 a month for housing, enough for about **$226,000** with 10% down — $53,900 below the median value. Buying the median home within the guideline takes roughly $84,000 a year. The [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=NM&income=67816) shows the price your income supports at different debt-to-income limits, and the [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=280000&down=10&tax=0.63&state=NM) lets you raise the tax rate to match the reset. ## FirstHome, FirstDown and FirstDown Plus Housing New Mexico (the state’s mortgage finance authority) lends through participating lenders, and its programs let qualified buyers purchase with as little as $500 of their own money. Every borrower needs a credit score of at least 620 and pre-purchase homebuyer counseling. - **FirstHome** — a first mortgage for first-time buyers with low to moderate incomes, with income and price limits; homes in targeted areas get higher limits and don’t require first-time status. - **FirstDown** — a fixed-rate second mortgage of up to 4% of the price for the down payment and closing costs, only with FirstHome. - **FirstDown Plus** — a third mortgage of $10,000 more for first-time buyers using FirstHome and FirstDown. - **HomeForward** — a first mortgage for repeat buyers or those over FirstHome’s limits, with its own second-mortgage assistance. > **Worked example: First-time buyer, median home, minimum down payment** > > Needed: 3.5% down ($9,797) plus closing costs at the midpoint of the CFPB’s 2%–5% range ($9,797) = $19,593. FirstDown at 4% of the price is $11,196; with FirstDown Plus the help totals **$21,196**, which covers the estimate, leaving only the program minimum for you to bring. Both are loans: ask the lender for their rates, payments and what happens when you sell or refinance, and add any payment to your monthly budget. Compare with other options in the [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/). ## New Mexico closing costs: recording fees, no transfer tax New Mexico has no real estate transfer tax, so the deed carries no state tax at closing — only recording fees. Buyers’ costs are mainly lender charges, title insurance and prepaid taxes and insurance: $5,598–$13,995 on the median home at the CFPB’s rule of thumb. Itemize yours with the [closing cost estimator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=NM). ## Frequently asked questions ### Do property taxes go up when you buy a house in New Mexico? They can. While one owner holds a home, its taxable value can rise no more than 3% a year, but the valuation resets to market value when it sells. If prices have risen faster than the cap, your bill will be higher than the seller’s. ### What is the property tax rate in New Mexico? Census data put the median bill at $1,776 a year, about 0.63% of median home value. Rates vary by county, city and school district. ### Does New Mexico have a transfer tax? No. New Mexico has no real estate transfer tax; buyers and sellers pay recording fees and their usual closing costs. ### What first-time homebuyer programs does New Mexico have? Housing New Mexico’s FirstHome mortgage can be paired with FirstDown, up to 4% of the price, and FirstDown Plus, $10,000 more. You need a score of at least 620 and homebuyer counseling. ### What is the head-of-household exemption in New Mexico? It reduces the taxable value of your primary home by $2,000. Apply with your county assessor. ### How much income do you need to buy a house in New Mexico? For the median $279,900 home with 10% down at today’s average rate, keeping housing under 30% of gross income takes roughly $84,000 a year. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US35) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US35) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US35) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [New Mexico Legislative Finance Committee: Property Taxes in New Mexico](https://www.nmlegis.gov/Entity/LFC/Documents/Revenue_Reports/Property%20Taxes%20in%20NM%20brief_FINAL.pdf) — New Mexico yearly limit on growth in a home's taxable value (reset to market value at sale); New Mexico head-of-household exemption (deducted from taxable value of a primary home) (May 15, 2024) - [Housing New Mexico: Programs for Individuals and Families brochure](https://housingnm.org/uploads/documents/%28WEB-READY%29_Programs_for_Individual_and_Families_Brochure_8-25-26.pdf) — Housing New Mexico FirstDown second mortgage, up to (share of the purchase price); Housing New Mexico FirstDown Plus third mortgage (Aug 25, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment; Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US35) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Housing New Mexico: Homebuyers](https://housingnm.org/homebuyers) — Housing New Mexico programs: buyer funds required, as little as (Oct 29, 2026) - [Housing New Mexico: Mortgage Programs](https://housingnm.org/individuals-and-families/homebuyers/mortgage-programs) — Housing New Mexico mortgage programs minimum credit score (Oct 29, 2026) - [Housing New Mexico: Mortgage programs](https://housingnm.org/individuals-and-families/homebuyers/mortgage-programs) - [Housing New Mexico: Programs for individuals and families (brochure)](https://housingnm.org/uploads/documents/%28WEB-READY%29_Programs_for_Individual_and_Families_Brochure_8-25-26.pdf) - [New Mexico Legislative Finance Committee: Property taxes in New Mexico](https://www.nmlegis.gov/Entity/LFC/Documents/Revenue_Reports/Property%20Taxes%20in%20NM%20brief_FINAL.pdf) _General information, not financial advice._ --- # New York mortgages: the recording tax, mansion tax and SONYMA help > New York mortgage numbers: the 1% mortgage recording tax, transfer and mansion taxes, the median home’s payment, STAR credits and SONYMA aid. URL: https://mortgage-math-us.com/location/new-york/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median New York home is valued at $449,800; with 10% down at the 7.24% national average rate, it costs about **$3,688 a month** with property tax and insurance. New York adds a closing cost most states don’t have — a **mortgage recording tax** of about 1% of the loan outside New York City, or roughly $4,048 on that purchase — and buyers pay an extra 1% tax on homes of $1,000,000 or more. SONYMA’s down payment loan of up to $15,000 is forgiven after 10 years. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value | $449,800 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US36) | 2024 ACS 1-year | | Effective property tax rate | 1.45% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US36) | 2024 ACS 1-year | | Homes lived in by their owners | 54.3% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US36) | 2024 ACS 1-year | | Mortgage recording tax (outside NYC, about) | 1% | [New York Department of Taxation and Finance](https://www.tax.ny.gov/pit/mortgage/mtgidx.htm) | Dec 30, 2025 | | State transfer tax (seller) | 0.4% | [New York Department of Taxation and Finance](https://www.tax.ny.gov/bus/transfer/rptidx.htm) | Jun 1, 2026 | | Mansion tax from $1,000,000 (buyer) | 1% | [NY Department of Taxation and Finance: Real estate transfer tax](https://www.tax.ny.gov/bus/transfer/rptidx.htm) | Jun 1, 2026 | | SONYMA down payment loan, up to | $15,000 | [NY Homes and Community Renewal: SONYMA Down Payment Assistance Loan](https://hcr.ny.gov/down-payment-assistance-loan-dpal) | Oct 29, 2026 | ## A state of renters, in the country’s oldest housing New York is a state of renters by US standards: only 54.3% of occupied homes are lived in by their owners, the 2nd-lowest homeownership rate among the states and DC (the US figure is 65.3%). The housing is old as well — half of New York’s homes were built before 1959, the oldest housing of any state. *New York State compared with the US (Census ACS 2024 1-year)* | | New York | United States | |---|---:|---:| | Median home value | $449,800 | $360,600 | | Median household income | $85,820 | $81,604 | | Home value ÷ income | 5.2× | 4.4× | | Effective property tax rate | 1.45% | 0.89% | | Median gross rent | $1,634 | $1,487 | | Owner-occupied share | 54.3% | 65.3% | Statewide numbers blend very different markets. New York City, where even fewer households own (32.7%), has its own transfer and mortgage taxes and a large co-op market — see our [New York City guide](https://mortgage-math-us.com/location/new-york-ny/). The rest of this page focuses on rules that apply across the state. ## New York’s mortgage recording tax When your mortgage is recorded, New York charges a tax on the amount borrowed. Outside New York City it totals about 1% of the loan, made up of a basic tax, a special additional tax and an additional tax; the exact rate depends on the county, and New York City and Yonkers add local taxes on top. The state’s Form MT-15 lists the current rate for each place. > **Worked example: Mortgage recording tax on the median New York home** > > Price $449,800, 10% down → loan $404,820 × 1% ≈ **$4,048** due at closing. With 20% down the loan is $359,840 and the tax falls to about $3,598. Because it is based on the loan, not the price, a bigger down payment shrinks it. Ask your lender to show it on the Loan Estimate. ## The transfer tax and the $1,000,000 line The state real estate transfer tax is 0.4% of the price, and the seller pays it unless the contract says otherwise — about $1,799 on the median-value home. Buyers have their own tax at the top of the market: the **mansion tax**, 1% of the whole price on homes selling for $1,000,000 or more. Because it applies to the full price, it creates a cliff: a home at $999,000 owes none, while one at $1,000,000 owes $10,000. If you are bidding near that line, the extra tax belongs in your cash-to-close math. New York City adds a city transfer tax and, on the priciest homes, a supplemental tax paid by the buyer. ## Paying for the median New York home > **Worked example: $449,800 home, 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $404,820 | $2,759 | > | Property tax at 1.45% a year | $544 | > | Homeowners insurance at the national $4.90 per $1,000 (Freddie Mac) | $184 | > | PMI (midpoint of Freddie Mac’s range) | $202 | > | **Total** | **$3,688** | > > Cash to close: the $44,980 down payment plus $8,996–$22,490 in closing costs at the CFPB’s 2%–5% range, a range that has to absorb the $4,048 recording tax — about $53,976–$67,470 in all. On New York’s median household income of $85,820, keeping housing under Freddie Mac’s 30% guideline allows $2,146 a month, which supports a price of about **$262,000** with 10% down — $187,800 below the median value. The median renter pays $1,634 a month; the [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=NY&price=450000&rent=1634) shows how long you would need to stay for buying to pay off, and the [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=450000&down=10&tax=1.45&state=NY) opens with these New York figures. ## SONYMA mortgages and the forgivable DPAL The State of New York Mortgage Agency (SONYMA), part of Homes and Community Renewal, lends through participating lenders. Achieving the Dream carries SONYMA’s lowest interest rates, and the Low Interest Rate Program covers one- to four-family homes, condos, co-ops and manufactured homes. Income and price limits vary by program and region, and in designated Target Areas you don’t have to be a first-time buyer. Any SONYMA mortgage can carry a **Down Payment Assistance Loan (DPAL)**: 3% of the price, up to $15,000, or $3,000, whichever is higher. It charges no interest, needs no monthly payments and is forgiven after 10 years; sell or refinance earlier and the amount owed shrinks a little each month you lived there. SONYMA says first mortgages that carry a DPAL have a slightly higher rate. > **Worked example: DPAL on the median New York price** > > 3% × $449,800 = **$13,494** toward the down payment and closing costs (the $15,000 cap applies from a price of $500,000). You still bring 1% of the price from your own funds — $4,498. Co-op buyers can finance up to 95% of value. For households up to 60% of area median income, the 2026 DPAL Plus offers up to $30,000 on a first-come, first-served basis while funds last. See how this compares with other help in the [down-payment grants guide](https://mortgage-math-us.com/first-time-buyers/grants/). ## Property tax and the STAR credit New York’s effective property tax rate of 1.45% is the 5th-highest among the states and DC, and the median owner pays $6,542 a year against $3,211 nationally. School taxes are a large part of most bills, which is where the School Tax Relief (STAR) program helps. New owners receive STAR as a **credit** paid by the state, rather than as an exemption on the tax bill. Register through the Homeowner Benefit Portal as soon as the home becomes your primary residence. Basic STAR is open to owners with income up to $500,000; Enhanced STAR, for owners 65 and older, has a 2026 income limit of $110,750. If your lender pays taxes from escrow, tell it if you switch from the exemption to the credit. ## Frequently asked questions ### How much is the mortgage tax in New York? Outside New York City the mortgage recording tax is about 1% of the loan amount, varying slightly by county. On a $404,820 loan that is roughly $4,048. New York City and Yonkers charge more. ### Who pays the transfer tax in New York State? The seller pays the 0.4% state transfer tax unless the contract shifts it. The buyer pays the 1% mansion tax on residences of $1,000,000 or more. ### What is the mansion tax in New York? A buyer-paid tax of 1% of the full price on homes selling for $1,000,000 or more. On a $1,000,000 purchase it is $10,000. New York City adds a supplemental tax at higher prices. ### Does New York have down payment assistance? Yes. SONYMA’s DPAL gives 3% of the price, up to $15,000 (at least $3,000), as a 0% loan forgiven after 10 years. It must be paired with a SONYMA mortgage. ### How do I get the STAR credit as a new homeowner? Register with the Department of Taxation and Finance through the Homeowner Benefit Portal once the home is your primary residence. Basic STAR has an income limit of $500,000. ### What is the property tax rate in New York? The Census Bureau puts the median New York bill at $6,542 a year, about 1.45% of median home value. Rates vary widely by county, town and school district. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US36) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US36) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US36) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US36) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US36) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [New York Department of Taxation and Finance](https://www.tax.ny.gov/pit/mortgage/mtgidx.htm) — State tax on recording a mortgage (Dec 30, 2025) - [NY Department of Taxation and Finance: Real estate transfer tax](https://www.tax.ny.gov/bus/transfer/rptidx.htm) — New York additional (mansion) tax applies to residences priced at or above; New York additional (mansion) tax on residences of $1 million or more (paid by the buyer); State real estate transfer tax (Jun 1, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [NY Homes and Community Renewal: SONYMA Down Payment Assistance Loan](https://hcr.ny.gov/down-payment-assistance-loan-dpal) — SONYMA DPAL, share of the purchase price; SONYMA Down Payment Assistance Loan (DPAL), up to; SONYMA DPAL, at least (Oct 29, 2026) - [NY Homes and Community Renewal: SONYMA Preparation and Eligibility](https://hcr.ny.gov/preparation-eligibility) — SONYMA minimum cash contribution from the buyer (share of the price); SONYMA maximum financing on a co-op (share of value) (Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=010XX00US) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US36) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US3651000) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [NY Department of Taxation and Finance: STAR eligibility](https://www.tax.ny.gov/pit/property/star/eligibility.htm) — Basic STAR credit income limit; Enhanced STAR income limit for 2026 benefits (one owner 65 or older) (Oct 27, 2026) - [NY Homes and Community Renewal: SONYMA programs](https://hcr.ny.gov/sonyma) - [NY Department of Taxation and Finance: Mortgage recording tax](https://www.tax.ny.gov/pit/mortgage/mtgidx.htm) - [NY Department of Taxation and Finance: STAR](https://www.tax.ny.gov/pit/property/star/) _General information, not financial advice._ --- # North Carolina mortgages: NCHFA help, the excise tax and monthly costs > North Carolina home buying numbers: the median home’s payment, the 0.61% property tax rate, the seller’s excise tax and NCHFA down-payment help. URL: https://mortgage-math-us.com/location/north-carolina/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer At the median value of $333,000, a North Carolina home costs about **$2,498 a month** with 10% down at the 7.24% national average rate, including property tax at the state’s effective rate of 0.61% — below the national 0.89%. The seller pays the state excise tax of 0.2%. Through NCHFA, buyers can get up to 3% of the loan, or $15,000 for first-time buyers and veterans, forgiven after 15 years. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value | $333,000 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US37) | 2024 ACS 1-year | | Effective property tax rate | 0.61% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US37) | 2024 ACS 1-year | | Median year homes were built | 1993 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US37) | 2024 ACS 1-year | | Excise tax on the deed (seller) | 0.2% | [N.C. Gen. Stat. 105-228.30](https://ncleg.gov/EnactedLegislation/Statutes/HTML/ByArticle/Chapter_105/Article_8E.html) | Oct 28, 2026 | | NC 1st Home Advantage Down Payment | $15,000 | [NC Housing Finance Agency: NC 1st Home Advantage Down Payment](https://www.nchfa.com/home-buyers/home-buyer-mortgage-products/nc-1st-home-advantage-down-payment) | Oct 29, 2026 | | NCHFA minimum credit score | 640 | [NC Housing Finance Agency: NC Home Advantage Mortgage](https://www.nchfa.com/home-buyers/buy-home/nc-home-advantage-mortgage) | Oct 29, 2026 | | Elderly or disabled exclusion, at least | $25,000 | [N.C. General Statutes § 105-277.1](https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_105/GS_105-277.1.html) | Oct 29, 2026 | ## Newer houses, lighter tax bills Half of North Carolina’s homes were built in 1993 or later, the 6th-newest housing among the states and DC; nationally the median year is 1981. Newer stock tends to mean fewer surprises in the inspection, though growing suburbs also bring new-construction contracts, HOA dues and special assessments to read carefully. Property taxes are moderate. The median owner pays $2,044 a year, an effective rate of 0.61% — the 15th-lowest among the states and DC. On the median-value home, that is $169 a month, $78 less than the same house would pay at the national ratio. Counties reappraise on their own schedules, so a recent revaluation can move a bill noticeably; check the county’s current rate and the property’s assessed value before you offer. ## The monthly cost, two ways Here is the median home with a conventional 10% down payment next to an FHA loan with the minimum 3.5% down, where NC Home Advantage assistance helps with the cash. > **Worked example: $333,000 home, 30-year fixed at 7.24%** > > | Monthly | 10% down, conventional | 3.5% down, FHA | > |---|---:|---:| > | Loan amount | $299,700 | $326,969 (incl. upfront MIP) | > | Principal and interest | $2,042 | $2,228 | > | Property tax at 0.61% | $169 | $169 | > | Insurance at the national $4.90 per $1,000 | $136 | $136 | > | PMI or annual FHA MIP | $150 | $147 | > | **Total** | **$2,498** | **$2,681** | > > On the FHA loan, 3% of the loan in NC Home Advantage assistance is $9,809 — leaving $1,846 of the down payment for you to cover. The FHA payment is higher because you borrow more and pay mortgage insurance. On North Carolina’s median household income of $73,958, Freddie Mac’s 30% housing guideline allows $1,849 a month. With 10% down, that supports about **$247,000**, $86,000 below the median value; buying the median home on that guideline takes roughly $100,000 a year. Adjust any of these inputs in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=333000&down=10&tax=0.61&state=NC). ## NCHFA’s two kinds of down-payment help The North Carolina Housing Finance Agency works through participating lenders. Its assistance comes as a 0% deferred second mortgage, forgiven in stages and gone entirely after 15 years — sell, refinance or transfer the home before then and some is repaid. *NCHFA purchase assistance (checked Oct 2026)* | Program | Help | Who qualifies | |---|---|---| | NC Home Advantage Mortgage | Up to 3% of the loan | First-time and move-up buyers with income up to $158,000 | | NC 1st Home Advantage Down Payment | $15,000 | First-time buyers (no principal residence in the past 3 years) and military veterans, or buyers in targeted areas; used with an NC Home Advantage Mortgage | Both need a credit score of at least 640 and work with FHA, VA, USDA or conventional loans within each loan type’s limits. For a buyer who qualifies, the flat $15,000 is worth more than the $9,809 that 3% of a median-price FHA loan would bring. See how these compare with federal options in the [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/). ## Excise tax and other closing costs North Carolina’s excise tax on deeds is 0.2% of the price, paid by the seller — about $666 on the median-value home. Buyers pay their own lender charges, title insurance, recording fees and prepaid items; at the CFPB’s 2%–5% rule of thumb, budget $6,660–$16,650 on the median home. The [closing cost estimator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=NC) breaks it down line by line. ## Charlotte, Raleigh and the rest of the state *North Carolina’s two largest markets (Census ACS 2024 1-year, city limits)* | | Charlotte | Raleigh | North Carolina | |---|---:|---:|---:| | Median home value | $431,900 | $450,300 | $333,000 | | Median household income | $86,416 | $85,060 | $73,958 | | Effective property tax rate | 0.69% | 0.72% | 0.61% | Both cities’ median values sit above the statewide figure, and Raleigh’s is $18,400 higher than Charlotte’s. Both cities run their own buyer assistance on top of NCHFA’s; see the [Charlotte](https://mortgage-math-us.com/location/charlotte-nc/) and [Raleigh](https://mortgage-math-us.com/location/raleigh-nc/) guides for local programs and costs. ## North Carolina’s homestead exclusion for older and disabled owners North Carolina’s elderly or disabled exclusion removes the greater of $25,000 or 50% of a home’s appraised value from taxation for owners who are 65 or older or totally and permanently disabled and whose income is under a limit the Department of Revenue adjusts each year. On a home at the median value, 50% would exclude $166,500 — roughly $1,016 a year at the state’s effective rate. Apply with your county tax office. ## Frequently asked questions ### What is the property tax rate in North Carolina? Census data put the median North Carolina bill at $2,044 a year, an effective rate of about 0.61% of home value. Each county and city sets its own rate, so check the rate where you are buying. ### Who pays the excise tax when you buy a house in North Carolina? The seller. The state excise tax is 0.2% of the price, about $666 on a median-value home. ### Does North Carolina have a first-time homebuyer program? Yes. NCHFA’s NC 1st Home Advantage Down Payment provides $15,000 to first-time buyers and military veterans, and the NC Home Advantage Mortgage offers up to 3% of the loan to first-time and move-up buyers. Both are forgiven after 15 years. ### What credit score do I need for NC Home Advantage? NCHFA requires a score of at least 640, with a higher minimum for manufactured homes. Household income can’t exceed $158,000. ### How much income do you need to buy a house in North Carolina? For the median $333,000 home with 10% down at today’s average rate, keeping housing under 30% of gross income takes about $100,000 a year, assuming few other debts. ### Does North Carolina have a homestead exemption? Not for all owners. Owners 65 or older, or totally and permanently disabled, with income under the yearly limit can exclude the greater of $25,000 or 50% of appraised value. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US37) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US37) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US37) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment; Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA upfront mortgage insurance premium; FHA annual MIP, 30-year loan, more than 95% LTV (Feb 22, 2023) - [NC Housing Finance Agency: NC Home Advantage Mortgage](https://www.nchfa.com/home-buyers/buy-home/nc-home-advantage-mortgage) — NC Home Advantage Mortgage down payment assistance, up to (share of the loan amount); NC Home Advantage Mortgage income limit; NC Home Advantage Mortgage minimum credit score (Oct 29, 2026) - [NC Housing Finance Agency: NC 1st Home Advantage Down Payment](https://www.nchfa.com/home-buyers/home-buyer-mortgage-products/nc-1st-home-advantage-down-payment) — NC 1st Home Advantage Down Payment (first-time buyers and military veterans); NCHFA down payment assistance is fully forgiven after (Oct 29, 2026) - [N.C. General Statutes § 105-277.1](https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_105/GS_105-277.1.html) — NC elderly or disabled homestead exclusion, at least (of appraised value); NC elderly or disabled homestead exclusion, share of appraised value (if larger than $25,000) (Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [N.C. Gen. Stat. 105-228.30](https://ncleg.gov/EnactedLegislation/Statutes/HTML/ByArticle/Chapter_105/Article_8E.html) — State real estate transfer tax (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US37) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=010XX00US) — Median year homes were built (2024 ACS 1-year) - [42 U.S.C. 12704(14)](https://www.law.cornell.edu/uscode/text/42/12704) — First-time homebuyer: has not owned a home in the past (HUD/HOME statute) (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US3712000) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US3755000) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US3712000) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US3755000) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US3712000) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US3755000) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [NC Housing Finance Agency: Home buyers](https://www.nchfa.com/home-buyers) - [NCHFA: NC 1st Home Advantage Down Payment](https://www.nchfa.com/home-buyers/home-buyer-mortgage-products/nc-1st-home-advantage-down-payment) - [N.C. General Statutes § 105-277.1: Elderly or disabled exclusion](https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_105/GS_105-277.1.html) _General information, not financial advice._ --- # North Dakota mortgages: the residence credit, NDHFA loans and monthly costs > North Dakota home buying numbers: the median home’s payment, the $1,600 Primary Residence Credit, no transfer tax and NDHFA’s 3% down-payment help. URL: https://mortgage-math-us.com/location/north-dakota/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median North Dakota home is valued at $266,100 and costs about **$2,073 a month** with 10% down at the 7.24% national average rate — $1,093 more than the median rent of $980. Homeowners can claim the state’s **Primary Residence Credit** of up to $1,600 a year against property tax, with no age or income limit. There is no transfer tax, and NDHFA adds 3% of the first mortgage toward the down payment for eligible buyers who put in $500 of their own. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value | $266,100 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US38) | 2024 ACS 1-year | | Median gross rent | $980/mo | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US38) | 2024 ACS 1-year | | Homes lived in by their owners | 61.2% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US38) | 2024 ACS 1-year | | Effective property tax rate | 0.96% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US38) | 2024 ACS 1-year | | Primary Residence Credit, up to | $1,600 | [North Dakota Office of State Tax Commissioner](https://www.tax.nd.gov/news/tax-commissioner-announces-upcoming-primary-residence-credit-application-period-opening) | Jan 1, 2026 | | NDHFA DCA or Start (share of loan) | 3% | [North Dakota Housing Finance Agency: Homeownership](https://www.ndhousing.nd.gov/homeownership) | Oct 29, 2026 | | FirstHome income limit (1–2 people) | $105,730 | [North Dakota Housing Finance Agency: Income and purchase price limits](https://www.ndhousing.nd.gov/income-and-purchase-price-limits) | Jun 15, 2026 | ## Cheap rent, fewer owners North Dakota’s median gross rent of $980 a month is the 2nd-lowest among the states and DC, and only 61.2% of occupied homes are lived in by their owners — the 5th-lowest among the states and DC (the US share is 65.3%). Cheap rent raises the bar for buying: the median home costs $1,093 more a month than the median rent before you count maintenance, so owning pays off mainly through equity and staying put long enough to recover buying and selling costs. The [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=ND&price=266000&rent=980) opens with North Dakota’s median price and rent, so you can see how many years it takes for owning to come out ahead at today’s rates. ## The Primary Residence Credit Since the 2025 legislative session, North Dakota pays a **Primary Residence Credit** of up to $1,600 a year toward the property tax on your home. There are no age or income restrictions, a household can claim one credit, and you apply each year — the 2026 application window ran from January 1 to April 1, through the Office of State Tax Commissioner. If you buy during the year, put the next application window on your calendar. Against a tax bill at the state’s effective rate of 0.96% (above the US 0.89%), the credit is large. On a home at the median value, property tax is about $2,555 a year, and the full credit would cover about 63% of it. ## The monthly cost, before and after the credit > **Worked example: $266,100 home, 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $239,490 | $1,632 | > | Property tax at 0.96% a year | $213 | > | Homeowners insurance at the national $4.90 per $1,000 (Freddie Mac) | $109 | > | PMI (midpoint of Freddie Mac’s range) | $120 | > | **Total** | **$2,073** | > | Primary Residence Credit, spread over 12 months | −$133 | > | **Effective cost after the credit** | **$1,940** | > > The credit row assumes the full credit applies to this bill. If you pay property tax through escrow, ask your servicer how the credit will show up in your escrow account. On North Dakota’s median household income of $77,871, Freddie Mac’s 30% guideline allows $1,947 a month — about **$250,000** of home with 10% down, $16,100 below the median value. Counting the credit, the same budget stretches to roughly $267,000. Try your own numbers in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=266000&down=10&tax=0.96&state=ND). ## NDHFA loans and down-payment help The North Dakota Housing Finance Agency (NDHFA) lends through participating lenders. Every program needs a $500 cash investment from the buyer and the home must be your principal residence. *NDHFA homeownership programs (checked Oct 2026)* | Program | For | Down-payment help | |---|---|---| | FirstHome | First-time buyers (no home owned in the past 3 years), income up to $105,730 for one or two people, price up to $500,000 | DCA or Start | | HomeAccess | Single parents, veterans, and households with a disabled member or one 65 or older, under the same limits | DCA or Start | | North Dakota Roots | Previous homeowners; no income or price limits | Start only | DCA and Start each give 3% of the first mortgage as a credit toward the down payment, closing costs and prepaid items; they can’t be combined with other assistance, and DCA has its own county income limits and requires a homebuyer education certificate. On an FHA loan for the median home, 3% of the $261,280 loan is about $7,838, against a $9,314 minimum down payment. The median home is below the FirstHome price limit, and the state’s median household income is below the one- and two-person FirstHome limit. Compare NDHFA with federal options in the [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/). ## Closing in North Dakota: no deed tax North Dakota has no real estate transfer tax, so neither side pays a deed tax at closing; county recording fees still apply. Most of what you pay is lender charges, title insurance and prepaid taxes and insurance — $5,322–$13,305 on the median home at the CFPB’s 2%–5% rule of thumb. Itemize them with the [closing cost estimator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=ND). ## Frequently asked questions ### What is the North Dakota Primary Residence Credit? A state credit of up to $1,600 a year toward the property tax on your primary residence. There are no age or income limits; you apply each year with the Office of State Tax Commissioner. ### Does North Dakota have a transfer tax on real estate? No. North Dakota has no real estate transfer tax, so buyers and sellers pay only recording fees and their usual closing costs. ### What down payment assistance does North Dakota offer? NDHFA’s DCA and Start programs give 3% of the first mortgage toward the down payment and closing costs, paired with a FirstHome, HomeAccess or (for Start) North Dakota Roots loan. You put in at least $500. ### What are the FirstHome income limits in North Dakota? Under limits effective June 15, 2026, FirstHome and HomeAccess allow household income up to $105,730 for one or two people, more for larger households, and a price up to $500,000 for a single-family home. ### Is it cheaper to rent or buy in North Dakota? Month to month, renting usually is: the median rent is $980, against about $2,073 to own the median home with 10% down. Buying can still win if you stay long enough to build equity. ### What is the property tax rate in North Dakota? Census data put the median bill at $2,550 a year, about 0.96% of median home value, before the Primary Residence Credit. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US38) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US38) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US38) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US38) — Median gross rent (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [North Dakota Office of State Tax Commissioner](https://www.tax.nd.gov/news/tax-commissioner-announces-upcoming-primary-residence-credit-application-period-opening) — North Dakota Primary Residence Credit, up to (per year) (Jan 1, 2026) - [North Dakota Housing Finance Agency: Homeownership](https://www.ndhousing.nd.gov/homeownership) — NDHFA DCA and Start assistance (share of the first mortgage); NDHFA programs: buyer cash investment required (Oct 29, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment; Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA upfront mortgage insurance premium (Feb 22, 2023) - [North Dakota Housing Finance Agency: Income and purchase price limits](https://www.ndhousing.nd.gov/income-and-purchase-price-limits) — NDHFA FirstHome and HomeAccess purchase price limit, single-family home; NDHFA FirstHome and HomeAccess income limit, households of one or two (Jun 15, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US38) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=010XX00US) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [42 U.S.C. 12704(14)](https://www.law.cornell.edu/uscode/text/42/12704) — First-time homebuyer: has not owned a home in the past (HUD/HOME statute) (Oct 28, 2026) - [North Dakota Housing Finance Agency: Homeownership](https://www.ndhousing.nd.gov/homeownership) - [NDHFA: Income and purchase price limits](https://www.ndhousing.nd.gov/income-and-purchase-price-limits) - [ND Office of State Tax Commissioner: Primary Residence Credit](https://www.tax.nd.gov/news/tax-commissioner-announces-upcoming-primary-residence-credit-application-period-opening) _General information, not financial advice._ --- # Ohio mortgages: monthly costs, property taxes and OHFA help > Ohio home buying numbers: the median home’s payment, a 1.22% property tax rate, county conveyance fees and OHFA’s 3%–3.5% down-payment help. URL: https://mortgage-math-us.com/location/ohio/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer Ohio’s median home is valued at $239,800, about 3.3 times the median household income — the 5th-lowest ratio among the states and DC. With 10% down at the 7.24% national average rate it costs about **$1,920 a month**, and property tax at 1.22% of value (above the US 0.89%) is a bigger share of the payment than in most states. OHFA’s down payment assistance — 3% or 3.5% of the price, forgiven after 7 years — can cover most or all of a minimum down payment. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value | $239,800 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US39) | 2024 ACS 1-year | | Median household income | $72,212/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US39) | 2024 ACS 1-year | | Effective property tax rate | 1.22% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US39) | 2024 ACS 1-year | | Base conveyance fee | 0.1% | [Ohio Revised Code 322.02](https://codes.ohio.gov/ohio-revised-code/section-322.02) | Apr 9, 2025 | | OHFA assistance, government loans | 3.5% | [Ohio Housing Finance Agency: Down Payment Assistance](https://ohiohome.org/partners/fillable/OHFA-DPA_Fillable.pdf) | Jul 1, 2025 | | OHFA assistance forgiven after | 7 years | [Ohio Housing Finance Agency: Down Payment Assistance](https://ohiohome.org/partners/fillable/OHFA-DPA_Fillable.pdf) | Jul 1, 2025 | | Homestead exemption base (65+ or disabled) | $25,000 | [Ohio Revised Code § 323.152](https://codes.ohio.gov/ohio-revised-code/section-323.152) | Sep 23, 2026 | ## Ohio’s price-to-income edge *Ohio compared with the US (Census ACS 2024 1-year)* | | Ohio | United States | |---|---:|---:| | Median home value | $239,800 | $360,600 | | Median household income | $72,212 | $81,604 | | Home value ÷ income | 3.3× | 4.4× | | Median owner costs with a mortgage | $1,563 | $2,035 | Even so, today’s rates stretch a typical budget. On the median income of $72,212, Freddie Mac’s 30% housing guideline leaves $1,805 a month, which supports about **$225,000** with 10% down at Ohio’s tax ratio — $14,800 below the median value. The gap is small enough that a modest price cut, a larger down payment or a rate discount can close it; the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=OH&income=72212) shows where your own income lands. ## Property taxes do more of the work Ohio’s effective property tax rate of 1.22% is the 12th-highest among the states and DC; the median owner pays $2,937 a year. On the median-value home that is $244 a month, $66 more than at the national ratio. School district levies approved by local voters are a big reason bills differ from one district to the next, so look up the exact parcel on the county auditor’s site. Owners who are 65 or older, or permanently and totally disabled, can claim the **homestead exemption**, which takes $25,000 of market value off the taxable value — an amount the state adjusts for inflation each year — subject to an income test for newer applicants. Qualifying disabled veterans get a larger exemption. At the state’s effective rate, the base amount is worth roughly $305 a year. Apply with your county auditor. ## Cash to close with OHFA assistance OHFA’s help is calculated on the purchase price: 3% with a conventional loan or 3.5% with FHA, VA or USDA. Here is the median home with a 10% down payment next to the 3% minimum conventional down payment, funded by OHFA’s 3%. > **Worked example: $239,800 home, 30-year fixed at 7.24%** > > | | 10% down | 3% down + OHFA assistance | > |---|---:|---:| > | Loan amount | $215,820 | $232,606 | > | Principal and interest | $1,471 | $1,585 | > | Property tax at 1.22% | $244 | $244 | > | Insurance at the national $4.90 per $1,000 | $98 | $98 | > | PMI (midpoint of Freddie Mac’s range) | $108 | $116 | > | **Monthly total** | **$1,920** | **$2,043** | > | Cash at closing (down payment + closing costs − assistance) | $32,373 | $8,393 | > > Closing costs are taken at the midpoint of the CFPB’s 2%–5% range. The assistance saves about $23,980 up front, at the cost of $123 more a month. With an FHA loan the 3.5% option would be $8,393, enough to cover the 3.5% FHA minimum down payment. Try the low-down-payment version in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=240000&down=3&tax=1.22&state=OH). ## OHFA programs: assistance, Ohio Heroes and the tax credit The Ohio Housing Finance Agency works through participating lenders across the state: - **Down payment assistance** — 3% (conventional) or 3.5% (government loans) of the price, usable for the down payment or closing costs. It is forgiven after 7 years; sell before then and you repay all of it. - **Ohio Heroes** — a discounted mortgage rate for people in public service, including first responders, some medical professionals and educators. It can be combined with the assistance. - **Mortgage Tax Credit** — eligible first-time buyers get back part of their mortgage interest as a federal tax credit each year; see [mortgage credit certificates](https://mortgage-math-us.com/first-time-buyers/mortgage-credit-certificates/). Borrowers need a credit score of at least 640 for conventional, USDA and VA loans (slightly higher for FHA), must meet county income and price limits and must finish OHFA’s free homebuyer education. ## Conveyance fees: the county decides Every Ohio county charges a conveyance fee of at least 0.1% of the price when the deed is recorded, and counties may add up to 0.3% more under state law. The tax is levied on the grantor, so in Ohio the seller pays. On the median-value home, that is between $240 and about $959, depending on the county. Buyers’ costs are the lender, title, recording and prepaid items covered by the CFPB range above. The [closing cost estimator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=OH) itemizes them. ## Columbus and the rest of Ohio Prices vary a lot within the state. In the City of Columbus, the median home is valued at $279,900, above the statewide median, and most Columbus households rent (45.9% own). Statewide, the median house was built in 1971, the 8th-oldest housing stock among the states and DC, so leave room for inspection findings and repairs. See the [Columbus guide](https://mortgage-math-us.com/location/columbus-oh/) for city assistance, Franklin County’s fee and local costs. ## Frequently asked questions ### What is the property tax rate in Ohio? The Census Bureau puts Ohio’s median property tax bill at $2,937 a year, about 1.22% of median home value. Rates vary by school district, city and county levies. ### How much is OHFA down payment assistance? OHFA provides 3% of the purchase price with a conventional loan or 3.5% with an FHA, VA or USDA loan. It is forgiven after 7 years if you don’t sell sooner. ### What credit score do I need for an OHFA loan? At least 640 for conventional, USDA and VA loans, and a slightly higher minimum for FHA loans, plus OHFA’s debt-to-income, income and price limits. ### Who pays the conveyance fee in Ohio? The seller. Ohio law levies the fee on the grantor. It is at least 0.1% of the price, and counties may add up to 0.3%. ### Does Ohio have a homestead exemption? Yes, for owners 65 and older or permanently and totally disabled. It exempts $25,000 of market value, indexed for inflation, from property tax, with an income test for newer applicants. ### How much house can I afford in Ohio on the median income? On $72,212 a year, keeping housing at 30% of income supports about $225,000 with 10% down at today’s average rate and Ohio’s tax ratio. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US39) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US39) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US39) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [Ohio Housing Finance Agency: Down Payment Assistance](https://ohiohome.org/partners/fillable/OHFA-DPA_Fillable.pdf) — OHFA down payment assistance, conventional loans (share of the purchase price); OHFA down payment assistance, government loans (share of the purchase price); OHFA down payment assistance is forgiven after (Jul 1, 2025) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum down payment on some conventional loans; Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [Ohio Revised Code § 322.02](https://codes.ohio.gov/ohio-revised-code/section-322.02) — Ohio county real property transfer tax, maximum (on top of the base conveyance fee); State real estate transfer tax (Apr 9, 2025) - [Ohio Revised Code § 323.152](https://codes.ohio.gov/ohio-revised-code/section-323.152) — Ohio homestead exemption for owners 65+ or disabled (market value exempted, before inflation indexing) (Sep 23, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=040XX00US39) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=010XX00US) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US3918000) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US3918000) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US39) — Median year homes were built (2024 ACS 1-year) - [Ohio Housing Finance Agency: Down payment assistance](https://ohiohome.org/partners/fillable/OHFA-DPA_Fillable.pdf) - [Ohio Housing Finance Agency: Homeownership resources](https://ohiohome.org/news/blog/june-2026/homeownership-resources.aspx) - [Ohio Revised Code § 323.152: Homestead exemption](https://codes.ohio.gov/ohio-revised-code/section-323.152) _General information, not financial advice._ --- # Oklahoma mortgages: recording taxes, OHFA help and the homestead cap > Oklahoma home buying numbers: about $1,690 a month for the median home, deed and mortgage taxes, the homestead cap reset and OHFA’s 3.5% help. URL: https://mortgage-math-us.com/location/oklahoma/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median Oklahoma home is valued at $222,100, the 4th-lowest among the states and DC. With 10% down at the 7.24% national average rate it costs about **$1,692 a month**, including property tax at 0.75% of value. At closing, Oklahoma charges a documentary stamp tax of 0.15% on the deed and a mortgage tax of 0.1% on the loan — about $533 together on that home — and OHFA lends 3.5% of the loan for the down payment as a 0% second lien you repay later. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value | $222,100 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US40) | 2024 ACS 1-year | | Median household income | $66,148/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US40) | 2024 ACS 1-year | | Effective property tax rate | 0.75% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US40) | 2024 ACS 1-year | | Documentary stamp tax on the deed | 0.15% | [68 O.S. §1904](https://law.justia.com/codes/oklahoma/title-68/section-68-1904/) | Nov 1, 2025 | | Mortgage tax on the loan | 0.1% | [68 O.S. §1904](https://law.justia.com/codes/oklahoma/title-68/section-68-1904/) | Nov 1, 2025 | | OHFA assistance (share of the loan) | 3.5% | [Oklahoma Housing Finance Agency: Homebuyers](https://www.ohfa.org/homebuyers/) | Oct 29, 2026 | | Yearly cap on homestead value growth | 3% | [Wagoner County Assessor: What is the 3%/5% limitation](https://wagonercounty.ok.gov/179/What-is-the-3-5-Limitation-cap) | Oct 29, 2026 | ## Two taxes at the county clerk’s window Oklahoma is one of a small group of states that tax both the deed and the mortgage when the papers are recorded. The **documentary stamp tax** on the deed is 0.15% of the price, and the **mortgage tax** is 0.1% of the principal on a long-term home loan. > **Worked example: Recording taxes on the median Oklahoma home** > > Deed: $222,100 × 0.15% ≈ $333. Mortgage: $199,890 (10% down) × 0.1% ≈ $200. Together, about **$533**. Neither is large next to Oklahoma’s other closing costs, which at the CFPB’s 2%–5% rule of thumb run $4,442–$11,105 on the median home. Who pays the deed stamps is set in your purchase contract. The [closing cost estimator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=OK) shows both lines. ## OHFA’s 3.5% assistance is a loan, not a gift The Oklahoma Housing Finance Agency offers down payment and closing cost assistance of 3.5% of the total loan amount through approved lenders. It is a “silent” second lien: no interest, no fees and no monthly payment, but you repay all of it when you sell, refinance, pay off the first mortgage or stop living in the home. *OHFA homebuyer requirements (checked Oct 2026)* | Requirement | Limit | |---|---| | Minimum credit score | 640 | | Maximum total debt-to-income ratio | 45% | | Income limit (DREAM program, statewide) | $150,000 | | Price limit (DREAM, FHA/VA/USDA loans) | $356,362 | | Occupancy | Must be your primary residence | OHFA runs two loan programs: GOLD, a bond-funded loan that requires first-time buyer status unless the home is in a targeted census tract and uses county income limits, and DREAM, which doesn’t require first-time status. Buyers also watch OHFA’s short video on how the assistance works, and OHFA lists discounted rates for school employees, first responders and state employees. On an FHA loan for the median home, 3.5% of the $218,077 loan (upfront premium included) is $7,633, which covers most of the $7,774 minimum down payment. The median home is under the DREAM government-loan price limit. ## A median Oklahoma home, month by month > **Worked example: $222,100 home, 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $199,890 | $1,362 | > | Property tax at 0.75% a year | $139 | > | Homeowners insurance at the national $4.90 per $1,000 (Freddie Mac) | $91 | > | PMI (midpoint of Freddie Mac’s range) | $100 | > | **Total** | **$1,692** | > > Insurance prices in Oklahoma vary widely with storm exposure and roof condition, so get a real quote before you rely on this total. Oklahoma’s median household income of $66,148 is the 6th-lowest among the states and DC. Spending Freddie Mac’s 30% of it on housing gives $1,654 a month, which buys about **$217,000** with 10% down — $5,100 below the median value — for a payment of about $1,653. Renters pay a median $1,044; compare the two paths in the [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=OK&price=222000&rent=1044) or adjust the inputs in the [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=222000&down=10&tax=0.75&state=OK). ## Your tax bill can jump the year you buy Oklahoma’s effective property tax rate of 0.75% is below the national 0.89%, and two homestead rules keep bills down for long-time owners. The **homestead exemption** takes $1,000 off the home’s assessed value; you must own and live in the home on January 1 and apply with the county assessor by March 15, and it carries over as long as you stay. The **valuation cap** limits how fast a homestead’s taxable fair cash value can rise — 3% a year (other property is capped at a higher rate). The cap does not follow the house to a new owner. In the year title changes hands, the county assesses the home at full fair cash value. Suppose prices rose 6% a year for 5 years while the seller’s value was held to 3% growth: the seller’s taxable value would be about $87 per $100 of market value, and your first bill could be roughly 15% higher than the seller’s, before your own exemption. Ask the assessor for an estimate at your purchase price, and expect your escrow payment to be set on that figure. ## Insurance in storm country Wind and hail drive homeowners insurance pricing in Oklahoma. Lenders require coverage at closing, so start shopping as soon as your offer is accepted: ask how the roof’s age and material affect the price, whether wind and hail carry a separate deductible, and whether an impact-resistant roof would lower the premium. Flood damage isn’t covered by standard policies; check the address on FEMA’s flood maps. See [homeowners insurance and your mortgage](https://mortgage-math-us.com/blog/homeowners-insurance-and-your-mortgage/) for how premiums flow through escrow. ## Frequently asked questions ### Does Oklahoma have a mortgage tax? Yes. Oklahoma charges a mortgage tax of 0.1% of the loan principal when the mortgage is recorded — about $200 on a $199,890 loan. ### How much is the documentary stamp tax in Oklahoma? The tax on a deed is 0.15% of the price, about $333 on a median-value home. The purchase contract decides who pays it. ### Is OHFA down payment assistance a grant? No. OHFA’s 3.5% of the loan is a second lien with no interest or monthly payment, but it must be repaid when you sell, refinance, pay off the first mortgage or move out. ### What credit score do I need for an OHFA loan? OHFA requires a minimum score of 640, total debt-to-income no higher than 45% and, for its DREAM program, income up to $150,000. ### Why did my property taxes go up after buying a house in Oklahoma? The 3% yearly cap on a homestead’s taxable value doesn’t apply in the year title changes hands, so the home is reassessed at full fair cash value. File for the $1,000 homestead exemption by March 15. ### What is the property tax rate in Oklahoma? Census data put the median Oklahoma bill at $1,672 a year, about 0.75% of median home value. Rates depend on the county and school district. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US40) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US40) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US40) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US40) — Median gross rent (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [68 O.S. §1904](https://law.justia.com/codes/oklahoma/title-68/section-68-1904/) — State real estate transfer tax; State tax on recording a mortgage (Nov 1, 2025) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price); Minimum FHA down payment (Oct 28, 2026) - [Oklahoma Housing Finance Agency: Homebuyers](https://www.ohfa.org/homebuyers/) — OHFA down payment and closing cost assistance (share of the total loan amount) (Oct 29, 2026) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA upfront mortgage insurance premium (Feb 22, 2023) - [Oklahoma Housing Finance Agency: DPA products](https://www.ohfa.org/dpaproducts/) — OHFA DREAM program purchase price limit, government loans (statewide) (Jul 31, 2025) - [Wagoner County Assessor: What is the 3%/5% limitation](https://wagonercounty.ok.gov/179/What-is-the-3-5-Limitation-cap) — Oklahoma yearly cap on increases in a homestead's fair cash value (5% for other property) (Oct 29, 2026) - [Oklahoma Housing Finance Agency: Homeownership FAQ](https://www.ohfa.org/homeownership-faq/) — OHFA homebuyer programs minimum credit score; OHFA maximum total debt-to-income ratio; OHFA homebuyer income limit (DREAM program, government loans, statewide) (Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Wagoner County Assessor: Homestead Exemption](https://www.wagonercounty.ok.gov/172/Homestead-Exemption) — Oklahoma homestead exemption (deducted from the home's gross assessed value) (Oct 29, 2026) - [Oklahoma Housing Finance Agency: Homebuyers](https://www.ohfa.org/homebuyers/) - [Oklahoma Housing Finance Agency: Homeownership FAQ](https://www.ohfa.org/homeownership-faq/) - [Wagoner County Assessor: The 3% / 5% limitation](https://wagonercounty.ok.gov/179/What-is-the-3-5-Limitation-cap) _General information, not financial advice._ --- # Oregon mortgages: high prices, capped tax values and OHCS help > Oregon home buying numbers: median home $497,500, what the median income buys, Measure 50 property taxes, no transfer tax and OHCS down-payment aid. URL: https://mortgage-math-us.com/location/oregon/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median Oregon home is valued at $497,500, 5.8 times the median household income — the 6th-highest among the states and DC. With 10% down at the 7.24% national average rate it costs about **$3,802 a month**. Property tax is moderate at 0.78% of value, helped by Measure 50’s 3% yearly limit on growth in taxable value; Oregon has no state transfer tax, and OHCS-funded local programs offer up to $60,000 in down-payment assistance. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value | $497,500 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US41) | 2024 ACS 1-year | | Median household income | $85,220/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US41) | 2024 ACS 1-year | | Effective property tax rate | 0.78% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US41) | 2024 ACS 1-year | | Yearly cap on growth in taxable value | 3% | [Oregon Department of Revenue: Oregon Property Tax Statistics FY 2025-26](https://www.oregon.gov/dor/programs/gov-research/Documents/FY%202025-26%20Oregon%20Property%20Tax%20Statistics%20Report-UA.pdf) | FY 2025-26 | | Assessed value as a share of market value | 53.6% | [Oregon Department of Revenue: Oregon Property Tax Statistics FY 2025-26](https://www.oregon.gov/dor/programs/gov-research/Documents/FY%202025-26%20Oregon%20Property%20Tax%20Statistics%20Report-UA.pdf) | FY 2025-26 | | State transfer tax | 0% | [ORS 306.815](https://www.oregonlegislature.gov/bills_laws/ors/ors306.html) | Oct 28, 2026 | | OHCS down-payment assistance, up to | $60,000 | [Oregon Housing and Community Services: Down Payment Assistance](https://www.oregon.gov/ohcs/homeownership/homebuyers/Pages/down-payment-assistance.aspx) | Oct 29, 2026 | ## Oregon’s price-to-income squeeze Oregon’s median home value is the 8th-highest among the states and DC, while its median household income of $85,220 sits much closer to the national $81,604. That mismatch shows up quickly in an affordability check. > **Worked example: Can the median Oregon household buy the median home?** > > Income $85,220 ÷ 12 × Freddie Mac’s 30% = **$2,131** a month for housing. At 7.24% with 10% down, Oregon’s tax ratio and the national insurance average, that supports about **$279,000** — $218,500 below the median value of $497,500. Buying the median home on that guideline takes roughly $152,000 a year. Closing a gap that size usually takes a combination of a lower price (a smaller home, a condo or a lower-cost market), more cash down and help such as OHCS assistance. The [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=OR&income=85220) shows what your income supports at higher debt-to-income limits lenders may allow. ## Monthly cost of the median Oregon home | Part of the payment | 10% down | 20% down | |---|---:|---:| | Principal and interest | $3,051 | $2,712 | | Property tax at 0.78% | $323 | $323 | | Insurance at the national $4.90 per $1,000 (Freddie Mac) | $203 | $203 | | PMI | $224 | $0 | | **Total** | **$3,802** | **$3,239** | *$497,500 home, 30-year fixed at 7.24%; PMI at the midpoint of Freddie Mac’s range* Putting 20% down removes PMI and lowers the payment by $563 a month, but it takes $49,750 more in cash. Wildfire and other hazards vary by location, so get an insurance quote for the specific address. Change any input in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=498000&down=10&tax=0.78&state=OR). ## Measure 50: why tax bills trail market values Oregon taxes a property on its **assessed value**, which is the lower of its real market value and its maximum assessed value. Under Measure 50, a property’s maximum assessed value can generally grow by no more than 3% a year unless it is improved. Because market values have grown faster than that, the Department of Revenue reports that assessed value statewide equals about 53.6% of real market value — on a home at the median value, that would be a taxable base near $266,660. That is why Oregon’s effective rate, measured against market value, is below the national 0.89%. The ratio differs from one property to the next, depending on its history, so two homes at the same price can carry very different bills. Don’t estimate from the price: ask for the property’s latest tax statement, which shows both values. ## No transfer tax — and a ban on new local ones Oregon has no state real estate transfer tax, and state law (ORS 306.815) bars cities, counties and districts from adopting one; only taxes already in effect in 1997 were allowed to continue, which is why Washington County still charges its own. Everywhere else, closing costs come down to lender fees, title insurance, escrow, recording and prepaid items — about $9,950–$24,875 on the median home at the CFPB’s 2%–5% rule of thumb. Line them up in the [closing cost estimator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=OR). ## OHCS down payment assistance and Flex Lending Oregon Housing and Community Services (OHCS) helps buyers two ways. - **Down Payment Assistance (DPA)** — OHCS awards funds to local organizations around the state, which offer buyers up to $60,000 or 20% of the price, whichever is less. Buyers must be first-time and/or first-generation homebuyers with income at or below 100% of area median income, complete first-time homebuyer education and meet with a certified housing counselor. Funds may come as a grant or a forgivable second lien, depending on the organization. - **Flex Lending** — fixed-rate first mortgages through approved lenders. FirstHome, for first-time buyers, comes with down payment assistance of up to 5% of the loan; NextStep, open to any buyer, pairs the mortgage with a forgivable or repayable second loan. > **Worked example: How far the assistance goes on the median home** > > Local DPA: 20% of $497,500 would be $99,500, so the dollar cap applies — up to **$60,000**, or 12% of the price. FirstHome: 5% of a $447,750 loan is about $22,388. Availability depends on the local organization serving your area. Compare the options in our [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/) and [down-payment grants guide](https://mortgage-math-us.com/first-time-buyers/grants/). ## Frequently asked questions ### Does Oregon have a real estate transfer tax? There is no state transfer tax, and Oregon law bars cities and counties from adopting new ones. Washington County’s tax, which was in place before the ban, is the main exception. ### How are property taxes calculated in Oregon? Taxes are based on assessed value, the lower of real market value and maximum assessed value. Measure 50 generally limits growth in maximum assessed value to 3% a year, so assessed value statewide averages about 53.6% of market value. ### What is the property tax rate in Oregon? Census figures put the median Oregon bill at $3,895 a year, about 0.78% of median home value. Bills vary widely with each property’s assessed value. ### How much down payment assistance can I get in Oregon? OHCS-funded local programs offer up to $60,000 or 20% of the price, whichever is less, to first-time or first-generation buyers at or below 100% of area median income. OHCS’s FirstHome loan includes up to 5% of the loan. ### Do I need 20% down to buy a house in Oregon? No. Conventional loans can go as low as 3% down and FHA loans 3.5%, though below 20% you pay mortgage insurance — about $224 a month on the median home with 10% down at the midpoint of Freddie Mac’s PMI range. ### How much income do you need to buy a house in Oregon? For the median $497,500 home with 10% down at today’s average rate, keeping housing under 30% of gross income takes roughly $152,000 a year. The median Oregon household earns $85,220. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US41) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US41) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US41) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [Oregon Department of Revenue: Oregon Property Tax Statistics FY 2025-26](https://www.oregon.gov/dor/programs/gov-research/Documents/FY%202025-26%20Oregon%20Property%20Tax%20Statistics%20Report-UA.pdf) — Oregon statewide ratio of assessed value to real market value; Oregon yearly limit on growth in a property's maximum assessed value (Measure 50) (FY 2025-26) - [Oregon Housing and Community Services: Down Payment Assistance](https://www.oregon.gov/ohcs/homeownership/homebuyers/Pages/down-payment-assistance.aspx) — OHCS Down Payment Assistance through local organizations, up to; OHCS Down Payment Assistance cap as a share of the purchase price (if lower than the dollar cap); OHCS down payment assistance income limit (share of area median income) (Oct 29, 2026) - [Oregon Housing and Community Services: Flex Lending](https://www.oregon.gov/ohcs/homeownership/homebuyers/Pages/default.aspx) — OHCS Flex Lending FirstHome down payment assistance, up to (share of the loan amount) (Oct 29, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price); Minimum down payment on some conventional loans (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [ORS 306.815](https://www.oregonlegislature.gov/bills_laws/ors/ors306.html) — State real estate transfer tax (Oct 28, 2026) - [Oregon Housing and Community Services: Down Payment Assistance](https://www.oregon.gov/ohcs/homeownership/homebuyers/Pages/down-payment-assistance.aspx) - [Oregon Housing and Community Services: Flex Lending](https://www.oregon.gov/ohcs/homeownership/homebuyers/Pages/default.aspx) - [ORS Chapter 306 (ORS 306.815: transfer taxes)](https://www.oregonlegislature.gov/bills_laws/ors/ors306.html) _General information, not financial advice._ --- # Pennsylvania mortgages: the realty transfer tax, PHFA help and monthly costs > Pennsylvania home buying numbers: the 1% state realty transfer tax plus local shares, the median home’s payment, tax rebates and PHFA’s K-FIT help. URL: https://mortgage-math-us.com/location/pennsylvania/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer A median-value Pennsylvania home ($277,600) costs about **$2,209 a month** with 10% down at the 7.24% national average rate, including property tax at 1.16% of value. The bigger surprise is at closing: the state realty transfer tax is 1% of the price — $2,776 on that home — and local governments usually levy their own on top. PHFA’s K-FIT can cover 5% of the price as assistance forgiven over 10 years. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | State realty transfer tax | 1% | [Pennsylvania Department of Revenue](https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/realty-transfer-tax) | Oct 28, 2026 | | Median home value | $277,600 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US42) | 2024 ACS 1-year | | Effective property tax rate | 1.16% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US42) | 2024 ACS 1-year | | Median year homes were built | 1966 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US42) | 2024 ACS 1-year | | PHFA K-FIT assistance (share of price) | 5% | [PHFA: Purchase Assistance](https://www.phfa.org/programs/assistance.aspx) | Oct 29, 2026 | | PHFA assistance minimum credit score | 660 | [PHFA: Purchase Assistance](https://www.phfa.org/programs/assistance.aspx) | Oct 29, 2026 | | Property Tax/Rent Rebate, up to | $1,000 | [PA Department of Revenue: Property Tax/Rent Rebate Program](https://www.pa.gov/agencies/revenue/ptrr) | Oct 29, 2026 | ## The realty transfer tax: 1% to the state, plus a local share Pennsylvania’s state realty transfer tax is 1% of the value of the property, the 5th-highest statewide rate among the states and DC. Local governments can levy their own realty transfer tax as well, and they may share it between the school district and the municipality. The county recorder of deeds usually collects the local tax together with the state tax when the deed is recorded, so ask the title company or recorder for the combined rate where you are buying. > **Worked example: State share of the transfer tax on the median home** > > $277,600 × 1% = **$2,776**, before any local tax. If you and the seller split the state share evenly — the assumption our closing cost estimator makes — your half is $1,388. Who pays is negotiable. The law makes the grantor and grantee **jointly and severally liable**, which means the state can collect from either side, so the purchase agreement should say how you and the seller divide the bill. Certain transfers are exempt, including some between family members. Price the state and local shares in the [closing cost estimator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=PA), alongside the lender, title and recording costs that the CFPB’s 2%–5% rule of thumb puts at $5,552–$13,880 on the median home. ## Paying for the median Pennsylvania home > **Worked example: $277,600 home, 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $249,840 | $1,703 | > | Property tax at 1.16% a year | $268 | > | Homeowners insurance at the national $4.90 per $1,000 (Freddie Mac) | $113 | > | PMI (midpoint of Freddie Mac’s range) | $125 | > | **Total** | **$2,209** | On Pennsylvania’s median household income of $77,545, Freddie Mac’s 30% guideline allows $1,939 a month for housing — about **$244,000** of home with 10% down, $33,600 below the median value. Buying the median home within that guideline takes roughly $88,000 a year. See where your own income lands in the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=PA&income=77545), or start from these figures in the [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=278000&down=10&tax=1.16&state=PA). ## Three PHFA ways to fund the down payment The Pennsylvania Housing Finance Agency (PHFA) pairs its first mortgages with second-loan assistance. Each option below needs a credit score of at least 660, and buyers can’t have more than a set amount of liquid assets left after closing. *PHFA assistance on the median-value home (checked Oct 2026)* | Option | How it works | On a $277,600 home | |---|---|---| | K-FIT (Keystone Forgivable in Ten Years) | 5% of the price or appraised value, no dollar cap; forgiven 10% a year | $13,880, about $1,388 forgiven each year | | Keystone Advantage Assistance Loan | Up to $6,000; 0% interest, repaid monthly over 10 years | $6,000, about $50 a month | | K-DATE | A share of the price as a 0% second mortgage with no payments, due when you sell, refinance or pay off the first mortgage | Varies by loan size and availability | K-FIT pairs with the Keystone Home Loan, which is limited to first-time buyers outside targeted counties and has income and price limits. The Keystone Government Loan (FHA, VA, USDA) and HFA Preferred conventional loan don’t require first-time status. On the median home, K-FIT’s $13,880 more than covers a 3.5% down payment ($9,716). Compare PHFA’s options with national ones in the [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/). ## Older houses: inspection first Half of Pennsylvania’s homes were built before 1966, the 5th-oldest housing stock among the states and DC. Budget for what age brings — older wiring, plumbing, heating systems and roofs — and make your offer contingent on a full [home inspection](https://mortgage-math-us.com/buying/appraisal-and-inspection/). If the house needs work, PHFA’s K-FIT and K-DATE come in Purchase & Improvement versions that fold repair costs into the purchase. ## Property taxes and the rebate program Pennsylvania’s effective property tax rate of 1.16% is the 14th-highest among the states and DC, above the national 0.89%; the median owner pays $3,214 a year. School district taxes are usually the largest part of the bill, so the district matters as much as the town — look up the parcel’s millage on the county assessment site before you offer. The state’s **Property Tax/Rent Rebate Program** pays up to $1,000 a year to homeowners and renters who are 65 or older, widows and widowers 50 or older, or people with disabilities 18 or older, with household income up to $48,110. The top rebate would cover about 31% of the median bill; the maximum goes only to the lowest incomes. Apply with the Department of Revenue each year. ## Frequently asked questions ### How much is the transfer tax in Pennsylvania? The state realty transfer tax is 1% of the property’s value — $2,776 on a $277,600 home — and local governments usually add their own. Ask the recorder of deeds for the combined rate. ### Who pays the realty transfer tax in Pennsylvania, buyer or seller? Both are jointly and severally liable under state law, so the purchase agreement decides how it is divided. Make sure yours spells it out. ### What is PHFA K-FIT? Keystone Forgivable in Ten Years provides 5% of the purchase price or appraised value as a second loan forgiven in equal yearly steps over 10 years. It pairs with a Keystone Home Loan and needs a credit score of at least 660. ### Do I have to be a first-time buyer for PHFA programs? Not always. The Keystone Home Loan requires first-time status unless you buy in a targeted county or area, but the Keystone Government Loan and HFA Preferred loan do not. ### What is the property tax rate in Pennsylvania? Census data put the median bill at $3,214 a year, about 1.16% of median home value. School district taxes are usually the largest part of a bill. ### Who qualifies for the Pennsylvania Property Tax/Rent Rebate? Homeowners and renters 65 or older, widows and widowers 50 or older and people with disabilities 18 or older, with household income up to $48,110. Rebates go up to $1,000. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US42) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US42) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US42) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [Pennsylvania Department of Revenue](https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/realty-transfer-tax) — State real estate transfer tax (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price); Minimum FHA down payment (Oct 28, 2026) - [PHFA: Purchase Assistance](https://www.phfa.org/programs/assistance.aspx) — PHFA Keystone Forgivable in Ten Years (K-FIT), share of the price or appraised value; PHFA K-FIT assistance is forgiven over; PHFA Keystone Advantage Assistance Loan, up to (Oct 29, 2026) - [PA Department of Revenue: Property Tax/Rent Rebate Program](https://www.pa.gov/agencies/revenue/ptrr) — Pennsylvania Property Tax/Rent Rebate, standard rebate up to; Pennsylvania Property Tax/Rent Rebate household income limit (Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US42) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [PA Department of Revenue: Realty transfer tax](https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/realty-transfer-tax) - [PHFA: Purchase assistance](https://www.phfa.org/programs/assistance.aspx) - [PHFA: Home purchase programs](https://www.phfa.org/programs/homepurchase.aspx) _General information, not financial advice._ --- # Rhode Island mortgages: the conveyance tax, RIHousing help and monthly costs > Rhode Island home buying numbers: the higher 0.75% conveyance tax, what the median home costs a month and RIHousing’s $15,000 down-payment loan. URL: https://mortgage-math-us.com/location/rhode-island/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median Rhode Island home is valued at $455,700; with 10% down at the 7.24% national average rate it costs about **$3,593 a month** with property tax and insurance. Since October 1, 2025 the state’s realty conveyance tax is 0.75% of the price — about $3,418 on that home — with a second tier on residential value above $800,000. First-time buyers can borrow $15,000 at 0% for the down payment through RIHousing’s 15kDPA, repaid only when they sell or move out. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value | $455,700 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US44) | 2024 ACS 1-year | | Median household income | $83,504/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US44) | 2024 ACS 1-year | | Effective property tax rate | 1.07% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US44) | 2024 ACS 1-year | | Realty conveyance tax | 0.75% | [Rhode Island Division of Taxation](https://tax.ri.gov/sites/g/files/xkgbur541/files/2025-08/NOTICE_2025-05_Conveyance_Tax_Increase.pdf) | Aug 21, 2025 | | Second conveyance tier above | $800,000 | [RI Division of Taxation: Notice 2025-05](https://tax.ri.gov/sites/g/files/xkgbur541/files/2025-08/NOTICE_2025-05_Conveyance_Tax_Increase.pdf) | Aug 21, 2025 | | RIHousing 15kDPA | $15,000 | [RIHousing: 15kDPA](https://www.rihousing.com/homebuyers/15k-dpa/) | Apr 30, 2026 | | RIHousing price limit (bond loans) | $915,883 | [RIHousing: Homebuyers](https://www.rihousing.com/homebuyers/) | Oct 29, 2026 | ## Rhode Island’s higher conveyance tax The realty conveyance tax is collected when the deed is recorded. On October 1, 2025 the rate rose to 0.75% of the price, the 8th-highest statewide rate among the states and DC, and a second tier now adds the same rate again on the part of a residential price above $800,000. > **Worked example: Conveyance tax at two prices** > > - Median-value home, $455,700: $455,700 × 0.75% ≈ **$3,418**. > - A $950,000 home: $7,125 on the full price plus $1,125 on the $150,000 above $800,000 = **$8,250**. Your purchase and sale agreement should say which side pays it. Buyers also cover lender fees, title insurance, recording and prepaid items; the CFPB’s 2%–5% rule of thumb works out to $9,114–$22,785 on the median home. The [closing cost estimator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=RI) includes the new rates. ## What the median Rhode Island home costs > **Worked example: $455,700 home, 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $410,130 | $2,795 | > | Property tax at 1.07% a year | $406 | > | Homeowners insurance at the national $4.90 per $1,000 (Freddie Mac) | $186 | > | PMI (midpoint of Freddie Mac’s range) | $205 | > | **Total** | **$3,593** | > > Coastal homes may need flood insurance on top, and older homes can cost more to insure. Rerun it with your quote in the [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=456000&down=10&tax=1.07&state=RI). ## A first-time buyer at the median income The median Rhode Island household earns $83,504. Spending Freddie Mac’s 30% of that on housing leaves $2,088 a month, which supports about **$265,000** with 10% down — $190,700 below the median value; buying the median home that way takes roughly $144,000 a year. If you can’t bring 10%, here is the same budget with the $15,000 15kDPA as the only down payment. *$265,000 home with a $15,000 15kDPA down payment (5.7% down), 30-year fixed at 7.24%* | Part of the payment | Monthly | |---|---:| | Principal and interest on $250,000 | $1,704 | | Property tax at 1.07% | $236 | | Insurance at the national $4.90 per $1,000 | $108 | | PMI | $125 | | 15kDPA (no monthly payment) | $0 | | **Total** | **$2,173** | The smaller down payment pushes the monthly cost above the $2,088 budget; lenders look at your full debt-to-income ratio rather than one rule of thumb. Test other combinations in the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=RI&income=83504). ## RIHousing programs Rhode Island Housing (RIHousing) lends through participating lenders and its own Loan Center. Its first-time buyer loans can finance the full price, and every first-time buyer must take a homebuyer education class before closing. *RIHousing down-payment help (checked Oct 2026)* | Program | Amount | Terms | Minimum score | |---|---|---|---| | 15kDPA | $15,000 | 0% interest, no monthly payments; repaid when you sell, transfer or stop living in the home | 660 | | Extra Assistance | Up to $20,000 (capped at a share of the price) | Second mortgage at your first-mortgage rate, repaid over 15 years | Lower than 15kDPA’s | Both are for first-time buyers of one- to four-family homes or condos used as a primary residence. For loans funded by mortgage revenue bonds, the purchase price can’t exceed $915,883 — the median home is well under that. Loan Center income limits vary by area; in the Providence area a one- or two-person household can earn up to $134,520, and the state’s median household income is below that. Participating lenders can serve eligible buyers at any income. RIHousing also runs a first-generation pilot in one Newport neighborhood. More on stacking help in the [down-payment grants guide](https://mortgage-math-us.com/first-time-buyers/grants/). ## Old houses and town-by-town tax bills Half of Rhode Island’s homes were built before 1964, the 3rd-oldest housing stock among the states and DC. Older homes can hide lead paint, aging heating systems and outdated wiring; make the offer contingent on an [inspection](https://mortgage-math-us.com/buying/appraisal-and-inspection/) and price any work before you choose a down payment. Property tax is set by each city and town. The median bill is $4,886 a year, the 9th-highest among the states and DC, and the effective rate of 1.07% is above the US 0.89%. Ask the local assessor whether the town offers a homestead exemption for owner-occupied homes and how to file for it. ## Frequently asked questions ### What is the conveyance tax in Rhode Island? Since October 1, 2025 it is 0.75% of the price, plus the same rate again on residential value above $800,000. On a median-value $455,700 home that comes to about $3,418. ### Does Rhode Island have down payment assistance? Yes. RIHousing’s 15kDPA lends first-time buyers $15,000 at 0% with no monthly payments, and Extra Assistance offers up to $20,000 as a second mortgage repaid over 15 years. ### What credit score do I need for RIHousing’s 15kDPA? At least 660. You must also be a first-time buyer, meet RIHousing’s price and income limits and complete a homebuyer education course. ### Is the 15kDPA forgivable? No. It is a 0% loan with no monthly payments, but the full amount is due when you sell or transfer the home or stop living in it as your primary residence. ### What is the property tax rate in Rhode Island? Census data put the median bill at $4,886 a year, about 1.07% of median home value. Each city and town sets its own rate. ### How much income do I need to buy a house in Rhode Island? For the median $455,700 home with 10% down at today’s average rate, keeping housing under 30% of gross income takes roughly $144,000 a year. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US44) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US44) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US44) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [RI Division of Taxation: Notice 2025-05](https://tax.ri.gov/sites/g/files/xkgbur541/files/2025-08/NOTICE_2025-05_Conveyance_Tax_Increase.pdf) — Rhode Island conveyance tax: second tier applies to residential value above; State real estate transfer tax (Aug 21, 2025) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [RIHousing: 15kDPA](https://www.rihousing.com/homebuyers/15k-dpa/) — RIHousing 15kDPA (0% loan, no monthly payments); RIHousing 15kDPA minimum credit score (Apr 30, 2026) - [RIHousing: Homebuyers](https://www.rihousing.com/homebuyers/) — RIHousing maximum purchase price, bond-financed first-time buyer loans; RIHousing Loan Center income limit, Providence area, households of one or two (Oct 29, 2026) - [RIHousing: Extra Assistance](https://www.rihousing.com/homebuyers/extra-assistance/) — RIHousing Extra Assistance second mortgage, up to; RIHousing Extra Assistance second mortgage term (Apr 30, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US44) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [RIHousing: Homebuyers](https://www.rihousing.com/homebuyers/) - [RIHousing: 15kDPA](https://www.rihousing.com/homebuyers/15k-dpa/) - [RI Division of Taxation: Notice 2025-05, conveyance tax increase](https://tax.ri.gov/sites/g/files/xkgbur541/files/2025-08/NOTICE_2025-05_Conveyance_Tax_Increase.pdf) _General information, not financial advice._ --- # Buying a home in South Carolina: payments, the 4% ratio and SC Housing > South Carolina mortgage numbers: the 0.45% effective property tax, the legal-residence assessment ratio, deed fees and SC Housing down payment help. URL: https://mortgage-math-us.com/location/south-carolina/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer A median-value South Carolina home ($299,500) costs about **$2,206 a month** with 10% down at the 7.24% national average rate, and only $112 of that is property tax. A home you live in is assessed at 4% of market value instead of the 6% used for second homes and most other property, which helps hold the effective tax rate to 0.45%, below the national 0.89%. SC Housing’s Palmetto Home Advantage adds forgivable help of up to 4% of the loan amount. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in South Carolina | $299,500 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US45) | 2024 ACS 1-year | | Median household income | $72,350/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US45) | 2024 ACS 1-year | | Effective property tax rate | 0.45% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US45) | 2024 ACS 1-year | | Assessment ratio, legal residence | 4% | [South Carolina Department of Revenue: Property Tax Exemptions](https://dor.sc.gov/property/property-tax-exemptions) | Oct 29, 2026 | | Assessment ratio, second homes and other property | 6% | [SCDOR Individual Property Tax manual, Chapter 5 (S.C. Code § 12-43-220)](https://dor.sc.gov/sites/dor/files/Documents/Policy%20Manuals/SCTIED-2025-Chapter%205.pdf) | 2025 | | Deed recording fee (state + county) | 0.37% | [South Carolina Department of Revenue](https://dor.sc.gov/tax-index/deed-recording-fee) | Oct 28, 2026 | | Palmetto Home Advantage help, up to (share of loan) | 4% | [SC Housing: Palmetto Home Advantage](https://schousing.sc.gov/homebuyers/programs-homebuyers/palmetto-home-advantage) | Oct 29, 2026 | | Homestead Exemption, 65+ or disabled | $50,000 | [South Carolina Department of Revenue: Property Tax Exemptions](https://dor.sc.gov/property/property-tax-exemptions) | Oct 29, 2026 | ## Why South Carolina tax bills start low South Carolina homeowners pay a median $1,337 a year in property tax, according to the Census Bureau — the 6th-lowest amount among the 50 states and DC — on homes with a median value of $299,500. That is an effective rate of 0.45%, the 5th-lowest ratio in the country. The assessment ratio does much of the work. Counties tax a home that is your legal residence on 4% of its fair market value; a second home, a vacation home, commercial property and vacant land are assessed at 6%. Local millage is applied to that assessed value, so the same house can carry two very different bills depending on whether its owner lives in it. > **Rule: The legal-residence ratio is not automatic** > > Apply to your county assessor. You certify that the home is your legal residence and domicile, that you don’t claim residency anywhere else and that you don’t claim the lower ratio on another home. The Department of Revenue’s manual says the application is due before the first penalty date, and a residence rented out for more than 72 days in a tax year is disqualified. Once approved, you don’t reapply while the home stays eligible. ## A month of payments on the median South Carolina home > **Worked example: $299,500 home (South Carolina median value), 10% down, 30-year fixed at 7.24%** > > | Part of the payment | As your legal residence | Same home taxed as a second home | > |---|---:|---:| > | Principal and interest on $269,550 | $1,837 | $1,837 | > | Property tax | $112 | $168 | > | Homeowners insurance at $4.90 per $1,000 of value (national average) | $122 | $122 | > | PMI (midpoint of Freddie Mac’s range) | $135 | $135 | > | **Total** | **$2,206** | **$2,263** | > > The second column applies the same millage to an assessment at 6% instead of 4% — 50% more taxable value. Real bills also differ because some levies treat the two classes differently, so ask the county for an estimate before buying a second home. Insurance is the line to check first. The example uses Freddie Mac’s national average premium per $1,000 of value; quotes near the coast can run well above it because of wind and flood exposure, and flood insurance is a separate policy. Open the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=300000&down=10&tax=0.45&state=SC) with these figures loaded and change the price, down payment or rate. ## What a South Carolina median income buys The median South Carolina household earns $72,350 a year. Keeping housing costs within Freddie Mac’s guideline of 30% of gross income leaves $1,809 a month, which supports a home of about **$246,000** with 10% down under the same rate, tax and insurance assumptions — $53,500 less than the median home value. To buy the median home on that guideline, a household needs roughly $88,000 a year. Owning is more common than nationally here: 72.3% of occupied homes are lived in by their owners, against 65.3% for the US. The housing stock is also newer than the national median — the median South Carolina home was built in 1993, the 7th-newest stock of the 50 states and DC. Test your own income and debts in the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=SC&income=72350). ## SC Housing’s forgivable down payment options SC Housing, the state’s housing finance agency, lends through participating banks and mortgage companies. Its two main purchase programs both pair a fixed-rate first mortgage with down payment assistance that you don’t repay if you keep the home: | Program | Help available | Main rules | |---|---|---| | Palmetto Home Advantage | Forgivable assistance of up to 4% of the loan amount (lower options available), no monthly payment | Borrower income up to $135,750 (not total household income); minimum credit score 640; repeat and move-up buyers eligible; conventional, FHA, VA or USDA first mortgage | | SC Housing Homebuyer Program | 0% second lien with no monthly payments | Forgiven after 15 years if you stay in the home; county income and sales price limits | On the median home bought with the 3% minimum down payment on a conventional loan, the top Palmetto Home Advantage option comes to about $11,621 — more than the $8,985 down payment, leaving about $2,636 toward closing costs. Choosing assistance can mean a slightly higher rate on the first mortgage, so compare offers from a participating lender with and without it. See how state programs fit together in [first-time home buyer programs](https://mortgage-math-us.com/first-time-buyers/programs/). ## The deed recording fee at closing South Carolina’s version of a transfer tax is the deed recording fee: a state portion and a county portion that together come to 0.37% of the price. On the median home that is about $1,108. South Carolina adds no separate state tax for recording the mortgage itself. Your purchase contract says which side pays the fee, so check it against the Closing Disclosure. Everything else follows the usual pattern — lender fees, title insurance, prepaid interest and escrow deposits — and the CFPB’s typical range of 2%–5% of the price works out to $5,990–$14,975 on the median home. The [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=SC&price=300000) adds the deed fee for you. ## Property tax relief for older and disabled owners On top of the 4% ratio, the Homestead Exemption removes the first $50,000 of fair market value of a legal residence from property tax for owners who are 65 or older, totally and permanently disabled, or legally blind — about 17% of the median home’s value. The county auditor administers it, and your legal residence must be approved before the exemption is granted. The state also authorized a temporary additional exemption for some recipients for tax year 2026. ## Frequently asked questions ### What is the property tax rate in South Carolina? Census data put the median South Carolina homeowner’s bill at $1,337 a year, an effective rate of about 0.45% of home value. The rate you pay depends on your county and city millage and on whether the home is assessed as your legal residence at 4% or at 6%. ### How do I get the 4% assessment ratio in South Carolina? Apply to your county assessor once the home is your legal residence. You certify that it is your domicile and that you don’t claim the lower ratio on another home. Renting it out for more than 72 days in a tax year disqualifies it. ### Does South Carolina have first-time home buyer programs? Yes. SC Housing’s Homebuyer Program pairs a fixed-rate loan with forgivable assistance that is forgiven after 15 years, and Palmetto Home Advantage offers forgivable help of up to 4% of the loan amount without a first-time buyer requirement. Both work through participating lenders. ### What credit score do I need for SC Housing? Palmetto Home Advantage requires a minimum credit score of 640 for all of its options, and the borrower income limit is $135,750. ### How much is the deed recording fee in South Carolina? The state and county portions together come to 0.37% of the price — about $1,108 on the median $299,500 home. The contract decides who pays it. ### How much income do I need to buy a house in South Carolina? To keep housing under 30% of gross income on the median home with 10% down at today’s average rate, you need roughly $88,000 a year, assuming no other large debts. The median South Carolina household earns $72,350. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US45) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US45) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US45) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [South Carolina Department of Revenue: Property Tax Exemptions](https://dor.sc.gov/property/property-tax-exemptions) — South Carolina assessment ratio for an owner-occupied legal residence; South Carolina Homestead Exemption for owners 65+, disabled or blind (fair market value of the legal residence exempt) (Oct 29, 2026) - [SCDOR Individual Property Tax manual, Chapter 5 (S.C. Code § 12-43-220)](https://dor.sc.gov/sites/dor/files/Documents/Policy%20Manuals/SCTIED-2025-Chapter%205.pdf) — South Carolina assessment ratio for second homes, vacation homes and other real property; A South Carolina legal residence rented out for more than this many days in a tax year loses the 4% ratio (2025) - [South Carolina Department of Revenue](https://dor.sc.gov/tax-index/deed-recording-fee) — State real estate transfer tax (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price); Minimum down payment on some conventional loans (Oct 28, 2026) - [SC Housing: Palmetto Home Advantage](https://schousing.sc.gov/homebuyers/programs-homebuyers/palmetto-home-advantage) — SC Housing Palmetto Home Advantage forgivable down payment assistance, up to (share of the loan amount); SC Housing Palmetto Home Advantage borrower income limit; SC Housing Palmetto Home Advantage minimum credit score (Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US45) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=010XX00US) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US45) — Median year homes were built (2024 ACS 1-year) - [SC Housing: SC Housing Homebuyer Program](https://schousing.sc.gov/homebuyers/programs-homebuyers/sc-housing-homebuyer-program) — SC Housing Homebuyer Program down payment assistance is forgiven after (Oct 29, 2026) - [SC Housing: Palmetto Home Advantage](https://schousing.sc.gov/homebuyers/programs-homebuyers/palmetto-home-advantage) - [SC Housing: SC Housing Homebuyer Program](https://schousing.sc.gov/homebuyers/programs-homebuyers/sc-housing-homebuyer-program) - [South Carolina Department of Revenue: Property tax exemptions](https://dor.sc.gov/property/property-tax-exemptions) _General information, not financial advice._ --- # South Dakota home buying: monthly costs, property tax and SD Housing loans > South Dakota mortgage numbers: median price $289,600, a 1.02% property tax ratio, below-average rents, the transfer fee and SD Housing Fixed Rate Plus. URL: https://mortgage-math-us.com/location/south-dakota/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median South Dakota home is worth $289,600; with 10% down at the 7.24% national average rate it costs about **$2,271 a month**, including $246 of property tax at the state’s effective rate of 1.02%, which is above the national 0.89%. Rent is the competition: the median renter pays $999/mo. SD Housing’s Fixed Rate Plus loans add down payment and closing-cost help of up to 5% of the loan amount as a 0% second mortgage with no payments. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in South Dakota | $289,600 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US46) | 2024 ACS 1-year | | Median household income | $76,881/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US46) | 2024 ACS 1-year | | Effective property tax rate | 1.02% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US46) | 2024 ACS 1-year | | Median gross rent | $999/mo | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US46) | 2024 ACS 1-year | | SD Housing Fixed Rate Plus help, up to (share of loan) | 5% | [South Dakota Housing: Downpayment Assistance](https://www.sdhousing.org/ready-to-buy/available-programs/downpayment-assistance) | Oct 29, 2026 | | SD Housing first-time buyer price limit | $410,000 | [South Dakota Housing: First-Time Homebuyer](https://www.sdhousing.org/ready-to-buy/first-time-homebuyer) | Oct 29, 2026 | | State transfer fee | 0.1% | [SDCL 43-4-21](https://sdlegislature.gov/api/Statutes/43-4-21.html?all=true) | Oct 28, 2026 | ## How South Dakota compares *South Dakota and the US (Census ACS 2024 1-year)* | | South Dakota | United States | |---|---:|---:| | Median home value | $289,600 | $360,600 | | Median household income | $76,881 | $81,604 | | Home value ÷ income | 3.8× | 4.4× | | Effective property tax rate | 1.02% | 0.89% | | Median gross rent | $999/mo | $1,487/mo | | Median owner costs with a mortgage | $1,739/mo | $2,035/mo | | Owner-occupied share of homes | 68.3% | 65.3% | Prices sit below the national median, and the median home costs 3.8 times the median household income. Two figures stand out. Rent is the 8th-lowest of the 50 states and DC, which makes renting a real alternative, and the effective property tax rate is the 18th-highest, which pushes up the cost of owning. ## Monthly cost of the median South Dakota home > **Worked example: $289,600 home (South Dakota median value), 10% down, 30-year fixed at 7.24%** > > | Part of the payment | South Dakota | Same home at the US tax ratio | > |---|---:|---:| > | Principal and interest on $260,640 | $1,776 | $1,776 | > | Property tax | $246 | $215 | > | Homeowners insurance at $4.90 per $1,000 of value (national average) | $118 | $118 | > | PMI (midpoint of Freddie Mac’s range) | $130 | $130 | > | **Total** | **$2,271** | **$2,240** | > > South Dakota’s tax ratio costs $31 a month more than the national ratio would on the same home. Insurance in the example uses Freddie Mac’s national average premium per $1,000 of value. Hail and wind exposure can push South Dakota quotes above that, so get a quote before you make an offer. To change the inputs, open the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=290000&down=10&tax=1.02&state=SD) with South Dakota’s figures filled in. ## What a South Dakota income supports The median household in South Dakota earns $76,881. Following Freddie Mac’s suggestion to keep housing under 30% of gross income gives a monthly budget of $1,922. With 10% down at today’s average rate and South Dakota’s tax ratio, that supports a price of about **$245,000** — $44,600 short of the median home value. A larger down payment, a less expensive home or a second income are the usual ways to close that gap; the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=SD&income=76881) shows the price at several debt-to-income limits. ## SD Housing’s Fixed Rate Plus loans The South Dakota Housing Development Authority offers 30-year fixed-rate first mortgages through participating lenders, plus a Fixed Rate Plus version that adds down payment and closing-cost help equal to a share of the loan amount — up to 5%. The help is a second mortgage at 0% interest with no monthly payments and no added fees, due when you sell or pay off the first loan. Rates on the Plus loans run slightly higher than the standard fixed rate. For the first-time homebuyer program, you must not have owned a home in the past 3 years, your income must be within SD Housing’s limits and the price must be $410,000 or less — so a home at the state median value fits under it. > **Worked example: Cash to close on the median home with 3% down** > > | | Without assistance | With Fixed Rate Plus at 5% | > |---|---:|---:| > | Down payment | $8,688 | $8,688 | > | Closing costs at the CFPB’s low end (2%) | $5,792 | $5,792 | > | SD Housing assistance | — | −$14,046 | > | **Cash you bring** | **$14,480** | **$434** | > > The assistance is repaid when you sell or refinance, so it lowers your cash to close but not the amount you owe. ## South Dakota property tax: above the national ratio Census figures put the median South Dakota homeowner’s bill at $2,940 a year. As a rule of thumb, every $100,000 of home value costs about $85 a month in property tax at the state’s effective rate. The bill on a specific house depends on its county, city and school district levies and on how the county assessor values it, so ask for the seller’s latest tax statement. If your lender escrows taxes, a change in the levy shows up in your payment after the annual escrow review. ## Closing costs and the South Dakota transfer fee South Dakota charges a real estate transfer fee of 0.1% of the value — about $290 on the median home. South Dakota charges no state tax for recording the mortgage. The rest of your closing costs come from the lender, title company and prepaid taxes and insurance; the CFPB’s typical range of 2%–5% of the price comes to $5,792–$14,480 here. Estimate yours in the [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=SD&price=290000). ## Renting or buying in South Dakota The median South Dakota rent of $999/mo is below the national $1,487/mo, and it is $1,272 a month less than owning the median home with 10% down — before repairs. Buying pays off when you stay long enough for equity and price growth to outrun the monthly difference and the costs of buying and selling. The [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=SD&price=290000&rent=999) opens with South Dakota’s median price and rent so you can find that break-even year. ## Frequently asked questions ### What is the property tax rate in South Dakota? Census data put the median South Dakota homeowner’s bill at $2,940 a year, an effective rate of about 1.02% of home value against 0.89% nationally. Your bill depends on the county, city and school district levies where the home sits. ### Does South Dakota have a first-time home buyer program? Yes. SD Housing’s first-time homebuyer program is for buyers who haven’t owned a home in the past 3 years, with income limits and a $410,000 purchase price limit. Fixed Rate Plus loans add help of up to 5% of the loan amount. ### How does SD Housing down payment assistance work? It is a second mortgage at 0% interest with no monthly payments and no added fees. You repay it when you sell the home or pay off the first mortgage, for example by refinancing. ### How much is a mortgage payment on a median South Dakota home? About $2,271 a month on the median $289,600 home with 10% down at the 7.24% average rate, including property tax, insurance at the national average and PMI. ### Does South Dakota have a real estate transfer tax? South Dakota charges a transfer fee of 0.1% of the property’s value, about $290 on the median home. ### Is it cheaper to rent or buy in South Dakota? Month to month, renting usually is: the median rent is $999/mo, against about $2,271 to own the median home with 10% down. Buying can still come out ahead if you stay long enough to build equity. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US46) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US46) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US46) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US46) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [SDCL 43-4-21](https://sdlegislature.gov/api/Statutes/43-4-21.html?all=true) — State real estate transfer tax (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price); Minimum down payment on some conventional loans (Oct 28, 2026) - [South Dakota Housing: Downpayment Assistance](https://www.sdhousing.org/ready-to-buy/available-programs/downpayment-assistance) — SD Housing Fixed Rate Plus down payment and closing-cost assistance, up to (share of the loan amount) (Oct 29, 2026) - [South Dakota Housing: First-Time Homebuyer](https://www.sdhousing.org/ready-to-buy/first-time-homebuyer) — SD Housing first-time homebuyer program purchase price limit; SD Housing first-time buyer: no home owned in the past (Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=040XX00US46) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=010XX00US) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US46) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=010XX00US) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [South Dakota Housing: Downpayment assistance](https://www.sdhousing.org/ready-to-buy/available-programs/downpayment-assistance) - [South Dakota Housing: First-time homebuyer](https://www.sdhousing.org/ready-to-buy/first-time-homebuyer) _General information, not financial advice._ --- # Tennessee home loans: payments, recordation taxes and THDA help > Tennessee mortgage math: $2,450/mo on the median home, the 0.37% transfer and 0.115% mortgage taxes, property tax and THDA Great Choice Plus. URL: https://mortgage-math-us.com/location/tennessee/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median Tennessee home is worth $332,600 and costs about **$2,450 a month** with 10% down at the 7.24% national average rate; $125 of that is property tax at the state’s 0.45% effective rate, below the national 0.89%. Tennessee adds two taxes at closing: a 0.37% transfer tax on the price and a 0.115% tax on the mortgage, about $1,573 together on the median home. THDA’s Great Choice Plus adds up to $15,000 in down payment help. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in Tennessee | $332,600 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US47) | 2024 ACS 1-year | | Median household income | $71,997/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US47) | 2024 ACS 1-year | | Effective property tax rate | 0.45% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US47) | 2024 ACS 1-year | | Realty transfer tax (share of price) | 0.37% | [Tennessee Department of Revenue](https://www.tn.gov/revenue/taxes/local-taxes/recordation-taxes/due-date-tax-rate.html) | May 6, 2024 | | Mortgage tax (share of the loan) | 0.115% | [Tennessee Department of Revenue](https://www.tn.gov/revenue/taxes/local-taxes/recordation-taxes/due-date-tax-rate.html) | May 6, 2024 | | THDA Great Choice Plus, up to | $15,000 | [Tennessee Housing Development Agency: Down Payment Assistance](https://thda.org/homebuyers/down-payment-assistance/) | Oct 29, 2026 | | THDA minimum credit score | 640 | [Tennessee Housing Development Agency: Great Choice Home Loan](https://thda.org/homebuyers/first-time-homebuyers/) | Oct 29, 2026 | ## Prices against Tennessee paychecks Tennessee’s median home value of $332,600 is below the national median, and its median household income of $71,997 is below the national figure — the 11th-lowest of the 50 states and DC. Put together, the median home costs 4.6 times the median income, the 17th-highest ratio in the country and above the US ratio of 4.4. *Tennessee, Nashville and the US (Census ACS 2024 1-year)* | | Tennessee | Nashville-Davidson | United States | |---|---:|---:|---:| | Median home value | $332,600 | $438,800 | $360,600 | | Median household income | $71,997 | $80,090 | $81,604 | | Home value ÷ income | 4.6× | 5.5× | 4.4× | | Effective property tax rate | 0.45% | 0.56% | 0.89% | | Median gross rent | $1,284/mo | $1,669/mo | $1,487/mo | | Owner-occupied share | 66.8% | 51.8% | 65.3% | Nashville’s median value is higher than the state’s and its effective tax rate is higher; the [Nashville housing guide](https://mortgage-math-us.com/location/nashville-tn/) covers Metro’s numbers and local programs in detail. ## The median Tennessee home, month by month > **Worked example: $332,600 home (Tennessee median value), 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $299,340 | $2,040 | > | Property tax at 0.45% a year | $125 | > | Homeowners insurance at $4.90 per $1,000 of value (national average) | $136 | > | PMI (midpoint of Freddie Mac’s range) | $150 | > | **Total** | **$2,450** | > > Principal and interest make up $2,040 of the $2,450, so the interest rate moves this payment far more than the tax rate does. The insurance line uses Freddie Mac’s national average per $1,000 of value; Tennessee premiums vary with roof age, storm exposure and the insurer, so price a policy early. Try other prices or down payments in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=333000&down=10&tax=0.45&state=TN). ## How much house a Tennessee median income buys On $71,997 a year, Freddie Mac’s guideline of spending no more than 30% of gross income on housing allows $1,800 a month. With 10% down at today’s average rate, the state tax ratio and the national insurance average, that supports a home of about **$244,000** — $88,600 less than the median value. Buying the median home within the guideline takes a household income of roughly $98,000. The [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=TN&income=71997) shows what your own income and debts support. ## Tennessee’s transfer tax and mortgage tax at closing Tennessee taxes both documents you record when you buy with a loan. The realty transfer tax is 0.37% of the purchase price, and the mortgage tax is 0.115% of the debt above the first $2,000. > **Worked example: Recordation taxes on the median Tennessee home with 10% down** > > | Tax | Based on | Amount | > |---|---|---:| > | Realty transfer tax | $332,600 price | $1,231 | > | Mortgage tax | $299,340 loan, less the exempt $2,000 | $342 | > | **Total** | | **$1,573** | > > That is about 0.47% of the price before any lender, title or prepaid costs. Your purchase contract sets which side pays the transfer tax. The mortgage tax is tied to your loan, so it normally sits with the buyer’s costs, and a larger down payment trims it. Add lender fees, title insurance and prepaid items and the CFPB’s typical range of 2%–5% comes to $6,652–$16,630 on the median home. The [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=TN&price=333000) applies both Tennessee taxes automatically. ## THDA Great Choice Plus: deferred or amortizing The Tennessee Housing Development Agency’s Great Choice Home Loan is a 30-year fixed-rate mortgage, most often insured by FHA or USDA, made through participating lenders. Every borrower needs a credit score of at least 640, and a homebuyer education class is required if you take down payment assistance. Great Choice Plus offers two kinds: | Option | Amount | Terms | |---|---|---| | Deferred | Up to $10,000 | 0% second mortgage, no payments; forgiven after 10 years; due in full if you sell or refinance sooner | | Amortizing | Up to 5% of the sales price, capped at $15,000 | 30-year loan at the first mortgage’s rate, repaid monthly | On the median home the amortizing option could reach $15,000 (the cap applies on the median home), which at the example rate adds about $102 a month. The deferred option adds nothing to the payment but has to be repaid if you leave early, so weigh how long you expect to stay. THDA serves first-time, repeat and military buyers; see [homebuyer education](https://mortgage-math-us.com/first-time-buyers/homebuyer-education/) for what the class covers. ## Below-average property tax rates, set by counties and cities Tennessee’s effective rate of 0.45% is the 6th-lowest among the 50 states and DC. The median homeowner pays $1,488 a year, $1,723 less than the national median bill of $3,211. Rates are set locally, and a home inside city limits can owe both a county and a city rate, so compare the tax history of each listing rather than relying on a statewide average. ## Frequently asked questions ### What is the property tax rate in Tennessee? Census data put the median Tennessee homeowner’s bill at $1,488 a year, an effective rate of about 0.45% of home value against 0.89% nationally. County and city rates decide the bill on a specific home. ### How much is the transfer tax in Tennessee? The realty transfer tax is 0.37% of the purchase price — about $1,231 on the median $332,600 home. The contract decides who pays it. ### What is the mortgage tax in Tennessee? Tennessee taxes recorded mortgage debt at 0.115% of the amount above the first $2,000. On a $299,340 loan that is about $342. ### What is THDA Great Choice Plus? Down payment and closing-cost help paired with a THDA Great Choice Home Loan: either a deferred 0% loan of up to $10,000 forgiven after 10 years, or an amortizing loan of up to 5% of the sales price, capped at $15,000. ### What credit score do I need for a THDA loan? THDA requires a credit score of at least 640 for everyone on the loan application. ### How much income do you need to buy a house in Tennessee? To keep housing under 30% of gross income on the median home with 10% down at today’s average rate, roughly $98,000 a year, assuming few other debts. The median Tennessee household earns $71,997. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US47) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US47) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US47) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US4752006) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US4752006) — Median household income (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [Tennessee Department of Revenue](https://www.tn.gov/revenue/taxes/local-taxes/recordation-taxes/due-date-tax-rate.html) — State real estate transfer tax; State tax on recording a mortgage; Tennessee mortgage tax: exempt first part of the debt (May 6, 2024) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [Tennessee Housing Development Agency: Down Payment Assistance](https://thda.org/homebuyers/down-payment-assistance/) — THDA Great Choice Plus amortizing assistance, up to (share of the sales price); THDA Great Choice Plus amortizing assistance, up to; THDA Great Choice Plus deferred (forgivable) assistance, up to (Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US4752006) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US47) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=160XX00US4752006) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US47) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US4752006) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=010XX00US) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [Tennessee Housing Development Agency: Great Choice Home Loan](https://thda.org/homebuyers/first-time-homebuyers/) — THDA Great Choice Home Loan minimum credit score (every borrower) (Oct 29, 2026) - [THDA: Down payment assistance](https://thda.org/homebuyers/down-payment-assistance/) - [THDA: Great Choice Home Loan](https://thda.org/homebuyers/first-time-homebuyers/) - [Tennessee Department of Revenue: Recordation tax rates](https://www.tn.gov/revenue/taxes/local-taxes/recordation-taxes/due-date-tax-rate.html) _General information, not financial advice._ --- # Texas mortgages: payments, property taxes and buyer programs > Texas mortgage numbers: 1.31% effective property tax, $140,000 homestead exemption, no transfer tax, insurance costs and TDHCA down-payment help. URL: https://mortgage-math-us.com/location/texas/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer A median-value Texas home ($313,200) costs about **$2,695 a month** with 10% down at the 7.24% national average rate — property tax and insurance make up $633 of that. Texas has no state property tax and no real estate transfer tax, but local property taxes average 1.31% of value, and first-time buyers can get 2%–5% of the loan in down-payment help from TDHCA. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in Texas | $313,200 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US48) | 2024 ACS 1-year | | Median property tax paid | $4,108/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US48) | 2024 ACS 1-year | | Effective property tax rate | 1.31% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US48) | 2024 ACS 1-year | | Median household income | $79,721/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US48) | 2024 ACS 1-year | | School homestead exemption | $140,000 | [Texas Comptroller](https://comptroller.texas.gov/taxes/property-tax/exemptions/) | Dec 11, 2025 | | Average homeowners premium | $3,489/yr | [Texas Department of Insurance](https://www.tdi.texas.gov/general/texas-homeowners-insurance-market-overview.html) | 2025 (preliminary) | | TDHCA down-payment help, up to | 5% | [Texas Department of Housing and Community Affairs](https://welcomehome.tdhca.texas.gov/uploads/My-First-Texas-Home-Program-Matrix-TMS.pdf) | Program matrix Aug 17, 2026 | | 2026 conforming loan limit | $832,750 | [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) | 2026 limit | ## What a mortgage payment looks like in Texas Texas homes are cheaper than the country as a whole — the Census Bureau puts the median owner-occupied home at $313,200 against $360,600 nationally — but two costs that ride along with the mortgage are higher than average. Property tax takes 1.31% of value a year (the US ratio is 0.89%), and the average homeowners premium reached $3,489/yr according to the Texas Department of Insurance. > **Worked example: Median Texas home, 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Texas | Same home at the US tax ratio | > |---|---:|---:| > | Principal and interest on $281,880 | $1,921 | $1,921 | > | Property tax | $342 | $232 | > | Homeowners insurance (TDI state average) | $291 | $291 | > | PMI (midpoint of Freddie Mac’s range) | $141 | $141 | > | **Total** | **$2,695** | **$2,585** | > > The Texas property tax alone adds $110 a month compared with the national ratio on the same price. On the state’s median household income of $79,721/yr, keeping housing under Freddie Mac’s 30% guideline gives a budget of $1,993 a month — enough for a home of roughly $232,000 with 10% down at today’s average rate once Texas taxes and insurance are counted. Try your own numbers in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?state=TX); choosing Texas loads the state tax ratio. ## Property tax in Texas There is no state property tax in Texas; every bill comes from local units — school districts, counties, cities and special districts — and each sets its own rate on the value set by the county appraisal district. That is why two homes at the same price in neighboring suburbs can carry very different tax bills, and why the listing’s past tax amount is a better guide than any statewide figure. The biggest lever you control is the **residence homestead exemption**. School districts must exempt $140,000 of a homestead’s value from school taxes, and owners who are 65 or older or disabled get an additional $60,000. The exemption applies to school district taxes, so its value depends on your district’s rate: every $1.00 of school tax rate per $100 of value is worth $1,400 a year on the basic $140,000 exemption. > **Tip: File for the homestead exemption early** > > Apply with your county appraisal district once the home is your principal residence. The Comptroller lists the general filing deadline as before May 1, and the exemption is not automatic — it has to be claimed. If your lender collects taxes through an escrow account, a rate change or a reappraisal shows up as an escrow adjustment at the annual review rather than as a separate bill. ## Homeowners insurance in Texas Insurance has become one of the fastest-rising parts of a Texas housing budget. TDI’s statistical data show the average annual homeowners premium climbing from $1,791/yr in 2016 to $3,291/yr in 2024 and $3,489/yr in 2025 — an increase of $1,698 a year, or $142 a month, over nine years. On the coast, wind and hail coverage can be harder to buy. The Texas Windstorm Insurance Association covers properties in the 14 first-tier coastal counties and parts of Harris County east of Highway 146, but only after a private insurer has declined the risk. If you are buying near the Gulf, get insurance quotes before you sign the contract, because lenders require coverage at closing. ## Closing costs in Texas Texas stands out for what it doesn’t charge. The Texas Constitution bars any law imposing a transfer tax on a sale of real property, so no deed or transfer tax is added at closing; county recording fees still apply. The CFPB’s national rule of thumb of $2–$5 per $100 of price therefore tends to land toward the lower end, depending on your lender’s fees and prepaid items. Title insurance is unusual too: the state sets the premium. Under rates effective March 1, 2026, the basic premium is $780 for a $100,000 policy plus $4.94 per $1,000 for each $1,000 above that. > **Worked example: Owner’s title policy on the median Texas home** > > $313,200 − $100,000 = $213,200 above the first $100,000 → $213 thousands × $4.94 + $780 = **about $1,833**, the same at every title company in the state because the rate is promulgated. ## First-time home buyer programs in Texas Two state-level agencies run purchase programs through participating lenders: | Program | Who it is for | Help available | Key rules | |---|---|---|---| | TDHCA My First Texas Home | First-time buyers (no owned-and-occupied home in the last 3 years), veterans | 2%–5% of the loan as a 0% second lien | FHA, VA or USDA 30-year fixed; minimum score 620; homebuyer education; income and price limits | | TSAHC Homes for Texas Heroes | Teachers, police, firefighters, EMS, veterans and other listed professions | Up to 5% of the loan | First-time status not required for the loan; grant or second-lien options | | TSAHC Home Sweet Texas | Buyers outside the hero professions | Up to 5% of the loan | Same lender network; program eligibility rules apply | TDHCA’s assistance comes as a 30-year deferred repayable second lien (due when you sell, refinance or pay off the first mortgage) or a 3-year deferred forgivable second lien that disappears if you keep the home as your residence for 36 months. TSAHC’s forgivable option is forgiven after 3 years. Both agencies also offer a Mortgage Credit Certificate for qualifying first-time buyers. Funding is limited, so ask a participating lender which options are open the week you apply. ## Borrowing against a Texas home The Texas Constitution puts firm limits on borrowing against a homestead. Home equity loans, HELOCs and cash-out refinances of a homestead are limited to 80% combined loan-to-value, fees are capped at 2% of the principal, you must wait at least 12 days after applying before closing, and only one such loan may close per year. On the median-value home, the 80% cap means a home equity loan only works while total mortgage debt, including the new loan, stays at or below $250,560. ## Loan limits in Texas The 2026 conforming limit for a one-unit home is $832,750 in standard-cost counties. FHA limits are set county by county between the national floor of $541,287 and ceiling of $1,249,125. Look up your county on HUD’s [FHA mortgage limits page](https://entp.hud.gov/idapp/html/hicostlook.cfm) and FHFA’s [conforming loan limit map](https://www.fhfa.gov/data/dashboard/conforming-loan-limits). ## Frequently asked questions ### How much is property tax on a house in Texas? Census data put the median Texas homeowner’s bill at $4,108 a year, about 1.31% of median home value. Your bill depends on the school district, county, city and special districts where the home sits, minus any exemptions. ### Does Texas have a real estate transfer tax? No. The Texas Constitution prohibits a transfer tax on the sale of real property, so buyers and sellers pay no deed or transfer tax at closing. ### What first-time home buyer programs does Texas offer? TDHCA’s My First Texas Home pairs an FHA, VA or USDA loan with 2%–5% of the loan in down-payment help for buyers who haven’t owned a home in 3 years. TSAHC’s Homes for Texas Heroes and Home Sweet Texas offer up to 5% and don’t require first-time status for the loan itself. ### What credit score do I need for TDHCA down-payment assistance? TDHCA’s program matrix sets a minimum middle score of 620, and every borrower must finish a HUD-certified homebuyer education course before buying. ### How much is homeowners insurance in Texas? The Texas Department of Insurance reports an average annual premium of $3,489/yr for 2025 (preliminary), up from $1,791/yr in 2016. Coastal homes may also need windstorm coverage through TWIA. ### How much can I borrow against my home in Texas? With a home equity loan, HELOC or cash-out refinance on a Texas homestead, total mortgage debt after the new loan can’t exceed 80% of the home’s value. Fees are capped at 2% of the principal and you must wait 12 days after applying before closing. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US48) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US48) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US48) — Median household income (2024 ACS 1-year) - [Texas Department of Insurance](https://www.tdi.texas.gov/general/texas-homeowners-insurance-market-overview.html) — Average Texas homeowners insurance premium; Average Texas homeowners insurance premium, 2016; Average Texas homeowners insurance premium, 2024 (2025 (preliminary)) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Texas Department of Insurance](https://www.tdi.texas.gov/title/titlerates2026.html) — Texas basic title premium for a $100,000 policy; Texas basic title premium per $1,000 above $100,000 (Rates effective Mar 1, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [Texas Comptroller](https://comptroller.texas.gov/taxes/property-tax/exemptions/) — School district residence homestead exemption; Additional school homestead exemption, age 65+ or disabled (Dec 11, 2025) - [Texas Constitution, Art. XVI §50(a)(6)](https://capitol.texas.gov/tlodocs/85R/billtext/pdf/SJ00060E.pdf) — Maximum combined loan-to-value for Texas home equity loans; Texas home equity fee cap (share of original principal); Minimum wait after application before a Texas home equity loan can close (Nov 7, 2017) - [Texas Department of Housing and Community Affairs](https://welcomehome.tdhca.texas.gov/uploads/My-First-Texas-Home-Program-Matrix-TMS.pdf) — TDHCA My First Texas Home assistance, low end (share of loan); TDHCA My First Texas Home assistance, high end (share of loan); TDHCA first-time buyer test: no owned and occupied home in the last (Program matrix Aug 17, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [Texas Windstorm Insurance Association](https://www.twia.org/coverage-eligibility/) — First-tier coastal counties in the TWIA windstorm area (Oct 28, 2026) - [Texas State Affordable Housing Corporation](https://www.tsahc.org/landing/home-down-payment-assistance) — TSAHC down payment assistance, up to (share of loan); TSAHC forgivable second lien is forgiven after (Oct 28, 2026) - [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) — 2026 baseline conforming loan limit (one-unit) (2026 limit) - [HUD](https://www.hud.gov/news/hud-no-25-145) — 2026 FHA loan limit floor (one-unit, low-cost areas); 2026 FHA loan limit ceiling (one-unit, high-cost areas) (2026 limit) - [HUD FHA mortgage limits lookup](https://entp.hud.gov/idapp/html/hicostlook.cfm) - [FHFA conforming loan limit values map](https://www.fhfa.gov/data/dashboard/conforming-loan-limits) _General information, not financial advice._ --- # Utah mortgages: home prices, the 45% residential exemption and Utah Housing help > Utah mortgage numbers: a $545,200 median home, what it costs monthly, the 45% primary residential exemption, no transfer tax and Utah Housing help. URL: https://mortgage-math-us.com/location/utah/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median Utah home is worth $545,200, above the US median of $360,600, and costs about **$4,035 a month** with 10% down at the 7.24% national average rate. Property tax is the lighter part: Utah exempts 45% of a primary residence’s market value, and the effective rate is 0.49%. First-time buyers of a newly built home priced up to $450,000 can get up to $20,000 through Utah Housing Corporation while funds last. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in Utah | $545,200 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US49) | 2024 ACS 1-year | | Median household income | $96,658/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US49) | 2024 ACS 1-year | | Effective property tax rate | 0.49% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US49) | 2024 ACS 1-year | | Median year built | 1994 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US49) | 2024 ACS 1-year | | Primary residential exemption | 45% | [Utah State Tax Commission: Primary Residential Exemption](https://tax.utah.gov/propertytax/tax-relief/primary-residential-exemption/) | Oct 29, 2026 | | New-construction first-time buyer help, up to | $20,000 | [Utah Housing Corporation: First-time Homebuyer Program Assistance (SB 240)](https://utahhousingcorp.org/homebuyer/sb240/) | Oct 29, 2026 | | Price limit for that help | $450,000 | [Utah Housing Corporation: First-time Homebuyer Program Assistance (SB 240)](https://utahhousingcorp.org/homebuyer/sb240/) | Oct 29, 2026 | ## Utah home values against Utah incomes Utah’s median home value is the 7th-highest among the 50 states and DC. The median household earns $96,658, above the national median and the 10th-highest in the country. Divide one by the other and the median home costs 5.6 times the median income — the 9th-highest ratio in the country, against 4.4 for the US. Utah’s housing is also newer than the nation’s: the median home was built in 1994, the 2nd-newest housing stock among the 50 states and DC, against 1981 nationally. Newer homes usually need fewer big repairs in the first years of ownership, which matters when most of the budget goes to the mortgage. ## What the median Utah home costs each month > **Worked example: $545,200 home (Utah median value), 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $490,680 | $3,344 | > | Property tax at 0.49% a year | $223 | > | Homeowners insurance at $4.90 per $1,000 of value (national average) | $223 | > | PMI (midpoint of Freddie Mac’s range) | $245 | > | **Total** | **$4,035** | On a loan this size, each percentage point on the rate changes principal and interest by about $339 a month. The insurance line uses Freddie Mac’s national average per $1,000 of value; get a Utah quote early. Run your own scenario in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=545000&down=10&tax=0.49&state=UT). ## The price a median Utah income supports Freddie Mac suggests keeping housing costs under 30% of gross income. For a household earning Utah’s median $96,658, that is $2,416 a month — enough for a home of about **$327,000** with 10% down, $218,200 below the median value. | | Median home | Price the median income supports | |---|---:|---:| | Price | $545,200 | $327,000 | | Principal and interest | $3,344 | $2,006 | | Property tax, insurance and PMI | $691 | $414 | | **Monthly total** | **$4,035** | **$2,420** | Buying the median home within the guideline takes about $161,000 a year in household income. Two incomes, a larger down payment or a smaller or older home are the usual ways to bridge that gap; the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=UT&income=96658) shows how far your own income goes. ## Utah’s 45% primary residential exemption Utah taxes a primary residence on only part of its value. Under Utah Code § 59-2-103, 45% of the market value of qualifying primary residential property is exempt, so the home is taxed on the remaining 55%. The home must be someone’s primary residence for at least 183 days in a row during the year — the owner’s or a full-time tenant’s — and a household can claim only one exemption in the state. The effect shows up when the same house is not a primary residence. A vacation home or short-term rental is taxed on its full value, so at the same local rate its bill would be about 1.8 times higher — roughly $405 a month instead of $223 on the median home. > **Watch out: Check the exemption when you buy** > > Counties track which homes qualify. Under a recent amendment (Senate Bill 238), the county board of equalization will require an application after a change in ownership or when a home’s eligibility is in doubt. Late applications are not accepted, so confirm the status with the county as soon as you close. ## Utah Housing’s new-construction help for first-time buyers Utah Housing Corporation, the state housing finance agency, offers fixed-rate first mortgages and a subordinate down payment loan through participating lenders. Its FirstHome loan is aimed at first-time buyers with a credit score of 660 or higher, within posted income and price limits. Alongside those, the First-Time Homebuyer Assistance Program, created by the Legislature in Senate Bill 240, lends up to **$20,000** to first-time buyers of a newly built home that no one has lived in, for the down payment, closing costs or a permanent rate buydown. The price can’t exceed $450,000 — below the state’s median home value, so the program fits starter homes rather than a typical Utah house — and the most help is about 4.4% of a home at that cap. You must qualify for a Utah Housing mortgage, and funds are available until they run out. Several other Utah Housing loan programs are listed as temporarily suspended, so ask a participating lender what is open the week you apply. More background is in [first-time home buyer programs](https://mortgage-math-us.com/first-time-buyers/programs/). ## Utah closing costs Utah has no state real estate transfer tax, and no state tax on recording the mortgage either. That leaves the usual lender, title, escrow and prepaid items, which the CFPB puts at 2%–5% of the price — $10,904–$27,260 on the median home. The [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=UT&price=545000) totals prepaid interest, insurance and the escrow deposit for a Utah purchase. ## Frequently asked questions ### What is the primary residential exemption in Utah? Utah exempts 45% of the market value of a primary residence from property tax, so the home is taxed on the rest. It must be someone’s primary residence for at least 183 days in a row each year, and each household can claim only one. ### What is the property tax rate in Utah? Census data put the median Utah homeowner’s bill at $2,648 a year, an effective rate of about 0.49% of home value, below the national 0.89%. The primary residential exemption is one reason. ### Does Utah have a real estate transfer tax? No. Utah has no state real estate transfer tax and no state mortgage recording tax, so closing costs are mostly lender, title, escrow and prepaid items. ### Does Utah have help for first-time home buyers? Yes. Utah Housing Corporation’s FirstHome loan serves first-time buyers, and the First-Time Homebuyer Assistance Program lends up to $20,000 toward a newly built home priced up to $450,000, while funds last. ### What credit score do I need for a Utah Housing loan? FirstHome requires a score of 660 or higher. Utah Housing’s FHA and VA options and Freddie Mac HFA Advantage loan have their own minimums; a participating lender can tell you which you qualify for. ### How much income do I need to buy a house in Utah? About $161,000 a year to keep the median $545,200 home with 10% down under 30% of gross income at today’s average rate. The median Utah household earns $96,658. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US49) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US49) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US49) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [Utah State Tax Commission: Primary Residential Exemption](https://tax.utah.gov/propertytax/tax-relief/primary-residential-exemption/) — Utah primary residential exemption (share of market value exempt from property tax); Utah primary residential exemption: home occupied as a primary residence for at least (consecutive days a year) (Oct 29, 2026) - [Utah Housing Corporation: First-time Homebuyer Program Assistance (SB 240)](https://utahhousingcorp.org/homebuyer/sb240/) — Utah First-Time Homebuyer Assistance Program (new construction), up to; Utah First-Time Homebuyer Assistance Program purchase price limit (Oct 29, 2026) - [National Association of Realtors](https://narfocus.com/publication-issue/view/2023-07-05-state-and-local-issues-real-estate-transfer-tax) — State real estate transfer tax (Jul 5, 2023) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US49) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=010XX00US) — Median year homes were built (2024 ACS 1-year) - [Utah Housing Corporation: Homeownership Programs](https://utahhousingcorp.org/homebuyer/homeownershipprograms/) — Utah Housing FirstHome loan minimum credit score (Oct 29, 2026) - [Utah Housing Corporation: First-time homebuyer program assistance](https://utahhousingcorp.org/homebuyer/sb240/) - [Utah Housing Corporation: Homeownership programs](https://utahhousingcorp.org/homebuyer/homeownershipprograms/) - [Utah State Tax Commission: Primary residential exemption](https://tax.utah.gov/propertytax/tax-relief/primary-residential-exemption/) _General information, not financial advice._ --- # Buying in Vermont: the property transfer tax, homestead taxes and VHFA help > Vermont home buying costs: the buyer-paid property transfer tax ($3,246 on the median home), a 1.42% tax rate, the Homestead Declaration and VHFA. URL: https://mortgage-math-us.com/location/vermont/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median Vermont home ($352,800) costs about **$2,884 a month** with 10% down at the 7.24% national average rate, and $417 of that is property tax — the effective rate of 1.42% is above the national 0.89%. At closing, the buyer owes Vermont’s property transfer tax: on a principal residence, 0.5% of the first $200,000 and 1.47% above it, or about $3,246 on the median home. Buying with VHFA financing exempts the first $250,000. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in Vermont | $352,800 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US50) | 2024 ACS 1-year | | Effective property tax rate | 1.42% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US50) | 2024 ACS 1-year | | Median property tax bill | $5,026/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US50) | 2024 ACS 1-year | | Transfer tax on the first $200,000 of a principal residence | 0.5% | [Vermont Department of Taxes](https://tax.vermont.gov/property/property-transfer-tax) | Oct 28, 2026 | | Transfer tax above that (incl. Clean Water Surcharge) | 1.47% | [Vermont Department of Taxes: Property Transfer Tax](https://tax.vermont.gov/property/property-transfer-tax) | Oct 29, 2026 | | Exempt with VHFA, CVTF or USDA financing | $250,000 | [Vermont Department of Taxes: Property Transfer Tax](https://tax.vermont.gov/property/property-transfer-tax) | Oct 29, 2026 | | VHFA ASSIST loan, up to | $10,000 | [Vermont Housing Finance Agency: Homebuyer Programs](https://vhfa.org/homebuyers) | Oct 29, 2026 | | Homes lived in by their owners | 73.2% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US50) | 2024 ACS 1-year | ## Vermont’s property transfer tax is the buyer’s bill Vermont puts its property transfer tax on the buyer. The Department of Taxes’ instructions say plainly that the transferee is liable for the tax, which is due at the time of transfer and paid directly to the Department. The rate depends on how the property will be used and financed. As the Department lists them: | Purchase | Rate | |---|---| | Principal residence | 0.5% on the first $200,000; 1.47% on value above that | | Principal residence bought with VHFA, CVTF or USDA assistance | First $250,000 exempt; 1.47% on value above that | | Home fit for year-round use that isn’t a principal residence or long-term rental | 3.62% | The higher rates include the Clean Water Surcharge, which the Department does not apply to the first $200,000 of a principal residence or the exempt part of an assisted purchase. To get the principal-residence rate, you must be an individual (or your revocable trust) who will use the home as your principal residence. > **Worked example: Transfer tax on the median Vermont home ($352,800)** > > | How you buy it | Tax | > |---|---:| > | As your principal residence | $3,246 | > | As your principal residence, with VHFA financing | $1,511 | > | As a second home | $12,771 | > > For a principal residence, the tax works out to about 0.92% of the price on the median home. Budget it as cash to close on your side of the Closing Disclosure. ## Paying for the median Vermont home > **Worked example: $352,800 home (Vermont median value), 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $317,520 | $2,164 | > | Property tax at 1.42% a year | $417 | > | Homeowners insurance at $4.90 per $1,000 of value (national average) | $144 | > | PMI (midpoint of Freddie Mac’s range) | $159 | > | **Total** | **$2,884** | > > Property tax is 14% of this payment. The insurance line uses Freddie Mac’s national average premium per $1,000 of value; winter weather and an older roof or heating system can change a Vermont quote, so price the specific house. The [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=353000&down=10&tax=1.42&state=VT) opens with these numbers. ## Vermont property taxes and the annual Homestead Declaration The median Vermont homeowner pays $5,026 a year in property tax, the 8th-highest amount among the 50 states and DC, and the effective rate of 1.42% is the 6th-highest. Every bill includes the state education property tax, which has separate rates for homesteads and for all other property. That is why the **Homestead Declaration** matters. If the home is your Vermont residence, you must file a declaration with the Department of Taxes every year by the April filing deadline. File late and you can owe a penalty; miss the final deadline in October and the home is classed as nonhomestead, so you pay the higher of the two education rates plus penalty and interest. The same filing is the starting point for the Vermont property tax credit, which is based on household income. > **Tip: After closing** > > Ask your attorney or the seller how the current year’s taxes were split and whether a declaration is on file, then file your own declaration for the next tax year. ## Income needed for a Vermont home At Vermont’s median household income of $82,730, Freddie Mac’s guideline of keeping housing under 30% of gross income allows $2,068 a month. With 10% down at today’s average rate and Vermont’s tax ratio, that supports a home of about **$253,000** — $99,800 less than the median home value. Buying the median home within the guideline takes about $115,000 a year. Compare your own numbers in the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=VT&income=82730). ## VHFA’s ASSIST loan and First Generation grant The Vermont Housing Finance Agency offers its MOVE, MOVE MCC and ADVANTAGE mortgages through participating lenders, with minimum credit scores from 640 depending on the program. Two kinds of help sit on top: | Help | Amount | Terms | |---|---|---| | ASSIST | Up to $10,000 | 0% deferred loan, no monthly payments, repaid when you sell, refinance or pay off the mortgage; with MOVE only, not with a VA loan; for buyers who have never owned a home and have limited liquid assets | | First Generation Homebuyer Grant | $15,000 | For down payment and closing costs, with MOVE, MOVE MCC or ADVANTAGE; for buyers who have never owned a home, where a buyer was in foster care or has parents or guardians who never owned a home or lost one to foreclosure | VHFA financing also changes the transfer tax: the exemption on the first $250,000 saves about $1,735 on the median home compared with a principal residence bought without that assistance. Ask a VHFA participating lender which options are open; see [down payment grants](https://mortgage-math-us.com/first-time-buyers/grants/) for how grants and deferred loans differ. ## Vermont’s housing stock and who owns it In Vermont 73.2% of occupied homes are owner-occupied, the 5th-highest share in the country, against 65.3% nationally. The housing is older than the US median — the median home was built in 1977 — so heating systems, insulation, wells and septic systems deserve a close look in the [home inspection](https://mortgage-math-us.com/buying/appraisal-and-inspection/). Closing costs beyond the transfer tax follow the CFPB’s typical 2%–5% of the price ($7,056–$17,640 here); the [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=VT&price=353000) adds Vermont’s tax for you. ## Frequently asked questions ### Who pays the property transfer tax in Vermont? The buyer. The Vermont Department of Taxes’ instructions state that the transferee is liable for the property transfer tax, which is due at the time of transfer and paid directly to the Department. ### How much is the Vermont property transfer tax? For a principal residence, 0.5% of the first $200,000 and 1.47% of value above that — about $3,246 on the median $352,800 home. A year-round home that isn’t your principal residence is taxed at 3.62%. ### Is there a transfer tax break when buying with VHFA? Yes. When a principal residence is bought with VHFA, CVTF or USDA assistance, the first $250,000 of value is exempt and the rest is taxed at 1.47%. ### What is the property tax rate in Vermont? Census data put the median Vermont homeowner’s bill at $5,026 a year, an effective rate of about 1.42% of home value against 0.89% nationally. ### Do I need to file a Homestead Declaration every year in Vermont? Yes. If the home is your Vermont residence, file the declaration with the Department of Taxes annually by the April deadline. Without it the home is classed as nonhomestead, and you pay the higher of the two education rates plus penalties. ### Does Vermont offer down payment assistance? VHFA’s ASSIST loan offers up to $10,000 as a 0% deferred loan with its MOVE mortgage, and its First Generation Homebuyer Grant provides $15,000 to eligible first-generation buyers. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US50) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US50) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US50) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [Vermont Department of Taxes: Property Transfer Tax](https://tax.vermont.gov/property/property-transfer-tax) — Vermont principal-residence transfer tax: 0.5% rate applies to the first; State real estate transfer tax; Vermont property transfer tax on principal-residence value above the first $200,000 (1.25% plus 0.22% Clean Water Surcharge) (Oct 29, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [Vermont Housing Finance Agency: Homebuyer Programs](https://vhfa.org/homebuyers) — VHFA minimum credit score (640–680 depending on program), from; VHFA ASSIST down payment and closing-cost loan, up to; VHFA First Generation Homebuyer Grant (Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US50) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=010XX00US) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US50) — Median year homes were built (2024 ACS 1-year) - [Vermont Department of Taxes: Property transfer tax](https://tax.vermont.gov/property/property-transfer-tax) - [Vermont Department of Taxes: Form PTT-172 instructions](https://tax.vermont.gov/sites/tax/files/documents/PTT-172%20Instr-2023.pdf) - [Vermont Department of Taxes: Homestead Declaration](https://tax.vermont.gov/homestead-declaration) - [Vermont Housing Finance Agency: Homebuyer programs](https://vhfa.org/homebuyers) _General information, not financial advice._ --- # Virginia mortgages: recordation taxes, monthly payments and Virginia Housing > Virginia home buying math: who pays recordation and grantor taxes, $3,060/mo on the median home, property tax and Virginia Housing’s Plus loan. URL: https://mortgage-math-us.com/location/virginia/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median Virginia home is worth $403,500 and costs about **$3,060 a month** with 10% down at the 7.24% national average rate, at an effective property tax rate of 0.71%. At closing, the buyer typically pays recordation tax of 0.25% on the deed and 0.25% on the deed of trust, plus any local tax — about $2,556 on the median home — while the seller owes the 0.1% grantor tax. Virginia Housing’s Plus Second Mortgage can lend up to 5% of the purchase price toward the down payment. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in Virginia | $403,500 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US51) | 2024 ACS 1-year | | Median household income | $92,090/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US51) | 2024 ACS 1-year | | Effective property tax rate | 0.71% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US51) | 2024 ACS 1-year | | State recordation tax on the deed | 0.25% | [Code of Virginia § 58.1-801](https://law.lis.virginia.gov/vacodefull/title58.1/chapter8/) | Oct 29, 2026 | | Recordation tax on the deed of trust | 0.25% | [Code of Virginia, Title 58.1, Chapter 8](https://law.lis.virginia.gov/vacodefull/title58.1/chapter8/) | Oct 28, 2026 | | Grantor tax (seller) | 0.1% | [Code of Virginia § 58.1-802](https://law.lis.virginia.gov/vacodefull/title58.1/chapter8/) | Oct 29, 2026 | | Virginia Housing Plus Second Mortgage, up to (share of price) | 5% | [Virginia Housing: Plus Second Mortgage](https://www.virginiahousing.com/homebuyers/plus-second-mortgage) | Oct 29, 2026 | ## Virginia incomes and home prices Virginia’s median household income of $92,090 is the 13th-highest among the 50 states and DC and above the national median. The median home value of $403,500 ranks 18th-highest and sits above the US figure, so the price-to-income ratio is about the same as the nation’s. *Virginia and the US (Census ACS 2024 1-year)* | | Virginia | United States | |---|---:|---:| | Median home value | $403,500 | $360,600 | | Median household income | $92,090 | $81,604 | | Home value ÷ income | 4.4× | 4.4× | | Effective property tax rate | 0.71% | 0.89% | | Median gross rent | $1,646/mo | $1,487/mo | | Median owner costs with a mortgage | $2,149/mo | $2,035/mo | Statewide medians blend very different markets, from Northern Virginia to the rural southwest, so use your county’s or city’s numbers when you set a budget. ## Who pays what: Virginia’s recordation and grantor taxes Virginia’s Code taxes the recording of both the deed and the deed of trust. The recordation tax is 0.25% of the greater of the price or the property’s value for the deed, and 0.25% of the amount the deed of trust secures. A city or county may add a local recordation tax equal to one-third of the state tax. Separately, the grantor tax of 0.1% must be paid by the grantor — the seller — unless the two sides agree otherwise. Together the two deed taxes come to 0.35% of the price. > **Worked example: Closing taxes on the median Virginia home ($403,500, 10% down)** > > | Tax | Usually paid by | Amount | > |---|---|---:| > | State recordation tax on the deed | Buyer | $1,009 | > | State recordation tax on the $363,150 deed of trust | Buyer | $908 | > | Local recordation tax, where your city or county charges it | Buyer | $639 | > | Grantor tax | Seller | $404 | > > The buyer’s recordation taxes total about $2,556. The statute names the grantor for the grantor tax; who pays recordation tax on the deed is set by custom and your contract. Lender fees, title insurance, prepaid interest and escrow come on top; the CFPB’s typical 2%–5% of the price is $8,070–$20,175 here. The [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=VA&price=404000) applies Virginia’s taxes to your price. ## Monthly payment on the median Virginia home > **Worked example: $403,500 home (Virginia median value), 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $363,150 | $2,475 | > | Property tax at 0.71% a year | $239 | > | Homeowners insurance at $4.90 per $1,000 of value (national average) | $165 | > | PMI (midpoint of Freddie Mac’s range) | $182 | > | **Total** | **$3,060** | On the median income of $92,090, Freddie Mac’s guideline of keeping housing under 30% of gross income allows $2,302 a month — enough for about **$304,000** with 10% down, $99,500 less than the median value. The median home within that guideline needs a household income of about $122,000. Change any input in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=404000&down=10&tax=0.71&state=VA) or the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=VA&income=92090). ## Virginia Housing’s Plus Second Mortgage and grants Virginia Housing, the state’s housing finance agency, makes its loans through approved lenders. FHA, VA and USDA loans are available with credit scores as low as 620; conventional loans need a higher score. Three kinds of down payment help can sit on top: - **Plus Second Mortgage** — a 30-year fixed-rate second loan of up to 5% of the purchase price, for first-time or repeat buyers within Virginia Housing’s income limits. On the median home that could be up to $20,175. - **Down Payment Assistance Grant** — a true grant you never repay, for first-time buyers (or repeat buyers in designated Areas of Economic Opportunity) using an eligible Virginia Housing FHA or conventional loan, within income and sales price limits. - **Closing Cost Assistance Grant** — for closing costs, also for first-time buyers. A second mortgage adds its own monthly payment, while a grant doesn’t, so ask a Virginia Housing lender to quote both routes. Our guide to [first-time buyer programs](https://mortgage-math-us.com/first-time-buyers/programs/) explains how state help works with your first loan. ## Property taxes set by Virginia’s counties and cities At 0.71% of value, Virginia’s effective rate is below the national 0.89% and the 20th-lowest among the 50 states and DC; the median bill is $2,872 a year. Real estate tax is set locally, and Virginia’s independent cities set rates separately from the surrounding counties, so the same price can carry noticeably different bills a few miles apart. Look up the locality’s current rate per $100 of assessed value before you write an offer. ## Service members and veterans buying in Virginia A VA loan lets eligible buyers put 0% down with no monthly mortgage insurance, in exchange for a one-time funding fee — 2.15% of the loan on a first-use loan with no down payment, which can be financed. > **Worked example: The median Virginia home with a VA loan, no down payment** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $412,175 (funding fee financed) | $2,809 | > | Property tax and insurance, as above | $404 | > | Mortgage insurance | — | > | **Total** | **$3,212** | > > That is $153 a month more than the 10%-down conventional example at the same rate, without the $40,350 down payment. See the full rules in our [VA loans guide](https://mortgage-math-us.com/loan-types/va-loans/). ## Frequently asked questions ### What is the recordation tax in Virginia? The state recordation tax is 0.25% of the price or value on the deed and 0.25% of the loan on the deed of trust. Cities and counties may add a local tax equal to one-third of the state tax. On the median home with 10% down, the buyer’s share comes to about $2,556 where the local tax applies. ### Who pays the grantor tax in Virginia? The seller. The Code of Virginia says the 0.1% grantor tax is paid by the grantor, though the buyer and seller may agree that the buyer pays all or part of it. ### What is the property tax rate in Virginia? Census data put the median Virginia homeowner’s bill at $2,872 a year, an effective rate of about 0.71% of home value. Each county and independent city sets its own rate. ### Does Virginia have first-time home buyer programs? Yes. Virginia Housing offers a Down Payment Assistance Grant and a Closing Cost Assistance Grant for first-time buyers, and a Plus Second Mortgage of up to 5% of the purchase price for first-time and repeat buyers within income limits. ### What credit score does Virginia Housing require? FHA, VA and USDA loans through Virginia Housing accept scores as low as 620; conventional loans require a higher minimum. ### How much income do I need to buy a house in Virginia? About $122,000 a year to keep the median $403,500 home with 10% down under 30% of gross income at today’s average rate. The median Virginia household earns $92,090. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US51) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US51) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US51) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [Code of Virginia § 58.1-801](https://law.lis.virginia.gov/vacodefull/title58.1/chapter8/) — Virginia state recordation tax on deeds (on the greater of price or value); Virginia grantor tax on deeds (paid by the grantor unless the parties agree otherwise); State tax on recording a mortgage (Oct 29, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [Virginia Housing: Plus Second Mortgage](https://www.virginiahousing.com/homebuyers/plus-second-mortgage) — Virginia Housing Plus Second Mortgage, up to (share of the purchase price) (Oct 29, 2026) - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) — VA funding fee, first use, less than 5% down (Apr 7, 2023) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US51) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=040XX00US51) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=010XX00US) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [Virginia Housing: Home Loans](https://www.virginiahousing.com/homebuyers/home-loans) — Virginia Housing FHA, VA and USDA loans: credit scores as low as (Oct 29, 2026) - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/loan-types/purchase-loan/) — VA purchase loan down payment (price at or below appraised value) (Jan 7, 2026) - [Virginia Housing: Plus Second Mortgage](https://www.virginiahousing.com/homebuyers/plus-second-mortgage) - [Virginia Housing: Down Payment Assistance Grant](https://www.virginiahousing.com/homebuyers/down-payment-assistance-grant) - [Code of Virginia, Title 58.1, Chapter 8: Recordation tax](https://law.lis.virginia.gov/vacodefull/title58.1/chapter8/) _General information, not financial advice._ --- # Washington State home buying: prices, the graduated REET and WSHFC help > Washington mortgage numbers: a $602,200 median home, what a median income buys, the graduated real estate excise tax and WSHFC down payment help. URL: https://mortgage-math-us.com/location/washington/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median Washington home is worth $602,200 and costs about **$4,607 a month** with 10% down at the 7.24% national average rate — more than a median-income household can carry on Freddie Mac’s 30% guideline, which supports about $325,000. The state’s real estate excise tax is graduated, from 1.1% on the first $525,000 up to 3% at the top, and the seller usually pays it. Every Washington State Housing Finance Commission loan comes with down payment help; Home Advantage offers up to 5% of the loan amount. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in Washington | $602,200 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US53) | 2024 ACS 1-year | | Median household income | $99,389/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US53) | 2024 ACS 1-year | | Effective property tax rate | 0.79% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US53) | 2024 ACS 1-year | | Median gross rent | $1,824/mo | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US53) | 2024 ACS 1-year | | State REET on the first bracket of the price | 1.1% | [Washington Department of Revenue](https://dor.wa.gov/taxes-rates/other-taxes/real-estate-excise-tax) | Oct 28, 2026 | | State REET, top bracket | 3% | [Washington Department of Revenue: Real estate excise tax](https://dor.wa.gov/taxes-rates/other-taxes/real-estate-excise-tax) | Oct 29, 2026 | | WSHFC Home Advantage help, up to (share of loan) | 5% | [Washington State Housing Finance Commission: Home buyers](https://heretohome.org/home-buyers/) | Oct 29, 2026 | | Home Advantage income limit | $215,000 | [Washington State Housing Finance Commission: Home buyers](https://heretohome.org/home-buyers/) | Oct 29, 2026 | ## What a Washington paycheck buys Washington’s median home value is the 5th-highest among the 50 states and DC. The median household earns $99,389, above the national median, and the median home costs 6.1 times that income — the 4th-highest ratio in the country, against 4.4 for the US. Freddie Mac suggests keeping housing costs under 30% of gross income. On Washington’s median income that is $2,485 a month, which supports a home of about **$325,000** with 10% down at today’s average rate — $277,200 below the median value, or 54% of it. Buying the median home within the guideline takes about $184,000 a year. Enter your own income and debts in the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=WA&income=99389). ## The monthly cost of the median Washington home > **Worked example: $602,200 home (Washington median value), 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $541,980 | $3,694 | > | Property tax at 0.79% a year | $396 | > | Homeowners insurance at $4.90 per $1,000 of value (national average) | $246 | > | PMI (midpoint of Freddie Mac’s range) | $271 | > | **Total** | **$4,607** | The down payment alone is $60,220 at 10%. Earthquake coverage is not part of a standard homeowners policy, so if you want it, price it separately. Adjust the inputs in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=602000&down=10&tax=0.79&state=WA). ## Washington’s graduated real estate excise tax Washington’s Department of Revenue applies a graduated rate to the state portion of the real estate excise tax (REET). Each rate applies only to the slice of the price inside its bracket: | Part of the selling price | State REET rate | |---|---:| | Up to $525,000 | 1.1% | | Above that, up to $1,525,000 | 1.28% | | Above that, up to $3,025,000 | 2.75% | | Above $3,025,000 | 3% | > **Worked example: State REET at three prices** > > | Price | State REET | > |---|---:| > | $325,000 (what the median income supports) | $3,575 | > | $602,200 (Washington median value) | $6,763 | > | $950,800 (Seattle median value) | $11,225 | > > At the Seattle median the state tax averages 1.18% of the price. Local REET charged by the city or county is added on top. The Department says the seller usually pays REET; if the seller doesn’t, the buyer becomes responsible. As a buyer, you’ll meet it again when you sell. The brackets change on January 1, 2027, when the first threshold rises to $551,000, with the others moving up by the same amount. Washington has no separate state tax on recording the mortgage. Typical closing costs otherwise run 2%–5% of the price ($12,044–$30,110 on the median home); the [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=WA&price=602000) applies the graduated schedule. ## WSHFC Home Advantage and House Key Opportunity The Washington State Housing Finance Commission lends through participating lenders, and every Commission home loan includes down payment assistance as a second loan. Most of that assistance is payment-deferred: nothing is due until you sell, refinance, move out or pay off the first mortgage. | Program | Assistance | Who qualifies | |---|---|---| | Home Advantage | 3%–5% of the mortgage loan amount | Household income up to $215,000 statewide; first-time buyer status not required | | House Key Opportunity | Deferred second loan; amount varies | First-time buyers, unless buying in a target area or an honorably discharged veteran; county income and price limits | On the median home with 10% down, the top Home Advantage amount would be about $27,099. Assistance doesn’t lower the price, so the payment-to-income math above still applies; it helps with the cash to close. See [first-time home buyer programs](https://mortgage-math-us.com/first-time-buyers/programs/) for how state programs compare. ## Property tax and no state income tax Washington’s effective property tax rate is 0.79%, below the national 0.89% and the 23rd-highest among the 50 states and DC. In dollars, the median homeowner pays $4,729 a year, the 10th-highest amount in the country. Washington doesn’t tax wages and salaries. Lenders qualify you on gross income either way, but the absence of a state income tax leaves more take-home pay for the mortgage than the same salary would in a state that has one. ## Seattle and the rest of Washington The City of Seattle’s median home value of $950,800 is 1.6 times the state median, and its median household earns $118,745. Renting is more common in the city: 41.9% of Seattle homes are owner-occupied, against 62.9% statewide — and the state’s owner share is itself smaller than the national 65.3%. For city numbers and programs, see the [Seattle housing guide](https://mortgage-math-us.com/location/seattle-wa/). If you’re weighing whether to keep renting, the [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=WA&price=602000&rent=1824) opens with Washington’s median price and rent of $1,824/mo. ## Frequently asked questions ### How much is the real estate excise tax in Washington? The state REET is graduated: 1.1% on the part of the price up to $525,000, rising to 3% on the part above $3,025,000. On the median $602,200 home the state portion is about $6,763, plus any local REET. ### Who pays REET in Washington? The Department of Revenue says the seller usually pays the real estate excise tax. If the seller doesn’t pay it, the buyer is responsible. ### Are Washington’s REET brackets changing? Yes. From January 1, 2027, the first bracket rises to $551,000, and the higher thresholds move up as well; the rates stay the same. ### What is the property tax rate in Washington? Census data put the median Washington homeowner’s bill at $4,729 a year, an effective rate of about 0.79% of home value against 0.89% nationally. ### Does Washington have down payment assistance? Yes. Every Washington State Housing Finance Commission home loan includes down payment assistance as a second loan. Home Advantage offers 3%–5% of the mortgage loan amount for households earning up to $215,000, with no first-time buyer requirement. ### How much income do I need to buy a house in Washington? About $184,000 a year to keep the median home with 10% down under 30% of gross income at today’s average rate. The median Washington household earns $99,389. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US53) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US53) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US53) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US53) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US5363000) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US5363000) — Median household income (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [Washington Department of Revenue: Real estate excise tax](https://dor.wa.gov/taxes-rates/other-taxes/real-estate-excise-tax) — Washington state REET: 1.1% bracket applies to the part of the price up to; State real estate transfer tax; Washington state REET: 1.28% bracket ends at (Oct 29, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [Washington State Housing Finance Commission: Home buyers](https://heretohome.org/home-buyers/) — WSHFC Home Advantage down payment assistance, up to (share of the mortgage loan amount); WSHFC Home Advantage down payment assistance, from (share of the mortgage loan amount); WSHFC Home Advantage household income limit (statewide) (Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US5363000) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US53) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=010XX00US) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [Washington Department of Revenue: Real estate excise tax](https://dor.wa.gov/taxes-rates/other-taxes/real-estate-excise-tax) - [Washington State Housing Finance Commission: Home buyers](https://heretohome.org/home-buyers/) _General information, not financial advice._ --- # West Virginia home buying: prices, property taxes and WVHDF loans > West Virginia mortgage numbers: a $170,800 median home at about $1,268/mo, the transfer tax, homestead exemption and WVHDF’s Low Down Home Loan. URL: https://mortgage-math-us.com/location/west-virginia/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median West Virginia home is worth $170,800 and costs about **$1,268 a month** with 10% down at the 7.24% national average rate — about 25% of the state’s median household income of $60,798. Property tax adds only $74 a month at the 0.52% effective rate, and owners 65 or older or disabled can exempt $20,000 of assessed value. WVHDF’s Low Down Home Loan lends up to $12,000 toward the down payment and closing costs at 2%. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in West Virginia | $170,800 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US54) | 2024 ACS 1-year | | Median household income | $60,798/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US54) | 2024 ACS 1-year | | Homes lived in by their owners | 75.5% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US54) | 2024 ACS 1-year | | Effective property tax rate | 0.52% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US54) | 2024 ACS 1-year | | Transfer tax (state + county) | 0.33% | [W. Va. Code 11-22-2](https://code.wvlegislature.gov/pdf/11-22-2/) | Oct 28, 2026 | | WVHDF Low Down Home Loan, up to | $12,000 | [West Virginia Housing Development Fund: Low Down Home Loan increase](https://www.wvhdf.com/wp-content/uploads/2026/01/Low-Down-Home-Loan-Increase_WVHDF_1.21.2026.pdf) | Jan 22, 2026 | | Homestead exemption, 65+ or disabled (assessed value) | $20,000 | [West Virginia Tax Division: Property Tax Exemptions](https://tax.wv.gov/Business/PropertyTax/Pages/PropertyTaxExemptions.aspx) | Oct 29, 2026 | ## West Virginia prices and paychecks By the Census Bureau’s count, West Virginia’s median home value of $170,800 is the lowest among the 50 states and DC, and its median household income of $60,798 is the 2nd-lowest. Put together, the median home costs 2.8 times the median income — the lowest ratio in the country, against 4.4 for the US. *West Virginia and the US (Census ACS 2024 1-year)* | | West Virginia | United States | |---|---:|---:| | Median home value | $170,800 | $360,600 | | Median household income | $60,798 | $81,604 | | Median property tax paid | $881 | $3,211 | | Median gross rent | $883/mo | $1,487/mo | | Median owner costs with a mortgage | $1,272/mo | $2,035/mo | | Owner-occupied share | 75.5% | 65.3% | | Median year built | 1977 | 1981 | The owner-occupied share, 75.5%, is the highest in the country. ## A median West Virginia household’s buying power Freddie Mac suggests keeping housing costs under 30% of gross income. On $60,798 a year that is $1,520 a month, which supports a home of about **$205,000** with 10% down at today’s average rate, West Virginia’s tax ratio and the national insurance average — $34,200 more than the median home value. Run the same test for every state: of the 50 states and DC, only 3 pass it at today’s average rate, West Virginia among them. That headroom can go to a larger down payment, a shorter loan term or simply a smaller share of income spent on housing. The [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=WV&income=60798) shows the price your own income and debts support at four debt-to-income limits. ## Monthly payment on the median West Virginia home > **Worked example: $170,800 home (West Virginia median value), 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $153,720 | $1,048 | > | Property tax at 0.52% a year | $74 | > | Homeowners insurance at $4.90 per $1,000 of value (national average) | $70 | > | PMI (midpoint of Freddie Mac’s range) | $77 | > | **Total** | **$1,268** | Homes along rivers and in hollows can sit in mapped flood zones, where federally regulated lenders require flood insurance on top of this, so check the address on FEMA’s flood maps early. Try your own figures in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=171000&down=10&tax=0.52&state=WV). ## WVHDF’s Low Down Home Loan The West Virginia Housing Development Fund offers 30-year fixed-rate mortgages through participating lenders: the Homeownership Program, mainly for buyers with no ownership interest in a primary residence in the past 3 years (buyers in targeted counties are exempt), and Movin’ Up for moderate-income first-time or repeat buyers. The Fund generally looks for a credit score of at least 620. In its January 2026 update, the Fund raised its **Low Down Home Loan** to $12,000 for new loan registrations and locks. It is a second loan at a fixed 2%, fully repaid over 15 years, available with both the Homeownership and Movin’ Up programs. > **Worked example: Using the full Low Down Home Loan on the median home** > > The $12,000 maximum equals 7.0% of the $170,800 median value. With a 3.5% down payment ($5,978), it covers that and the $3,416 low-end estimate of closing costs, with about $2,606 to spare. Repaying it costs about **$77 a month** for 15 years, on top of the first mortgage. Because this help is repaid monthly rather than deferred, count its payment when you check your budget. Compare the two loans together with a WVHDF lender, and read the [FHA loans guide](https://mortgage-math-us.com/loan-types/fha-loans/) if you’re weighing the low-down-payment options. ## Transfer tax at closing West Virginia’s excise tax on transferring real estate has a state portion and a county portion that together come to 0.33% of the price — about $564 on the median home. The statute puts the county portion on the grantor, the seller, unless the buyer accepts the deed without it paid; the purchase contract decides the rest. The CFPB’s typical closing costs of 2%–5% of the price are $3,416–$8,540 here. The [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=WV&price=171000) adds the transfer tax for you. ## Property tax and the homestead exemption West Virginia’s effective property tax rate of 0.52% is below the national 0.89% and the 12th-lowest among the 50 states and DC; the median bill of $881 is the lowest. For owners who are 65 or older or permanently and totally disabled, the state exempts the first $20,000 of assessed value of owner-occupied residential property. Contact your county assessor’s office about applying. The housing is older than the nation’s — the median home was built in 1977, the 15th-oldest stock among the 50 states and DC — so budget for an inspection that looks hard at the roof, foundation, furnace and drainage. ## Frequently asked questions ### What is the property tax rate in West Virginia? Census data put the median West Virginia homeowner’s bill at $881 a year, an effective rate of about 0.52% of home value against 0.89% nationally. ### Does West Virginia have a homestead exemption? Yes, for owners who are 65 or older or permanently and totally disabled: the first $20,000 of assessed value of their owner-occupied home is exempt from property tax. ### What is the WVHDF Low Down Home Loan? A second loan of up to $12,000 for down payment and closing costs, at a fixed 2% and repaid over 15 years. It is available with WVHDF’s Homeownership and Movin’ Up programs; the full amount costs about $77 a month. ### What credit score do I need for a WVHDF loan? The West Virginia Housing Development Fund generally requires a credit score of at least 620, and your score doesn’t change the interest rate. ### How much is the transfer tax in West Virginia? The state and county portions together come to 0.33% of the price — about $564 on the median $170,800 home. ### How much house can I afford in West Virginia? On the state’s median household income of $60,798, keeping housing under 30% of gross income supports a home of about $205,000 with 10% down at today’s average rate. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US54) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US54) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US54) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [West Virginia Housing Development Fund: Low Down Home Loan increase](https://www.wvhdf.com/wp-content/uploads/2026/01/Low-Down-Home-Loan-Increase_WVHDF_1.21.2026.pdf) — WVHDF Low Down Home Loan (down payment and closing-cost assistance), up to; WVHDF Low Down Home Loan fixed interest rate; WVHDF Low Down Home Loan term (Jan 22, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment; Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [W. Va. Code 11-22-2](https://code.wvlegislature.gov/pdf/11-22-2/) — State real estate transfer tax (Oct 28, 2026) - [West Virginia Tax Division: Property Tax Exemptions](https://tax.wv.gov/Business/PropertyTax/Pages/PropertyTaxExemptions.aspx) — West Virginia homestead exemption for owners 65+ or permanently and totally disabled (assessed value exempt) (Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US54) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=040XX00US54) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=010XX00US) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US54) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=010XX00US) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US54) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=010XX00US) — Median year homes were built (2024 ACS 1-year) - [West Virginia Housing Development Fund: A guide to WVHDF mortgage programs](https://www.wvhdf.com/a-guide-to-west-virginia-housing-development-fund-mortgage-programs/) — WVHDF Homeownership Program: no ownership interest in a primary residence for the past; WVHDF mortgage programs: minimum credit score, generally (Oct 29, 2026) - [WVHDF: Low Down Home Loan increase (January 2026)](https://www.wvhdf.com/wp-content/uploads/2026/01/Low-Down-Home-Loan-Increase_WVHDF_1.21.2026.pdf) - [WVHDF: A guide to WVHDF mortgage programs](https://www.wvhdf.com/a-guide-to-west-virginia-housing-development-fund-mortgage-programs/) - [West Virginia Tax Division: Property tax exemptions](https://tax.wv.gov/Business/PropertyTax/Pages/PropertyTaxExemptions.aspx) - [W. Va. Code § 11-22-2: Real estate transfer excise tax](https://code.wvlegislature.gov/pdf/11-22-2/) _General information, not financial advice._ --- # Wisconsin home buying: property tax, WHEDA loans and closing costs > Wisconsin mortgage numbers: a 1.25% effective property tax on a $294,700 median home, the seller-paid transfer fee and WHEDA Easy Close help. URL: https://mortgage-math-us.com/location/wisconsin/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer A median-value Wisconsin home ($294,700) costs about **$2,367 a month** with 10% down at the 7.24% national average rate, and $307 of that is property tax at the state’s effective rate of 1.25% — above the national 0.89%. The 0.3% transfer fee is charged to the seller by law. WHEDA’s Easy Close Advantage can lend up to 6% of the purchase price for the down payment and closing costs, repaid over 10 years. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in Wisconsin | $294,700 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US55) | 2024 ACS 1-year | | Median household income | $77,488/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US55) | 2024 ACS 1-year | | Effective property tax rate | 1.25% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US55) | 2024 ACS 1-year | | Median property tax bill | $3,680/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US55) | 2024 ACS 1-year | | Real estate transfer fee (seller) | 0.3% | [Wis. Stat. 77.22](https://docs.legis.wisconsin.gov/statutes/statutes/77/ii/22?view=section) | May 17, 2024 | | WHEDA Easy Close Advantage, up to (share of price) | 6% | [WHEDA: Available Programs](https://www.wheda.com/homeownership-and-renters/home-buyers/available-programs) | Oct 29, 2026 | | WHEDA minimum credit score (conventional) | 620 | [WHEDA: Available Programs](https://www.wheda.com/homeownership-and-renters/home-buyers/available-programs) | Oct 29, 2026 | ## Wisconsin property tax in the monthly payment The Census Bureau puts the median Wisconsin homeowner’s property tax at $3,680 a year, or 1.25% of the median home value — the 10th-highest effective rate among the 50 states and DC. On the median home that is $307 a month, $88 a month more than the national ratio of 0.89% would charge on the same price, and 2.6 times the insurance line. Bills are set by the municipality, county, school district and technical college district where the home sits, so two houses at the same price in neighboring towns can be taxed quite differently. Before you offer, look up the property’s last tax bill and the assessed value it was based on; if the assessment lags the price you’re paying, the bill may rise after the next revaluation. ## The median Wisconsin home with 10% down > **Worked example: $294,700 home (Wisconsin median value), 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $265,230 | $1,808 | > | Property tax at 1.25% a year | $307 | > | Homeowners insurance at $4.90 per $1,000 of value (national average) | $120 | > | PMI (midpoint of Freddie Mac’s range) | $133 | > | **Total** | **$2,367** | > > Property tax is 13% of this payment. The insurance line uses Freddie Mac’s national average premium per $1,000 of value; a Wisconsin quote depends on the roof, heating system and claims history. Change the inputs in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=295000&down=10&tax=1.25&state=WI). ## What Wisconsin’s median income supports The median Wisconsin household earns $77,488. Freddie Mac’s guideline of keeping housing costs under 30% of gross income allows $1,937 a month, which supports a home of about **$241,000** with 10% down at today’s average rate and Wisconsin’s tax ratio — $53,700 less than the median value. A household needs roughly $95,000 a year to buy the median home within that guideline. Check your own numbers in the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=WI&income=77488). ## WHEDA Easy Close Advantage: help with a payment attached WHEDA, the Wisconsin Housing and Economic Development Authority, makes fixed-rate first mortgages through approved lenders; conventional loans need a credit score of at least 620, and FHA loans a higher one. First-time buyers complete homebuyer education. Its main down payment product, **Easy Close Advantage DPA**, is not a grant or a deferred loan. It is a fixed-rate second mortgage for up to 6% of the purchase price, at the same rate as the WHEDA first mortgage, repaid in monthly payments over 10 years. Household income limits apply. > **Worked example: The median home with 3% down, financed with Easy Close** > > | Part of the payment | Monthly | > |---|---:| > | First mortgage on $285,859, with tax, insurance and PMI | $2,518 | > | Easy Close loan of $14,735 (down payment plus low-end closing costs) over 10 years | $173 | > | **Total** | **$2,691** | > > That is $324 more a month than the 10%-down example, with about $35,364 less cash needed at closing. The second-loan payment ends after 10 years, and the PMI can come off once you build enough equity. WHEDA also offers a deferred Capital Access DPA with lower income limits, but its funding has been limited and allocated first come, first served, so ask a WHEDA lender whether it is open before counting on it. For how assistance and mortgage insurance interact, see [PMI](https://mortgage-math-us.com/buying/pmi/). ## Wisconsin’s transfer fee is the seller’s Wisconsin’s real estate transfer fee is 0.3% of the value — about $884 on the median home — and the statute imposes it on the grantor, so the seller pays. Wisconsin has no state tax on recording the mortgage. Buyers still pay lender, title, recording and prepaid costs; the CFPB’s typical 2%–5% of the price is $5,894–$14,735 here. The [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=WI&price=295000) puts the fee on the seller’s side by default. ## Older homes across Wisconsin The median Wisconsin home was built in 1976, the 14th-oldest housing stock among the 50 states and DC, so inspections matter: look at the basement and foundation for water, the age of the furnace and roof, and any knob-and-tube wiring. Owners live in 68% of the state’s occupied homes. The median renter pays $1,142/mo; the [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=WI&price=295000&rent=1142) compares that with owning the median home over the years you expect to stay. ## Frequently asked questions ### What is the property tax rate in Wisconsin? Census data put the median Wisconsin homeowner’s bill at $3,680 a year, an effective rate of about 1.25% of home value against 0.89% nationally. Local levies decide the bill on a specific home. ### Who pays the real estate transfer fee in Wisconsin? The seller. Wisconsin’s statute imposes the 0.3% transfer fee on the grantor — about $884 on the median home. ### What is WHEDA Easy Close? Easy Close Advantage DPA is a fixed-rate second mortgage of up to 6% of the purchase price, at the same rate as the WHEDA first mortgage and repaid over 10 years, used for the down payment and closing costs. ### Is WHEDA down payment assistance forgivable? Easy Close is not; it is repaid in monthly payments over 10 years. WHEDA’s Capital Access DPA is deferred, but its funding has been limited, so ask a lender whether it is available. ### What credit score do I need for a WHEDA loan? WHEDA’s conventional first mortgages require a credit score of at least 620; FHA loans require a higher minimum. ### How much house can I afford in Wisconsin? On the median household income of $77,488, keeping housing under 30% of gross income supports about $241,000 with 10% down at today’s average rate and Wisconsin’s tax ratio. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US55) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US55) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US55) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US55) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [WHEDA: Available Programs](https://www.wheda.com/homeownership-and-renters/home-buyers/available-programs) — WHEDA Easy Close Advantage DPA, up to (share of the purchase price); WHEDA Easy Close Advantage DPA term; WHEDA conventional first mortgage minimum credit score (Oct 29, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum down payment on some conventional loans; Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [Wis. Stat. 77.22](https://docs.legis.wisconsin.gov/statutes/statutes/77/ii/22?view=section) — State real estate transfer tax (May 17, 2024) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US55) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US55) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [WHEDA: Available home buyer programs](https://www.wheda.com/homeownership-and-renters/home-buyers/available-programs) - [Wis. Stat. § 77.22: Real estate transfer fee](https://docs.legis.wisconsin.gov/statutes/statutes/77/ii/22?view=section) _General information, not financial advice._ --- # Buying a home in Wyoming: closing costs, property tax and WCDA help > Wyoming mortgage numbers: about $2,535/mo on the $339,500 median home, no state transfer tax, a 0.57% tax rate and WCDA down payment help. URL: https://mortgage-math-us.com/location/wyoming/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median Wyoming home is worth $339,500 and costs about **$2,535 a month** with 10% down at the 7.24% national average rate, including $161 of property tax at an effective rate of 0.57%, below the national 0.89%. Wyoming has no state real estate transfer tax, and no state tax on recording the mortgage either, so closing costs are mostly lender, title and prepaid items. The Wyoming Community Development Authority offers down payment assistance of up to $15,000, with a minimum credit score of 620. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value in Wyoming | $339,500 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US56) | 2024 ACS 1-year | | Median household income | $75,532/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US56) | 2024 ACS 1-year | | Effective property tax rate | 0.57% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US56) | 2024 ACS 1-year | | Median gross rent | $998/mo | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US56) | 2024 ACS 1-year | | Homes lived in by their owners | 71.7% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US56) | 2024 ACS 1-year | | WCDA down payment assistance, up to | $15,000 | [Wyoming Community Development Authority: Homebuyers](https://www.wyomingcda.com/homebuyers/) | Oct 29, 2026 | | WCDA minimum credit score | 620 | [Wyoming Community Development Authority: Homebuyers](https://www.wyomingcda.com/homebuyers/) | Oct 29, 2026 | ## Wyoming closings without a transfer tax Wyoming has no state real estate transfer tax, and no state tax on recording the mortgage either. That makes a Wyoming closing simpler than in neighboring states that tax the sale. On Wyoming’s median price of $339,500, here is what each neighbor’s statewide transfer tax would add: *Statewide transfer tax on a $339,500 sale, Wyoming and its neighbors* | State | Statewide rate | Tax on this price | |---|---:|---:| | Wyoming | 0% | $0 | | Montana | 0% | $0 | | South Dakota | 0.1% | $340 | | Nebraska | 0.332% | $1,127 | | Colorado | 0.01% | $34 | | Utah | 0% | $0 | | Idaho | 0% | $0 | What you still pay are the lender’s charges, title insurance, recording fees, prepaid interest and the first escrow deposits for taxes and insurance. The CFPB’s typical range of 2%–5% of the price is $6,790–$16,975 on the median home, and with no transfer tax to add, a Wyoming closing can land toward the lower part of that range, depending on your lender. Estimate yours in the [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=WY&price=340000). ## Monthly cost of the median Wyoming home > **Worked example: $339,500 home (Wyoming median value), 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $305,550 | $2,082 | > | Property tax at 0.57% a year | $161 | > | Homeowners insurance at $4.90 per $1,000 of value (national average) | $139 | > | PMI (midpoint of Freddie Mac’s range) | $153 | > | **Total** | **$2,535** | The insurance line uses Freddie Mac’s national average premium per $1,000 of value. Hail, wind and wildfire exposure vary a lot across Wyoming, so get a quote for the specific address before you commit. Open the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=340000&down=10&tax=0.57&state=WY) to change the price, down payment or rate. ## Can a Wyoming median income cover it? The median Wyoming household earns $75,532, the 19th-lowest among the 50 states and DC. Keeping housing under Freddie Mac’s guideline of 30% of gross income leaves $1,888 a month, enough for a home of about **$253,000** with 10% down at today’s average rate — $86,500 less than the median home value. Buying the median home within the guideline takes about $101,000 a year. The [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=WY&income=75532) runs the same test on your own income and debts. ## WCDA down payment assistance The Wyoming Community Development Authority makes 30-year fixed-rate mortgages through participating lenders. Its First-Time Homebuyer loan is for buyers with no ownership interest in a primary residence in the last 3 years, within purchase price and income limits that vary by county, family size and product, and buyers complete homebuyer education. Its Advantage and Edge loans have no first-time buyer requirement and no purchase price limit, though income limits apply. All WCDA down payment assistance shares three rules: a maximum of $15,000, a minimum credit score of 620 and a borrower contribution of at least $1,500, which may be a gift. | Option | Pairs with | Terms | |---|---|---| | Home$tretch DPA | First-Time Homebuyer, Spruce Up and Edge loans | 0% interest, no monthly payment; due when you sell, refinance or reach the 30-year maturity | | Amortizing DPA | Advantage loans | Fixed rate, fully amortizing with low monthly payments over a short term | > **Worked example: A first-time buyer on the median Wyoming home with Home$tretch** > > With an FHA-size down payment of 3.5% ($11,883) and closing costs at the CFPB’s low end ($6,790), the cash needed is $18,673. Home$tretch can cover up to $15,000 of it — the $15,000 maximum is 4.4% of the median price — leaving you to bring about $3,673, never less than the $1,500 minimum. Because Home$tretch has no monthly payment, the mortgage payment stays as calculated; the balance is repaid when you sell or refinance. Compare the options with a WCDA participating lender, and see [first-time home buyer programs](https://mortgage-math-us.com/first-time-buyers/programs/) for how state assistance fits with FHA, VA and USDA loans. ## Property taxes in Wyoming Wyoming’s effective property tax rate of 0.57% is the 14th-lowest among the 50 states and DC, and the median homeowner pays $1,947 a year. Counties assess homes and local levies set the bill, so check the property’s tax history on the county treasurer’s or assessor’s site. The Wyoming Department of Revenue also runs a Property Tax Refund Program for qualifying residents, with refunds issued each year between July and September; its brochure lists the income and residency rules. ## Renting vs owning in Wyoming The median Wyoming renter pays $998/mo, below the national $1,487/mo and the 7th-lowest rent among the 50 states and DC. Owning the median home with 10% down costs $1,537 a month more than that before repairs. Even so, 71.7% of Wyoming’s occupied homes are owner-occupied, above the national 65.3%. The [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=WY&price=340000&rent=998) shows how many years it takes for owning to pull ahead at Wyoming’s median price and rent. ## Frequently asked questions ### Does Wyoming have a real estate transfer tax? No. Wyoming has no state real estate transfer tax and no state mortgage recording tax, so buyers pay mainly lender, title, recording and prepaid costs. ### What is the property tax rate in Wyoming? Census data put the median Wyoming homeowner’s bill at $1,947 a year, an effective rate of about 0.57% of home value against 0.89% nationally. ### Does Wyoming have down payment assistance? Yes. The Wyoming Community Development Authority offers up to $15,000: Home$tretch, a 0% loan with no monthly payment due on sale, refinance or maturity, or an amortizing loan with its Advantage mortgage. ### What credit score do I need for WCDA down payment assistance? At least 620, and you must put in $1,500 or more of your own money, which can be a gift. ### Who counts as a first-time homebuyer for WCDA? Someone who hasn’t had an ownership interest in a primary residence in the last 3 years. WCDA’s Advantage and Edge loans don’t require first-time status. ### How much income do I need to buy a house in Wyoming? About $101,000 a year to keep the median $339,500 home with 10% down under 30% of gross income at today’s average rate. The median Wyoming household earns $75,532. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US56) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US56) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US56) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US56) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=010XX00US) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US56) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [National Association of Realtors](https://narfocus.com/publication-issue/view/2023-07-05-state-and-local-issues-real-estate-transfer-tax) — State real estate transfer tax (Jul 5, 2023) - [Montana Constitution, Art. VIII §17](https://mca.legmt.gov/bills/mca/title_0000/article_0080/part_0010/section_0170/0000-0080-0010-0170.html) — State real estate transfer tax (Oct 28, 2026) - [SDCL 43-4-21](https://sdlegislature.gov/api/Statutes/43-4-21.html?all=true) — State real estate transfer tax (Oct 28, 2026) - [C.R.S. 39-13-102](https://colorado.public.law/statutes/crs_39-13-102) — State real estate transfer tax (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price); Minimum FHA down payment (Oct 28, 2026) - [Wyoming Community Development Authority: Homebuyers](https://www.wyomingcda.com/homebuyers/) — WCDA down payment assistance, up to; WCDA down payment assistance minimum borrower contribution (may be a gift); WCDA down payment assistance minimum credit score (Oct 29, 2026) - [Nebraska Department of Revenue](https://revenue.nebraska.gov/PAD/documentary-stamp-tax/documentary-stamp-tax-rate-history) — State real estate transfer tax (Jul 18, 2026) - [Wyoming Community Development Authority: Homebuyers](https://www.wyomingcda.com/homebuyers/) - [WCDA: Purchase price and income limits](https://www.wyomingcda.com/purchase-price-income-limts/) - [Wyoming Department of Revenue: Property Tax Refund Program](https://revenue.wyo.gov/property-tax-refund-program) _General information, not financial advice._ --- # Buying a home in Atlanta: payments, property taxes and Invest Atlanta programs > Atlanta mortgage numbers: a $462,000 median home, a 1.01% property tax ratio, Georgia’s closing taxes and Invest Atlanta’s ATL HomeNOW help. URL: https://mortgage-math-us.com/location/atlanta-ga/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median owner-occupied home in the City of Atlanta is worth $462,200, against $343,300 statewide. With 10% down at the 7.24% national average rate, it costs about **$3,621 a month** including property tax at the city’s effective 1.01%, insurance and PMI. Invest Atlanta’s ATL HomeNOW program adds up to **$20,000**, forgiven after 10 years, for buyers purchasing inside city limits. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value, Atlanta | $462,200 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US1304000) | 2024 ACS 1-year | | Median household income | $88,165/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US1304000) | 2024 ACS 1-year | | Effective property tax rate | 1.01% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US1304000) | 2024 ACS 1-year | | Median year built | 1993 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=160XX00US1304000) | 2024 ACS 1-year | | ATL HomeNOW assistance, up to | $20,000 | [Invest Atlanta: Homebuyer Programs & Downpayment Assistance](https://www.investatlanta.com/homebuyers/homebuyer-programs-downpayment-assistance) | Oct 29, 2026 | | Beltline program, civil servants and legacy residents | $30,000 | [Invest Atlanta: Homebuyer Programs & Downpayment Assistance](https://www.investatlanta.com/homebuyers/homebuyer-programs-downpayment-assistance) | Oct 29, 2026 | | Georgia intangible recording tax | 0.3% | [Georgia Department of Revenue](https://dor.georgia.gov/intangible-recording-tax) | Oct 28, 2026 | ## What Atlanta homes cost against Georgia The median Atlanta home is above the Georgia median, and incomes in the city run higher than the state’s. Slightly more Atlanta households rent than own: 47.7% of occupied homes are owner-occupied, against 66.3% statewide. The median home was built in 1993, the fifth-newest among the 20 large cities we cover. *City of Atlanta compared with Georgia and the US (Census ACS 2024 1-year)* | | Atlanta | Georgia | United States | |---|---:|---:|---:| | Median home value | $462,200 | $343,300 | $360,600 | | Median household income | $88,165 | $79,991 | $81,604 | | Home value ÷ income | 5.2× | 4.3× | 4.4× | | Effective property tax rate | 1.01% | 0.74% | 0.89% | | Median property tax paid | $4,663 | $2,554 | $3,211 | | Median gross rent | $1,765/mo | $1,506/mo | $1,487/mo | | Median owner costs with a mortgage | $2,542/mo | $1,909/mo | $2,035/mo | These figures cover the City of Atlanta only. Most of the metro’s suburbs are separate cities or unincorporated county land with their own prices and tax rates. ## Atlanta’s property tax bill At 1.01% of value, the city’s effective rate is higher than Georgia’s 0.74% and above the national 0.89%. On the median-priced home that difference from the state ratio comes to $1,248 a year more. The median city owner pays $4,663. The city sits mostly in Fulton County, with a portion in DeKalb, and a bill combines county, city and school taxes on the assessed value. Exemptions for a primary residence are claimed through the county tax assessor, so file once you move in, and use the actual bill of the home you are buying rather than an average when you estimate escrow. ## Payment on the median Atlanta home > **Worked example: $462,200 home, 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $415,980 | $2,835 | > | Property tax at 1.01% | $389 | > | Homeowners insurance at $4.90 per $1,000 (national average) | $189 | > | PMI (midpoint of Freddie Mac’s range) | $208 | > | **Total** | **$3,621** | Fulton and DeKalb counties use the national baseline conforming limit of $832,750, so the $415,980 loan is well inside conforming territory. The [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=462000&down=10&tax=1.01&state=GA) opens with these inputs. ## Invest Atlanta’s ATL HomeNOW and Beltline help Invest Atlanta, the city’s development authority, runs several purchase incentives for homes inside Atlanta city limits. Every program asks for at least $1,500 of your own funds, homebuyer education and an owner-occupied home. | Program | Help, up to | Main rules | |---|---|---| | ATL HomeNOW | $20,000 for down payment, closing costs or a rate buydown | Forgiven after 10 years as your home; 30-year fixed first mortgage up to $325,000; minimum score 620; income up to $99,000 for one person | | Beltline Mortgage Assistance | $30,000 for civil servants and legacy residents, less for other buyers | Homes in set Beltline subareas; interest-free soft second with an affordability period of 15 years | The median Atlanta home with 10% down needs a $415,980 first mortgage — above HomeNOW’s first-mortgage cap, so HomeNOW buyers shop below the median. > **Worked example: Buying at the ATL HomeNOW loan cap** > > With the maximum $20,000 of help and the $1,500 minimum of your own, a $325,000 first mortgage buys a home of about $346,500. At 7.24%, principal and interest are $2,215; with tax $292, insurance $141 and PMI $163, the total is about **$2,810 a month** — $810 less than the median-home payment. Incentives can be combined to reduce the cash you need. Statewide Georgia Dream loans are covered in the [Georgia guide](https://mortgage-math-us.com/location/georgia/) and the [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/). ## Georgia’s two closing taxes in an Atlanta purchase Georgia levies a transfer tax of about 0.1% of the price, normally paid by the seller, and an intangible recording tax of 0.3% on a long-term mortgage, capped by state law. On the median home they come to about $462 and $1,248 on a 10%-down loan. The intangible tax follows the loan amount, so a larger down payment lowers it. Add lender fees, title insurance and prepaid items in the [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=GA&price=462200). ## Does the median Atlanta income cover the median home? The median city household earns $88,165. At Freddie Mac’s 30% guideline that is $2,204 a month for housing — enough for about **$281,000** with 10% down at today’s rate, which leaves a gap of $181,200 to the median value. Carrying the median home within the guideline takes about $145,000 a year. The [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=GA&income=88165) lets you add your debts. Compare Atlanta with [Charlotte](https://mortgage-math-us.com/location/charlotte-nc/) and [Dallas](https://mortgage-math-us.com/location/dallas-tx/), or weigh renting at the city’s median $1,765/mo in the [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=GA&price=462000&rent=1765&tax=1.01). ## Frequently asked questions ### What is the property tax rate in Atlanta? Census data put the median Atlanta owner’s bill at $4,663 a year, an effective rate of about 1.01% of home value, compared with 0.74% across Georgia. ### Does Atlanta have down payment assistance? Yes. Invest Atlanta’s ATL HomeNOW offers up to $20,000, forgiven after 10 years, with a minimum score of 620 and a first mortgage up to $325,000. Other Invest Atlanta incentives target the Beltline and specific neighborhoods. ### What closing taxes do Atlanta buyers pay? Georgia charges a transfer tax of about 0.1% of the price, usually paid by the seller, and an intangible recording tax of 0.3% on the mortgage amount. ### What is the median home price in Atlanta? The 2024 American Community Survey puts the median value of owner-occupied homes in the City of Atlanta at $462,200, compared with $343,300 for Georgia and $360,600 nationally. ### How much income do you need to buy a house in Atlanta? To keep the $3,621 monthly cost of the median home with 10% down under 30% of gross income, you would need about $145,000 a year with no other large debts. ### Who qualifies for the Beltline Mortgage Assistance Program? Buyers of homes in set Beltline subareas within the city, with higher help — up to $30,000 — for civil servants and legacy residents. It is an interest-free soft second mortgage with an affordability period of 15 years. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US1304000) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US1304000) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US1304000) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=160XX00US1304000) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US1304000) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US13) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US13) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US13) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [Invest Atlanta: Homebuyer Programs & Downpayment Assistance](https://www.investatlanta.com/homebuyers/homebuyer-programs-downpayment-assistance) — Invest Atlanta ATL HomeNOW assistance, up to; ATL HomeNOW maximum first-mortgage amount; Invest Atlanta homebuyer programs: buyer’s own funds, at least (Oct 29, 2026) - [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) — 2026 baseline conforming loan limit (one-unit) (2026 limit) - [Georgia Department of Revenue](https://dor.georgia.gov/intangible-recording-tax) — State tax on recording a mortgage (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US13) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=160XX00US1304000) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US13) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=160XX00US1304000) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=040XX00US13) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=010XX00US) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [Georgia Department of Revenue](https://dor.georgia.gov/real-estate-transfer-tax) — State real estate transfer tax (Oct 28, 2026) - [Invest Atlanta: Homebuyer Programs & Downpayment Assistance](https://www.investatlanta.com/homebuyers/homebuyer-programs-downpayment-assistance) - [FHFA: Conforming Loan Limit Values](https://www.fhfa.gov/data/conforming-loan-limit) _General information, not financial advice._ --- # Buying a home in Austin: prices, property tax bills and city down payment help > Austin mortgage numbers: a $571,000 median home, a $7,468 median tax bill, Texas closing rules and up to $40,000 in City help. URL: https://mortgage-math-us.com/location/austin-tx/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median owner-occupied home in Austin is worth $571,000. With 10% down at the 7.24% national average rate, it costs about **$4,673 a month** with property tax, insurance at the Texas average and PMI. Austin has the lowest effective tax rate of the 3 Texas cities we cover (1.31%) but the largest median bill ($7,468), because its homes are worth more. The City’s Down Payment Assistance Program offers up to **$40,000** for homes up to $440,000. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value, Austin | $571,000 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US4805000) | 2024 ACS 1-year | | Median property tax paid | $7,468/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US4805000) | 2024 ACS 1-year | | Effective property tax rate | 1.31% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US4805000) | 2024 ACS 1-year | | Median year built | 2000 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=160XX00US4805000) | 2024 ACS 1-year | | City of Austin DPA, up to | $40,000 | [City of Austin Housing Department: Homebuyer Resources](https://www.austintexas.gov/housing/homebuyer-resources) | Oct 29, 2026 | | City DPA maximum sales price | $440,000 | [City of Austin Housing Department: Homebuyer Resources](https://www.austintexas.gov/housing/homebuyer-resources) | Oct 29, 2026 | | School homestead exemption | $140,000 | [Texas Comptroller](https://comptroller.texas.gov/taxes/property-tax/exemptions/) | Dec 11, 2025 | ## Austin homes, incomes and owners The median Austin home was built in 2000, the newest housing stock among the 20 large cities we cover, and it is worth 6.3 times the median household income — against 3.9 for Texas. Most Austin households rent: 41.2% of occupied homes are owner-occupied, compared with 62.3% statewide. *City of Austin compared with Texas and the US (Census ACS 2024 1-year)* | | Austin | Texas | United States | |---|---:|---:|---:| | Median home value | $571,000 | $313,200 | $360,600 | | Median household income | $90,430 | $79,721 | $81,604 | | Home value ÷ income | 6.3× | 3.9× | 4.4× | | Effective property tax rate | 1.31% | 1.31% | 0.89% | | Median gross rent | $1,770/mo | $1,475/mo | $1,487/mo | | Median owner costs with a mortgage | $2,801/mo | $2,211/mo | $2,035/mo | | Median year built | 2000 | 1994 | 1981 | Newer homes usually mean fewer big repairs in the first years, but newer subdivisions often come with HOA dues and, in some areas, extra special-district taxes. Ask for both before you make an offer. ## Austin’s tax bill against Houston and Dallas The effective rate alone doesn’t tell you what you will pay. Among the Texas cities we cover, Austin has the lowest effective rate but the largest median bill: *Property tax in the Texas markets (Census ACS 2024 1-year)* | City | Median home value | Effective tax rate | Median tax paid | |---|---:|---:|---:| | Dallas | $340,400 | 1.45% | $4,943 | | Houston | $301,200 | 1.43% | $4,308 | | Austin | $571,000 | 1.31% | $7,468 | Bills come from Travis County (and Williamson or Hays County for parts of the city), the City, a school district and other local units, applied to the appraisal district’s value. The school homestead exemption of $140,000 covers about 25% of the median Austin value for the school portion — a smaller share than in the other Texas cities we cover, because the exemption is a fixed dollar amount and Austin homes are worth more. File with the appraisal district once you move in; the [Texas guide](https://mortgage-math-us.com/location/texas/) explains the over-65 addition. ## The monthly payment on a median Austin home > **Worked example: $571,000 home, 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $513,900 | $3,502 | > | Property tax at 1.31% | $623 | > | Homeowners insurance at the Texas average of $3,489/yr | $291 | > | PMI (midpoint of Freddie Mac’s range) | $257 | > | **Total** | **$4,673** | The [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=571000&down=10&tax=1.31&ins=3489&state=TX) opens with Austin’s median value, tax ratio and the Texas insurance average; add HOA dues if the home has them. ## City of Austin Down Payment Assistance The City of Austin Housing Department offers up to $40,000 through participating lenders. To qualify: - Household income at or below 80% of median family income — $106,800 for a household of four. - A first-time buyer who hasn’t owned a home in the past 3 years (displaced homemakers and some divorced applicants can also qualify). - A sales price no higher than $440,000. - Homebuyer education classes before you buy. The median Austin home is $131,000 above that cap, so DPA buyers shop below the median. At the cap, the maximum assistance equals about 9.1% of the price. The median household income is below the four-person limit, so many families qualify on income even when the median home is out of range. The City’s page does not list current funding status or repayment terms, so confirm both with a participating lender. Statewide TDHCA and TSAHC programs offer 2%–5% of the loan; compare them in the [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/). ## Closing in Austin Texas bars real estate transfer taxes, so Austin buyers pay no transfer tax at closing. The state sets title insurance premiums: the basic owner’s policy on the median home works out to about $3,107, the same at any title company. All-in closing costs at the CFPB’s 2%–5% range would be $11,420–$28,550. Walk through the line items in [closing costs](https://mortgage-math-us.com/buying/closing-costs/). Creek-side neighborhoods can sit in FEMA flood zones, and standard policies don’t cover flooding, so check the address on FEMA’s Flood Map Service Center before you sign. ## Austin affordability at the median income On a median household income of $90,430, Freddie Mac’s 30% guideline gives $2,261 a month for housing. With 10% down at today’s rate, Austin’s tax ratio and the Texas insurance average, that supports about **$276,000** — $295,000 below the median value. Carrying the median home within the guideline takes about $187,000 a year. The [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=TX&income=90430) shows your own range. Compare with [Dallas](https://mortgage-math-us.com/location/dallas-tx/) and [Houston](https://mortgage-math-us.com/location/houston-tx/), or test buying against renting at the median $1,770/mo in the [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=TX&price=571000&rent=1770&tax=1.31). ## Frequently asked questions ### What is the property tax rate in Austin? Census data put the effective rate at about 1.31% of home value, with a median bill of $7,468 a year. Your bill depends on the county, school district and special districts, minus exemptions such as the $140,000 school homestead exemption. ### Are property taxes higher in Austin than in Dallas or Houston? Austin has the lowest effective rate of the 3 Texas cities we cover but the largest median bill, because its homes are worth more. Census puts the Austin median bill at $7,468. ### Does Austin have down payment assistance? Yes. The City of Austin’s Down Payment Assistance Program offers up to $40,000 to first-time buyers at or below 80% of median family income, for homes priced up to $440,000, through participating lenders. ### What is the median home price in Austin? The 2024 American Community Survey puts the median value of owner-occupied homes in Austin at $571,000, compared with $313,200 for Texas. ### How much income do you need to buy a house in Austin? To keep the $4,673 monthly cost of the median home with 10% down under 30% of gross income, you would need about $187,000 a year with no other large debts. ### Is there a transfer tax in Austin? No. The Texas Constitution prohibits real estate transfer taxes; buyers pay recording fees and state-set title insurance premiums instead. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US4805000) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US4805000) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US4805000) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=160XX00US4805000) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US4805000) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US48) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US48) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [Texas Department of Insurance](https://www.tdi.texas.gov/general/texas-homeowners-insurance-market-overview.html) — Average Texas homeowners insurance premium (2025 (preliminary)) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [Texas Comptroller](https://comptroller.texas.gov/taxes/property-tax/exemptions/) — School district residence homestead exemption (Dec 11, 2025) - [City of Austin Housing Department: Homebuyer Resources](https://www.austintexas.gov/housing/homebuyer-resources) — City of Austin Down Payment Assistance Program, up to; Austin down payment assistance maximum sales price; Austin down payment assistance income limit, four-person household (Oct 29, 2026) - [Texas Department of Insurance](https://www.tdi.texas.gov/title/titlerates2026.html) — Texas basic title premium for a $100,000 policy; Texas basic title premium per $1,000 above $100,000 (Rates effective Mar 1, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=160XX00US4805000) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US48) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US48) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US48) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=160XX00US4805000) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=040XX00US48) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=010XX00US) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US48) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=010XX00US) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US4819000) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US4819000) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US4835000) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US4835000) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [42 U.S.C. 12704(14)](https://www.law.cornell.edu/uscode/text/42/12704) — First-time homebuyer: has not owned a home in the past (HUD/HOME statute) (Oct 28, 2026) - [Texas Department of Housing and Community Affairs](https://welcomehome.tdhca.texas.gov/uploads/My-First-Texas-Home-Program-Matrix-TMS.pdf) — TDHCA My First Texas Home assistance, low end (share of loan); TDHCA My First Texas Home assistance, high end (share of loan) (Program matrix Aug 17, 2026) - [City of Austin Housing Department: Homebuyer Resources](https://www.austintexas.gov/housing/homebuyer-resources) - [FEMA Flood Map Service Center](https://msc.fema.gov/portal/home) _General information, not financial advice._ --- # Buying a home in Boston: prices, property tax and city help > Boston home buying: $722,800 median value, the residential exemption, Massachusetts deeds excise and up to $50,000 from the City’s buyer program. URL: https://mortgage-math-us.com/location/boston-ma/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median owner-occupied home in Boston is worth $722,800, above the Massachusetts median of $607,400. With 10% down at the 7.24% national average rate it costs about **$5,427 a month**. Owners who live in their home can claim the City’s residential exemption, worth up to $4,353.74 off the tax bill, and first-time buyers can get up to **$50,000** from the City’s First-Time Homebuyer Program. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value, Boston | $722,800 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US2507000) | 2024 ACS 1-year | | Homes lived in by their owners | 35.9% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US2507000) | 2024 ACS 1-year | | Median year built | 1947 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=160XX00US2507000) | 2024 ACS 1-year | | Residential exemption savings, up to | $4,353.74 | [City of Boston Assessing: Residential exemption](https://www.boston.gov/departments/assessing/residential-exemption) | FY2026 | | City first-time buyer help, up to | $50,000 | [City of Boston: First-Time Homebuyer Program](https://boston.gov/first-time-homebuyer-program) | Oct 16, 2026 | | Massachusetts deeds excise | 0.456% | [Massachusetts Department of Revenue](https://www.mass.gov/info-details/massachusetts-tax-rates) | Dec 30, 2025 | ## Owners and renters in Boston Boston is a city of renters: 35.9% of occupied homes are owner-occupied, against 62.4% across Massachusetts — the third-lowest homeownership rate among the 20 large cities this site covers. The median Boston home costs 7.4 times the median household income, against 5.8 statewide and 4.4 nationally, and Boston’s median income is lower than the state’s. *City of Boston compared with Massachusetts and the US (Census ACS 2024 1-year)* | | Boston | Massachusetts | United States | |---|---:|---:|---:| | Median home value | $722,800 | $607,400 | $360,600 | | Median household income | $97,791 | $104,828 | $81,604 | | Home value ÷ income | 7.4× | 5.8× | 4.4× | | Effective property tax rate | 0.62% | 1% | 0.89% | | Median gross rent | $2,196 | $1,848 | $1,487 | | Median owner costs with a mortgage | $2,984 | $2,755 | $2,035 | | Median year built | 1947 | 1965 | 1981 | ## The age of Boston’s housing Boston has the oldest housing of the cities on this site: the median home was built in 1947, 34 years before the national median of 1981. Condos in converted row houses and two- and three-family houses — common forms of older Boston housing — are all eligible for the City’s buyer programs. Age changes what you should budget for. Plan a thorough inspection that looks at the heating system, wiring, roof, foundation and windows, and set money aside for repairs in the first years. Homes this old often contain lead paint; Massachusetts law makes owners responsible for removing lead hazards when young children live in the home, so ask for any lead inspection records before you buy. In a condo, read the association’s budget and reserve study, because an aging building’s big repairs are shared among owners. ## What the median Boston home costs a month > **Worked example: $722,800 home (Boston’s median value), 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $650,520 | $4,433 | > | Property tax at 0.62% a year | $373 | > | Homeowners insurance at the national $4.90 per $1,000 | $295 | > | PMI (midpoint of Freddie Mac’s range) | $325 | > | **Total** | **$5,427** | > > Condo buyers add monthly association fees, which can be substantial in older buildings. Insurance uses Freddie Mac’s national per-$1,000 figure. Test other prices and down payments in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=723000&down=10&tax=0.62&state=MA). ## The residential exemption Boston’s effective property tax rate of 0.62% is lower than the Massachusetts figure of 1% and below the national 0.89%. For owner-occupants, the City’s residential exemption lowers it further: in the last fiscal year it cut qualifying owners’ bills by up to $4,353.74, about $363 a month. You qualify for one property that you own and occupy as your principal residence, and you must apply — Boston’s Assessing Department publishes each year’s deadline. The payment example above uses the citywide average rate; if you buy and move in, ask your lender to estimate your escrow with the exemption applied once it is approved. ## Boston Home Center buyer programs The Boston Home Center, part of the Mayor’s Office of Housing, runs the City’s purchase programs for one- to three-family homes and condos in Boston that you will live in. You must be a first-time buyer (no home owned in the past 3 years), complete the Center’s Homebuying 101 class, get pre-approved with a participating lender and meet income and asset limits. *City of Boston First-Time Homebuyer Program assistance* | Household income | City help | Ceiling | |---|---|---:| | Below area median income | Up to 3% of the price plus eligible closing costs | $50,000 | | Above the median, up to 135% of it | A smaller share of the price plus eligible closing costs | $35,000 | Current Boston residents receive the help as a grant. Buyers moving in from outside the city receive it as a 0% deferred loan, repaid when they sell, refinance or transfer the home. ONE+Boston, run with the state’s housing partnership, adds a discounted fixed rate on a 30-year mortgage for eligible first-time buyers. > **Worked example: Cash to close on the median $722,800 home with 5% down and the City’s top-tier help** > > The down payment is $36,140 and closing costs at the CFPB’s typical range run $14,456–$36,140. City help of up to 3% of the price plus eligible closing costs, capped at $50,000, would cover about $36,140–$50,000, leaving roughly $14,456–$22,280 for you to bring. The monthly payment with 5% down would be about $5,691. ## Deeds excise and cash to close Massachusetts charges a deeds excise of 0.456% of the price when the deed is recorded — about $3,296 on a home at Boston’s median value. Check the purchase and sale agreement for which side pays it. Lender fees, title insurance, attorney fees and prepaid items make up the rest of closing costs; the [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=MA&price=723000) uses Massachusetts rules. The [Massachusetts guide](https://mortgage-math-us.com/location/massachusetts/) covers MassHousing loans that can be combined with City help. ## How far a Boston income goes The median Boston household earns $97,791. At Freddie Mac’s 30% housing guideline that is $2,445 a month, enough for about **$326,000** with 10% down at today’s average rate — $396,800 short of the median value. The [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=MA&income=97791) tests your own income and debts, and the [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=MA&price=723000&rent=2196) compares buying with the median rent of $2,196. For other East Coast markets, see [Washington, DC](https://mortgage-math-us.com/location/washington-dc/) and [New York City](https://mortgage-math-us.com/location/new-york-ny/). ## Frequently asked questions ### What is the median home price in Boston? The Census Bureau’s 2024 American Community Survey puts the median value of owner-occupied homes in the City of Boston at $722,800, compared with $607,400 for Massachusetts and $360,600 for the US. ### What is the property tax rate in Boston? Census figures put the median Boston homeowner’s bill at $4,447 a year, an effective rate of about 0.62% of value. Owner-occupants who claim the residential exemption pay less. ### What is Boston’s residential exemption? It is a reduction in the property tax bill for owners who live in the home as their principal residence. In the last fiscal year it saved qualifying owners up to $4,353.74. New owners must apply to the Assessing Department, and only one property per owner qualifies. ### Does Boston have first-time homebuyer assistance? Yes. The City’s First-Time Homebuyer Program offers up to 3% of the price plus eligible closing costs, up to $50,000, for households below area median income, and up to $35,000 for households up to 135% of median. A Homebuying 101 class is required. ### How much income do you need to buy a home in Boston? About $217,085 a year keeps the payment on the median $722,800 home under 30% of gross income with 10% down at today’s average rate, before condo fees. The median Boston household earns $97,791. ### Is there a transfer tax on Boston homes? Massachusetts charges a deeds excise of 0.456% of the price, about $3,296 on a median-value Boston home. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US2507000) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US2507000) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US2507000) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=160XX00US2507000) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US2507000) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US25) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US25) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US25) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [Massachusetts Department of Revenue](https://www.mass.gov/info-details/massachusetts-tax-rates) — State real estate transfer tax (Dec 30, 2025) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=160XX00US2507000) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=010XX00US) — Median year homes were built (2024 ACS 1-year) - [City of Boston Assessing: Residential exemption](https://www.boston.gov/departments/assessing/residential-exemption) — City of Boston residential exemption, tax savings up to (FY2026) - [City of Boston: First-Time Homebuyer Program](https://boston.gov/first-time-homebuyer-program) — City of Boston First-Time Homebuyer down payment help, share of purchase price (under 100% of AMI); City of Boston First-Time Homebuyer Program, households under 100% of area median income, up to; City of Boston First-Time Homebuyer Program income limit (share of area median income) (Oct 16, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US25) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US25) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=160XX00US2507000) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=040XX00US25) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=010XX00US) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US25) — Median year homes were built (2024 ACS 1-year) - [42 U.S.C. 12704(14)](https://www.law.cornell.edu/uscode/text/42/12704) — First-time homebuyer: has not owned a home in the past (HUD/HOME statute) (Oct 28, 2026) - [City of Boston: First-Time Homebuyer Program](https://boston.gov/first-time-homebuyer-program) - [City of Boston Assessing: Residential exemption](https://www.boston.gov/departments/assessing/residential-exemption) - [Massachusetts Department of Revenue: Tax rates](https://www.mass.gov/info-details/massachusetts-tax-rates) _General information, not financial advice._ --- # Buying in Charlotte: home prices, monthly costs and HouseCharlotte help > Charlotte home buying: median value $431,900, a 0.69% effective tax rate, who pays the NC excise tax and how HouseCharlotte assistance works. URL: https://mortgage-math-us.com/location/charlotte-nc/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median owner-occupied home in Charlotte is worth $431,900, above the North Carolina median of $333,000. With 10% down at the 7.24% national average rate, it costs about **$3,268 a month** including property tax at the city’s effective rate of 0.69%, insurance and PMI. The City’s HouseCharlotte program offers first-time buyers up to **$80,000**, but only on homes priced up to $365,000. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value, Charlotte | $431,900 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US3712000) | 2024 ACS 1-year | | Median household income, Charlotte | $86,416/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US3712000) | 2024 ACS 1-year | | Effective property tax rate, Charlotte | 0.69% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US3712000) | 2024 ACS 1-year | | Median year Charlotte homes were built | 1999 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=160XX00US3712000) | 2024 ACS 1-year | | North Carolina excise tax on deeds | 0.2% | [N.C. Gen. Stat. 105-228.30](https://ncleg.gov/EnactedLegislation/Statutes/HTML/ByArticle/Chapter_105/Article_8E.html) | Oct 28, 2026 | | HouseCharlotte help, up to | $80,000 | [City of Charlotte: Homeownership (HouseCharlotte)](https://www.charlottenc.gov/Streets-and-Neighborhoods/Housing/Resources-for-Homeowners-Renters/Homeownership) | Oct 29, 2026 | | HouseCharlotte maximum sales price | $365,000 | [City of Charlotte: Homeownership (HouseCharlotte)](https://www.charlottenc.gov/Streets-and-Neighborhoods/Housing/Resources-for-Homeowners-Renters/Homeownership) | Oct 29, 2026 | ## Charlotte’s housing stock Charlotte has the second-newest housing stock among the 20 large cities this site covers: the median home was built in 1999, newer than the national median of 1981. Newer construction usually means fewer surprises from wiring, plumbing and roofs, though it also means many buyers are paying for recently built homes at today’s prices rather than inheriting older, cheaper stock. Charlotte is split almost evenly between owners and renters: 50.5% of occupied homes are lived in by their owners, compared with 66.8% across North Carolina. Prices sit above the US median, and the median home costs 5.0 times the median household income — a higher multiple than the statewide ratio of 4.5. *City of Charlotte compared with North Carolina and the US (Census ACS 2024 1-year)* | | Charlotte | North Carolina | United States | |---|---:|---:|---:| | Median home value | $431,900 | $333,000 | $360,600 | | Median household income | $86,416 | $73,958 | $81,604 | | Home value ÷ income | 5.0× | 4.5× | 4.4× | | Effective property tax rate | 0.69% | 0.61% | 0.89% | | Median gross rent | $1,720/mo | $1,338/mo | $1,487/mo | | Median owner costs with a mortgage | $2,029/mo | $1,747/mo | $2,035/mo | | Median year built | 1999 | 1993 | 1981 | These figures cover the City of Charlotte only. Suburbs elsewhere in Mecklenburg County and across the state line in South Carolina have their own prices and tax rates. ## The monthly cost of a median Charlotte home > **Worked example: $431,900 home (Charlotte’s median value), 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $388,710 | $2,649 | > | Property tax at 0.69% a year | $248 | > | Homeowners insurance at the national rate of $4.90 per $1,000 of value | $176 | > | PMI (midpoint of Freddie Mac’s range) | $194 | > | **Total** | **$3,268** | > > The insurance line uses Freddie Mac’s national per-$1,000 figure because North Carolina doesn’t publish a city average; get real quotes before you commit. The Census median for owners who already carry a mortgage is $2,029 a month — lower than a new purchase because many of those loans were taken out at older prices and rates. Try your own price, down payment and tax rate in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=432000&down=10&tax=0.69&state=NC). ## HouseCharlotte and its price cap The City of Charlotte’s HouseCharlotte program, administered with a nonprofit partner, helps first-time buyers with the down payment, closing costs and rate buy-downs on homes inside city limits. Help comes as a deferred loan with a term of 30 years that is forgiven when the term ends, so you make no monthly payment on it as long as you keep the home. *HouseCharlotte assistance tiers (City of Charlotte)* | Income tier | Base assistance | Total with match | |---|---:|---:| | Lowest tier (Program 1A) | up to $30,000 | up to $80,000 | | Moderate income, up to 110% of area median (Program 1B) | up to $10,000 | base plus a smaller match | The catch is the price cap. HouseCharlotte homes can sell for no more than $365,000, which is below the city’s median home value — about 85% of it. In practice that steers buyers toward condos, townhomes and smaller houses in the eligible neighborhood areas. > **Worked example: A $365,000 home at the HouseCharlotte cap, 5% down** > > The down payment is $18,250, and closing costs at the CFPB’s typical 2%–5% add $7,300–$18,250, for $25,550–$36,500 of cash needed. If the full $30,000 base award went toward those costs, it would cover everything at the low end of that range and leave about $6,500 for the buyer to bring at the high end. The monthly payment on the first mortgage would be about **$2,895**, including tax, insurance and PMI at the same assumptions as above. Program rules, eligible areas and funding can change, so confirm current terms with the City before signing a contract. Statewide options from the North Carolina Housing Finance Agency are covered in the [North Carolina guide](https://mortgage-math-us.com/location/north-carolina/), and the [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/) explains how deferred and forgivable loans compare. ## Who pays North Carolina’s excise tax North Carolina charges an excise tax of 0.2% of the price when a deed is recorded, and the statute makes the seller (the transferor) responsible for paying it. On a home at Charlotte’s median value that comes to about $864 — a seller’s cost, not yours. As a buyer, your closing costs are mostly lender fees, title insurance, the appraisal, recording fees and prepaid interest, taxes and insurance. The [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=NC&price=432000) opens with North Carolina’s rules. ## Charlotte property taxes At 0.69% of value, Charlotte’s effective property tax rate is higher than the North Carolina figure of 0.61% and below the national 0.89%. A Charlotte bill combines Mecklenburg County’s rate and the City’s rate, plus any special district charges, applied to the county’s assessed value. That makes the tax line on a payment predictable within a revaluation cycle, but expect a step up when the county reappraises. ## Can a median Charlotte income buy the median home? The median household in Charlotte earns $86,416. Keeping housing costs under Freddie Mac’s 30% guideline gives a budget of $2,160 a month, which supports a price of about **$286,000** with 10% down at today’s average rate — which falls $145,900 short of the median value. Run your own income and debts through the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=NC&income=86416). If renting longer is on the table, the median Charlotte rent is $1,720 a month against about $3,268 to own the median home. The [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=NC&price=432000&rent=1720) shows how many years of ownership it takes to come out ahead. For a comparison within the state, see [Raleigh](https://mortgage-math-us.com/location/raleigh-nc/); for another Southern market, see [Nashville](https://mortgage-math-us.com/location/nashville-tn/). ## Frequently asked questions ### What is the median home price in Charlotte? The Census Bureau’s 2024 American Community Survey puts the median value of owner-occupied homes in the City of Charlotte at $431,900, against $333,000 for North Carolina and $360,600 for the US. ### What is the property tax rate in Charlotte? Census data put the median Charlotte homeowner’s tax bill at $2,975 a year, an effective rate of about 0.69% of home value. The actual bill combines Mecklenburg County and City of Charlotte rates applied to the county’s assessed value. ### Does Charlotte have down payment assistance? Yes. HouseCharlotte offers first-time buyers up to $80,000 in the lowest income tier as a deferred, forgivable loan, for homes priced up to $365,000 inside city limits. Income can be up to 110% of area median in the higher tier. ### Who pays the transfer tax on a Charlotte home sale? North Carolina’s excise tax of 0.2% of the price is paid by the seller under state law — about $864 on a home at Charlotte’s median value. ### How much income do you need to buy a house in Charlotte? To keep housing under 30% of gross income on the median $431,900 home with 10% down at today’s average rate, you would need roughly $130,724 a year, assuming few other debts. The median Charlotte household earns $86,416. ### Are homes in Charlotte newer than average? Yes. The median Charlotte home was built in 1999, against 1981 for the US as a whole, according to the Census Bureau. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US3712000) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US3712000) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US3712000) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=160XX00US3712000) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US3712000) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=160XX00US3712000) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US37) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=010XX00US) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US37) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US37) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US37) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [N.C. Gen. Stat. 105-228.30](https://ncleg.gov/EnactedLegislation/Statutes/HTML/ByArticle/Chapter_105/Article_8E.html) — State real estate transfer tax (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [City of Charlotte: Homeownership (HouseCharlotte)](https://www.charlottenc.gov/Streets-and-Neighborhoods/Housing/Resources-for-Homeowners-Renters/Homeownership) — HouseCharlotte maximum total sales price; HouseCharlotte base assistance for buyers at or below 80% of area median income, up to; HouseCharlotte assistance for buyers at or below 80% of area median income (base plus match), up to (Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US37) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US37) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=160XX00US3712000) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=040XX00US37) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=010XX00US) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [City of Charlotte: Homeownership and HouseCharlotte](https://www.charlottenc.gov/Streets-and-Neighborhoods/Housing/Resources-for-Homeowners-Renters/Homeownership) - [North Carolina General Statutes, Article 8E: Excise Stamp Tax on Conveyances](https://ncleg.gov/EnactedLegislation/Statutes/HTML/ByArticle/Chapter_105/Article_8E.html) _General information, not financial advice._ --- # Buying a home in Chicago: property taxes, transfer taxes and payments > Chicago mortgage numbers: a 1.51% effective property tax, the city’s buyer and CTA transfer taxes, FHA vs conventional payments and city buyer resources. URL: https://mortgage-math-us.com/location/chicago-il/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer A median-value Chicago home ($341,200) costs about **$2,815 a month** with 10% down at the 7.24% national average rate, and property tax at the city’s effective 1.51% makes up 15% of it. At closing, the buyer usually owes the city’s 0.75% transfer tax, while the 0.3% CTA portion generally falls to the seller. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Effective property tax rate, Chicago | 1.51% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US1714000) | 2024 ACS 1-year | | Median property tax paid | $5,152/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US1714000) | 2024 ACS 1-year | | Median home value | $341,200 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US1714000) | 2024 ACS 1-year | | Median household income | $80,613/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US1714000) | 2024 ACS 1-year | | Median year built | 1954 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=160XX00US1714000) | 2024 ACS 1-year | | City transfer tax, buyer portion | 0.75% | [City of Chicago Department of Finance: Real Property Transfer Tax](https://www.chicago.gov/city/en/depts/fin/supp_info/revenue/tax_list/real_property_transfertax.html) | Oct 29, 2026 | | CTA portion, generally the seller | 0.3% | [City of Chicago Department of Finance: Real Property Transfer Tax](https://www.chicago.gov/city/en/depts/fin/supp_info/revenue/tax_list/real_property_transfertax.html) | Oct 29, 2026 | ## Chicago’s property tax weight Chicago’s effective property tax rate of 1.51% is the highest among the 20 large cities we cover. Illinois as a whole ranks highest of all states at 1.92%, so the city is lower than the state ratio and well above the national 0.89%. On the median-priced home, that difference from the US ratio works out to $2,115 a year more in tax. The median Chicago owner pays $5,152 a year. Bills come from the Cook County assessment and the rates of every local body that taxes the property, minus any exemptions you file for. Before you bid, pull the latest bill for the specific property rather than relying on a citywide figure, and ask a lender to escrow at that amount. ## Chicago, Illinois and the US side by side Most Chicago households rent: 46.5% of occupied homes are owner-occupied. The median home is above the Illinois median and below the national one, and it costs 4.2 times the median household income. *City of Chicago compared with Illinois and the US (Census ACS 2024 1-year)* | | Chicago | Illinois | United States | |---|---:|---:|---:| | Median home value | $341,200 | $280,700 | $360,600 | | Median household income | $80,613 | $83,211 | $81,604 | | Home value ÷ income | 4.2× | 3.4× | 4.4× | | Effective property tax rate | 1.51% | 1.92% | 0.89% | | Median gross rent | $1,486/mo | $1,322/mo | $1,487/mo | | Median owner costs with a mortgage | $2,377/mo | $1,994/mo | $2,035/mo | | Median year built | 1954 | 1971 | 1981 | The median home was built in 1954, the third-oldest housing stock among the cities we cover. Older two-flats, bungalows and vintage condos can carry repair costs a payment estimate won’t show, so budget for the [inspection](https://mortgage-math-us.com/buying/appraisal-and-inspection/) findings. ## Monthly payment: 10% conventional vs 3.5% FHA > **Worked example: $341,200 home (Chicago’s median), 30-year fixed at 7.24%** > > | Part of the payment | Conventional, 10% down | FHA, 3.5% down | > |---|---:|---:| > | Loan amount | $307,080 | $335,020 (incl. 1.75% upfront premium) | > | Principal and interest | $2,093 | $2,283 | > | Property tax at 1.51% | $429 | $429 | > | Insurance at $4.90 per $1,000 (national average) | $139 | $139 | > | PMI or FHA annual premium | $154 | $151 | > | **Total** | **$2,815** | **$3,003** | FHA needs $22,178 less cash up front, at the cost of a higher monthly bill and an annual premium that lasts for the life of the loan unless the starting loan-to-value is 90% or less. The FHA base loan of $329,258 is below the national FHA floor limit of $541,287, so it fits under the FHA limit in any county. Compare the two in detail in the [FHA loans guide](https://mortgage-math-us.com/loan-types/fha-loans/), or run your numbers in the [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=341000&down=10&tax=1.51&state=IL). ## Chicago’s transfer tax: city portion and CTA portion Chicago levies its own real property transfer tax in two parts, on top of the state’s 0.1% and Cook County’s own tax: > **Worked example: Transfer taxes on the median $341,200 sale** > > | Tax | Generally paid by | Amount | > |---|---|---:| > | Chicago transfer tax, city portion (0.75%) | Buyer | $2,559 | > | Chicago transfer tax, CTA portion (0.3%) | Seller | $1,024 | > | Illinois transfer tax (0.1%) | Set by contract | $341 | The city portion is a buyer cost, so add it to your cash-to-close estimate along with the down payment, lender fees and prepaid items. Buyers aged 65 or older who live in the home for at least a year can get the CTA portion refunded on transfers of $250,000 or less. The median-priced home is $91,200 above that limit, so the refund applies mainly to lower-priced homes. The [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=IL&price=341200) adds lender fees and prepaid items to the state tax. ## How far the median Chicago income goes The median Chicago household earns $80,613. At Freddie Mac’s 30% housing guideline that is $2,015 a month, enough for about **$244,000** with 10% down at today’s rate and the city’s tax ratio — $97,200 less than the median value. To carry the median home within the guideline you would need about $113,000 a year. Each $10,000 of price adds roughly $74 a month in loan payment and property tax. The [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=IL&income=80613) runs the same math with your debts. ## City of Chicago homebuyer resources The Chicago Department of Housing lists several routes for buyers: TaxSmart, the City’s federal mortgage tax credit for qualified buyers (see [mortgage credit certificates](https://mortgage-math-us.com/first-time-buyers/mortgage-credit-certificates/)); Building Neighborhoods and Affordable Homes, for newly built affordable homes in targeted areas; the Chicago Housing Trust’s affordable ownership homes; and counseling at HUD-approved housing counseling centers. Terms and funding change during the year, so confirm current availability with the department. Statewide IHDA programs are covered in the [Illinois guide](https://mortgage-math-us.com/location/illinois/). Chicago’s older neighborhoods also see basement and sewer-backup flooding after heavy rain. That damage is usually excluded from standard policies unless you add coverage, and homes in FEMA high-risk flood zones with federally backed loans need flood insurance. For other big-city comparisons, see [New York City](https://mortgage-math-us.com/location/new-york-ny/) and [Atlanta](https://mortgage-math-us.com/location/atlanta-ga/), or test renting against buying with the [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=IL&price=341000&rent=1486&tax=1.51). ## Frequently asked questions ### What is the property tax rate in Chicago? Census data put the median Chicago owner’s bill at $5,152 a year, an effective rate of about 1.51% of home value, against 1.92% for Illinois and 0.89% nationally. Your bill depends on the Cook County assessment and exemptions. ### How much is the Chicago transfer tax and who pays it? The City of Chicago charges 0.75% of the price, generally paid by the buyer, plus a 0.3% CTA portion generally paid by the seller. The Illinois and Cook County transfer taxes are separate. ### What is the median home price in Chicago? The 2024 American Community Survey puts the median value of owner-occupied homes in Chicago at $341,200, compared with $280,700 for Illinois and $360,600 for the US. ### How much do I need to make to buy a house in Chicago? To keep the $2,815 monthly cost of the median home with 10% down under 30% of gross income, you would need roughly $113,000 a year with no other large debts. ### Is there a senior exemption from the Chicago transfer tax? Buyers aged 65 or older can get the CTA portion refunded on transfers of $250,000 or less if they occupy the home as their dwelling for at least one year. The rules are in Municipal Code section 3-33-060. ### Does Chicago have first-time homebuyer programs? The Chicago Department of Housing offers TaxSmart, a federal mortgage tax credit, plus affordable homeownership programs and housing counseling. Statewide down-payment help comes from IHDA through participating lenders. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US1714000) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US1714000) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US1714000) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=160XX00US1714000) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US1714000) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US17) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US17) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US17) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment (Oct 28, 2026) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA upfront mortgage insurance premium; FHA annual MIP, 30-year loan, more than 95% LTV; FHA annual MIP ends after 11 years when the starting LTV is at or below (Feb 22, 2023) - [HUD](https://www.hud.gov/news/hud-no-25-145) — 2026 FHA loan limit floor (one-unit, low-cost areas) (2026 limit) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [City of Chicago Department of Finance: Real Property Transfer Tax](https://www.chicago.gov/city/en/depts/fin/supp_info/revenue/tax_list/real_property_transfertax.html) — Chicago real property transfer tax, city portion paid by the buyer ($3.75 per $500); Chicago real property transfer tax, CTA portion generally paid by the seller ($1.50 per $500); Chicago: CTA portion refundable to buyers 65 or older who live in the home, on transfers of (Oct 29, 2026) - [Illinois Department of Revenue](https://tax.illinois.gov/research/taxrates/other.html) — State real estate transfer tax (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US17) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=160XX00US1714000) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=040XX00US17) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=010XX00US) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=160XX00US1714000) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US17) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=010XX00US) — Median year homes were built (2024 ACS 1-year) - [City of Chicago Department of Finance: Real Property Transfer Tax](https://www.chicago.gov/city/en/depts/fin/supp_info/revenue/tax_list/real_property_transfertax.html) - [Chicago Department of Housing: For Homebuyers](https://www.chicago.gov/city/en/depts/doh/provdrs/homebuyers.html) - [FEMA Flood Map Service Center](https://msc.fema.gov/portal/home) _General information, not financial advice._ --- # Buying in Columbus, Ohio: prices, property taxes and ADDI help > Columbus, Ohio: $279,900 median home, a 1.27% effective property tax rate, the Franklin County conveyance fee and up to $14,999 from ADDI. URL: https://mortgage-math-us.com/location/columbus-oh/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median owner-occupied home in Columbus is worth $279,900, below the US median of $360,600. With 10% down at the 7.24% national average rate it costs about **$2,253 a month**, and property tax at the city’s effective rate of 1.27% makes up 13% of that. The City’s American Dream Downpayment Initiative lends first-time buyers up to 6% of the price, capped at **$14,999**, forgiven after 5 years. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value, Columbus | $279,900 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US3918000) | 2024 ACS 1-year | | Median household income, Columbus | $67,084/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US3918000) | 2024 ACS 1-year | | Effective property tax rate, Columbus | 1.27% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US3918000) | 2024 ACS 1-year | | Median gross rent, Columbus | $1,383/mo | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=160XX00US3918000) | 2024 ACS 1-year | | City of Columbus ADDI, up to | $14,999 | [City of Columbus: ADDI Guidelines](https://www.columbus.gov/files/sharedassets/city/v/1/housing-amp-assistance-programs/addi/2025-addi-guidelines.pdf) | Jun 1, 2024 | | Franklin County conveyance fee | 0.3% | [Franklin County Auditor: Transfer & Conveyance Standards](https://auditor.franklincountyohio.gov/files/assets/auditor/v/2/documents/real-estate/conveyance-standards/conveyancestandards.pdf) | Mar 2, 2026 | ## Columbus prices next to Ohio and the US Of the 20 large cities this site covers, Columbus has the lowest median home value — and the fifth-highest effective property tax rate. That combination defines the market: the purchase price is the easy part, and the tax bill deserves as much attention as the interest rate. Most Columbus households rent: 45.9% of occupied homes are owner-occupied, against 68% across Ohio. *City of Columbus compared with Ohio and the US (Census ACS 2024 1-year)* | | Columbus | Ohio | United States | |---|---:|---:|---:| | Median home value | $279,900 | $239,800 | $360,600 | | Median household income | $67,084 | $72,212 | $81,604 | | Home value ÷ income | 4.2× | 3.3× | 4.4× | | Median property tax paid | $3,559 | $2,937 | $3,211 | | Effective property tax rate | 1.27% | 1.22% | 0.89% | | Median gross rent | $1,383 | $1,090 | $1,487 | | Median year built | 1982 | 1971 | 1981 | The city extends beyond Franklin County into small parts of Delaware and Fairfield counties; these figures cover the whole City of Columbus but not suburbs such as Dublin, Westerville or Grove City. ## The property-tax tradeoff in Franklin County At 1.27% of value, the Columbus effective rate is higher than Ohio’s 1.22% and above the national 0.89%. On the median home that is $296 a month — $89 a month more than the same home would cost at the national rate. Each $10,000 of price adds about $127 a year in tax at the city’s rate, on top of the extra principal and interest. Ohio property tax depends heavily on school district and voted levies, so two Columbus homes at the same price can carry different bills. The Franklin County Auditor sets values in periodic reappraisals and applies Ohio’s owner-occupancy reduction once you file for it; look up the parcel on the Auditor’s site and read the current tax bill before you offer. The [Ohio guide](https://mortgage-math-us.com/location/ohio/) covers statewide tax relief. ## Payment on the median Columbus home > **Worked example: $279,900 home (Columbus’s median value), 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $251,910 | $1,717 | > | Property tax at 1.27% a year | $296 | > | Homeowners insurance at the national $4.90 per $1,000 | $114 | > | PMI (midpoint of Freddie Mac’s range) | $126 | > | **Total** | **$2,253** | > > Insurance uses Freddie Mac’s national per-$1,000 figure; Ohio doesn’t publish a city average. Change the price, rate or tax in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=280000&down=10&tax=1.27&state=OH). ## ADDI: the City of Columbus down-payment loan The City’s American Dream Downpayment Initiative (ADDI) helps first-time buyers purchase inside Columbus city limits. The loan is deferred and forgiven after 5 years as long as the home stays your principal residence; sell or move out sooner and it is repaid from the sale. *City of Columbus ADDI at a glance* | ADDI rule | Requirement | |---|---| | Amount | Up to 6% of the price, no more than $14,999 | | Income | At or below 120% of area median income | | First-time buyer | No home owned in the past 3 years | | Your own money | At least $500 from your savings — not a gift or loan | | Education | Homebuyer education with a HUD-certified agency approved by the City | | Location | Inside the City of Columbus corporation limits | Funds are limited and handed out first come, first served, so contact the City’s Housing Division before you sign a purchase contract. > **Worked example: ADDI on the median $279,900 home with 3% down** > > The down payment is $8,397 and closing costs at the CFPB’s typical range run $5,598–$13,995, so you need $13,995–$22,392 at closing. ADDI would provide $14,999 (limited by the dollar cap), leaving about $500–$7,393 for you to bring. With 3% down the monthly payment is about $2,397, including PMI on the larger loan. Ohio Housing Finance Agency loans and grants can also be used in Columbus; the [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/) explains how state and city help stack. ## Franklin County conveyance fee Ohio charges a conveyance fee when a deed is recorded: the state portion of 0.1% applies in every county, and Franklin County adds its own share for a total of 0.3%. On a median-value home that is about $840 — $280 state and $560 county — plus a small per-parcel transfer fee. Under Ohio’s rules the fee is generally the seller’s cost. The [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=OH&price=280000) estimates the buyer’s side. ## How far a Columbus income goes The median Columbus household earns $67,084. At Freddie Mac’s 30% housing guideline that is $1,677 a month, enough for about **$208,000** with 10% down at today’s average rate — 74% of the median value, or $71,900 less than the median value. Buying the median home on those terms takes about $90,129 a year. Run your own numbers in the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=OH&income=67084). Owning the median home costs $870 a month more than the median rent of $1,383. The [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=OH&price=280000&rent=1383) shows how long you would need to stay for buying to come out ahead. For comparison, see [Chicago](https://mortgage-math-us.com/location/chicago-il/), another big Midwestern market, and [Charlotte](https://mortgage-math-us.com/location/charlotte-nc/) in the Southeast. ## Frequently asked questions ### What is the median home price in Columbus, Ohio? The Census Bureau’s 2024 American Community Survey puts the median value of owner-occupied homes in the City of Columbus at $279,900, against $239,800 for Ohio and $360,600 for the US. ### What is the property tax rate in Columbus? Census figures put the median Columbus homeowner’s bill at $3,559 a year, an effective rate of about 1.27% of home value. The actual rate depends on the school district and voted levies where the home sits. ### Does Columbus have down payment assistance? Yes. The City’s American Dream Downpayment Initiative lends first-time buyers earning up to 120% of area median income up to 6% of the price, capped at $14,999. It is forgiven after 5 years if you keep living in the home. ### What is the conveyance fee in Franklin County? Franklin County’s conveyance fee totals 0.3% of the price, including Ohio’s 0.1% state portion — about $840 on a median-value Columbus home, plus a small per-parcel transfer fee. ### How much income do you need to buy a house in Columbus? About $90,129 a year keeps the payment on the median $279,900 home under 30% of gross income with 10% down at today’s average rate. The median Columbus household earns $67,084. ### Is it cheaper to rent or buy in Columbus? Month to month, owning the median home with 10% down costs about $2,253, against a median rent of $1,383. Whether buying wins depends on how long you stay and how prices and rents change. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US3918000) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US3918000) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US3918000) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=160XX00US3918000) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US3918000) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US39) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US39) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US39) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [Ohio Revised Code 322.02](https://codes.ohio.gov/ohio-revised-code/section-322.02) — State real estate transfer tax (Apr 9, 2025) - [Franklin County Auditor: Transfer & Conveyance Standards](https://auditor.franklincountyohio.gov/files/assets/auditor/v/2/documents/real-estate/conveyance-standards/conveyancestandards.pdf) — Franklin County conveyance fee, total ($3 per $1,000: $1 state, $2 county) (Mar 2, 2026) - [City of Columbus: ADDI Guidelines](https://www.columbus.gov/files/sharedassets/city/v/1/housing-amp-assistance-programs/addi/2025-addi-guidelines.pdf) — City of Columbus American Dream Downpayment Initiative (ADDI), up to; City of Columbus ADDI assistance, share of purchase price, up to; City of Columbus ADDI minimum buyer contribution from own savings (Jun 1, 2024) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US39) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US39) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=160XX00US3918000) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US39) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=010XX00US) — Median year homes were built (2024 ACS 1-year) - [42 U.S.C. 12704(14)](https://www.law.cornell.edu/uscode/text/42/12704) — First-time homebuyer: has not owned a home in the past (HUD/HOME statute) (Oct 28, 2026) - [City of Columbus: American Dream Downpayment Initiative](https://new.columbus.gov/Services/Housing-Assistance-Programs/Housing-Renters-Programs/American-Dream-Downpayment-Initiative) - [Franklin County Auditor: Transfer & Conveyance Standards](https://auditor.franklincountyohio.gov/files/assets/auditor/v/2/documents/real-estate/conveyance-standards/conveyancestandards.pdf) _General information, not financial advice._ --- # Buying a home in Dallas: property taxes, DHAP help and what it costs > Dallas mortgage numbers: a $340,000 median home, a 1.45% effective property tax, up to $60,000 from DHAP and Texas closing rules. URL: https://mortgage-math-us.com/location/dallas-tx/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median owner-occupied home in Dallas is worth $340,400. With 10% down at the 7.24% national average rate, it costs about **$2,943 a month** with property tax at the city’s effective 1.45%, insurance at the Texas average and PMI. The City’s Dallas Homebuyer Assistance Program (DHAP) offers up to **$60,000** in High Opportunity Areas and $50,000 elsewhere for homes up to $342,000, and Texas charges no transfer tax. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value, Dallas | $340,400 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US4819000) | 2024 ACS 1-year | | Effective property tax rate | 1.45% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US4819000) | 2024 ACS 1-year | | Median household income | $74,323/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US4819000) | 2024 ACS 1-year | | Homes lived in by their owners | 42.2% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US4819000) | 2024 ACS 1-year | | DHAP, High Opportunity Areas, up to | $60,000 | [City of Dallas Housing & Homelessness: Dallas Homebuyer Assistance Program](https://dallascityhall.com/departments/housing-neighborhood-revitalization/Pages/Dallas-Homebuyer-Assistance-Program-DHAP.aspx) | Oct 29, 2026 | | DHAP maximum sales price | $342,000 | [City of Dallas Housing & Homelessness: Dallas Homebuyer Assistance Program](https://dallascityhall.com/departments/housing-neighborhood-revitalization/Pages/Dallas-Homebuyer-Assistance-Program-DHAP.aspx) | Sep 1, 2024 | | School homestead exemption | $140,000 | [Texas Comptroller](https://comptroller.texas.gov/taxes/property-tax/exemptions/) | Dec 11, 2025 | ## Dallas compared with Texas and the US Renters are the majority in Dallas: 42.2% of occupied homes are owner-occupied, against 62.3% statewide. The median Dallas home is above the Texas median and below the US median, and the city’s tax ratio is above the state’s. Among the 3 Texas cities we cover, Dallas has the highest effective property tax rate (Dallas 1.45%, Houston 1.43%, Austin 1.31%). *City of Dallas compared with Texas and the US (Census ACS 2024 1-year)* | | Dallas | Texas | United States | |---|---:|---:|---:| | Median home value | $340,400 | $313,200 | $360,600 | | Median household income | $74,323 | $79,721 | $81,604 | | Home value ÷ income | 4.6× | 3.9× | 4.4× | | Effective property tax rate | 1.45% | 1.31% | 0.89% | | Median property tax paid | $4,943 | $4,108 | $3,211 | | Median gross rent | $1,599/mo | $1,475/mo | $1,487/mo | | Median year built | 1983 | 1994 | 1981 | The city spreads across Dallas, Collin, Denton, Kaufman and Rockwall counties, so the appraisal district and school district behind a tax bill depend on the address. ## Monthly cost: 10% down vs DHAP at the price limit > **Worked example: Two ways to buy in Dallas, 30-year fixed at 7.24%** > > | | Median home, 10% down | DHAP buyer at the $342,000 limit | > |---|---:|---:| > | Price | $340,400 | $342,000 | > | Cash from you for the down payment | $34,040 | $1,000 | > | DHAP second lien (no monthly payment) | — | $60,000 | > | First mortgage | $306,360 | $281,000 | > | Principal and interest | $2,088 | $1,915 | > | Property tax at 1.45% | $411 | $413 | > | Insurance at the Texas average of $3,489/yr | $291 | $291 | > | PMI | $153 | $141 | > | **Monthly total** | **$2,943** | **$2,760** | > > The DHAP column assumes the High Opportunity Area maximum and the $1,000 minimum cash investment; closing costs are extra in both cases. Even at a slightly higher price, the full DHAP amount cuts the payment by $184 a month compared with the 10% down purchase of the median home. Try your own figures in the [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=340000&down=10&tax=1.45&ins=3489&state=TX), which opens with Dallas’s median value, tax ratio and the Texas insurance average. ## DHAP and the Anti-Displacement program The City of Dallas funds two purchase-assistance programs that a nonprofit administrator now runs for it. Both are forgivable, deferred, interest-free second liens with no monthly payments; part is repaid if you sell, lease or transfer the home early. | | DHAP | Anti-Displacement Homebuyer Assistance | |---|---|---| | Help, up to | $60,000 in High Opportunity Areas, $50,000 elsewhere | $50,000 | | Income | Up to 80% of area median ($65,700 for one person) | Up to 120% of area median | | Price limit | $342,000 | None | | Other rules | Home inside Dallas city limits; 8-hour homebuyer course | Lived in Dallas at least 10 years | Under the 2024–2025 program manual, the largest awards carry an affordability period of 15 years. The median Dallas home sits $1,600 under the DHAP price limit, so many homes near the median qualify on price. Funding is first come, first served, and the separate Targeted Occupations extension has already spent all of its money — confirm availability before you sign a contract. Statewide TDHCA and TSAHC help (2%–5% of the loan) can work for buyers above the City’s limits; see the [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/). ## Dallas property taxes and the homestead exemption The median Dallas owner pays $4,943 a year. Every bill comes from local units — the City, the county, a school district and often a college or hospital district — applied to the appraisal district’s value. Texas makes school districts exempt $140,000 of a homestead’s value from school taxes; on the median Dallas home that is about 41% of the value for the school portion. You must apply with the appraisal district after you move in. The [Texas guide](https://mortgage-math-us.com/location/texas/) explains the over-65 addition. ## Closing in Dallas: no transfer tax, state-set title rates The Texas Constitution prohibits real estate transfer taxes, so your closing bill is lender fees, recording, prepaid items and title insurance. Texas promulgates title premiums: on the median $340,400 home, the basic owner’s policy comes to about $1,968 at any title company. Overall closing costs on the median home would run about $6,808–$17,020 at the CFPB’s typical 2%–5% range. See [closing costs](https://mortgage-math-us.com/buying/closing-costs/) for what to compare on a Loan Estimate. ## Affordability on a Dallas median income On the median household income of $74,323, Freddie Mac’s 30% guideline allows $1,858 a month for housing. With 10% down at today’s rate, the Dallas tax ratio and the Texas insurance average, that supports about **$215,000** — $125,400 below the median value. Carrying the median home within the guideline takes roughly $118,000 a year. Hail is a frequent insurance risk in North Texas, so ask about roof age and a percentage wind-and-hail deductible when you shop for coverage. Compare with [Houston](https://mortgage-math-us.com/location/houston-tx/) and [Austin](https://mortgage-math-us.com/location/austin-tx/), or check renting against buying in the [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=TX&price=340000&rent=1599&tax=1.45), which starts from the city’s median rent of $1,599/mo. ## Frequently asked questions ### What is the property tax rate in Dallas? Census data put the median Dallas owner’s tax bill at $4,943 a year, an effective rate of about 1.45% of value. The actual rate depends on the county, school district and special districts, minus exemptions such as the $140,000 school homestead exemption. ### Does Dallas have down payment assistance? Yes. DHAP offers up to $60,000 in High Opportunity Areas and $50,000 elsewhere for buyers at or below 80% of area median income buying homes up to $342,000. Funding is first come, first served. ### What is the Dallas Anti-Displacement Homebuyer Assistance Program? It offers up to $50,000 to households earning up to 120% of area median income who have lived in Dallas at least 10 years, with no purchase price limit. Some funds are limited to targeted areas. ### What is the median home price in Dallas? The 2024 American Community Survey puts the median value of owner-occupied homes in the City of Dallas at $340,400, compared with $313,200 for Texas. ### How much do you need to earn to buy a house in Dallas? To keep the $2,943 monthly cost of the median home with 10% down under 30% of gross income, you would need about $118,000 a year with no other large debts. ### Are there transfer taxes on a home purchase in Dallas? No. The Texas Constitution bars real estate transfer taxes. You still pay recording fees and title insurance, whose premiums the state sets. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US4819000) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US4819000) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US4819000) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=160XX00US4819000) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US4819000) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US48) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US48) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US48) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [Texas Department of Insurance](https://www.tdi.texas.gov/general/texas-homeowners-insurance-market-overview.html) — Average Texas homeowners insurance premium (2025 (preliminary)) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [City of Dallas Housing & Homelessness: Dallas Homebuyer Assistance Program](https://dallascityhall.com/departments/housing-neighborhood-revitalization/Pages/Dallas-Homebuyer-Assistance-Program-DHAP.aspx) — Dallas Homebuyer Assistance Program (DHAP) in High Opportunity Areas, up to; DHAP assistance in all other Dallas locations, up to; DHAP maximum sales price, existing and new homes (Oct 29, 2026) - [City of Dallas Homebuyer Assistance Program Manual 2024–2025](https://dallascityhall.com/departments/housing-neighborhood-revitalization/dallasmap/DCH%20Documents/DHAP%20Manual%202024-2025%20rev%2011-2024.pdf) — DHAP minimum initial cash investment by the buyer; Hours of homebuyer education required for DHAP (borrower and co-borrower); DHAP affordability period for assistance above $40,000 (2024–2025 program manual) - [Texas Comptroller](https://comptroller.texas.gov/taxes/property-tax/exemptions/) — School district residence homestead exemption (Dec 11, 2025) - [Texas Department of Insurance](https://www.tdi.texas.gov/title/titlerates2026.html) — Texas basic title premium for a $100,000 policy; Texas basic title premium per $1,000 above $100,000 (Rates effective Mar 1, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US48) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US48) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=160XX00US4819000) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US48) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=010XX00US) — Median year homes were built (2024 ACS 1-year) - [Texas Department of Housing and Community Affairs](https://welcomehome.tdhca.texas.gov/uploads/My-First-Texas-Home-Program-Matrix-TMS.pdf) — TDHCA My First Texas Home assistance, low end (share of loan); TDHCA My First Texas Home assistance, high end (share of loan) (Program matrix Aug 17, 2026) - [City of Dallas: Dallas Homebuyer Assistance Program (DHAP)](https://dallascityhall.com/departments/housing-neighborhood-revitalization/Pages/Dallas-Homebuyer-Assistance-Program-DHAP.aspx) - [City of Dallas: DHAP Manual 2024–2025](https://dallascityhall.com/departments/housing-neighborhood-revitalization/dallasmap/DCH%20Documents/DHAP%20Manual%202024-2025%20rev%2011-2024.pdf) _General information, not financial advice._ --- # Buying a home in Denver: payments, loan limits and down payment help > Denver mortgage numbers: a $636,000 median home, a 0.48% property tax ratio, the $862,500 county loan limit and metroDPA help. URL: https://mortgage-math-us.com/location/denver-co/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median owner-occupied home in Denver is worth $636,400. With 10% down at the 7.24% national average rate, it costs about **$4,704 a month**, of which property tax at the city’s effective 0.48% is $255. Denver County’s 2026 conforming limit is $862,500, and the City-sponsored metroDPA program offers a deferred, interest-free second mortgage to buyers with a credit score above 640. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value, Denver | $636,400 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US0820000) | 2024 ACS 1-year | | Median household income | $92,504/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US0820000) | 2024 ACS 1-year | | Effective property tax rate | 0.48% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US0820000) | 2024 ACS 1-year | | Homes lived in by their owners | 48.1% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US0820000) | 2024 ACS 1-year | | 2026 conforming limit, Denver County | $862,500 | [FHFA: Conforming Loan Limit Values](https://www.fhfa.gov/data/conforming-loan-limit) | 2026 | | metroDPA: credit score above | 640 | [City and County of Denver: metroDPA](https://www.denvergov.org/Government/Agencies-Departments-Offices/Agencies-Departments-Offices-Directory/Department-of-Housing-Stability/Resident-Resources/Affordable-Home-Ownership/metroDPA) | Oct 29, 2026 | ## Denver against Colorado and the US Denver is both a city and a county, so one assessor and one county loan limit cover the whole city. A little over half of Denver households rent: 48.1% of occupied homes are owner-occupied, compared with 65.9% statewide. The median home value is the 7th-highest among the 20 large cities we cover and above the Colorado median. *City and County of Denver compared with Colorado and the US (Census ACS 2024 1-year)* | | Denver | Colorado | United States | |---|---:|---:|---:| | Median home value | $636,400 | $574,600 | $360,600 | | Median household income | $92,504 | $97,113 | $81,604 | | Home value ÷ income | 6.9× | 5.9× | 4.4× | | Effective property tax rate | 0.48% | 0.49% | 0.89% | | Median property tax paid | $3,071 | $2,828 | $3,211 | | Median gross rent | $1,870/mo | $1,822/mo | $1,487/mo | | Median year built | 1979 | 1989 | 1981 | ## 30-year or 15-year on a median Denver home > **Worked example: $636,400 home, 10% down** > > | Part of the payment | 30-year at 7.24% | 15-year at 6.6% | > |---|---:|---:| > | Principal and interest on $572,760 | $3,903 | $5,021 | > | Property tax at 0.48% | $255 | $255 | > | Insurance at $4.90 per $1,000 (national average) | $260 | $260 | > | PMI (midpoint of Freddie Mac’s range) | $286 | $286 | > | **Total** | **$4,704** | **$5,822** | > | Interest over the full term | $832,446 | $331,001 | The 15-year loan costs $1,118 more a month but saves about $501,444 in interest. Hail is a common roof risk along the Front Range, so ask insurers about roof age and wind-and-hail deductibles; the national average used here may understate your quote. See [15-year vs 30-year](https://mortgage-math-us.com/blog/15-year-vs-30-year-mortgage/) or adjust the inputs in the [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=636000&down=10&tax=0.48&state=CO). ## Denver County’s higher loan limit FHFA sets Denver County’s 2026 one-unit conforming limit at $862,500, $29,750 above the national baseline of $832,750. The median home’s $572,760 loan with 10% down is well within it. With the same down payment, prices up to about $958,000 keep the loan conforming; above that you are into [jumbo loan](https://mortgage-math-us.com/loan-types/jumbo-loans/) territory. ## metroDPA and Denver’s income-restricted homes The City and County of Denver sponsors **metroDPA**, a down payment program used across the Front Range. It pays a percentage of your first mortgage toward the down payment as a second mortgage with no interest and no scheduled payments, over a term of 30 years. You repay it when you sell or refinance, or if the home stops being your primary residence. You must use a metroDPA-approved lender for a 30-year fixed first mortgage and have a credit score above 640; the percentage depends on the loan type (FHA, VA, USDA or conventional). The City’s page also points Denver County buyers to ask their lender about the Denver Advantage option. Denver’s Department of Housing Stability also oversees **income-restricted homes** sold below market price. Buyers must earn at least 50% of area median income and no more than a cap — up to 120% — that depends on the home, gifts can cover at most 20% of the price, and personal assets are capped relative to the home’s price. CHFA’s statewide programs are on the [Colorado guide](https://mortgage-math-us.com/location/colorado/). ## Property tax and closing costs in Denver Denver’s effective property tax rate of 0.48% is the second-lowest among the cities we cover, and Colorado has the 10th-lowest ratio of any state. On the median home that is $2,609 a year less than the national ratio would charge. The median Denver owner pays $3,071 a year. Colorado’s documentary fee is 0.01% of the price — about $64 on the median home — so transfer taxes barely register. Most of your closing bill is lender fees, title insurance and prepaid items; the CFPB’s 2%–5% rule of thumb gives $12,728–$31,820. The [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=CO&price=636400) builds a fuller estimate. ## What the median Denver income supports The median Denver household earns $92,504. At Freddie Mac’s 30% guideline that is $2,313 a month, which supports about **$313,000** with 10% down at today’s 30-year rate — $323,400 below the median value. Carrying the median home within the guideline takes about $188,000 a year. Run your own income through the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=CO&income=92504). Compare Denver with [Phoenix](https://mortgage-math-us.com/location/phoenix-az/) and [Seattle](https://mortgage-math-us.com/location/seattle-wa/), or check how long you would need to stay for buying to beat renting at the median $1,870/mo in the [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=CO&price=636000&rent=1870&tax=0.48). ## Frequently asked questions ### What is the conforming loan limit in Denver? FHFA set the 2026 one-unit conforming limit for Denver County at $862,500, above the $832,750 national baseline. Larger loans are jumbo loans. ### What is the property tax rate in Denver? Census data put the median Denver owner’s bill at $3,071 a year, an effective rate of about 0.48% of home value, against 0.49% for Colorado and 0.89% nationally. ### Does Denver have down payment assistance? The City and County of Denver sponsors metroDPA, a deferred, interest-free second mortgage for down payments through approved lenders, with a term of 30 years and a credit score above 640. Denver also offers income-restricted homes sold below market price. ### What is the median home price in Denver? The 2024 American Community Survey puts the median value of owner-occupied homes in Denver at $636,400, compared with $574,600 for Colorado and $360,600 for the US. ### How much do you need to make to buy a house in Denver? To keep the $4,704 monthly cost of the median home with 10% down under 30% of gross income, you would need about $188,000 a year with no other large debts. ### Is there a transfer tax when buying a home in Denver? Colorado charges a documentary fee of 0.01% of the price, about $64 on the median home. Recording, title and lender fees make up most closing costs. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average; 15-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US0820000) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US0820000) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US0820000) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=160XX00US0820000) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US0820000) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US08) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US08) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US08) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) — 2026 baseline conforming loan limit (one-unit) (2026 limit) - [FHFA: Conforming Loan Limit Values](https://www.fhfa.gov/data/conforming-loan-limit) — Conforming loan limit, Denver County (one unit) (2026) - [C.R.S. 39-13-102](https://colorado.public.law/statutes/crs_39-13-102) — State real estate transfer tax (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [City and County of Denver: metroDPA](https://www.denvergov.org/Government/Agencies-Departments-Offices/Agencies-Departments-Offices-Directory/Department-of-Housing-Stability/Resident-Resources/Affordable-Home-Ownership/metroDPA) — metroDPA (City and County of Denver): credit score must be above; metroDPA deferred second mortgage term (no interest, no scheduled payments) (Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US08) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US08) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=160XX00US0820000) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US08) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=010XX00US) — Median year homes were built (2024 ACS 1-year) - [City and County of Denver: Affordable Home Ownership](https://www.denvergov.org/Government/Agencies-Departments-Offices/Agencies-Departments-Offices-Directory/Department-of-Housing-Stability/Resident-Resources/Affordable-Home-Ownership) — Denver income-restricted for-sale homes: minimum income (share of area median income); Denver income-restricted for-sale homes: maximum income, up to (share of area median income; 80%–120% depending on the home); Denver income-restricted homes: financial gifts limited to (share of the purchase price) (Oct 29, 2026) - [City and County of Denver: metroDPA](https://www.denvergov.org/Government/Agencies-Departments-Offices/Agencies-Departments-Offices-Directory/Department-of-Housing-Stability/Resident-Resources/Affordable-Home-Ownership/metroDPA) - [City and County of Denver: Affordable Home Ownership](https://www.denvergov.org/Government/Agencies-Departments-Offices/Agencies-Departments-Offices-Directory/Department-of-Housing-Stability/Resident-Resources/Affordable-Home-Ownership) - [FHFA: Conforming Loan Limit Values](https://www.fhfa.gov/data/conforming-loan-limit) _General information, not financial advice._ --- # Buying a home in Houston: prices, payments and buyer help > Houston mortgage numbers: median home value, the 1.4% effective property tax, what a median household can afford, flood risk and city buyer help. URL: https://mortgage-math-us.com/location/houston-tx/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median owner-occupied home in the City of Houston is worth $301,200, below the Texas median of $313,200. With 10% down at the 7.24% national average rate, that home costs about **$2,633 a month** including property tax at the city’s effective rate of 1.43%, insurance at the Texas average and PMI. Income-qualified buyers inside city limits can apply for up to **$75,000** through the City’s Homebuyer Assistance Program. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value, Houston | $301,200 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US4835000) | 2024 ACS 1-year | | Median household income, Houston | $64,361/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US4835000) | 2024 ACS 1-year | | Effective property tax rate, Houston | 1.43% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US4835000) | 2024 ACS 1-year | | Homes lived in by their owners | 40.9% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US4835000) | 2024 ACS 1-year | | Median owner costs with a mortgage | $2,415/mo | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=160XX00US4835000) | 2024 ACS 1-year | | City of Houston down-payment help, up to | $75,000 | [City of Houston HAP Guidelines, version 8.0](https://houstontx.gov/housing/plans-reports/guidelines/hap/Homebuyer_Assistance_Program_HAP_Guidelines-8.0-Entitlement-071526.pdf) | Jun 23, 2026 | ## Houston housing at a glance Most Houston households rent: 40.9% of occupied homes in the city are lived in by their owners, against 62.3% in Texas and 65.3% nationally. The median home is below the Texas median, but incomes matter as much as prices: the median home costs 4.7 times the median household income in Houston, higher than the Texas ratio of 3.9. *City of Houston compared with Texas and the US (Census ACS 2024 1-year)* | | Houston | Texas | United States | |---|---:|---:|---:| | Median home value | $301,200 | $313,200 | $360,600 | | Median household income | $64,361 | $79,721 | $81,604 | | Home value ÷ income | 4.7× | 3.9× | 4.4× | | Effective property tax rate | 1.43% | 1.31% | 0.89% | | Median gross rent | $1,408/mo | $1,475/mo | $1,487/mo | | Median owner costs with a mortgage | $2,415/mo | $2,211/mo | $2,035/mo | | Median year built | 1985 | 1994 | 1981 | The figures cover the City of Houston only, not the wider metro, where suburbs in Fort Bend, Montgomery and other counties have their own price levels and tax rates. ## What the median Houston home costs each month > **Worked example: $301,200 home (Houston’s median value), 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $271,080 | $1,847 | > | Property tax at 1.43% a year | $359 | > | Homeowners insurance at the Texas average of $3,489/yr | $291 | > | PMI (midpoint of Freddie Mac’s range) | $136 | > | **Total** | **$2,633** | > > The insurance line uses the Texas Department of Insurance’s statewide average; quotes inside Houston vary with flood zone, roof age and wind exposure. Flood insurance, if required, is extra. Cash to close on the same home is the $30,120 down payment plus closing costs of roughly $6,024–$15,060 at the CFPB’s typical range. Texas charges no real estate transfer tax, and owner’s title insurance premiums are set by the state, so closing costs tend to sit toward the lower end. Run your own numbers in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=301000&down=10&tax=1.43&ins=3489), which opens with Houston’s median value, tax rate and the Texas insurance average. ## Can a median Houston household afford the median home? On the city’s median household income of $64,361, Freddie Mac’s guideline of keeping housing under 30% of gross income gives a budget of $1,609 a month. With 10% down at today’s average rate, Houston’s tax rate and the Texas insurance average, that supports a price of about **$184,000** — $117,200 below the median home value. That gap is why many Houston buyers stretch toward a lender’s higher debt-to-income limits, buy a smaller or older home, or look for down-payment help. Lowering the price is the strongest lever: every $10,000 less borrowed saves about $68 a month in principal and interest, plus about $12 in property tax at the city’s rate. The [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=TX&income=64361) shows the price your own income supports at four debt-to-income limits. ## Property taxes inside city limits At 1.43% of value, Houston’s effective rate is well above the national ratio of 0.89%. Texas has no state property tax, so every bill comes from local units: a Houston bill combines rates from the City, Harris County (or Fort Bend or Montgomery County for parts of the city), a school district and often a community college or special district, all applied to the value set by the county appraisal district. Texas requires school districts to exempt $140,000 of a homestead’s value from school taxes. On a home at Houston’s median value, that covers about 46% of the value for the school portion of the bill — but you must file for it, and the county and city portions are taxed separately. See the [Texas guide](https://mortgage-math-us.com/location/texas/) for how the exemption and the over-65 addition work. > **Tip: Use the listing’s actual tax bill** > > Because rates vary by school district and special district, two homes at the same price in different parts of Houston can have very different bills. Ask for the most recent tax statement and look up the property on the appraisal district’s website before you make an offer. ## Flood risk and insurance Flooding is the cost Houston buyers most often underestimate. Standard homeowners policies don’t cover flood damage. If a home is in a high-risk Special Flood Hazard Area on FEMA’s flood maps and your mortgage comes from a federally regulated or insured lender, flood insurance is required for the life of the loan; outside those zones it’s optional but still worth pricing. Check the address on FEMA’s Flood Map Service Center and ask the seller about past flooding and insurance claims before the option period ends. Wind is the other piece. The Texas Windstorm Insurance Association covers properties in the 14 first-tier coastal counties and parts of Harris County east of Highway 146 when private insurers decline the risk — most of the City of Houston is outside that area, so wind coverage usually comes from a standard policy. ## Down-payment help in Houston The City of Houston’s Housing and Community Development Department runs two purchase programs for homes inside city limits: | Program | Help available | Main rules | |---|---|---| | Homebuyer Assistance Program (HAP) | Up to $75,000, based on need, for down payment, closing costs and principal reduction | Household income up to 80% of area median (higher for some funding sources); first-time buyer (no home owned in the past 3 years); 8-hour HUD-approved homebuyer course; at least $350 of your own cash | | Harvey Homebuyer Assistance Program 2.0 | Up to $125,000 | Income up to 120% of area median; you must have lived inside city limits on August 25, 2017 | HAP assistance is a forgivable loan: amounts up to $50,000 are forgiven over 5 years if you keep living in the home, and larger amounts over 8 years. Sell, refinance or move out sooner and part of it is repaid. Funding opens and closes during the year, so check the City’s Homebuyer Hub for current status before you sign a contract. Statewide programs from TDHCA and TSAHC — 2%–5% of the loan through participating lenders — are available in Houston too and can suit buyers above the City’s income limits. Compare all three in the [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/). ## Renting vs buying in Houston The median Houston renter pays $1,408 a month, against $2,633 to own the median home with 10% down — before maintenance. Owning wins only if you stay long enough for equity and price growth to cover buying and selling costs. The [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=TX&price=301000&rent=1408&tax=1.43) opens with Houston’s median price, rent and tax rate so you can test how long that takes. ## Frequently asked questions ### What is the median home price in Houston? The Census Bureau’s 2024 American Community Survey puts the median value of owner-occupied homes in the City of Houston at $301,200, compared with $313,200 for Texas and $360,600 for the US. ### What is the property tax rate in Houston? Census figures put the median Houston homeowner’s tax bill at $4,308 a year, an effective rate of about 1.43% of home value. Your bill depends on the school district and special districts the home sits in, minus exemptions such as the school homestead exemption. ### How much income do you need to buy a house in Houston? To keep housing under 30% of gross income on the median $301,200 home with 10% down at today’s average rate, you need roughly $105,305 a year, assuming no other large debts. The median Houston household earns $64,361. ### Does Houston offer down-payment assistance? Yes. The City’s Homebuyer Assistance Program offers up to $75,000 to income-qualified first-time buyers purchasing inside city limits, as a forgivable loan. Statewide TDHCA and TSAHC programs are also available through participating lenders. ### Do I need flood insurance in Houston? If the home is in a FEMA Special Flood Hazard Area and your loan comes from a federally regulated or insured lender, yes. Elsewhere it’s optional, but standard homeowners policies don’t cover flooding, so many Houston owners buy it anyway. ### Is there a transfer tax when buying a home in Houston? No. The Texas Constitution prohibits real estate transfer taxes, so Houston buyers and sellers pay recording fees but no transfer tax. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US4835000) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US4835000) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US4835000) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=160XX00US4835000) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US48) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US48) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [Texas Department of Insurance](https://www.tdi.texas.gov/general/texas-homeowners-insurance-market-overview.html) — Average Texas homeowners insurance premium (2025 (preliminary)) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US4835000) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Texas Comptroller](https://comptroller.texas.gov/taxes/property-tax/exemptions/) — School district residence homestead exemption (Dec 11, 2025) - [City of Houston HAP Guidelines, version 8.0](https://houstontx.gov/housing/plans-reports/guidelines/hap/Homebuyer_Assistance_Program_HAP_Guidelines-8.0-Entitlement-071526.pdf) — City of Houston Homebuyer Assistance Program (HAP), up to; HAP income limit, CDBG-funded assistance (share of area median income); HAP minimum cash investment by the buyer (Jun 23, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US48) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=010XX00US) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US48) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US48) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=160XX00US4835000) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=040XX00US48) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=010XX00US) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=160XX00US4835000) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US48) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=010XX00US) — Median year homes were built (2024 ACS 1-year) - [Texas Windstorm Insurance Association](https://www.twia.org/coverage-eligibility/) — First-tier coastal counties in the TWIA windstorm area (Oct 28, 2026) - [42 U.S.C. 12704(14)](https://www.law.cornell.edu/uscode/text/42/12704) — First-time homebuyer: has not owned a home in the past (HUD/HOME statute) (Oct 28, 2026) - [City of Houston Housing and Community Development: Homebuyer Hub](https://www.houstontx.gov/housing/hbhub.html) — Hours of HUD-approved homebuyer education required by City of Houston programs; Harvey Homebuyer Assistance Program 2.0 (HbAP 2.0), up to; HbAP 2.0 income limit (share of area median income) (Oct 29, 2026) - [Texas Department of Housing and Community Affairs](https://welcomehome.tdhca.texas.gov/uploads/My-First-Texas-Home-Program-Matrix-TMS.pdf) — TDHCA My First Texas Home assistance, low end (share of loan); TDHCA My First Texas Home assistance, high end (share of loan) (Program matrix Aug 17, 2026) - [City of Houston Housing and Community Development: Homebuyer Hub](https://www.houstontx.gov/housing/hbhub.html) - [FEMA: Flood insurance](https://www.fema.gov/flood-insurance) - [FEMA Flood Map Service Center](https://msc.fema.gov/portal/home) _General information, not financial advice._ --- # Las Vegas home buying: property taxes, transfer tax and payments > Las Vegas mortgage numbers: $458,300 median home, a 0.49% effective tax rate, Clark County’s transfer tax and FHA vs conventional payments. URL: https://mortgage-math-us.com/location/las-vegas-nv/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median owner-occupied home in Las Vegas is worth $458,300, close to the Nevada median of $455,500. With 10% down at the 7.24% national average rate it costs about **$3,391 a month**, and property tax accounts for $187 of that at the city’s effective rate of 0.49%. At closing, Clark County’s real property transfer tax totals 0.51% of the price — about $2,337 on a median home. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value, Las Vegas | $458,300 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US3240000) | 2024 ACS 1-year | | Median household income, Las Vegas | $78,556/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US3240000) | 2024 ACS 1-year | | Effective property tax rate, Las Vegas | 0.49% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US3240000) | 2024 ACS 1-year | | Homes lived in by their owners | 56.6% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US3240000) | 2024 ACS 1-year | | Clark County transfer tax, total | 0.51% | [Clark County Recorder: Land documents](https://www.clarkcountynv.gov/government/elected_officials/county_recorder/land-documents) | Oct 29, 2026 | | Nevada statewide transfer tax | 0.39% | [Nevada Department of Taxation](https://tax.nv.gov/tax-types/real-property-transfer-tax/) | Oct 28, 2026 | ## Las Vegas ownership by the numbers Las Vegas leans toward owning: 56.6% of occupied homes are owner-occupied — the second-highest homeownership rate among the 20 large cities this site covers, though below Nevada’s 60.1%. Las Vegas also has the third-lowest effective property tax rate on the list. Its housing is newer than the nation’s: the median home dates from 1995, against 1981 nationally. *City of Las Vegas compared with Nevada and the US (Census ACS 2024 1-year)* | | Las Vegas | Nevada | United States | |---|---:|---:|---:| | Median home value | $458,300 | $455,500 | $360,600 | | Median household income | $78,556 | $81,134 | $81,604 | | Home value ÷ income | 5.8× | 5.6× | 4.4× | | Median property tax paid | $2,229 | $2,143 | $3,211 | | Effective property tax rate | 0.49% | 0.47% | 0.89% | | Median gross rent | $1,688 | $1,709 | $1,487 | | Median year built | 1995 | 1997 | 1981 | The figures cover the City of Las Vegas only. Henderson, North Las Vegas and unincorporated areas such as Paradise and Spring Valley are separate places with their own numbers, though all sit in Clark County and pay the same county transfer tax. ## Las Vegas property taxes, in dollars At 0.49% of value, the Las Vegas effective rate is below the national 0.89%. On a median-value home, that works out to $187 a month; at the national rate the same home would carry $340, so a Las Vegas owner pays about $153 a month less. That difference equals the payment on roughly $22,000 of loan at today’s average rate — which is why the same income can carry a bigger mortgage where property taxes are light. Check the property’s current bill with the Clark County Treasurer before you buy, and ask your lender to escrow from that figure rather than from an estimate. ## Monthly payment on a median Las Vegas home > **Worked example: $458,300 home (Las Vegas’s median value), 30-year fixed at 7.24%** > > | | Conventional, 10% down | FHA, 3.5% down | > |---|---:|---:| > | Loan amount | $412,470 | $449,999 (includes the 1.75% upfront premium) | > | Principal and interest | $2,811 | $3,067 | > | Property tax at 0.49% | $187 | $187 | > | Insurance at the national $4.90 per $1,000 | $187 | $187 | > | PMI or FHA annual premium (0.55%) | $206 | $203 | > | **Total** | **$3,391** | **$3,644** | > > PMI is the midpoint of Freddie Mac’s typical range. If the home is in a homeowners association, add the monthly dues. The FHA base loan of $442,260 is below FHA’s national floor limit of $541,287, so it fits under the FHA limit in any county. The FHA route needs $16,041 down instead of $45,830, but its premium usually lasts for the life of the loan at that down payment — see [FHA loans](https://mortgage-math-us.com/loan-types/fha-loans/). Try both in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=458000&down=10&tax=0.49&state=NV). ## Clark County’s real property transfer tax Nevada’s real property transfer tax is 0.39% of value statewide, and Clark County adds to it, for a total of 0.51% of the full purchase price or estimated market value. On a median Las Vegas home that is about $2,337: $1,787 at the state rate and $550 on top. The purchase contract says which side pays it, so read that line before you sign. With lender, title and escrow fees, total closing costs typically run 2%–5% of the price — model yours in the [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=NV&price=458000). ## Income versus price in Las Vegas The median Las Vegas household earns $78,556. At Freddie Mac’s 30% housing guideline that is $1,964 a month, enough for about **$265,000** with 10% down at today’s average rate — $193,300 below the median value. Buying the median home on the same terms takes an income of about $135,660. The [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=NV&income=78556) runs your own income and debts, and the [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=NV&price=458000&rent=1688) compares owning with the median rent of $1,688. ## Flash floods and insurance Las Vegas gets little rain, but summer storms can send fast-moving water through washes and low streets. Some neighborhoods along washes sit in FEMA flood zones, where a federally backed or regulated mortgage requires flood insurance; standard homeowners policies don’t cover flood anywhere. Look up the address on FEMA’s Flood Map Service Center, and price a policy even outside the mapped zones if the lot sits low. ## Down-payment help for Las Vegas buyers When we checked in October 2026, we found no open City of Las Vegas or Clark County down-payment program on their official websites. Statewide help comes from the Nevada Housing Division and is covered in the [Nevada guide](https://mortgage-math-us.com/location/nevada/); the [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/) explains how state assistance combines with FHA and conventional loans. For other Western markets, compare [Phoenix](https://mortgage-math-us.com/location/phoenix-az/) and [Denver](https://mortgage-math-us.com/location/denver-co/). ## Frequently asked questions ### What is the median home price in Las Vegas? The Census Bureau’s 2024 American Community Survey puts the median value of owner-occupied homes in the City of Las Vegas at $458,300, against $455,500 for Nevada and $360,600 for the US. ### What is the property tax rate in Las Vegas? The median Las Vegas homeowner pays $2,229 a year, an effective rate of about 0.49% of home value according to Census data, below the national 0.89%. ### How much is the transfer tax in Las Vegas? Clark County’s real property transfer tax totals 0.51% of the price, including Nevada’s statewide 0.39% — about $2,337 on a median-value Las Vegas home. ### Does Las Vegas have down payment assistance? We found no open City of Las Vegas or Clark County program on their official sites in October 2026. Statewide programs from the Nevada Housing Division are available to Las Vegas buyers through participating lenders. ### How much income do you need to buy a house in Las Vegas? About $135,660 a year keeps the payment on the median $458,300 home under 30% of gross income with 10% down at today’s average rate. The median Las Vegas household earns $78,556. ### Do you need flood insurance in Las Vegas? Only if the home is in a FEMA Special Flood Hazard Area and your loan is federally backed or regulated. Flash floods can reach homes outside mapped zones, and standard homeowners policies exclude flood, so it is worth pricing a policy. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US3240000) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US3240000) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US3240000) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=160XX00US3240000) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US3240000) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US32) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US32) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US32) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price); Minimum FHA down payment (Oct 28, 2026) - [Nevada Department of Taxation](https://tax.nv.gov/tax-types/real-property-transfer-tax/) — State real estate transfer tax (Oct 28, 2026) - [Clark County Recorder: Land documents](https://www.clarkcountynv.gov/government/elected_officials/county_recorder/land-documents) — Clark County real property transfer tax, total rate ($2.55 per $500, including the state’s $1.95) (Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US32) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA upfront mortgage insurance premium; FHA annual MIP, 30-year loan, more than 95% LTV (Feb 22, 2023) - [HUD](https://www.hud.gov/news/hud-no-25-145) — 2026 FHA loan limit floor (one-unit, low-cost areas) (2026 limit) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=160XX00US3240000) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=010XX00US) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US32) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US32) — Median year homes were built (2024 ACS 1-year) - [Clark County Recorder: Land documents and transfer tax](https://www.clarkcountynv.gov/government/elected_officials/county_recorder/land-documents) - [Nevada Department of Taxation: Real property transfer tax](https://tax.nv.gov/tax-types/real-property-transfer-tax/) - [FEMA Flood Map Service Center](https://msc.fema.gov/portal/home) _General information, not financial advice._ --- # Buying a home in Los Angeles: loan limits, Measure ULA and LAHD help > Los Angeles mortgage numbers: a $948,000 median home, LA County loan limits, the city transfer tax and Measure ULA, and LAHD buyer loans. URL: https://mortgage-math-us.com/location/los-angeles-ca/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median owner-occupied home in the City of Los Angeles is worth $947,900, about 11.5 times the median household income. With 10% down at the 7.24% national average rate, it costs about **$7,141 a month** with property tax, insurance and PMI — and the $853,110 loan fits under Los Angeles County’s $1,249,125 conforming limit. The city charges a 0.45% transfer tax, and income-qualified first-time buyers can borrow up to **$161,000** through LAHD’s LIPA program. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value, Los Angeles | $947,900 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US0644000) | 2024 ACS 1-year | | Median household income | $82,263/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US0644000) | 2024 ACS 1-year | | Effective property tax rate | 0.65% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US0644000) | 2024 ACS 1-year | | Homes lived in by their owners | 35.9% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US0644000) | 2024 ACS 1-year | | 2026 conforming limit, LA County | $1,249,125 | [FHFA: Conforming Loan Limit Values](https://www.fhfa.gov/data/conforming-loan-limit) | 2026 | | City transfer tax, base rate | 0.45% | [City of Los Angeles Office of Finance: Real Property Transfer Tax and Measure ULA FAQ](https://finance.lacity.gov/faq/measure-ula) | Jul 1, 2026 | | LAHD LIPA loan, up to | $161,000 | [Los Angeles Housing Department: Programs for First Time Homebuyers (2026)](https://housing.lacity.gov/wp-content/uploads/2023/04/Eng-FTHB-Booklet.pdf) | 2026 booklet | ## Los Angeles prices against California and the US The median Los Angeles home is worth $947,900, the third-highest among the 20 large cities we cover, and the ratio of value to income is the highest. Renters outnumber owners in Los Angeles: 35.9% of occupied homes are owner-occupied, compared with 55.8% across California. *City of Los Angeles compared with California and the US (Census ACS 2024 1-year)* | | Los Angeles | California | United States | |---|---:|---:|---:| | Median home value | $947,900 | $759,500 | $360,600 | | Median household income | $82,263 | $100,149 | $81,604 | | Home value ÷ income | 11.5× | 7.6× | 4.4× | | Effective property tax rate | 0.65% | 0.71% | 0.89% | | Median property tax paid | $6,146 | $5,369 | $3,211 | | Median gross rent | $1,958/mo | $2,104/mo | $1,487/mo | | Median year built | 1965 | 1977 | 1981 | The tax ratio is below the national 0.89%, yet because values are so high the median bill is higher than the US median. Figures cover the City of Los Angeles only, not the other cities of Los Angeles County. ## Conforming or jumbo in Los Angeles County? Fannie Mae and Freddie Mac buy loans up to a county limit set each year by FHFA. The 2026 baseline is $832,750, but Los Angeles County is a high-cost area with a one-unit limit of $1,249,125. A 10% down payment on the median home leaves a $853,110 loan — above the national baseline but within the Los Angeles County limit, so it can still be a conforming “high-balance” loan rather than a jumbo. With 10% down you could buy up to about $1,388,000 before the loan crosses the county limit. Above it, you need a [jumbo loan](https://mortgage-math-us.com/loan-types/jumbo-loans/), which usually means stricter reserve and down-payment rules set by each lender. ## A month in a median-priced LA home > **Worked example: $947,900 home (the city’s median), 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $853,110 | $5,814 | > | Property tax at 0.65% | $513 | > | Homeowners insurance at $4.90 per $1,000 (national average) | $387 | > | PMI (midpoint of Freddie Mac’s range) | $427 | > | **Total** | **$7,141** | > > Insurance here uses Freddie Mac’s national figure; fire-zone homes can cost far more to insure. On the city’s median household income of $82,263, Freddie Mac’s 30% guideline gives a housing budget of $2,057 a month, which supports about **$273,000** at today’s rate with 10% down — $674,900 short of the median. Paying for the median home within that guideline takes an income near $286,000. Try other prices in the [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=948000&down=10&tax=0.65&state=CA). ## The City of Los Angeles transfer tax and Measure ULA California has no state transfer tax, but counties and cities can levy one. Inside the City of Los Angeles, the Office of Finance collects a base tax of 0.45% — $4,266 on the median-priced home — on top of the county’s own documentary transfer tax. Measure ULA adds a second layer on expensive sales: 4% on top of the base tax for sales above $5,400,000, and 5.5% at $10,900,000 or more. The rate applies to the whole price, not just the part above the threshold, so a sale just over the first line owes about $216,000 more than one just under it. The thresholds are 5.7 times the median value and are adjusted each July for inflation, so they touch only the top of the market. Who pays the tax is a matter for the purchase contract; see [closing costs](https://mortgage-math-us.com/buying/closing-costs/) for the rest of the bill. ## LIPA and MIPA: LAHD purchase assistance The Los Angeles Housing Department lends first-time buyers (no ownership interest in the past 3 years) money for the down payment, closing costs and acquisition: | | LIPA (low income) | MIPA (moderate income) | |---|---|---| | Loan, up to | $161,000 | $115,000 | | Income limit, one person | $93,300 | $128,300 | | Maximum purchase price | $956,465 | $956,465 | | Terms | Interest-free, no monthly payments, shared appreciation; due on sale, transfer, payoff or at the end of the term | Same | You need at least 1% of the price as your own down payment and an 8-hour homebuyer education course. The citywide median value sits just under the price cap. LAHD says it uses a modified loan reservation process because resources are limited, so ask a participating lender about current availability before you make an offer. > **Note: What LIPA can stretch to** > > A one-person household earning exactly $93,300, using the full LIPA loan and the minimum own down payment, could afford a price of about **$446,000** within Freddie Mac’s 30% guideline at today’s rate — far more than the $273,000 the same rules give a median-income household with no help. ## Wildfire, earthquakes and the FAIR Plan Lenders require hazard insurance, and in fire-prone hillside and canyon areas a standard policy can be hard to find. The California Department of Insurance describes the California FAIR Plan as the insurer of last resort, to use only after searching the regular market. It covers fire, lightning, internal explosion and smoke, but not theft or liability, so FAIR Plan owners can add a difference-in-conditions policy to fill the gaps. Standard homeowners policies generally exclude earthquake damage; quake coverage is sold separately. Get quotes during escrow, not after. Compare the numbers with [San Diego](https://mortgage-math-us.com/location/san-diego-ca/) or [Seattle](https://mortgage-math-us.com/location/seattle-wa/), and see the [California guide](https://mortgage-math-us.com/location/california/) for CalHFA programs. The [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=CA&price=948000&rent=1958&tax=0.65) starts from the city’s median rent of $1,958/mo. ## Frequently asked questions ### What is the transfer tax in the City of Los Angeles? The Office of Finance charges a base tax of 0.45% of the price. Measure ULA adds 4% on sales above $5,400,000 and 5.5% at $10,900,000 or more. The county’s documentary transfer tax is separate. ### Does Measure ULA apply to my home purchase? Only if the price is above $5,400,000, the threshold for transactions closing after June 30, 2026. The median city home is worth $947,900, so most buyers pay only the base city tax. ### What is the conforming loan limit in Los Angeles County? For 2026, FHFA set the one-unit limit at $1,249,125, above the $832,750 national baseline. Larger loans are jumbo loans. ### How much income do you need to buy a home in Los Angeles? For the median $947,900 home with 10% down at today’s average rate, keeping housing under 30% of gross income takes about $286,000 a year. The median household in the city earns $82,263. ### Does Los Angeles have a first-time homebuyer program? Yes. LAHD’s LIPA program lends up to $161,000 and MIPA up to $115,000, both interest-free with no monthly payments, for homes up to $956,465. Funding is limited and handled through loan reservations. ### What is the California FAIR Plan? It is the state’s insurer of last resort for property owners who can’t get coverage in the regular market. It covers fire and a few related perils, so owners can add a difference-in-conditions policy for the rest. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US0644000) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US0644000) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US0644000) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=160XX00US0644000) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US0644000) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US06) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US06) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US06) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) — 2026 baseline conforming loan limit (one-unit) (2026 limit) - [FHFA: Conforming Loan Limit Values](https://www.fhfa.gov/data/conforming-loan-limit) — Conforming loan limit, Los Angeles County (one unit) (2026) - [City of Los Angeles Office of Finance: Real Property Transfer Tax and Measure ULA FAQ](https://finance.lacity.gov/faq/measure-ula) — City of Los Angeles real property transfer tax, base rate ($2.25 per $500); Measure ULA tax applies to City of Los Angeles sales above; Measure ULA tax on sales above $5.4 million and under $10.9 million, on top of the base tax (Jul 1, 2026) - [Los Angeles Housing Department: Programs for First Time Homebuyers (2026)](https://housing.lacity.gov/wp-content/uploads/2023/04/Eng-FTHB-Booklet.pdf) — LAHD Low Income Purchase Assistance (LIPA), up to; LIPA and MIPA maximum home purchase price; LIPA income limit, one-person household (2026 booklet) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US06) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US06) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=160XX00US0644000) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US06) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=010XX00US) — Median year homes were built (2024 ACS 1-year) - [42 U.S.C. 12704(14)](https://www.law.cornell.edu/uscode/text/42/12704) — First-time homebuyer: has not owned a home in the past (HUD/HOME statute) (Oct 28, 2026) - [City of Los Angeles Office of Finance: Real Property Transfer Tax and Measure ULA FAQ](https://finance.lacity.gov/faq/measure-ula) - [Los Angeles Housing Department: Programs for First Time Homebuyers](https://housing.lacity.gov/wp-content/uploads/2023/04/Eng-FTHB-Booklet.pdf) - [California Department of Insurance: Home/Residential Insurance](https://www.insurance.ca.gov/01-consumers/105-type/5-residential/index.cfm) _General information, not financial advice._ --- # Buying a home in Miami: payments, documentary stamps and flood insurance > Miami mortgage numbers: a $598,000 median home, Miami-Dade documentary stamp rates, Citizens’ flood insurance rule and county down payment help. URL: https://mortgage-math-us.com/location/miami-fl/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median owner-occupied home in the City of Miami is worth $598,200, while the median household earns $66,337. With 10% down at the 7.24% national average rate, that home costs about **$4,611 a month** before flood insurance. Deeds in Miami-Dade carry documentary stamps of 0.6% on single-family homes and condos (other property adds a 0.45% surtax), and Citizens policyholders with wind coverage must carry flood insurance by January 1, 2027. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value, Miami | $598,200 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US1245000) | 2024 ACS 1-year | | Median household income | $66,337/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US1245000) | 2024 ACS 1-year | | Homes lived in by their owners | 32.7% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US1245000) | 2024 ACS 1-year | | Median gross rent | $1,975/mo | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=160XX00US1245000) | 2024 ACS 1-year | | Deed stamps, Miami-Dade single-family and condo | 0.6% | [Florida Department of Revenue: Documentary Stamp Tax (GT-800014)](https://floridarevenue.com/Forms_library/current/gt800014.pdf) | Form GT-800014 (R. 12/17) | | Miami-Dade surtax, other property | 0.45% | [Florida Statutes §125.0167](https://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0100-0199/0125/Sections/0125.0167.html) | Oct 29, 2026 | | Miami-Dade down payment loan, up to | $35,000 | [Miami-Dade County: Homebuyer Down Payment Assistance Program](https://www.miamidade.gov/global/housing/downpayment-assistance.page) | Oct 29, 2026 | ## Miami prices, incomes and renters Most Miami households rent: 32.7% of occupied homes are owner-occupied, the lowest share among the 20 large cities we cover. Median household income is the second-lowest of the group, while the median rent of $1,975/mo is the fourth-highest. The result is a price-to-income ratio of 9.0, against 5.1 for Florida. *City of Miami compared with Florida and the US (Census ACS 2024 1-year)* | | Miami | Florida | United States | |---|---:|---:|---:| | Median home value | $598,200 | $396,900 | $360,600 | | Median household income | $66,337 | $77,735 | $81,604 | | Home value ÷ income | 9.0× | 5.1× | 4.4× | | Effective property tax rate | 0.86% | 0.75% | 0.89% | | Median gross rent | $1,975/mo | $1,812/mo | $1,487/mo | | Median owner costs with a mortgage | $2,893/mo | $2,168/mo | $2,035/mo | | Median year built | 1984 | 1990 | 1981 | The median home is above the Florida median and the effective tax ratio is above the state’s. These numbers cover the City of Miami only, not Miami Beach, Coral Gables or the rest of Miami-Dade County. ## Monthly payment on a median Miami home > **Worked example: $598,200 home, 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $538,380 | $3,669 | > | Property tax at 0.86% | $429 | > | Homeowners insurance at $4.90 per $1,000 (national average) | $244 | > | PMI (midpoint of Freddie Mac’s range) | $269 | > | **Total before flood insurance and HOA dues** | **$4,611** | > > The insurance line uses Freddie Mac’s national average per $1,000 of value. Windstorm coverage in South Florida can cost much more, and flood insurance and condo association dues are separate bills — get quotes before you rely on this total. Change the insurance and HOA figures to real quotes in the [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=598000&down=10&tax=0.86&state=FL). ## Miami-Dade documentary stamps and the surtax Florida’s documentary stamp tax on deeds is 0.7% of the price in most of the state, but Miami-Dade has its own schedule. Deeds for a single-family residence — which under state law includes a condominium or co-op unit — are taxed at 0.6%. Deeds for other property, such as a multifamily building, add a discretionary surtax of 0.45%. Any party to the deed can be liable for the tax; who pays is usually settled in the contract. > **Worked example: Documentary stamps on a $598,200 purchase in Miami-Dade** > > | Item | Amount | > |---|---:| > | Deed stamps, single-family home or condo (0.6%) | $3,589 | > | Deed stamps plus surtax, other property | $6,281 | > | Mortgage stamps and intangible tax on a $538,380 loan (0.55%) | $2,961 | > > On a house or condo, the deed stamps come to $598 less than the statewide rate would charge on the same price. The [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=FL&price=598200) adds the Florida mortgage taxes, title and lender fees; keep in mind it uses the statewide deed rate. ## Citizens, flood zones and the 2027 flood rule When private insurers decline a home, owners can turn to Citizens Property Insurance Corporation — under Florida law a government entity, not a private insurance company, created for applicants who can’t get coverage in the voluntary market. Citizens is phasing in a flood-insurance requirement set by the Legislature in December 2022: - Homes in a FEMA Special Flood Hazard Area with a Citizens personal residential policy that includes wind must carry flood insurance. - Outside those zones, the rule has applied since January 1, 2026 to homes with dwelling coverage of $400,000 or more. Dwelling coverage reflects the cost to rebuild, not the market price, so check the figure on your quote. - By January 1, 2027 it covers most new and renewing personal residential policies with wind coverage, regardless of value. Condo unit-owner and tenant policies are exempt. Separately, lenders require flood insurance on homes in a Special Flood Hazard Area when the loan is federally backed or regulated. Check the address on FEMA’s Flood Map Service Center, ask for the seller’s flood history and elevation certificate if one exists, and price flood coverage before you lock in the rate. ## Miami-Dade’s down payment loan Miami-Dade County’s Homebuyer Down Payment Assistance Program lends first-time buyers (no ownership of a principal residence in the past 3 years) up to $35,000 — about 5.9% of the city’s median value. The loan is deferred for up to 30 years at no interest, with the principal due at maturity. If you sell early, the County takes a share of the resale profit that falls to zero after 6 years of ownership. You must be a Miami-Dade resident, put in at least 1% of the price from your own funds, finish homebuyer education and counseling, and earn less than $95,620 for a one-person household. Florida’s statewide programs are on the [Florida guide](https://mortgage-math-us.com/location/florida/). ## Miami incomes and the median price On the median income of $66,337, Freddie Mac’s 30% guideline allows $1,658 a month for housing — enough for about **$215,000** with 10% down at today’s rate, against a median value of $598,200. Covering the median home within the guideline takes about $184,000 a year, 2.8 times what the median household earns, and that is before flood insurance. The [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=FL&income=66337) shows the price your income supports. Compare with [Tampa](https://mortgage-math-us.com/location/tampa-fl/) and [New York City](https://mortgage-math-us.com/location/new-york-ny/), or test renting against buying in the [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=FL&price=598000&rent=1975&tax=0.86). ## Frequently asked questions ### How much are documentary stamps on a home in Miami? In Miami-Dade County, deeds for a single-family residence or condo unit are taxed at 0.6% of the price. Other property adds a 0.45% surtax. The mortgage carries separate stamps and intangible tax totaling 0.55% of the loan. ### Does the Miami-Dade surtax apply to condos? No. Florida law exempts documents that convey only a single-family residence from the surtax, and it counts a condominium unit as a single-family residence. ### Do I need flood insurance in Miami? You need it if the home is in a FEMA Special Flood Hazard Area and your loan is federally backed or regulated. Citizens policyholders with wind coverage must also carry flood insurance under a phase-in that reaches most policies by January 1, 2027. ### What is the median home price in Miami? The 2024 American Community Survey puts the median value of owner-occupied homes in the City of Miami at $598,200, compared with $396,900 for Florida. ### Does Miami-Dade County offer down payment assistance? Yes. Its Homebuyer Down Payment Assistance Program offers up to $35,000 as a deferred, interest-free loan to income-eligible first-time buyers who live in the county, with a resale profit share that ends after 6 years. ### How much income do you need to buy a home in Miami? For the median $598,200 home with 10% down at today’s average rate, keeping housing under 30% of gross income takes about $184,000 a year, before flood insurance and HOA dues. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US1245000) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US1245000) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US1245000) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=160XX00US1245000) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US1245000) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US12) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US12) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US12) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [Florida Department of Revenue: Documentary Stamp Tax (GT-800014)](https://floridarevenue.com/Forms_library/current/gt800014.pdf) — Florida documentary stamp tax on deeds in Miami-Dade County ($0.60 per $100), single-family residences including condo units; State real estate transfer tax (Form GT-800014 (R. 12/17)) - [Florida Statutes §125.0167](https://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0100-0199/0125/Sections/0125.0167.html) — Miami-Dade discretionary surtax on deeds ($0.45 per $100) for property other than a single-family residence (Oct 29, 2026) - [Florida Statutes 199.133; Florida DOR GT-800014](https://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0100-0199/0199/Sections/0199.133.html) — State tax on recording a mortgage (Oct 28, 2026) - [Miami-Dade County: Homebuyer Down Payment Assistance Program](https://www.miamidade.gov/global/housing/downpayment-assistance.page) — Miami-Dade County Homebuyer Down Payment Assistance Program, up to; Miami-Dade down payment assistance: deferred, no-interest loan term, up to; Miami-Dade down payment assistance: no share of resale profit owed to the County after (Oct 29, 2026) - [Citizens Property Insurance Corporation: Flood insurance requirement](https://www.citizensfla.com/flood) — Citizens Property Insurance: date by which most new and renewing Personal Residential policies with wind coverage must also carry flood insurance; Citizens Property Insurance: homes outside a Special Flood Hazard Area with dwelling coverage at or above this amount must carry flood insurance (from Jan 1, 2026) (Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US12) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=160XX00US1245000) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=040XX00US12) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=010XX00US) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=160XX00US1245000) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US12) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=010XX00US) — Median year homes were built (2024 ACS 1-year) - [42 U.S.C. 12704(14)](https://www.law.cornell.edu/uscode/text/42/12704) — First-time homebuyer: has not owned a home in the past (HUD/HOME statute) (Oct 28, 2026) - [Florida Statutes §125.0167 (discretionary surtax on documents)](https://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0100-0199/0125/Sections/0125.0167.html) - [Florida Statutes §627.351 (Citizens Property Insurance Corporation)](https://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0600-0699/0627/Sections/0627.351.html) - [Miami-Dade County: Homebuyer Down Payment Assistance Program](https://www.miamidade.gov/global/housing/downpayment-assistance.page) - [FEMA Flood Map Service Center](https://msc.fema.gov/portal/home) _General information, not financial advice._ --- # Nashville home buying: prices, recordation taxes and property tax > Nashville mortgage costs: $438,800 median home, a 0.56% effective tax rate, Tennessee recordation taxes at closing and where buyers find help. URL: https://mortgage-math-us.com/location/nashville-tn/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median owner-occupied home in Nashville-Davidson is worth $438,800, above the Tennessee median of $332,600. With 10% down at the 7.24% national average rate it costs about **$3,273 a month**, with property tax at a below-average effective rate of 0.56%. At closing, Tennessee charges a recordation tax of 0.37% of the price on the deed and 0.115% on the mortgage — about $2,078 together on a median home. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value, Nashville-Davidson | $438,800 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US4752006) | 2024 ACS 1-year | | Median household income | $80,090/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US4752006) | 2024 ACS 1-year | | Effective property tax rate | 0.56% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US4752006) | 2024 ACS 1-year | | Share of appraised value that is taxed (homes) | 25% | [Metro Nashville Trustee: How to figure your property tax bill](https://nashville.gov/departments/trustee/calculate-property-taxes) | Aug 11, 2025 | | Tennessee tax on recording a deed | 0.37% | [Tennessee Department of Revenue](https://www.tn.gov/revenue/taxes/local-taxes/recordation-taxes/due-date-tax-rate.html) | May 6, 2024 | | Tennessee tax on recording a mortgage | 0.115% | [Tennessee Department of Revenue](https://www.tn.gov/revenue/taxes/local-taxes/recordation-taxes/due-date-tax-rate.html) | May 6, 2024 | ## Metro Nashville in numbers Nashville and Davidson County share one consolidated Metro government, so the city and the county are, for most purposes, the same place. The Census Bureau reports the area as “Nashville-Davidson (balance)”, which leaves out the few small towns inside the county that kept their own governments. Owners are a slim majority in Nashville: 51.8% of occupied homes are owner-occupied, against 66.8% statewide. Prices sit above the state median, and at 5.5 times the median household income, a Nashville home stretches incomes further than the Tennessee average of 4.6. *Nashville-Davidson compared with Tennessee and the US (Census ACS 2024 1-year)* | | Nashville-Davidson | Tennessee | United States | |---|---:|---:|---:| | Median home value | $438,800 | $332,600 | $360,600 | | Median household income | $80,090 | $71,997 | $81,604 | | Home value ÷ income | 5.5× | 4.6× | 4.4× | | Median property tax paid | $2,471 | $1,488 | $3,211 | | Effective property tax rate | 0.56% | 0.45% | 0.89% | | Median gross rent | $1,669 | $1,284 | $1,487 | | Median year built | 1988 | 1988 | 1981 | ## Monthly payment on a median Nashville home > **Worked example: $438,800 home (Nashville-Davidson’s median value), 30-year fixed at 7.24%** > > | | 10% down | 20% down | > |---|---:|---:| > | Loan amount | $394,920 | $351,040 | > | Principal and interest | $2,691 | $2,392 | > | Property tax at 0.56% | $205 | $205 | > | Insurance at the national $4.90 per $1,000 | $179 | $179 | > | PMI | $197 | $0 | > | **Total** | **$3,273** | **$2,776** | > > PMI uses the midpoint of Freddie Mac’s typical range and drops off at 20% down. Insurance uses Freddie Mac’s national per-$1,000 figure; Tennessee does not publish a city average. The tax rate matters: at the national effective rate of 0.89%, the tax line on the same home would be $325 instead of $205, so a Nashville buyer pays about $121 a month less than the US norm. Try other prices and down payments in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=439000&down=10&tax=0.56&state=TN). ## Tennessee recordation taxes on a Nashville purchase Tennessee’s property taxes are lighter than the nation’s — the statewide effective rate is 0.45% against 0.89% nationally — but it does tax the paperwork. Two recordation taxes are due when documents are recorded at the Davidson County Register of Deeds: *Tennessee recordation taxes (Tennessee Department of Revenue)* | Tax | Rate | On a median Nashville home, 10% down | |---|---|---:| | Realty transfer tax (on the deed) | 0.37% of the price | $1,624 | | Mortgage tax (on the new loan) | 0.115% of the debt, with a small first slice exempt | about $454 | | **Together** | | **about $2,078** | The mortgage tax is levied on your loan, so it is a borrower’s cost. The purchase contract says which side pays the deed tax and other closing items, so check those lines before you sign. Add these to lender fees, title insurance and prepaid items: at the CFPB’s typical range, total cash to close on the median home with 10% down runs about $52,656–$65,820. The [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=TN&price=439000) applies Tennessee’s rates for you. ## Davidson County’s assessment ratio Tennessee taxes homes on only part of their value. Davidson County appraises each property, and residential property is assessed at 25% of that appraisal; Metro’s tax rate, quoted per $100 of assessed value, is then applied to the assessed amount. Homes in the Urban Services District pay a higher combined rate than those only in the General Services District, because the urban district receives extra services. On a home appraised at Nashville’s median value, the assessed value is $109,700, so every 10 cents of tax rate per $100 assessed adds about $110 a year to the bill. The Census figures imply that the median owner pays about $2,471 a year, or 0.56% of value — higher than the Tennessee rate of 0.45% and below the national 0.89%. Appraisals change at periodic countywide reappraisals, so look up the property’s current appraisal on the Assessor’s site and budget for the bill to move when the next reappraisal arrives. ## Incomes against prices in Nashville The median Nashville household earns $80,090. Holding housing costs to Freddie Mac’s 30% guideline gives $2,002 a month, enough for a home of about **$268,000** with 10% down at today’s average rate — $170,800 below the median value. The [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=TN&income=80090) shows what your own income and debts support. Renting is still the cheaper monthly option: the median Nashville rent is $1,669, against about $3,273 to own the median home. The [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=TN&price=439000&rent=1669) estimates how long you’d need to stay for buying to pay off. ## First-time buyer help in Davidson County When we checked in October 2026, neither Metro Nashville’s nor the Metropolitan Development and Housing Agency’s official websites listed an open citywide down-payment assistance program for buyers. The main source of help is statewide: the Tennessee Housing Development Agency (THDA) offers a 30-year fixed-rate home loan for first-time buyers, veterans and buyers in targeted areas through participating lenders, including in Davidson County. The [Tennessee guide](https://mortgage-math-us.com/location/tennessee/) covers THDA’s current terms and down-payment help, and the [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/) explains how state help stacks with FHA, VA and conventional loans. HUD-approved housing counselors, reachable at 800-569-4287, can point you to local homebuyer classes. ## Flood risk along the Cumberland Parts of Nashville sit in FEMA flood zones along the Cumberland River and its creeks. Standard homeowners policies exclude flood damage, and a home in a high-risk zone financed with a federally backed or regulated loan must carry flood insurance. Check the address on FEMA’s Flood Map Service Center before you make an offer. For other Southern markets, compare [Charlotte](https://mortgage-math-us.com/location/charlotte-nc/) and [Atlanta](https://mortgage-math-us.com/location/atlanta-ga/). ## Frequently asked questions ### What is the median home price in Nashville? The Census Bureau’s 2024 American Community Survey puts the median value of owner-occupied homes in Nashville-Davidson at $438,800, against $332,600 for Tennessee and $360,600 for the US. ### What is the property tax rate in Nashville? The median Nashville homeowner pays $2,471 a year, an effective rate of about 0.56% of value. Metro’s official rate is quoted per $100 of assessed value, and homes are assessed at 25% of their appraised value. ### How is property tax calculated in Nashville? Take the appraised value, multiply by 25% to get the assessed value, divide by 100 and multiply by Metro’s tax rate for your district. Homes in the Urban Services District pay a higher rate than those only in the General Services District. ### Does Tennessee have a real estate transfer tax? Yes. Tennessee charges a recordation tax of 0.37% of the price on the deed and 0.115% on the mortgage, about $2,078 together on a median Nashville home with 10% down. ### Does Nashville have first-time homebuyer programs? We found no open citywide down-payment program on Metro Nashville’s official sites in October 2026. Buyers in Davidson County can use the Tennessee Housing Development Agency’s statewide home loan for first-time buyers, veterans and buyers in targeted areas, offered through participating lenders. ### How much income do you need to buy a house in Nashville? About $130,911 a year keeps the payment on the median $438,800 home with 10% down under 30% of gross income at today’s average rate. The median Nashville household earns $80,090. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US4752006) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US4752006) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US4752006) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=160XX00US4752006) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US4752006) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US47) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US47) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US47) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [Tennessee Department of Revenue](https://www.tn.gov/revenue/taxes/local-taxes/recordation-taxes/due-date-tax-rate.html) — State real estate transfer tax; State tax on recording a mortgage (May 6, 2024) - [Metro Nashville Trustee: How to figure your property tax bill](https://nashville.gov/departments/trustee/calculate-property-taxes) — Davidson County residential assessment ratio (share of appraised value that is taxed) (Aug 11, 2025) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US47) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US47) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=160XX00US4752006) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US47) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=010XX00US) — Median year homes were built (2024 ACS 1-year) - [HUD](https://www.hud.gov/stat/sfh/housing-counseling) — HUD housing counseling referral line (Oct 28, 2026) - [Metro Nashville Trustee: How to figure your property tax bill](https://nashville.gov/departments/trustee/calculate-property-taxes) - [Tennessee Department of Revenue: Recordation tax rates](https://www.tn.gov/revenue/taxes/local-taxes/recordation-taxes/due-date-tax-rate.html) - [FEMA Flood Map Service Center](https://msc.fema.gov/portal/home) _General information, not financial advice._ --- # Buying a home in New York City: payments, closing taxes and HomeFirst > NYC mortgage math: a $779,000 median home, city transfer and mortgage recording taxes, the mansion tax and HPD’s HomeFirst help. URL: https://mortgage-math-us.com/location/new-york-ny/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median owner-occupied home in New York City is worth $778,600. With 10% down at the 7.24% national average rate, that is about **$6,002 a month** including property tax, insurance and PMI. What sets the city apart is the closing bill: a city transfer tax of up to 1.425%, a combined mortgage recording tax of up to 2.175% of the loan and the state’s mansion tax on higher-priced homes. First-time buyers can get up to **$100,000** through HPD’s HomeFirst program. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value, New York City | $778,600 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US3651000) | 2024 ACS 1-year | | Median household income | $81,228/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US3651000) | 2024 ACS 1-year | | Homes lived in by their owners | 32.7% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US3651000) | 2024 ACS 1-year | | Median year built | 1953 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=160XX00US3651000) | 2024 ACS 1-year | | NYC transfer tax, higher residential rate | 1.425% | [NYC Department of Finance: Real Property Transfer Tax (RPTT)](https://www.nyc.gov/site/finance/property/property-real-property-transfer-tax-rptt.page) | Oct 29, 2026 | | Mortgage recording tax, larger loans | 2.175% | [New York State Department of Taxation and Finance: Form MT-15](https://www.tax.ny.gov/pdf/current_forms/mortgage/mt15.pdf) | Form MT-15 (rev. 1/25) | | HomeFirst down-payment help, up to | $100,000 | [NYC Department of Housing Preservation and Development: HomeFirst Down Payment Assistance Program](https://www.nyc.gov/site/hpd/services-and-information/homefirst-down-payment-assistance-program.page) | Oct 29, 2026 | ## Owning in a city of renters Most New York City households rent: 32.7% of occupied homes are owner-occupied, the lowest share among the 20 large cities we cover and well under the 54.3% statewide. The housing is old, too — the median home was built in 1953, the second-oldest among those cities — so inspections, building finances and repair reserves deserve as much attention as the rate. *New York City compared with New York State and the US (Census ACS 2024 1-year)* | | New York City | New York State | United States | |---|---:|---:|---:| | Median home value | $778,600 | $449,800 | $360,600 | | Median household income | $81,228 | $85,820 | $81,604 | | Home value ÷ income | 9.6× | 5.2× | 4.4× | | Effective property tax rate | 0.86% | 1.45% | 0.89% | | Median gross rent | $1,811/mo | $1,634/mo | $1,487/mo | | Median owner costs with a mortgage | $3,335/mo | $2,544/mo | $2,035/mo | | Median year built | 1953 | 1959 | 1981 | The price-to-income ratio of 9.6 is far above the state’s 5.2. Census values cover houses, condo units and co-op apartments together, and prices differ widely between boroughs. ## Monthly cost of a median-priced NYC home > **Worked example: $778,600 home, 30-year fixed at 7.24%** > > | Part of the payment | 10% down | 20% down | > |---|---:|---:| > | Loan amount | $700,740 | $622,880 | > | Principal and interest | $4,776 | $4,245 | > | Property tax at 0.86% | $558 | $558 | > | Homeowners insurance at $4.90 per $1,000 | $318 | $318 | > | PMI | $350 | $0 | > | **Total** | **$6,002** | **$5,121** | > > Insurance uses Freddie Mac’s national average per $1,000 of value. Condo and co-op buyers also pay monthly common charges or maintenance, which are not included here. Putting 20% down removes PMI and cuts the payment by $881 a month, but it means bringing $77,860 more cash. The [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=779000&down=10&tax=0.86&state=NY) opens with the city’s median value and tax ratio. ## NYC transfer and mortgage recording taxes Three layers of tax can apply when you buy in the five boroughs, and two of them are city-specific. - **NYC Real Property Transfer Tax:** 1% of the price for a home valued at $500,000 or less, and 1.425% above that. The Department of Finance applies the same residential rates to one- to three-family houses, condo units and co-op apartments. - **New York State transfer tax:** 0.4% statewide, plus the buyer-paid mansion tax on homes of $1,000,000 or more. In the city, the state also adds a supplemental tax of 0.25%–2.9% on residential sales of $2,000,000 or more. - **Mortgage recording tax:** 2.05% of the loan for mortgages under $500,000, and 2.175% on houses and condo units with larger loans, against about 1% in most of the state. > **Worked example: Taxes at closing on the median $778,600 home with 10% down** > > | Tax | Amount | > |---|---:| > | City transfer tax at 1.425% | $11,095 | > | State transfer tax | $3,114 | > | Mansion tax | $0 | > | Mortgage recording tax on $700,740 at 2.175% | $15,241 | > > The state transfer tax is normally the seller’s; the mansion tax does not apply at the median value, which is $221,400 below the threshold. Check your contract and Loan Estimate for which of the other taxes you pay. Because the recording tax follows the loan, a bigger down payment trims it too: with 20% down the tax falls to $13,548. Model your own price in the [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=NY&price=778600), and see the [closing costs guide](https://mortgage-math-us.com/buying/closing-costs/) for the fees that sit on top. ## What a median income buys in the five boroughs The median city household earns $81,228. Keeping housing under Freddie Mac’s 30% guideline gives $2,031 a month, which supports a price of about **$263,000** with 10% down at today’s average rate — roughly $515,600 short of the median value. Covering the median home’s payment within the same guideline takes an income near $240,000. Ways to close a gap like this include a second income, a smaller unit or a borough with a lower price level. The [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=NY&income=81228) shows how far your income stretches at several debt-to-income limits. ## HomeFirst: HPD’s down-payment loan HPD’s HomeFirst Down Payment Assistance Program lends first-time buyers up to $100,000 toward the down payment or closing costs as a forgivable loan. The main rules: - Household income up to 120% of area median income, and homebuyer education with an HPD-approved counseling agency. - At least 3% of the price from your own funds. - A one- to four-family home, condo or co-op that you live in, with an owner-occupancy period of up to 15 years. - An existing one-family home priced at or below the borough limit: $732,000 in Brooklyn and $661,000 in the Bronx, Manhattan and Staten Island. The citywide median value is above every borough’s HomeFirst limit, so HomeFirst buyers usually shop below the median. At the Brooklyn limit, the maximum loan would cover about 14% of the price, on top of the $21,960 you would put in yourself. For statewide SONYMA loans and the rest of the state’s rules, see the [New York guide](https://mortgage-math-us.com/location/new-york/). ## Property tax and flood zones New York State has the fifth-highest effective property tax ratio of any state, but the city’s ratio of 0.86% is lower than the state’s 1.45%; the median owner pays $6,669 a year. Ask for the actual bill on any home you consider, since it depends on the property’s class and assessment. Waterfront neighborhoods can sit inside FEMA high-risk flood zones. If a home is in a Special Flood Hazard Area and your loan comes from a federally regulated or insured lender, flood insurance is required. Look up the address on FEMA’s Flood Map Service Center before you sign a contract. For comparison, see how closing taxes work in [Chicago](https://mortgage-math-us.com/location/chicago-il/) and [Los Angeles](https://mortgage-math-us.com/location/los-angeles-ca/), which also add city transfer taxes. If you are weighing renting against buying, the [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=NY&price=779000&rent=1811&tax=0.86) starts from the city’s median rent of $1,811/mo. ## Frequently asked questions ### How much is the transfer tax when buying in NYC? The city’s Real Property Transfer Tax is 1% of the price for homes valued at $500,000 or less and 1.425% above that. New York State adds 0.4%, and buyers pay the state mansion tax on homes of $1,000,000 or more. ### What is the mortgage recording tax in New York City? Combining state and city parts, it is 2.05% of the loan for mortgages under $500,000 and 2.175% for larger mortgages on one- to three-family houses and condo units, according to the state’s Form MT-15. ### What is the median home price in New York City? The Census Bureau’s 2024 American Community Survey puts the median value of owner-occupied homes in the city at $778,600, against $449,800 for New York State and $360,600 nationally. ### How much income do you need to buy a home in NYC? To keep the $6,002 monthly cost of the median home with 10% down under 30% of gross income, you would need about $240,000 a year with no other large debts. The median city household earns $81,228. ### Does New York City have a first-time homebuyer program? Yes. HPD’s HomeFirst program offers up to $100,000 as a forgivable loan to first-time buyers earning up to 120% of area median income, for a one- to four-family home, condo or co-op within the program’s price limits. ### Can I use HomeFirst to buy a co-op? Yes. HPD lists one- to four-family homes, condominiums and cooperatives as eligible, as long as you live in the home and meet the income, education and own-funds rules. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US3651000) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US3651000) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US3651000) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=160XX00US3651000) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US3651000) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=160XX00US3651000) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US36) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US36) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US36) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [NYC Department of Finance: Real Property Transfer Tax (RPTT)](https://www.nyc.gov/site/finance/property/property-real-property-transfer-tax-rptt.page) — NYC Real Property Transfer Tax: the higher residential rate applies above; NYC Real Property Transfer Tax on a home valued above $500,000; NYC Real Property Transfer Tax on a home (one- to three-family, condo or co-op) valued at $500,000 or less (Oct 29, 2026) - [New York State Department of Taxation and Finance: Form MT-15](https://www.tax.ny.gov/pdf/current_forms/mortgage/mt15.pdf) — Combined New York State and New York City mortgage recording tax, one- to three-family homes and condo units, mortgages of $500,000 or more; Combined New York State and New York City mortgage recording tax, mortgages under $500,000 (Form MT-15 (rev. 1/25)) - [NYC Department of Housing Preservation and Development: HomeFirst Down Payment Assistance Program](https://www.nyc.gov/site/hpd/services-and-information/homefirst-down-payment-assistance-program.page) — NYC HPD HomeFirst Down Payment Assistance, up to; HomeFirst purchase price limit, existing one-family home in Brooklyn (highest borough limit); HomeFirst purchase price limit, existing one-family home in the Bronx, Manhattan or Staten Island (Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US36) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US36) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=160XX00US3651000) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=040XX00US36) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=010XX00US) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US36) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=010XX00US) — Median year homes were built (2024 ACS 1-year) - [New York Department of Taxation and Finance](https://www.tax.ny.gov/bus/transfer/rptidx.htm) — State real estate transfer tax; New York State supplemental transfer tax in New York City, lowest incremental rate; New York State supplemental transfer tax in New York City, highest incremental rate (Jun 1, 2026) - [New York Department of Taxation and Finance](https://www.tax.ny.gov/pit/mortgage/mtgidx.htm) — State tax on recording a mortgage (Dec 30, 2025) - [NYC HPD: HomeFirst Down Payment Assistance Program](https://www.nyc.gov/site/hpd/services-and-information/homefirst-down-payment-assistance-program.page) - [NYC Department of Finance: Real Property Transfer Tax](https://www.nyc.gov/site/finance/property/property-real-property-transfer-tax-rptt.page) - [NYS Department of Taxation and Finance: Real estate transfer tax](https://www.tax.ny.gov/bus/transfer/rptidx.htm) - [FEMA Flood Map Service Center](https://msc.fema.gov/portal/home) _General information, not financial advice._ --- # Buying a home in Phoenix: property taxes, payments and Open Doors help > Phoenix mortgage numbers: a $455,000 median home, a 0.4% effective property tax, no transfer tax and City of Phoenix Open Doors help. URL: https://mortgage-math-us.com/location/phoenix-az/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median owner-occupied home in Phoenix is worth $454,900. With 10% down at the 7.24% national average rate, it costs about **$3,332 a month**, and property tax at the city’s effective 0.4% is $152 of that. Arizona has no real estate transfer tax, and the City’s Open Doors program lends first-time buyers up to **10% of the price** for homes up to $470,250. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value, Phoenix | $454,900 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US0455000) | 2024 ACS 1-year | | Effective property tax rate | 0.4% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US0455000) | 2024 ACS 1-year | | Median property tax paid | $1,816/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US0455000) | 2024 ACS 1-year | | Homes lived in by their owners | 57.6% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US0455000) | 2024 ACS 1-year | | Arizona real estate transfer tax | 0% | [Arizona Constitution, Art. IX §24](https://www.azleg.gov/viewDocument/?docName=http://www.azleg.gov/const/9/24.htm) | Oct 28, 2026 | | Open Doors help, up to (share of price) | 10% | [City of Phoenix Housing Department: Open Doors fact sheet](https://web-prod.phoenix.gov/content/dam/phoenix/housingsite/documents/homeownership/Open_Doors_Fact_Sheet_Eng.pdf) | Aug 25, 2026 | | Open Doors price limit | $470,250 | [City of Phoenix Housing Department: Open Doors fact sheet](https://web-prod.phoenix.gov/content/dam/phoenix/housingsite/documents/homeownership/Open_Doors_Fact_Sheet_Eng.pdf) | Aug 25, 2026 | ## Phoenix property taxes against other big cities Phoenix has the lowest effective property tax rate among the 20 large cities we cover: 0.4% of value, and the median owner pays $1,816 a year — the smallest bill of the group. Arizona as a whole has the fourth-lowest ratio of any state at 0.43%. On the median-priced home, property tax runs $186 a month less than it would at the national ratio of 0.89%. At this tax level, principal and interest make up 84% of the median home’s monthly payment. Your actual bill depends on the county’s assessment and the school, city and special districts that tax the parcel, so check the listing’s last bill. ## A city where more households own More Phoenix households own than rent: 57.6% of occupied homes are owner-occupied, the highest share among the cities we cover, though below the 67.8% across Arizona. *City of Phoenix compared with Arizona and the US (Census ACS 2024 1-year)* | | Phoenix | Arizona | United States | |---|---:|---:|---:| | Median home value | $454,900 | $426,000 | $360,600 | | Median household income | $85,246 | $81,486 | $81,604 | | Home value ÷ income | 5.3× | 5.2× | 4.4× | | Effective property tax rate | 0.4% | 0.43% | 0.89% | | Homes lived in by their owners | 57.6% | 67.8% | 65.3% | | Median gross rent | $1,712/mo | $1,672/mo | $1,487/mo | | Median year built | 1986 | 1994 | 1981 | The median Phoenix home is above the Arizona median. Figures cover the City of Phoenix only; Scottsdale, Mesa and the other Valley cities have their own prices and tax rates. ## The monthly payment on a median Phoenix home > **Worked example: $454,900 home, 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $409,410 | $2,790 | > | Property tax at 0.4% | $152 | > | Homeowners insurance at $4.90 per $1,000 (national average) | $186 | > | PMI (midpoint of Freddie Mac’s range) | $205 | > | **Total** | **$3,332** | > > Insurance uses Freddie Mac’s national figure per $1,000 of value; get a real quote for the address. Many Phoenix neighborhoods also carry HOA dues, which are extra. Open the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=455000&down=10&tax=0.4&state=AZ) to change the price, down payment or rate. ## Open Doors: Phoenix’s down-payment loan The City of Phoenix Housing Department’s Open Doors program helps first-time buyers (as FHA defines them) with up to 10% of the purchase price, based on need. The rules: - Household income at or below 80% of area median income. - A home inside Phoenix city limits priced at or below $470,250. - At least $1,000 of your own money, or more if the first-mortgage lender requires it. - An 8-hour pre-purchase homebuyer education class plus housing counseling. - An interest-free deferred loan with no monthly payments, fully forgiven after an affordability period of up to 15 years; selling, moving out or refinancing sooner triggers repayment. The city’s median value is $15,350 under the price limit. The city says reservations for funding are limited, so ask an approved lender whether money is available before you write an offer. > **Worked example: Cash to close at $454,900 with and without Open Doors** > > | | 10% down on your own | With Open Doors at the maximum | > |---|---:|---:| > | Down payment from you | $45,490 | $1,000 minimum | > | Down payment from Open Doors | $0 | $45,490 | > | Closing costs ($2–$5 per $100) | $9,098–$22,745 | Same | > > Because the Open Doors loan has no monthly payment, the payment stays close to the 10% down figure above while your cash outlay drops sharply. ## No transfer tax in Arizona Arizona’s constitution bars real estate transfer taxes, so neither the state nor Phoenix adds one at closing; you pay recording fees, title insurance, lender charges and prepaid items. With no transfer tax, closing costs on the median home tend to sit nearer the low end of the CFPB’s 2%–5% range, about $9,098–$22,745. The [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=AZ&price=454900) estimates the pieces. ## What a Phoenix paycheck supports The median Phoenix household earns $85,246. Using Freddie Mac’s guideline of keeping housing under 30% of gross income, that is a $2,131 monthly budget — enough for about **$291,000** with 10% down at today’s average rate, $163,900 below the median value. Covering the median home within the guideline takes about $133,000 a year. The [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=AZ&income=85246) shows the range across debt-to-income limits. Summer heat drives up cooling bills, so ask for a year of utility history along with the HOA documents. To compare markets, see [Denver](https://mortgage-math-us.com/location/denver-co/) and [Las Vegas](https://mortgage-math-us.com/location/las-vegas-nv/); statewide programs are on the [Arizona guide](https://mortgage-math-us.com/location/arizona/). The [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=AZ&price=455000&rent=1712&tax=0.4) starts at the city’s median rent of $1,712/mo. ## Frequently asked questions ### What is the property tax rate in Phoenix? Census figures put the median Phoenix owner’s bill at $1,816 a year, an effective rate of about 0.4% of home value, compared with 0.43% for Arizona and 0.89% nationally. ### Is there a transfer tax when buying a house in Phoenix? No. Arizona’s constitution bars real estate transfer taxes, so buyers and sellers in Phoenix pay recording and title costs but no transfer tax. ### What is the Open Doors program in Phoenix? It is the City of Phoenix’s down payment assistance for first-time buyers earning up to 80% of area median income: up to 10% of the price as an interest-free deferred loan, forgiven after the affordability period, for homes up to $470,250 inside city limits. ### What is the median home price in Phoenix? The Census Bureau’s 2024 American Community Survey puts the median value of owner-occupied homes in Phoenix at $454,900, against $426,000 for Arizona and $360,600 for the US. ### How much income do I need to buy a house in Phoenix? To keep the $3,332 monthly cost of the median home with 10% down under 30% of gross income, you would need about $133,000 a year with no other large debts. ### Do I need homebuyer education for Open Doors? Yes. Buyers complete an 8-hour pre-purchase homebuyer education class and one-on-one counseling with a HUD-approved agency. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US0455000) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US0455000) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US0455000) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=160XX00US0455000) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US0455000) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US04) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US04) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US04) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=010XX00US) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [City of Phoenix Housing Department: Open Doors fact sheet](https://web-prod.phoenix.gov/content/dam/phoenix/housingsite/documents/homeownership/Open_Doors_Fact_Sheet_Eng.pdf) — City of Phoenix Open Doors down payment assistance, up to (share of the purchase price); Open Doors maximum purchase price; Open Doors minimum investment from the buyer (Aug 25, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US04) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US04) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=160XX00US0455000) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US04) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=010XX00US) — Median year homes were built (2024 ACS 1-year) - [City of Phoenix Housing Department: Homeownership Opportunities](https://www.phoenix.gov/administration/departments/housing/housing-options/homeownership-opportunities.html) — Open Doors period of affordability, up to (depends on the loan amount) (Oct 29, 2026) - [Arizona Constitution, Art. IX §24](https://www.azleg.gov/viewDocument/?docName=http://www.azleg.gov/const/9/24.htm) — State real estate transfer tax (Oct 28, 2026) - [City of Phoenix Housing Department: Homeownership Opportunities](https://www.phoenix.gov/administration/departments/housing/housing-options/homeownership-opportunities.html) - [City of Phoenix: Open Doors fact sheet](https://web-prod.phoenix.gov/content/dam/phoenix/housingsite/documents/homeownership/Open_Doors_Fact_Sheet_Eng.pdf) _General information, not financial advice._ --- # Raleigh mortgages: what homes cost and how the City helps buyers > Raleigh home buying in numbers: $450,300 median value, what the median income buys, 0.72% property tax and City of Raleigh buyer assistance. URL: https://mortgage-math-us.com/location/raleigh-nc/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer Raleigh’s median owner-occupied home is worth $450,300, $18,400 more than Charlotte’s and above the North Carolina median of $333,000. At 10% down and the 7.24% national average rate, the median home costs about **$3,419 a month** with tax, insurance and PMI, while the median household income of $85,060 supports a price of about $280,000 under Freddie Mac’s housing guideline. The City of Raleigh lends first-time buyers up to **$45,000** at zero interest, and up to $60,000 in targeted areas. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value, Raleigh | $450,300 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US3755000) | 2024 ACS 1-year | | Median household income, Raleigh | $85,060/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US3755000) | 2024 ACS 1-year | | Effective property tax rate, Raleigh | 0.72% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US3755000) | 2024 ACS 1-year | | Median gross rent, Raleigh | $1,661/mo | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=160XX00US3755000) | 2024 ACS 1-year | | City of Raleigh homebuyer assistance, up to | $45,000 | [City of Raleigh: Apply for Homebuyer Assistance](https://raleighnc.gov/housing/homebuyer-assistance) | Sep 4, 2026 | | Enhanced assistance in targeted areas, up to | $60,000 | [City of Raleigh: Apply for Homebuyer Assistance](https://raleighnc.gov/housing/homebuyer-assistance) | Sep 4, 2026 | | North Carolina excise tax (paid by the seller) | 0.2% | [N.C. Gen. Stat. 105-228.30](https://ncleg.gov/EnactedLegislation/Statutes/HTML/ByArticle/Chapter_105/Article_8E.html) | Oct 28, 2026 | ## Raleigh next to Charlotte and North Carolina Raleigh and Charlotte are the two North Carolina cities buyers compare most often. Raleigh’s median home is $18,400 more expensive than Charlotte’s while its median income is lower. That puts Raleigh’s price-to-income ratio at 5.3, against 5.0 in Charlotte and 4.5 statewide. *Raleigh, Charlotte, North Carolina and the US (Census ACS 2024 1-year)* | | Raleigh | Charlotte | North Carolina | United States | |---|---:|---:|---:|---:| | Median home value | $450,300 | $431,900 | $333,000 | $360,600 | | Median household income | $85,060 | $86,416 | $73,958 | $81,604 | | Home value ÷ income | 5.3× | 5.0× | 4.5× | 4.4× | | Effective property tax rate | 0.72% | 0.69% | 0.61% | 0.89% | | Median gross rent | $1,661 | $1,720 | $1,338 | $1,487 | | Share of homes owner-occupied | 49.6% | 50.5% | 66.8% | 65.3% | | Median year built | 1999 | 1999 | 1993 | 1981 | Raleigh is split almost down the middle between owners and renters: 49.6% of occupied homes are owner-occupied. The figures cover the City of Raleigh only; Cary, Wake Forest, Apex and other Wake County towns have their own prices and tax rates. For the Charlotte side of the comparison, see the [Charlotte market page](https://mortgage-math-us.com/location/charlotte-nc/). ## What a Raleigh median income can buy Start from income rather than price. A household earning Raleigh’s median of $85,060 that keeps housing under Freddie Mac’s 30% guideline has $2,127 a month to spend. With 10% down at today’s average rate, that budget supports a home of about **$280,000** — $170,300 (38%) below the median home value. > **Worked example: Buying at the price Raleigh’s median income supports: $280,000, 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $252,000 | $1,717 | > | Property tax at 0.72% | $168 | > | Insurance at the national $4.90 per $1,000 | $114 | > | PMI (midpoint of Freddie Mac’s range) | $126 | > | **Total** | **$2,126** | Lenders may approve more than this, because they look at total debt-to-income rather than housing alone. Whether you should borrow more is a separate question — the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=NC&income=85060) shows the price at four debt-to-income limits for your own income and debts. ## Monthly payment on the median Raleigh home At the median value of $450,300, the same 10% down and today’s average rate produce a loan of $405,270 and a full monthly cost of about **$3,419**: $2,762 principal and interest, $270 property tax, $184 insurance at the national per-$1,000 figure and $203 PMI. To keep that under 30% of income, a household would need about $136,744 a year — $51,684 more than the median. Cash to close is the $45,030 down payment plus closing costs of roughly $9,006–$22,515, so $54,036–$67,545 in all. Adjust any of these in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=450000&down=10&tax=0.72&state=NC). ## City of Raleigh homebuyer assistance The City’s housing department runs two second-mortgage programs for homes inside Raleigh city limits. Both are zero-interest deferred loans: there is no monthly payment, and the balance is due when you sell the home or stop living in it as your primary residence. *City of Raleigh purchase assistance* | Program | Help available | Main rules | |---|---|---| | Homebuyer Assistance Program | Up to $45,000 | First-time buyers earning up to 80% of area median income; City-approved homeownership class; purchase price limit set by the City | | Enhanced Homebuyer Assistance | Up to $60,000 | Homes in targeted areas priced up to $450,000; deed restriction for 10 years that limits sale proceeds if you sell early | The enhanced program’s price limit is just under the city’s median value, and its maximum award equals 13.3% of a home at that limit — enough to cover a 10% down payment with some left over for closing costs. The deed restriction is the tradeoff: sell within the restriction period and the City limits what you keep from the sale, so this suits buyers who plan to stay put. > **Watch out: Price limits differ between the two programs** > > The City’s own program page has listed more than one purchase price limit for the traditional program. Confirm the current limit with the City before you make an offer, and confirm that funding is open. North Carolina Housing Finance Agency loans can be used across the state, including in Raleigh — see the [North Carolina guide](https://mortgage-math-us.com/location/north-carolina/) and [first-time buyer programs](https://mortgage-math-us.com/first-time-buyers/programs/). ## Wake County property tax and the seller-paid excise Raleigh’s effective property tax rate of 0.72% is higher than Charlotte’s and below the national 0.89%. Most of the city lies in Wake County, and a Raleigh bill combines the county rate with the City rate on the county’s assessed value; a small part of Raleigh extends into Durham County, which sets its own rate. At closing, North Carolina’s excise tax of 0.2% — about $901 on the median home — is paid by the seller under state law. Buyers pay lender, title, appraisal and recording costs, plus prepaid interest, taxes and insurance. ## Renting or owning in Raleigh The median Raleigh renter pays $1,661 a month, below Charlotte’s median, against about $3,419 to own the median home before maintenance. The gap narrows if you buy below the median or put more down, and owning pays off only if you stay long enough to recover buying and selling costs. The [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=NC&price=450000&rent=1661) opens with Raleigh’s numbers so you can test your own timeline. For a Midwestern comparison, see [Columbus](https://mortgage-math-us.com/location/columbus-oh/). ## Frequently asked questions ### What is the median home price in Raleigh? The Census Bureau’s 2024 American Community Survey puts the median value of owner-occupied homes in the City of Raleigh at $450,300, compared with $431,900 in Charlotte and $333,000 statewide. ### Is Raleigh more expensive than Charlotte? By median home value, Raleigh is $18,400 more expensive: $450,300 against $431,900. Raleigh’s median household income of $85,060 is lower than Charlotte’s, so its price-to-income ratio is 5.3 against 5.0. ### What is the property tax rate in Raleigh? The median Raleigh homeowner pays $3,245 a year in property tax, an effective rate of about 0.72% of home value according to Census data. Bills combine Wake County and City of Raleigh rates. ### Does Raleigh offer down payment assistance? Yes. The City of Raleigh offers first-time buyers earning up to 80% of area median income a zero-interest deferred loan of up to $45,000, and up to $60,000 for homes in targeted areas priced up to $450,000. ### How much income do you need to buy a house in Raleigh? About $136,744 a year to keep the payment on the median $450,300 home under 30% of gross income, with 10% down at today’s average rate. The median Raleigh household earns $85,060. ### Who pays the transfer tax in Raleigh? North Carolina’s excise tax of 0.2% of the price is the seller’s responsibility under state law, about $901 on a median-value Raleigh home. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US3755000) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US3755000) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US3755000) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=160XX00US3755000) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US3755000) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US37) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US37) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US37) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [N.C. Gen. Stat. 105-228.30](https://ncleg.gov/EnactedLegislation/Statutes/HTML/ByArticle/Chapter_105/Article_8E.html) — State real estate transfer tax (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [City of Raleigh: Apply for Homebuyer Assistance](https://raleighnc.gov/housing/homebuyer-assistance) — City of Raleigh Enhanced Homebuyer Assistance (targeted areas), up to; City of Raleigh Enhanced Homebuyer Assistance maximum purchase price; City of Raleigh Homebuyer Assistance Program, up to (Sep 4, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US3712000) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US3712000) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US3712000) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=160XX00US3712000) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US37) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US3712000) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US37) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=010XX00US) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=160XX00US3755000) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=160XX00US3712000) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US37) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=010XX00US) — Median year homes were built (2024 ACS 1-year) - [City of Raleigh: Apply for Homebuyer Assistance](https://raleighnc.gov/housing/homebuyer-assistance) - [North Carolina General Statutes, Article 8E: Excise Stamp Tax on Conveyances](https://ncleg.gov/EnactedLegislation/Statutes/HTML/ByArticle/Chapter_105/Article_8E.html) _General information, not financial advice._ --- # San Diego mortgages: prices, county loan limits and buyer help > San Diego mortgage math: a $980,700 median home, the $1,104,000 county loan limit, Prop 13 property tax and San Diego Housing Commission help. URL: https://mortgage-math-us.com/location/san-diego-ca/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median owner-occupied home in San Diego is worth $980,700, above the California median of $759,500. With 10% down at the 7.24% national average rate it costs about **$7,364 a month**. The $882,630 loan is above the national baseline but within San Diego County’s 2026 conforming limit of $1,104,000. The San Diego Housing Commission’s middle-income program lends up to **$40,000** toward a down payment. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value, San Diego | $980,700 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US0666000) | 2024 ACS 1-year | | Median household income, San Diego | $111,032/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US0666000) | 2024 ACS 1-year | | Effective property tax rate, San Diego | 0.62% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US0666000) | 2024 ACS 1-year | | 2026 conforming loan limit, San Diego County | $1,104,000 | [FHFA: Conforming Loan Limit Values](https://www.fhfa.gov/data/conforming-loan-limit) | 2026 | | San Diego County documentary transfer tax | 0.11% | [San Diego County Assessor/Recorder/County Clerk: Recording](https://www.sdarcc.gov/content/arcc/home/divisions/recorder-clerk/recording.html) | Oct 29, 2026 | | SDHC middle-income down-payment loan | $40,000 | [San Diego Housing Commission: First-Time Homebuyer](https://www.sdhc.org/housing-opportunities/first-time-homebuyer/) | Feb 1, 2026 | ## San Diego prices against California and the US Among the 20 large cities this site covers, San Diego has the highest median home value and the highest median rent. The median home costs 8.8 times the median household income, against 7.6 for California and 4.4 for the US, with a median household income above the state’s. Most San Diego households rent: 46.5% of occupied homes are owner-occupied. *City of San Diego compared with California and the US (Census ACS 2024 1-year)* | | San Diego | California | United States | |---|---:|---:|---:| | Median home value | $980,700 | $759,500 | $360,600 | | Median household income | $111,032 | $100,149 | $81,604 | | Home value ÷ income | 8.8× | 7.6× | 4.4× | | Effective property tax rate | 0.62% | 0.71% | 0.89% | | Median gross rent | $2,414 | $2,104 | $1,487 | | Median owner costs with a mortgage | $3,333 | $3,001 | $2,035 | | Median year built | 1980 | 1977 | 1981 | ## Loan limits in San Diego County At San Diego prices, the size of the loan decides which kind of mortgage you get. Fannie Mae and Freddie Mac buy loans up to the national baseline of $832,750 for a single-family home, and up to $1,104,000 in San Diego County, a high-cost area. Loans above the county limit are jumbo loans with their own down-payment, reserve and credit standards. *Median-price San Diego loans and the 2026 limits (FHFA)* | Down payment on the median $980,700 home | Loan | Where it falls | |---|---:|---| | 10% | $882,630 | above the national baseline but within the San Diego County limit, so it is still a conforming (high-balance) loan | | 20% | $784,560 | within the national baseline conforming limit | To keep a median-price loan within the national baseline you would need about $147,950 down, or 15.1% of the price. With 10% down, the most you can pay and stay within the county limit is about $1,227,000. The [jumbo loans guide](https://mortgage-math-us.com/loan-types/jumbo-loans/) covers what changes above the limit. ## Monthly cost at the median price > **Worked example: $980,700 home (San Diego’s median value), 30-year fixed at 7.24%** > > | | 10% down | 20% down | > |---|---:|---:| > | Principal and interest | $6,015 | $5,347 | > | Property tax at 0.62% | $507 | $507 | > | Insurance at the national $4.90 per $1,000 | $400 | $400 | > | PMI | $441 | $0 | > | **Total** | **$7,364** | **$6,254** | > > PMI is the midpoint of Freddie Mac’s typical range. Insurance uses the national per-$1,000 figure; wildfire exposure in canyon and hillside areas can raise quotes. The cash needed is large either way: $98,070–$196,140 for the down payment plus closing costs of $19,614–$49,035 at the CFPB’s typical range. Change the inputs in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=981000&down=10&tax=0.62&state=CA). ## Proposition 13 and a new buyer’s tax bill San Diego’s effective property tax rate of 0.62% is lower than California’s 0.71% and below the national 0.89%, but that average flatters what a buyer will pay. Under Proposition 13, California generally sets a home’s taxable value at its purchase price and limits increases while you own it, so long-time owners often pay tax on values far below today’s prices. Your bill starts from your purchase price at the full local rate, plus any special assessments on the parcel — ask for the property’s tax bill and check for assessments before you make an offer. Expect the tax line to be higher than the citywide average used in the example above. ## San Diego Housing Commission help for buyers The San Diego Housing Commission runs the City of San Diego’s first-time homebuyer programs. At its latest update, the lower-income program showed no funding available, so don’t plan around it unless the Commission reopens it. The middle-income program was listed with funds available: *SDHC middle-income first-time homebuyer program* | Middle-income program | Terms | |---|---| | Down-payment loan | Up to $40,000 at 4% simple interest; no payments for 5 years, then repaid over 120 months | | Closing-cost grant | Up to $10,000, forgiven after 3 years if you still live in the home | | Income | Above the low-income limit, up to 150% of area median income | | Price limit | $1,250,000 | The $40,000 loan equals 4.1% of the median home value — helpful, but short of a 10% down payment at that price. Interest at 4% adds about $1,600 a year to the balance during the payment-free period. The program’s price limit is above the city’s median value. State programs from CalHFA are covered in the [California guide](https://mortgage-math-us.com/location/california/). ## Incomes and the San Diego price tag The median San Diego household earns $111,032. Holding housing to Freddie Mac’s 30% guideline gives $2,776 a month, enough for about **$370,000** with 10% down at today’s average rate — 38% of the median value. Buying the median home on the same terms would take about $294,543 a year. Run your own income in the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=CA&income=111032). ## Documentary transfer tax and renting San Diego County’s Recorder collects a documentary transfer tax of 0.11% of value for the county and its cities — about $1,079 on a median-price home; the purchase contract says who pays it. California has no separate state transfer tax. The [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=CA&price=981000) adds lender and title costs. Most San Diego households rent: the median San Diego rent is $2,414 a month against about $7,364 to own the median home with 10% down. The [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=CA&price=981000&rent=2414) shows how long you would need to stay for buying to win. Compare [Los Angeles](https://mortgage-math-us.com/location/los-angeles-ca/) and [Seattle](https://mortgage-math-us.com/location/seattle-wa/), two other West Coast markets on this site. ## Frequently asked questions ### What is the median home price in San Diego? The Census Bureau’s 2024 American Community Survey puts the median value of owner-occupied homes in the City of San Diego at $980,700, against $759,500 for California and $360,600 for the US. ### What is the conforming loan limit in San Diego County? For 2026 the one-unit conforming loan limit in San Diego County is $1,104,000, above the national baseline of $832,750. Larger loans are jumbo loans. ### What is the property tax rate in San Diego? The Census effective rate is about 0.62% of value, but under Proposition 13 a buyer’s bill is based on the purchase price, so a new owner usually pays more than the citywide average suggests. ### Does San Diego have first-time homebuyer programs? Yes. The San Diego Housing Commission’s middle-income program offers a down-payment loan of up to $40,000 and a closing-cost grant of up to $10,000 for homes up to $1,250,000. Its low-income program showed no funding available at the last update. ### How much income do you need to buy a house in San Diego? About $294,543 a year keeps the payment on the median $980,700 home under 30% of gross income with 10% down at today’s average rate. The median San Diego household earns $111,032. ### Is there a transfer tax in San Diego? Yes. San Diego County collects a documentary transfer tax of 0.11% of value, about $1,079 on a median-price home. California has no statewide transfer tax. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US0666000) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US0666000) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US0666000) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=160XX00US0666000) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US0666000) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US06) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US06) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US06) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) — 2026 baseline conforming loan limit (one-unit) (2026 limit) - [FHFA: Conforming Loan Limit Values](https://www.fhfa.gov/data/conforming-loan-limit) — Conforming loan limit, San Diego County (one unit) (2026) - [San Diego County Assessor/Recorder/County Clerk: Recording](https://www.sdarcc.gov/content/arcc/home/divisions/recorder-clerk/recording.html) — San Diego County documentary transfer tax ($0.55 per $500 of value) (Oct 29, 2026) - [San Diego Housing Commission: First-Time Homebuyer](https://www.sdhc.org/housing-opportunities/first-time-homebuyer/) — San Diego Housing Commission middle-income down-payment loan; San Diego Housing Commission middle-income loan interest rate (simple interest); San Diego Housing Commission middle-income loan, no monthly payments for (Feb 1, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US06) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=160XX00US0666000) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=040XX00US06) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=010XX00US) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=160XX00US0666000) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US06) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=010XX00US) — Median year homes were built (2024 ACS 1-year) - [San Diego Housing Commission: First-Time Homebuyer](https://www.sdhc.org/housing-opportunities/first-time-homebuyer/) - [San Diego County Assessor/Recorder/County Clerk: Recording](https://www.sdarcc.gov/content/arcc/home/divisions/recorder-clerk/recording.html) - [FHFA: Conforming Loan Limit Values](https://www.fhfa.gov/data/conforming-loan-limit) _General information, not financial advice._ --- # Buying a home in Seattle: payments, excise tax and city down payment loans > Seattle mortgage numbers: a $951,000 median home, what the median income buys, state and city excise tax, and Office of Housing loans. URL: https://mortgage-math-us.com/location/seattle-wa/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median owner-occupied home in Seattle is worth $950,800. With 10% down at the 7.24% national average rate, it costs about **$7,274 a month**, while the median household income of $118,745 supports a price of about $388,000 under Freddie Mac’s guideline. Sellers usually pay Washington’s graduated real estate excise tax plus Seattle’s 0.5% local share, and the City’s Office of Housing offers income-eligible first-time buyers up to **$76,000**. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value, Seattle | $950,800 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US5363000) | 2024 ACS 1-year | | Median household income | $118,745/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US5363000) | 2024 ACS 1-year | | Median property tax paid | $7,503/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US5363000) | 2024 ACS 1-year | | Homes lived in by their owners | 41.9% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US5363000) | 2024 ACS 1-year | | Seattle local excise tax | 0.5% | [Washington Department of Revenue: Local REET rates (May 1, 2026)](https://dor.wa.gov/sites/default/files/2026-03/84-0013-May26_REET.pdf) | May 1, 2026 | | Office of Housing help, up to | $76,000 | [City of Seattle Office of Housing: Buy a Home](https://www.seattle.gov/housing/renters/buy-a-home) | Oct 29, 2026 | ## Seattle’s incomes and prices Seattle has the highest median household income among the 20 large cities we cover and the second-highest median home value. Most Seattle households rent: 41.9% of occupied homes are owner-occupied, compared with 62.9% statewide. The price-to-income ratio of 8.0 is higher than the national 4.4, so higher incomes don’t close the gap. *City of Seattle compared with Washington and the US (Census ACS 2024 1-year)* | | Seattle | Washington | United States | |---|---:|---:|---:| | Median home value | $950,800 | $602,200 | $360,600 | | Median household income | $118,745 | $99,389 | $81,604 | | Home value ÷ income | 8.0× | 6.1× | 4.4× | | Effective property tax rate | 0.79% | 0.79% | 0.89% | | Median property tax paid | $7,503 | $4,729 | $3,211 | | Median owner costs with a mortgage | $3,651/mo | $2,519/mo | $2,035/mo | | Median gross rent | $2,007/mo | $1,824/mo | $1,487/mo | The median owner pays the largest property tax bill of the group, and median owner costs with a mortgage are the highest. ## Two Seattle payments: the median home and the affordable one > **Worked example: 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Median home ($950,800) | What the median income supports ($388,000) | > |---|---:|---:| > | Loan amount | $855,720 | $349,200 | > | Principal and interest | $5,832 | $2,380 | > | Property tax at 0.79% | $626 | $255 | > | Insurance at $4.90 per $1,000 (national average) | $388 | $158 | > | PMI | $428 | $175 | > | **Total** | **$7,274** | **$2,968** | The right-hand column is the price at which housing costs stay within Freddie Mac’s 30% guideline on the city’s median income. Paying for the median home inside the same guideline takes about $291,000 a year. Ways to close that gap include a condo or townhome, a second income or a larger down payment; test the trade-offs in the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=WA&income=118745) and the [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=951000&down=10&tax=0.79&state=WA). ## Seattle’s real estate excise tax: state tiers plus the city’s share Washington charges a graduated real estate excise tax (REET) on the price — 1.1% on the first tier and higher rates above it — and each city adds a local rate. Seattle’s local rate is 0.5%. The Department of Revenue says the seller usually pays, but the buyer is responsible if the seller doesn’t. > **Worked example: REET on a Seattle sale** > > | | Median home ($950,800) | Price the median income supports ($388,000) | > |---|---:|---:| > | State graduated REET | $11,225 | $4,268 | > | Seattle local REET (0.5%) | $4,754 | $1,940 | > | **Total** | **$15,979** | **$6,208** | On the median home that is 1.68% of the price. The state tiers adjust every four years, with new thresholds starting January 1, 2027. Estimate the rest of your closing bill in the [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=WA&price=950800). ## Seattle loans and the conforming limit A 10% down payment on the median Seattle home leaves a $855,720 loan, $22,970 above the 2026 national baseline conforming limit of $832,750. With 10% down, prices up to about $925,000 stay under the baseline. Above it, whether a loan is conforming depends on King County’s 2026 limit, which can be no higher than the $1,249,125 ceiling; look it up on FHFA’s map before you choose between a conforming and a [jumbo loan](https://mortgage-math-us.com/loan-types/jumbo-loans/). ## Office of Housing down payment loans The City of Seattle’s Office of Housing funds down payment assistance of up to $76,000 per household, delivered through nonprofit partners that set their own loan terms. To qualify you must: - Earn less than 80% of area median income for your household size. - Be a first-time buyer, or not have owned a home in the past 3 years. - Buy a principal residence inside Seattle city limits. - Complete a City-approved pre-purchase education class and one-on-one counseling. At the price the median income supports, the maximum would cover about 20% of the price. The City notes that its former Seattle Downpayment Assistance Program through the Washington State Housing Finance Commission is no longer available, so start with the Office of Housing’s current partner list. Statewide programs are on the [Washington guide](https://mortgage-math-us.com/location/washington/). Seattle sits in an active earthquake zone, and standard homeowners policies generally exclude quake damage, so price a separate earthquake policy — especially for older unreinforced homes. Compare Seattle with [Denver](https://mortgage-math-us.com/location/denver-co/) and [Los Angeles](https://mortgage-math-us.com/location/los-angeles-ca/), or check the [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=WA&price=951000&rent=2007&tax=0.79) against the median rent of $2,007/mo. ## Frequently asked questions ### How much is the real estate excise tax in Seattle? Washington’s state REET is graduated, starting at 1.1% on the first tier, and Seattle adds a local 0.5%. On the median-priced home the two come to about $15,979. The seller usually pays. ### What is the median home price in Seattle? The 2024 American Community Survey puts the median value of owner-occupied homes in Seattle at $950,800, compared with $602,200 for Washington and $360,600 nationally. ### How much income do you need to buy a house in Seattle? To keep the $7,274 monthly cost of the median home with 10% down under 30% of gross income, you would need about $291,000 a year with no other large debts. The median Seattle household earns $118,745. ### Does Seattle have down payment assistance? Yes. The Office of Housing funds up to $76,000 per household for first-time buyers earning under 80% of area median income, through nonprofit partners. The older WSHFC-run Seattle program is no longer available. ### What is the property tax rate in Seattle? Census figures put the median Seattle owner’s bill at $7,503 a year, an effective rate of about 0.79% of value, about the same as the 0.79% statewide ratio. ### Is a Seattle mortgage a jumbo loan? It depends on the loan size. Loans above the $832,750 baseline can still be conforming if King County’s 2026 limit is higher; check FHFA’s conforming loan limit map for the current figure. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US5363000) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US5363000) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US5363000) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=160XX00US5363000) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US5363000) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US53) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US53) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [Washington Department of Revenue: Local REET rates (May 1, 2026)](https://dor.wa.gov/sites/default/files/2026-03/84-0013-May26_REET.pdf) — Seattle local real estate excise tax, added to the state REET (May 1, 2026) - [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) — 2026 baseline conforming loan limit (one-unit); 2026 high-cost area conforming ceiling (one-unit) (2026 limit) - [City of Seattle Office of Housing: Buy a Home](https://www.seattle.gov/housing/renters/buy-a-home) — City of Seattle Office of Housing down payment assistance, up to (per household); Seattle down payment assistance income limit (share of area median income) (Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US53) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US53) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=160XX00US5363000) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=040XX00US53) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=010XX00US) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US53) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [Washington Department of Revenue](https://dor.wa.gov/taxes-rates/other-taxes/real-estate-excise-tax) — State real estate transfer tax (Oct 28, 2026) - [42 U.S.C. 12704(14)](https://www.law.cornell.edu/uscode/text/42/12704) — First-time homebuyer: has not owned a home in the past (HUD/HOME statute) (Oct 28, 2026) - [City of Seattle Office of Housing: Buy a Home](https://www.seattle.gov/housing/renters/buy-a-home) - [Washington Department of Revenue: Real estate excise tax](https://dor.wa.gov/taxes-rates/other-taxes/real-estate-excise-tax) - [FHFA: Conforming Loan Limit Values](https://www.fhfa.gov/data/conforming-loan-limit) _General information, not financial advice._ --- # Buying in Tampa: payments, doc stamps, flood risk and city help > Tampa home buying: $494,400 median value, Florida doc stamps at closing, insurance and flood risk, and up to $50,000 from Dare to Own the Dream. URL: https://mortgage-math-us.com/location/tampa-fl/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median owner-occupied home in Tampa is worth $494,400, above the Florida median of $396,900. With 10% down at the 7.24% national average rate it costs about **$3,795 a month** using the national insurance rate — Florida premiums can push that well higher. Florida taxes the deed at 0.7% and the new mortgage at 0.55%, and the City’s Dare to Own the Dream program offers up to **$50,000** on homes priced up to $450,000. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value, Tampa | $494,400 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US1271000) | 2024 ACS 1-year | | Median household income, Tampa | $84,114/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US1271000) | 2024 ACS 1-year | | Effective property tax rate, Tampa | 0.82% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US1271000) | 2024 ACS 1-year | | Florida documentary stamp tax on deeds | 0.7% | [Florida Department of Revenue](https://floridarevenue.com/Forms_library/current/gt800014.pdf) | Dec 1, 2017 | | Florida taxes on a new mortgage | 0.55% | [Florida Statutes 199.133; Florida DOR GT-800014](https://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0100-0199/0199/Sections/0199.133.html) | Oct 28, 2026 | | Dare to Own the Dream, up to | $50,000 | [City of Tampa: Dare to Own the Dream flyer (2026)](https://www.tampa.gov/sites/default/files/document/2026/2026-dare-to-own-the-dream-flyer-05-07-2026-ada.pdf) | May 7, 2026 | | Dare to Own the Dream price limit | $450,000 | [City of Tampa: Dare to Own the Dream flyer (2026)](https://www.tampa.gov/sites/default/files/document/2026/2026-dare-to-own-the-dream-flyer-05-07-2026-ada.pdf) | May 7, 2026 | ## Tampa prices next to Florida and the US Tampa is split evenly between owners and renters: 50% of occupied homes are owner-occupied, compared with 68% statewide. The median Tampa home is above the national median and costs 5.9 times the median household income, against 5.1 for Florida. *City of Tampa compared with Florida and the US (Census ACS 2024 1-year)* | | Tampa | Florida | United States | |---|---:|---:|---:| | Median home value | $494,400 | $396,900 | $360,600 | | Median household income | $84,114 | $77,735 | $81,604 | | Home value ÷ income | 5.9× | 5.1× | 4.4× | | Effective property tax rate | 0.82% | 0.75% | 0.89% | | Median gross rent | $1,898 | $1,812 | $1,487 | | Median owner costs with a mortgage | $2,456 | $2,168 | $2,035 | | Median year built | 1987 | 1990 | 1981 | The numbers cover the City of Tampa, not the rest of Hillsborough County or the Pinellas and Pasco suburbs. ## A median Tampa home, month by month > **Worked example: $494,400 home (Tampa’s median value), 10% down, 30-year fixed at 7.24%** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $444,960 | $3,032 | > | Property tax at 0.82% a year | $338 | > | Homeowners insurance at the national $4.90 per $1,000 | $202 | > | PMI (midpoint of Freddie Mac’s range) | $222 | > | **Total** | **$3,795** | Tampa’s effective property tax rate of 0.82% is higher than Florida’s 0.75% and below the US figure of 0.89%. Florida’s homestead exemption and its cap on yearly assessment increases for homesteads lower the bill for owners who live in the home — but a buyer’s bill is reset from the new purchase, so the seller’s tax bill is a poor guide to yours. The [Florida guide](https://mortgage-math-us.com/location/florida/) covers the exemption. Change any input in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=494000&down=10&tax=0.82&state=FL). ## Insurance: the number to check first in Tampa The payment above uses Freddie Mac’s national figure of $4.90 per $1,000 of home value a year because no official Tampa average is on file. Premiums in coastal Florida can be much higher, so treat the insurance line as a floor and get real quotes — wind coverage included — during your inspection period. *How the insurance line moves the payment on a median Tampa home (10% down)* | Insurance cost assumption | Insurance per month | Total payment | |---|---:|---:| | National rate | $202 | $3,795 | | Twice the national rate | $404 | $3,996 | | Three times the national rate | $606 | $4,198 | When private insurers decline a property, Florida’s state-created insurer, Citizens Property Insurance Corporation, may write the policy. Citizens has its own eligibility rules, so ask your agent or insurer early whether the home qualifies for private coverage. ## Flood zones, storm surge and coverage Much of Tampa lies low around Tampa Bay and the Hillsborough River, and standard homeowners policies don’t cover flood damage. If the home sits in a FEMA Special Flood Hazard Area and your mortgage comes from a federally regulated or insured lender, flood insurance is required for the life of the loan. Outside those zones it’s optional but still worth pricing. Look up the address on FEMA’s Flood Map Service Center and ask the seller about past flood claims. ## Florida documentary stamps at a Tampa closing Florida’s transfer tax takes the form of a documentary stamp tax, and it also reaches the mortgage: *Florida taxes due when a Tampa purchase is recorded (Florida Department of Revenue)* | Tax | Rate | On a median Tampa home, 10% down | |---|---|---:| | Documentary stamps on the deed | 0.7% of the price | $3,461 | | Documentary stamps on the note plus nonrecurring intangible tax on the mortgage | 0.55% of the loan | $2,447 | State law lets the tax be collected from any party to the deal; contracts decide who actually pays the deed stamps, while the taxes on the mortgage are normally the borrower’s cost. Add lender, title and prepaid costs and the total is usually 2%–5% of the price. The [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=FL&price=494000) applies Florida’s rates. ## Dare to Own the Dream The City of Tampa’s Dare to Own the Dream program, run by the Housing and Community Development Department, helps income-eligible first-time buyers with down payment and closing costs through a 0% deferred second mortgage with no monthly payment. It is fully forgiven after 20 years if you still live in the home. *Dare to Own the Dream assistance by income tier (City of Tampa, 2026)* | Household income | Assistance | |---|---:| | Lowest eligible tier | $50,000 | | Middle tier | $40,000 | | Highest tier, up to 140% of area median | $30,000 | Other rules: a purchase price of no more than $450,000, a middle credit score of at least 600, at least $2,000 of your own money in the deal, and counseling with an approved agency before you go under contract. Households with very low incomes are not eligible. The price limit is below Tampa’s median value, and the top award equals 11.1% of a home at that limit; at 7.24% with 10% down, a home at the limit costs about $3,454 a month on the first mortgage. Confirm that funds are available with the department before you sign a contract. ## What Tampa incomes support The median Tampa household earns $84,114. Keeping housing within Freddie Mac’s 30% guideline gives a budget of $2,103 a month, which supports about **$274,000** with 10% down at today’s average rate — $220,400 less than the median value, and below the Dare to Own the Dream price limit. Test your own figures in the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=FL&income=84114), or weigh buying against the median rent of $1,898 in the [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=FL&price=494000&rent=1898). For other coastal markets, compare [Miami](https://mortgage-math-us.com/location/miami-fl/) and [Houston](https://mortgage-math-us.com/location/houston-tx/). ## Frequently asked questions ### What is the median home price in Tampa? The Census Bureau’s 2024 American Community Survey puts the median value of owner-occupied homes in the City of Tampa at $494,400, compared with $396,900 for Florida and $360,600 nationally. ### What is the property tax rate in Tampa? Census figures put the median Tampa homeowner’s tax bill at $4,031 a year, about 0.82% of home value. Homestead owners pay less thanks to Florida’s homestead exemption and assessment cap; a new buyer’s bill is based on the purchase. ### Does Tampa have down payment assistance? Yes. The City’s Dare to Own the Dream program offers first-time buyers up to $50,000, depending on income, as a 0% deferred loan forgiven after 20 years. Homes must be inside city limits and priced up to $450,000. ### How much are doc stamps on a Tampa home? Florida’s documentary stamp tax on the deed is 0.7% of the price, about $3,461 on a median Tampa home. The note stamps and intangible tax on a new mortgage add 0.55% of the loan, about $2,447 with 10% down. ### Do I need flood insurance in Tampa? If the home is in a FEMA Special Flood Hazard Area and your loan comes from a federally regulated or insured lender, yes. Elsewhere it’s optional, but standard homeowners policies exclude flood, so it is worth pricing a flood policy anyway. ### How much income do you need to buy a house in Tampa? About $151,784 a year keeps the payment on the median $494,400 home under 30% of gross income with 10% down at today’s average rate and national-average insurance. Higher insurance quotes raise that figure. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US1271000) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US1271000) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US1271000) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=160XX00US1271000) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US1271000) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US12) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US12) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US12) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [Florida Department of Revenue](https://floridarevenue.com/Forms_library/current/gt800014.pdf) — State real estate transfer tax (Dec 1, 2017) - [Florida Statutes 199.133; Florida DOR GT-800014](https://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0100-0199/0199/Sections/0199.133.html) — State tax on recording a mortgage (Oct 28, 2026) - [City of Tampa: Dare to Own the Dream flyer (2026)](https://www.tampa.gov/sites/default/files/document/2026/2026-dare-to-own-the-dream-flyer-05-07-2026-ada.pdf) — Dare to Own the Dream maximum purchase price; City of Tampa Dare to Own the Dream assistance (50.01–80% of area median income), up to; Dare to Own the Dream 0% deferred loan fully forgiven after (May 7, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US12) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US12) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=160XX00US1271000) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=040XX00US12) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=010XX00US) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=160XX00US1271000) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US12) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=010XX00US) — Median year homes were built (2024 ACS 1-year) - [City of Tampa: Dare to Own the Dream (2026 flyer)](https://www.tampa.gov/sites/default/files/document/2026/2026-dare-to-own-the-dream-flyer-05-07-2026-ada.pdf) - [Florida Department of Revenue: Documentary Stamp Tax](https://floridarevenue.com/Forms_library/current/gt800014.pdf) - [FEMA Flood Map Service Center](https://msc.fema.gov/portal/home) _General information, not financial advice._ --- # Washington, DC housing market: renting vs owning in the capital > Washington, DC buyers: a $733,400 median home vs $1,931 median rent, the monthly cost of owning, loan limits and what closing taxes add. URL: https://mortgage-math-us.com/location/washington-dc/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The median owner-occupied home in Washington is worth $733,400, about 2.0 times the US median. With 10% down at the 7.24% national average rate it costs about **$5,513 a month** — $3,582 a month more than the median rent of $1,931. Most Washington households rent, and at the city’s median household income of $109,707, Freddie Mac’s housing guideline supports a price of about $365,000. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Median home value, Washington | $733,400 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US1150000) | 2024 ACS 1-year | | Median gross rent | $1,931/mo | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=160XX00US1150000) | 2024 ACS 1-year | | Homes lived in by their owners | 40.9% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US1150000) | 2024 ACS 1-year | | Median household income | $109,707/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US1150000) | 2024 ACS 1-year | | Effective property tax rate | 0.63% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US1150000) | 2024 ACS 1-year | | 2026 conforming loan limit, DC | $1,249,125 | [FHFA: Conforming Loan Limit Values](https://www.fhfa.gov/data/conforming-loan-limit) | 2026 | ## Washington next to other big cities and the nation Washington is both a city and the District of Columbia, so its Census figures are the District’s figures — the useful comparisons are with other big cities and with the country. Washington’s median home is worth more than the national median and its median household income is higher, so its price-to-income ratio is 6.7 — against 7.4 in Boston, 9.6 in New York and 4.4 nationally. *Washington compared with Boston, New York City and the US (Census ACS 2024 1-year)* | | Washington | Boston | New York City | United States | |---|---:|---:|---:|---:| | Median home value | $733,400 | $722,800 | $778,600 | $360,600 | | Median household income | $109,707 | $97,791 | $81,228 | $81,604 | | Median gross rent | $1,931 | $2,196 | $1,811 | $1,487 | | Home value ÷ annual rent | 31.7 | 27.4 | 35.8 | 20.2 | | Share owner-occupied | 40.9% | 35.9% | 32.7% | 65.3% | | Effective property tax rate | 0.63% | 0.62% | 0.86% | 0.89% | | Median year built | 1960 | 1947 | 1953 | 1981 | The median Washington home was built in 1960, older than the national median. Row houses, condos and co-ops are common, and condo or co-op fees come on top of the costs below. ## Renting vs owning in the District Most Washington households rent: 40.9% of occupied homes are owner-occupied, against 65.3% nationally. The price-to-rent ratio is one way to see why. A median Washington home costs 31.7 years of median rent, a higher multiple than the national 20.2 — meaning buying is expensive relative to renting here, which tilts the math toward renting for shorter stays. > **Worked example: Year one of owning the median $733,400 home vs renting at the median $1,931** > > | | Amount | > |---|---:| > | Monthly cost to own (10% down, tax, insurance, PMI) | $5,513 | > | Median monthly rent | $1,931 | > | Difference each month | $3,582 | > | Principal paid down in the first year (equity you keep) | $6,401 | > | Interest, property tax, insurance and PMI in the first year (costs you don’t get back) | $59,753 | > > These are the unrecoverable costs of owning in year one. A renter’s unrecoverable cost is the rent itself: $23,172 a year. Owning catches up through price growth, rising rents and a growing share of principal in each payment — and loses ground to buying and selling costs. The answer depends on how long you stay. The [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=DC&price=733000&rent=1931) opens with Washington’s median price and rent and shows the year when owning pulls ahead under your own assumptions for price growth and investment returns. ## What the median Washington home costs a month With 10% down at 7.24%, the $660,060 loan carries $4,498 a month in principal and interest. Property tax at the District’s effective rate of 0.63% — below the national 0.89% — adds $385, insurance at Freddie Mac’s national $4.90 per $1,000 adds $299, and PMI at the midpoint of Freddie Mac’s range adds $330, for **$5,513** in all before any condo fee. Cash to close is the $73,340 down payment plus closing costs of $14,668–$36,670 at the CFPB’s typical range. Adjust the inputs in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=733000&down=10&tax=0.63&state=DC). ## Income and the price it supports At the median household income of $109,707, Freddie Mac’s 30% guideline allows $2,743 a month for housing. With 10% down at today’s average rate that buys about **$365,000** — $368,400 below the median value. Buying the median home on the same terms takes about $220,513 a year. Two incomes, a larger down payment or a smaller home are the usual ways to close that gap. See what your own numbers support in the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=DC&income=109707). ## Loan limits in the District The District is a high-cost area: its 2026 one-unit conforming loan limit is $1,249,125, above the national baseline of $832,750. A 10% down loan on the median home fits under the national baseline. With 10% down, prices up to about $925,000 keep the loan under the baseline and prices up to about $1,388,000 stay within the District’s limit; above that you would need a [jumbo loan](https://mortgage-math-us.com/loan-types/jumbo-loans/) or a bigger down payment. ## District recordation and transfer taxes The District taxes both the recording of the deed and the transfer itself, and the combined rate steps up for higher-priced homes. At the median value the two taxes total about $21,269 ($10,634 each side if split evenly), an effective rate of 2.9% of the price. Even its base rate of 2.2% is the second-highest of the 51 state and District rates on this site. The [District of Columbia guide](https://mortgage-math-us.com/location/district-of-columbia/) explains the rates and who pays which tax, along with DC’s Home Purchase Assistance Program and DCHFA loans. The [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=DC&price=733000) applies the District’s rules. For other East Coast markets, see [Boston](https://mortgage-math-us.com/location/boston-ma/) and [New York City](https://mortgage-math-us.com/location/new-york-ny/). ## Frequently asked questions ### What is the median home price in Washington, DC? The Census Bureau’s 2024 American Community Survey puts the median value of owner-occupied homes in Washington at $733,400, against $360,600 nationally. Because the city and the District cover the same area, the figure is the same for both. ### Is it better to rent or buy in Washington, DC? It depends on how long you stay. Owning the median home with 10% down costs about $5,513 a month against a median rent of $1,931, and a median home costs 31.7 years of median rent. Use a rent vs buy calculator with your own timeline. ### What is the property tax rate in Washington, DC? The median DC homeowner pays $4,594 a year, an effective rate of about 0.63% of value according to Census data, below the national 0.89%. ### How much are closing taxes when you buy in DC? The District’s recordation and transfer taxes total about $21,269 on a median-value home, usually split between buyer and seller. Lender, title and prepaid costs come on top. ### What is the conforming loan limit in DC? The 2026 one-unit conforming loan limit in the District of Columbia is $1,249,125, above the national baseline of $832,750. ### How much income do you need to buy a home in DC? About $220,513 a year keeps the payment on the median $733,400 home under 30% of gross income with 10% down at today’s average rate, before condo fees. The median DC household earns $109,707. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US1150000) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US1150000) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US1150000) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=160XX00US1150000) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US1150000) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) — 2026 baseline conforming loan limit (one-unit) (2026 limit) - [FHFA: Conforming Loan Limit Values](https://www.fhfa.gov/data/conforming-loan-limit) — Conforming loan limit, District of Columbia (one unit) (2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=160XX00US1150000) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=010XX00US) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US2507000) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US3651000) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US2507000) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=160XX00US3651000) — Median household income (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=160XX00US2507000) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=160XX00US3651000) — Median gross rent (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US2507000) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=160XX00US3651000) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=010XX00US) — Share of occupied homes lived in by their owners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US2507000) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US3651000) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=160XX00US2507000) — Median year homes were built (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=160XX00US3651000) — Median year homes were built (2024 ACS 1-year) - [DC Office of the Chief Financial Officer](https://cfo.dc.gov/page/tax-rates-and-revenues-property-taxes) — District real estate transfer tax (Oct 28, 2026) - [FHFA: Conforming Loan Limit Values](https://www.fhfa.gov/data/conforming-loan-limit) - [DC Office of the Chief Financial Officer: Real property tax rates](https://cfo.dc.gov/page/tax-rates-and-revenues-property-taxes) _General information, not financial advice._ --- # 15-year vs 30-year mortgage: what the shorter term really costs and saves > 15-year vs 30-year mortgages at today’s rates: monthly payment, total interest, equity, the extra-payment middle path and the price you qualify for. URL: https://mortgage-math-us.com/blog/15-year-vs-30-year-mortgage/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer On a $300,000 loan at today’s averages, a 15-year mortgage at 6.6% costs $2,630 a month in principal and interest against $2,044 for a 30-year loan at 7.24% — $585 more. In return it saves about **$262,646 in interest**. Paying that same $585 extra on a 30-year loan clears it in 16 years 2 months with about $36,215 more interest than the true 15-year loan, while keeping the lower required payment as a fallback. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | 30-year fixed average (Freddie Mac) | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | 15-year fixed average (Freddie Mac) | 6.6% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | Freddie Mac housing-cost guideline | 30% | [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) | Jan 22, 2026 | | Longest Qualified Mortgage term | 30 years | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-qualified-mortgage-en-1789/) | Jan 7, 2025 | | No prepayment penalty on a Qualified Mortgage after | 3 years | [12 CFR 1026.43(g)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43) | Oct 28, 2026 | ## The two terms side by side A mortgage’s [loan term](https://mortgage-math-us.com/glossary/loan-term/) sets how many monthly payments it takes to repay. Halving the term does not double the payment, because the payment on a long loan is mostly interest. At today’s Freddie Mac averages the 15-year payment is about 1.29 times the 30-year payment: *Principal and interest at 7.24% (30-year) and 6.6% (15-year)* | Loan amount | 30-year payment | 15-year payment | Extra a month | 30-year interest | 15-year interest | Interest saved | |---|---:|---:|---:|---:|---:|---:| | $200,000 | $1,363 | $1,753 | +$390 | $290,679 | $115,581 | $175,098 | | $300,000 | $2,044 | $2,630 | +$585 | $436,018 | $173,372 | $262,646 | | $400,000 | $2,726 | $3,506 | +$780 | $581,357 | $231,162 | $350,195 | | $500,000 | $3,407 | $4,383 | +$976 | $726,697 | $288,953 | $437,744 | Property tax, insurance and any PMI come on top and are the same for both terms, so the dollar gap in the full payment is the same — but in percentage terms it looks smaller: > **Worked example: Full monthly payment on a $375,000 home with 20% down** > > | | 30-year at 7.24% | 15-year at 6.6% | > |---|---:|---:| > | Principal and interest | $2,044 | $2,630 | > | Property tax (0.89%) | $278 | $278 | > | Homeowners insurance | $153 | $153 | > | **Total** | **$2,476** | **$3,061** | Principal and interest rise 29% with the shorter term, the full payment 24%. If you are weighing a fixed rate against an adjustable one instead, that is a different decision — the [fixed vs adjustable-rate guide](https://mortgage-math-us.com/loan-types/fixed-vs-adjustable-rate/) covers it. ## Where the interest savings come from Two things cut the interest on a 15-year loan. The first is time: the balance is repaid twice as fast, so there is far less balance for interest to accrue on. The 15-year loan also carries a lower rate — 6.6% against 7.24% in Freddie Mac’s latest survey, a gap of 0.64 percentage points, as shorter loans generally carry lower rates. On the $300,000 example, a 15-year loan at the 30-year rate would already save $243,376, about 93% of the total. The lower rate saves the remaining $19,270, about 7%. In the first year alone, the 30-year borrower pays $21,625 of interest and the 15-year borrower $19,438. The way each payment splits between interest and principal is called [amortization](https://mortgage-math-us.com/glossary/amortization/). ## Equity after 5, 10 and 15 years The faster payoff shows up as equity long before the loan ends. Here is the balance still owed on the $300,000 loan: *Balance and principal repaid on a $300,000 loan* | After | 30-year balance | 15-year balance | 30-year principal repaid | 15-year principal repaid | |---|---:|---:|---:|---:| | Year 5 | $283,107 | $230,572 | $16,893 | $69,428 | | Year 10 | $258,872 | $134,087 | $41,128 | $165,913 | | Year 15 | $224,103 | $0 | $75,897 | $300,000 | After five years the 15-year borrower owes $52,535 less. That matters if you sell, refinance or want to borrow against the home: more equity means more cash at sale, an earlier end to PMI on a conventional loan and more room under a lender’s loan-to-value limits. ## The middle path: a 30-year loan paid down faster You can get most of the 15-year result without committing to the 15-year payment. Take the 30-year loan and add extra principal each month; if money gets tight, drop back to the required payment. > **Worked example: $300,000 at 7.24% for 30 years, paid to an earlier date** > > | Paid off in | Payment needed | Extra over the required $2,044 | Total interest | Saved vs the regular 30-year schedule | > |---|---:|---:|---:|---:| > | 25 years | $2,166 | $122 | $349,946 | $86,072 | > | 20 years | $2,369 | $325 | $268,635 | $167,383 | > | 15 years | $2,737 | $692 | $192,642 | $243,376 | > Paying the 30-year loan off in 15 years costs $19,270 more in interest than a true 15-year loan — the same figure as the rate effect above, because the only difference left is the rate. Think of that as the price of flexibility: the lower required payment protects you if income drops. If the 30-year and 15-year averages move closer together, that price shrinks. Two things to check before using this approach. Make sure extra payments go to principal, not to next month’s payment; and check your loan for a prepayment penalty — on a [Qualified Mortgage](https://mortgage-math-us.com/glossary/qualified-mortgage/) it can apply only in the first 3 years, capped at 2% of the amount prepaid in the first two years and 1% in the third. The [extra payment calculator with these numbers](https://mortgage-math-us.com/tools/extra-payment-calculator/?loan=300000&rate=7.24&term=30&extra=585) shows the full schedule. ## How the term changes the house you qualify for Lenders qualify you on the required payment, so the 15-year loan’s higher payment buys a smaller home on the same income. For a $100,000 household with 10% down, property tax at 0.89%, insurance at $4.90 per $1,000 and PMI at the midpoint of Freddie Mac’s range: *Home price on $100,000 a year by loan term (10% down, no other debts)* | Budget | A month | 30-year price | 15-year price | Difference | |---|---:|---:|---:|---:| | Freddie Mac housing guideline (30%) | $2,500 | $323,000 | $263,000 | −$60,000 (19%) | | Freddie Mac total-debt guideline (45%) | $3,750 | $485,000 | $395,000 | −$90,000 (19%) | At the comfortable budget the 15-year term costs about $60,000 of purchase price. That is why many buyers qualify on a 30-year loan and prepay, or start with a 30-year loan and refinance to a shorter term later when their income has grown. The [$100,000 affordability post](https://mortgage-math-us.com/blog/how-much-house-can-i-afford-on-100k/) runs the 30-year math with debts included. ## What less interest means at tax time Mortgage interest is deductible only if you itemize, and only on up to $750,000 of mortgage debt for loans taken out after December 15, 2017. A shorter term means less interest, and so a smaller possible deduction — but for many households the deduction never comes into play. On the $300,000 example, first-year interest is $21,625 on the 30-year loan and $19,438 on the 15-year loan — both below the $32,200 standard deduction for a married couple filing jointly, so a couple with few other deductions would get no tax benefit from either. Treat any tax effect as a detail, not a reason to pick the longer loan. ## Which term fits which situation - **The 15-year loan suits** buyers whose budget easily covers the higher payment with savings intact, who want the lowest total cost and a paid-off home by a set date — before retirement, for example. - **The 30-year loan suits** buyers who need the lower payment to qualify, have irregular income, or would rather keep cash for an emergency fund, retirement contributions or higher-rate debt. - **The 30-year loan with extra payments suits** buyers who want much of the 15-year saving but value a fallback. It only works if you actually make the extra payments. > **Note: The longest term most loans can have** > > A Qualified Mortgage cannot have a term longer than 30 years, so 30 years is the longest standard option. Many lenders also offer 10-, 20- and 25-year fixed terms; ask for a quote on each if a 15-year payment is just out of reach. ## Questions to settle before you choose **How to decide between a 15-year and 30-year mortgage** 1. **Price both terms on the same day** — Ask each lender for Loan Estimates on a 15-year and a 30-year loan so the rates and fees are comparable. 2. **Run your budget on the 15-year payment** — Check that it leaves room for savings, retirement contributions and irregular costs, not just the lender’s ratio. 3. **Check your emergency cushion** — A higher required payment is harder to cover in a bad month; the 30-year loan keeps that risk lower. 4. **Compare against the middle path** — Work out the extra payment that would clear a 30-year loan in your target years, and decide whether you would really make it. 5. **Decide what the saved interest is worth to you** — Weigh the interest saved against the flexibility and the house you can buy. [Open the mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/) If you go with the 30-year loan and prepay, the schedule matters too — the [biweekly payments post](https://mortgage-math-us.com/blog/biweekly-mortgage-payments/) compares paying every two weeks with adding a little each month. ## Frequently asked questions ### Is a 15-year mortgage worth it? It is if the higher payment fits your budget comfortably. On a $300,000 loan at today’s averages it costs $585 more a month and saves about $262,646 in interest. If the payment would leave you without savings, a 30-year loan with voluntary extra payments is safer. ### Why is the 15-year rate lower than the 30-year rate? Lenders take less risk on a shorter loan: there is less time for rates to move or for the borrower’s situation to change. Freddie Mac’s latest averages are 6.6% for 15 years and 7.24% for 30 years. ### Can I pay a 30-year mortgage off in 15 years? Yes. On a $300,000 loan at 7.24%, paying $2,737 a month instead of $2,044 clears it in about 15 years. You pay more interest than on a true 15-year loan at 6.6% — about $19,270 here — but you can drop back to the lower payment at any time. ### Does a 15-year mortgage make it harder to qualify? Yes, because lenders use the required payment. On $100,000 a year with 10% down, the 15-year term lowers the price you can afford at a 30% housing budget by about $60,000. ### Should I refinance from a 30-year to a 15-year loan? It can save interest if the new rate and closing costs make sense and the higher payment fits. Compare the saving with the cost of refinancing and how long you will keep the loan, and see the refinancing guides for the break-even math. ### Is PMI different on a 15-year loan? PMI works the same way on both terms, but a 15-year loan reaches the point where it can be cancelled — 80% of the original value — much sooner because the balance falls faster. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average; 15-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income; Freddie Mac guidance: total debt payments below this share of gross income (Jan 22, 2026) - [IRS](https://www.irs.gov/newsroom/working-families-tax-cuts-individuals-and-workers) — 2026 standard deduction, married filing jointly (Tax year 2026) - [12 CFR 1026.43(g)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43) — Prepayment penalty may not apply after this many years (qualified mortgages); Maximum prepayment penalty in the first two years (share of balance prepaid); Maximum prepayment penalty in the third year (share of balance prepaid) (Oct 28, 2026) - [IRS Publication 936](https://www.irs.gov/pub/irs-pdf/p936.pdf) — Mortgage debt on which interest is deductible (loans after Dec 15, 2017) (Tax year 2025) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-qualified-mortgage-en-1789/) — Longest term allowed on a Qualified Mortgage (Jan 7, 2025) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) — Ask your servicer to cancel PMI at this share of original value (Oct 28, 2026) - [CFPB: Understand the different kinds of loans available](https://www.consumerfinance.gov/owning-a-home/explore/understand-the-different-kinds-of-loans-available/) - [CFPB: Explore interest rates](https://www.consumerfinance.gov/owning-a-home/explore-rates/) _General information, not financial advice._ --- # ARM risks explained, with the numbers > The real risks of an adjustable-rate mortgage: payment shock under 5/6 and 7/6 caps, a rate-path stress test, the margin, refinancing and qualifying. URL: https://mortgage-math-us.com/blog/arm-risks-explained/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The biggest ARM risk is payment shock at the first reset. On a $350,000 7/6 ARM starting at an example 6.74%, Fannie Mae’s caps let the rate reach 11.74% in month 85, lifting principal and interest from $2,268 to **$3,335** — 47% more in one step. Over 10 years the 7/6 costs less than a 30-year fixed at today’s average unless its rate after the reset ends up more than **1.85 percentage points** above the start — about 8.59%. Lenders generally approve a 7/6 on its starting payment, and refinancing out depends on rates, your home’s value and your finances at the time. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Caps on Fannie Mae 7/6 and 10/6 ARMs | 5/1/5 | [Fannie Mae Standard ARM Plan Matrix](https://singlefamily.fanniemae.com/media/6951/display) | Oct 1, 2021 | | Caps on a Fannie Mae 5/6 ARM | 2/1/5 | [Fannie Mae Standard ARM Plan Matrix](https://singlefamily.fanniemae.com/media/6951/display) | Oct 1, 2021 | | Index on Fannie Mae ARMs | 30-day average SOFR | [Fannie Mae Selling Guide B2-1.4-02](https://selling-guide.fanniemae.com/sel/b2-1.4-02/adjustable-rate-mortgages-arms) | Dec 10, 2025 | | Highest margin on a Fannie Mae ARM | 3% | [Fannie Mae Selling Guide B2-1.4-02](https://selling-guide.fanniemae.com/sel/b2-1.4-02/adjustable-rate-mortgages-arms) | Dec 10, 2025 | | Years of rate changes a Qualified Mortgage must underwrite | 5 years | [12 CFR 1026.43(e)(2)(iv)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43) | Oct 29, 2026 | | 30-year fixed average used for comparison | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | ## Five risks, one example loan The [fixed vs adjustable-rate guide](https://mortgage-math-us.com/loan-types/fixed-vs-adjustable-rate/) explains how an ARM works and runs a worst case on a 5/6 ARM. This post takes the other side: each risk, sized on one example. You buy a $400,000 home with a $350,000 30-year ARM. The start rate is an example 6.74%, half a point under today’s 7.24% 30-year fixed average, and we assume it equals the fully indexed rate today — no discount. Caps are Fannie Mae’s standard plans: 2/1/5 on a 5/6 ARM and 5/1/5 on a 7/6. *The main ARM risks and what limits them* | Risk | What triggers it | How big it can get here | What limits it | |---|---|---|---| | Payment shock | The first reset | +47% on the 7/6 in one step | Rate caps | | Rising index | The 30-day average SOFR goes up | Up to the lifetime cap | Periodic and lifetime caps | | Margin | Set at closing, never changes | $49 a month per 0.25 point | Shopping; Fannie Mae’s 3% maximum | | Refinance risk | Falling value, higher rates, weaker finances | No conventional refinance below a certain value | Equity and savings | | Qualifying gap | Approval on the starting payment | Payment 47% above what you were approved on | Your own budget | ## Payment shock: why a 7/6 can jump further at once Longer fixed periods feel safer, and they are — for longer. But the caps are different. A 5/6 ARM’s first change is capped at 2 points, then 1 point every six months. A 7/6 ARM’s first change is capped at 5 points, the same as its lifetime cap, so the whole increase can arrive in a single reset. *Worst case at the first reset on $350,000* | ARM | Starting payment | First reset | Payment after it | Highest payment | |---|---:|---|---:|---:| | 5/6 ARM | $2,268 | Month 61: 8.74% | $2,699 (+19%) | $3,382 from month 79 | | 7/6 ARM | $2,268 | Month 85: 11.74% | $3,335 (+47%) | $3,335 from month 85 | The 5/6 climbs in steps and ends a little higher, because its increases start two years earlier on a larger balance. The 7/6 gives two more years at the starting payment, then delivers the full shock at once. Payments here are principal and interest only; taxes and insurance come on top. > **Watch out: Plan for the worst-case payment** > > The CFPB’s ARM handbook advises taking an ARM only if you could afford the payment at its maximum. Your Loan Estimate shows that maximum on page 1 — check it against your budget, not just the starting figure. ## A stress test across rate paths The worst case is a boundary, not a forecast. The table shows what happens if the fully indexed rate is 1 point lower, unchanged or higher at the reset and stays there — and what each path means for total cost over 10 years against a 30-year fixed at 7.24%. “10-year cost” counts every payment plus the balance still owed at the end of year 10. *7/6 ARM on $350,000 across rate paths (5/6 shown for comparison)* | Rate path at the reset | 7/6 rate from month 85 | 7/6 payment | 5/6 payment once caps allow | 7/6 10-year cost vs fixed | |---|---:|---:|---:|---:| | Rates fall 1 point | 5.74% | $2,076 | $2,065 | −$27,111 | | Rates unchanged | 6.74% | $2,268 | $2,268 | −$17,634 | | Rates rise 1 point | 7.74% | $2,468 | $2,479 | −$8,110 | | Rates rise 2 points | 8.74% | $2,675 | $2,699 | +$1,451 | | Rates rise 3 points | 9.74% | $2,889 | $2,923 | +$11,041 | | Worst case (lifetime cap) | 11.74% | $3,335 | $3,382 | +$30,278 | Over 10 years the 7/6 costs less than a 30-year fixed at today’s average unless its rate after the reset ends up more than **1.85 percentage points** above the start — about 8.59%. If rates stay where they are, the ARM is $17,634 cheaper over the decade. If you are confident you will sell or pay off the loan before month 85, the reset never reaches you — but that is a plan about your life, not about rates. > **Worked example: How the 10-year cost is counted** > > | | 30-year fixed at 7.24% | 7/6 ARM, rates unchanged | > |---|---:|---:| > | Monthly principal and interest | $2,385 | $2,268 | > | Payments over 10 years plus balance owed | $588,247 | $570,613 | > | Difference | | $17,634 less | ## The index and the margin After the fixed period, your rate is the [index](https://mortgage-math-us.com/glossary/arm-index/) plus the [margin](https://mortgage-math-us.com/glossary/arm-margin/), within the caps. On Fannie Mae ARMs the index is the 30-day average SOFR, which you can’t influence. The margin is set by your lender, printed in your note and never changes — and it is negotiable at the start. Fannie Mae caps the margin at 3% above the index and doesn’t let the rate fall below the margin, so the margin is also your floor. Every quarter point of margin adds about $49 a month to the payment after the reset on the $317,705 balance left at month 84 — for the remaining 23 years. Compare margins between lenders as carefully as start rates. ## Refinance risk: rates, value and your finances The usual plan with an ARM is to refinance before the reset. The CFPB’s handbook is blunt about it: don’t count on being able to refinance, and you might not qualify if your home loses value. Three things all have to line up at once: rates low enough to make it worthwhile, enough equity, and income and credit that still qualify. Equity is the easiest to measure. At the 7/6 reset you would still owe about $317,705 of the original $350,000: *Loan-to-value at the 7/6 reset, by change in the home’s value* | Home value change | Value | Loan-to-value | What it means for a conventional refinance | |---|---:|---:|---| | −20% | $320,000 | 99.3% | Above the conventional refinance limit | | −10% | $360,000 | 88.3% | Refinance possible, with PMI | | Unchanged | $400,000 | 79.4% | Refinance without PMI if you qualify | | +10% | $440,000 | 72.2% | Refinance without PMI if you qualify | A conventional rate-and-term refinance on a one-unit home generally tops out at 97% loan-to-value, and above 80% you would pay PMI on the new loan. If values fall and rates rise together, you may be stuck with the reset payment exactly when it is highest. [Is refinancing worth it?](https://mortgage-math-us.com/blog/is-refinancing-worth-it/) covers what to weigh when a refinance is possible. ## Qualifying: approved on one payment, owing another Federal rules require lenders to check that you can repay, and for ARMs they look only a few years ahead. A general [Qualified Mortgage](https://mortgage-math-us.com/glossary/qualified-mortgage/) must be underwritten at the highest rate that can apply in the first 5 years after the first payment. Fannie Mae applies a stricter rate to ARMs with a fixed period of 5 years or less, but a 7/6 or 10/6 ARM is generally qualified at its note rate. *Payment you qualify on vs the worst case* | Loan | Fannie Mae qualifying rate | Rate | Qualifying payment | Worst-case payment | Worst case above qualifying | |---|---|---:|---:|---:|---:| | 5/6 ARM | Higher of start rate + first cap, or fully indexed rate | 8.74% | $2,751 | $3,382 | 23% | | 7/6 ARM | Start (note) rate | 6.74% | $2,268 | $3,335 | 47% | | 30-year fixed | Note rate | 7.24% | $2,385 | $2,385 | 0% | The 5/6 ARM is the harder loan to qualify for, yet its worst case is closer to what you were approved on. The 7/6 is easier to get, and its worst case is the furthest from the approval. Before you rely on a 7/6 to stretch your budget, run the reset payment in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=400000&down=12.5&rate=11.74&term=30) with your taxes and insurance added. ## Prepayment penalties and other features to check Federal rules generally keep [prepayment penalties](https://mortgage-math-us.com/glossary/prepayment-penalty/) off ARMs: a mortgage covered by the ability-to-repay rule may carry one only if its APR can’t rise after closing, it is a Qualified Mortgage and it isn’t a higher-priced loan. Even on a fixed-rate loan that meets those tests, the penalty is capped at 2% of the balance prepaid in the first two years and 1% in the third, and none is allowed after 3 years — at most $7,000 on $350,000. So the ARM-specific question is less about penalties and more about structure. Check the Loan Estimate and note for: - **The caps** — first, periodic and lifetime, and whether they work in both directions. - **The floor** — the lowest the rate can go; on Fannie Mae ARMs, the margin. - **Interest-only or payment-option features** — these can make the balance grow; neither is allowed on a Qualified Mortgage. - **A conversion option** — some ARMs can switch to a fixed rate for a fee at set times. ## How to stress-test your own ARM offer **Stress-test an ARM before you sign** 1. **Find the caps and margin** — They are in the AIR table on page 2 of the Loan Estimate; the index is named there too. 2. **Work out the worst-case payment** — Start rate plus the first cap, on the balance you will owe at the first reset. Page 1 shows the maximum payment. 3. **Test it against your budget** — Add taxes, insurance and any HOA dues, and compare the total with your take-home pay. 4. **Price the fixed alternative** — Get a fixed-rate quote on the same day and compare 10-year costs under a few rate paths. 5. **Check your refinance cushion** — Estimate the loan-to-value at the reset if the home’s value falls 10%. 6. **Keep a reserve** — Savings for several months of the higher payment buy time if you can’t refinance. ## Frequently asked questions ### What is the biggest risk of an adjustable-rate mortgage? Payment shock at the first reset. On our $350,000 example, a 7/6 ARM’s payment could rise from $2,268 to $3,335 in month 85 under Fannie Mae’s 5/1/5 caps — 47% in one step. ### Is a 7/6 ARM safer than a 5/6 ARM? It is safer for longer: the payment can’t change for seven years instead of five. But its first cap equals its lifetime cap, so the full increase can come at once, and lenders generally qualify it at the starting rate rather than a higher one. ### Can my ARM rate go down? Yes. After the fixed period it follows the 30-day average SOFR plus your margin, within the caps. On Fannie Mae ARMs it can never fall below the margin, which can be up to 3% above the index. ### Will I be able to refinance before my ARM resets? Only if you qualify at the time. In our example you would owe about $317,705 at the 7/6 reset; if the home’s value fell 20%, the loan-to-value would be 99.3%, above the 97% limit for a conventional refinance. The CFPB advises not to count on refinancing. ### Do ARMs have prepayment penalties? Generally not. Under the federal ability-to-repay rule, a covered mortgage can include a prepayment penalty only if its APR cannot increase after closing, among other conditions — which rules out ARMs. ### How do lenders qualify me for an ARM? A general Qualified Mortgage is underwritten at the highest rate possible in the first 5 years after the first payment. Fannie Mae uses a higher rate for ARMs with a fixed period of 5 years or less; longer ARMs are generally qualified at the note rate. ### How much does the margin matter? A lot, because it lasts for the rest of the loan. In our example each 0.25 point of margin adds about $49 a month after the reset. Compare margins, not only start rates. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [Fannie Mae Standard ARM Plan Matrix](https://singlefamily.fanniemae.com/media/6951/display) — Rate caps on a Fannie Mae 5/6 ARM (first/periodic/lifetime); Rate caps on Fannie Mae 7/6 and 10/6 ARMs (first/periodic/lifetime) (Oct 1, 2021) - [Fannie Mae Selling Guide B2-1.4-02](https://selling-guide.fanniemae.com/sel/b2-1.4-02/adjustable-rate-mortgages-arms) — Fannie Mae ARMs: highest margin allowed (percentage points over the index); the rate can never fall below the margin; Index on Fannie Mae ARMs (Dec 10, 2025) - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae limited cash-out refinance maximum LTV, one-unit principal residence (fixed rate) (Apr 1, 2026) - [12 CFR 1026.43(g)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43) — Maximum prepayment penalty in the first two years (share of balance prepaid); General Qualified Mortgage: an ARM is underwritten at the highest rate that may apply during this many years after the first payment is due; Maximum prepayment penalty in the third year (share of balance prepaid) (Oct 28, 2026) - [Fannie Mae Selling Guide B3-6-04](https://selling-guide.fanniemae.com/sel/b3-6-04/qualifying-payment-requirements) — Fannie Mae: ARMs with an initial fixed period this long or shorter must qualify at a higher rate (Feb 7, 2024) - [CFPB: Consumer Handbook on Adjustable-Rate Mortgages (CHARM)](https://files.consumerfinance.gov/f/documents/cfpb_charm_booklet.pdf) - [Fannie Mae Selling Guide B3-6-04, Qualifying Payment Requirements](https://selling-guide.fanniemae.com/sel/b3-6-04/qualifying-payment-requirements) - [12 CFR 1026.43, Minimum standards for transactions secured by a dwelling](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43) _General information, not financial advice._ --- # Biweekly mortgage payments: do they save money? > Biweekly payments add a 13th payment each year. See what that saves at today’s rate, two simpler ways to get the same result, and fees to avoid. URL: https://mortgage-math-us.com/blog/biweekly-mortgage-payments/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer Yes, but only because 26 half-payments add up to 13 monthly payments a year instead of 12. On a $315,000 30-year loan at today’s 7.24% average, that extra payment saves about **$120,408 in interest** and ends the loan 6 years 8 months early. Adding one-twelfth of a payment each month saves about $115,797 and needs no special plan or fee — so check how your servicer handles extra money before paying anyone to set up a biweekly schedule. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | 30-year fixed average used here | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | PMI ends automatically at | 78% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) | Oct 28, 2026 | | No prepayment penalty on a Qualified Mortgage after | 3 years | [12 CFR 1026.43(g)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43) | Oct 28, 2026 | | Highest prepayment penalty, first two years | 2% | [12 CFR 1026.43(g)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43) | Oct 28, 2026 | | CFPB emergency cushion, low end | 3 months | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | ## Why 26 half-payments equal 13 full ones A year has 52 weeks, so paying every two weeks means 26 payments. If each is half of your monthly payment, you pay the equivalent of 13 monthly payments a year — one more than the regular schedule. In most months two half-payments arrive; in two months of the year, a third one does. That 13th payment goes entirely to principal, because the interest for each month is already covered by the regular payment. A lower balance means less interest the following month, and the effect compounds over the life of the loan. Nothing else about the biweekly schedule saves money: interest on most mortgages is still calculated monthly, so paying half a payment two weeks early saves only a few dollars. The way each payment splits between interest and principal is explained under [amortization](https://mortgage-math-us.com/glossary/amortization/). ## Three ways to make the 13th payment Say you borrow $315,000 to buy a $350,000 home with 10% down, on a 30-year fixed loan at today’s 7.24% average. The regular payment is $2,147 a month, so a half-payment is $1,073. Here is what each way of paying one extra payment a year does: *$315,000 at 7.24% for 30 years — one extra payment a year, three ways* | How you pay | Paid a year | Paid off in | Total interest | Interest saved | |---|---:|---:|---:|---:| | Regular monthly payments | $25,761 | 30 years | $457,819 | — | | Half-payment every two weeks (26 a year) | $27,907 | 23 years 4 months | $337,411 | **$120,408** | | One-twelfth extra with each monthly payment | $27,907 | 23 years 7 months | $342,022 | **$115,797** | | One extra payment once a year | $27,907 | 23 years 10 months | $346,402 | **$111,417** | All three land within $8,991 of each other; the biweekly schedule saves the most here, because the extra money starts working sooner. The biweekly row assumes your servicer credits each half-payment in the month it arrives. If a half-payment sits in a holding account until the next one arrives, the saving is slightly smaller. > $115,797 > Interest saved by adding one-twelfth of a payment ($179) each month — no biweekly plan needed. ## How the savings build over time The saving is small at first and grows with every year the lower balance compounds. That matters if you might sell or refinance in a few years, and it matters a lot if a biweekly plan charges fees up front. *Cumulative interest saved on the $315,000 loan* | By the end of | Biweekly | One-twelfth extra monthly | Extra payment yearly | |---|---:|---:|---:| | Year 1 | $86 | $73 | $0 | | Year 3 | $814 | $729 | $494 | | Year 5 | $2,342 | $2,154 | $1,732 | | Year 10 | $10,586 | $9,909 | $8,881 | | Year 20 | $56,103 | $53,019 | $49,877 | After three years the biweekly schedule has saved about $814. Any setup fee or per-payment charge comes straight out of that, which is why a paid plan can take years to come out ahead. There is a second, earlier benefit on a loan with PMI: the balance reaches 78% of the original value sooner. Here PMI would end automatically 41 months earlier on the biweekly schedule, saving about $6,458 of premiums on top of the interest. You can also ask to cancel PMI once the balance reaches 80% of the original value — see the [PMI guide](https://mortgage-math-us.com/buying/pmi/). ## Setting up biweekly payments with your servicer Your [mortgage servicer](https://mortgage-math-us.com/glossary/mortgage-servicer/) — the company that collects your payments — decides what you can do. Federal rules require it to credit a full periodic payment as of the day it is received. A payment smaller than a full one is a *partial payment*, and a servicer may hold it in a suspense account rather than apply it; once enough accumulates to cover a full payment, it must apply that money as a payment. Sending half-payments on your own, without an arrangement, may simply mean the first half waits for the second. **How to get a 13th payment without paying a fee** 1. **Ask your servicer what it offers** — Some servicers run a biweekly or extra-payment option. Ask whether there is any fee and when each half-payment is credited. 2. **Check your loan for a prepayment penalty** — On a Qualified Mortgage a penalty can only apply in the first 3 years. Your Loan Estimate and Closing Disclosure show whether your loan has one. 3. **Choose the simplest method you will keep up** — Adding $179 to each monthly payment, or one extra payment a year, gets almost the same result as biweekly. 4. **Mark the extra as principal** — Use the servicer’s “additional principal” field online or a written instruction with a check. 5. **Check the next statement** — The extra should show as principal paid and lower the balance, not as an advance on next month’s payment. The [extra payment calculator with these numbers](https://mortgage-math-us.com/tools/extra-payment-calculator/?loan=315000&rate=7.24&term=30&extra=179) shows the full schedule and lets you try other amounts. ## Third-party biweekly plans and their fees Some companies offer to manage biweekly payments for you: they debit half your payment every two weeks and forward the money to your servicer on their own schedule. If the extra is held and passed on in a lump sum, the result is closer to the yearly extra-payment row above — minus whatever the plan charges. > **Watch out: Read the fee terms before you enroll** > > The CFPB has sued a company that sold biweekly payment programs, alleging that its marketing promised savings without making clear that borrowers paid a setup fee and recurring processing fees, and that many borrowers would pay more in fees than they saved in interest for the first several years. You can make the same extra payment yourself for free. If you do use a plan, ask in writing how much it charges to enroll, per debit and to cancel; when it forwards money to your servicer; and whether it holds your extra payments until year end. Money that sits with a third party is not reducing your balance. ## Make sure the extra money goes to principal Extra money can be applied in different ways, and not all of them save interest. Some servicers treat a larger payment as an early payment of next month’s installment, which leaves the balance — and the interest — almost unchanged. To avoid that: - **Separate the extra from the regular payment** or tick the “principal only” box, and keep a record of your instruction. - **Compare the principal line** on two consecutive statements; the balance should drop by your extra amount plus the normal principal. - **Don’t expect a lower required payment.** On a fixed-rate loan, prepaying shortens the loan; the monthly payment stays the same unless your servicer offers a [recast](https://mortgage-math-us.com/glossary/recast/), which may carry a fee and a minimum lump sum. - **Keep the escrow separate.** Extra principal does not count toward taxes and insurance, so an escrow shortage still has to be paid on its own. If a payment is misapplied, send your servicer a written notice of error. Federal servicing rules treat failing to apply an accepted payment correctly as an error, and the servicer must either fix it or investigate and explain in writing why it found no error. ## When an extra payment is not the best use of the money A 13th payment saves interest at your mortgage rate. That is a good, guaranteed return, but not always the best one: - **Build an emergency cushion first.** The CFPB suggests 3–6 months of expenses; money paid into the house is hard to get back quickly. - **Pay off higher-rate debt first.** A credit card balance usually costs far more than 7.24%. - **Take any employer retirement match.** It is usually worth more than the interest saved. - **Compare with a shorter loan.** If you are sure you can afford it, a 15-year loan often has a lower rate than the 30-year — the [15-year vs 30-year post](https://mortgage-math-us.com/blog/15-year-vs-30-year-mortgage/) runs that math. Small extra amounts still help: $100 a month on this loan saves about $74,303 and ends it 4 years 1 month early. ## Frequently asked questions ### Do biweekly mortgage payments really save money? Yes, because 26 half-payments equal 13 full payments a year. On a $315,000 30-year loan at today’s average of 7.24%, that saves about $120,408 in interest and ends the loan 6 years 8 months early. ### Is biweekly better than one extra payment a year? Only slightly. On this example the difference over the life of the loan is $8,991. Choose the method you can keep up; the extra payment matters far more than its timing. ### Can I just pay half my mortgage every two weeks on my own? Not always usefully. A payment smaller than a full monthly payment can be held in a suspense account until enough arrives to make a full payment. Ask your servicer how it handles half-payments, or add one-twelfth of a payment each month instead. ### Are biweekly payment programs worth the fee? Rarely. Any fee comes out of savings that build slowly — about $814 of interest in the first three years on this example. The CFPB has taken action against a company whose biweekly program it said cost many borrowers more in fees than they saved for years. ### Will biweekly payments lower my monthly payment? No. The required payment stays the same and the loan ends earlier. A recast, if your servicer offers one, can lower the payment after a large lump sum. ### Do biweekly payments help remove PMI sooner? Yes. The balance reaches 80% and 78% of the original value sooner. In this example PMI would end automatically about 41 months earlier. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) — PMI ends automatically at this share of original value; Ask your servicer to cancel PMI at this share of original value (Oct 28, 2026) - [12 CFR 1026.43(g)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43) — Prepayment penalty may not apply after this many years (qualified mortgages); Maximum prepayment penalty in the first two years (share of balance prepaid) (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — CFPB: emergency cushion, low end (months of expenses); CFPB: emergency cushion, high end (months of expenses) (Oct 28, 2026) - [CFPB: Suit against a biweekly payment company over savings claims](https://www.consumerfinance.gov/archive/newsroom/cfpb-files-suit-against-nationwide-biweekly-for-luring-consumers-with-false-promises-of-mortgage-savings/) - [12 CFR 1026.36(c): Crediting of payments and partial payments](https://www.consumerfinance.gov/rules-policy/regulations/1026/36/) - [CFPB: What is a prepayment penalty?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-prepayment-penalty-en-1957/) - [12 CFR 1024.35: Error resolution procedures](https://www.consumerfinance.gov/rules-policy/regulations/1024/35/) _General information, not financial advice._ --- # Second home vs investment property: how the mortgage changes > How lenders tell a second home from a rental, and what that does to your down payment, reserves, rental income, rate and taxes. URL: https://mortgage-math-us.com/blog/buying-a-second-home-or-rental/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer Fannie Mae treats a home you’ll use part of the year as a **second home**, which needs at least 10% down (a 90% maximum LTV) and 2 months of payments in reserve. A home you won’t live in is an **investment property**: at least 15% down and 6 months of reserves — on a $350,000 purchase that is about **$67,972** before closing costs. FHA, VA and USDA loans are for homes you live in, so neither qualifies. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Maximum LTV, second home purchase | 90% | [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) | Apr 1, 2026 | | Maximum LTV, one-unit investment purchase | 85% | [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) | Apr 1, 2026 | | Minimum reserves, second home | 2 months | [Fannie Mae Selling Guide B3-4.1-01](https://selling-guide.fanniemae.com/sel/b3-4.1-01/minimum-reserve-requirements) | Aug 7, 2024 | | Minimum reserves, investment property | 6 months | [Fannie Mae Selling Guide B3-4.1-01](https://selling-guide.fanniemae.com/sel/b3-4.1-01/minimum-reserve-requirements) | Aug 7, 2024 | | Share of rent counted as income | 75% | [Fannie Mae Selling Guide B3-3.8-02](https://selling-guide.fanniemae.com/sel/b3-3.8-02/rental-income-subject-property) | Sep 2, 2026 | | IRS personal-use line for a rented home | 14 days | [IRS Tax Topic 415](https://www.irs.gov/taxtopics/tc415) | Sep 24, 2026 | ## Who lives there decides the loan Lenders sort every purchase into one of three occupancy types, and the type sets the down payment, the reserves, the price of the loan and which programs you can use. Fannie Mae’s Selling Guide defines them like this: *Fannie Mae occupancy types at a glance* | | Principal residence | Second home | Investment property | |---|---|---|---| | Who occupies it | You, as your main home | You, for some part of the year | Not you | | Property | One to four units | One unit, suitable for year-round use | One to four units | | Control | Yours | Yours exclusively — no rental pool or management firm controlling occupancy | Yours, tenants occupy | | Rental income to qualify | From other units of a 2–4 unit home | Not counted | Counted at 75% of gross rent | | Maximum LTV (one unit, purchase) | 97% | 90% | 85% | | Minimum reserves (automated underwriting) | Set by underwriting | 2 months | 6 months | A second home also has to be a place you could actually use: the guide rules out timeshares and homes tied to agreements that hand a management company control over who stays there. If a lender sees that you plan to rent a second home occasionally, the loan can still be a second-home loan, but that rent can’t help you qualify. The basics of each program are in the [conventional loans guide](https://mortgage-math-us.com/loan-types/conventional-loans/). This post looks at what the label does to the numbers. ## Cash to close on a $350,000 purchase Here is the same $350,000 property bought three ways at the minimum down payment, with today’s 7.24% average rate, tax at the national 0.89% ratio, insurance at $4.90 per $1,000 and PMI on each, since every loan here is above 80% of the price. Reserves are months of the full payment that must still be in your accounts after closing. > **Worked example: $350,000 property, 30-year fixed, minimum down payment for each occupancy type** > > | Occupancy | Down payment | Loan | Monthly payment (PITI + PMI) | Reserves required | Cash needed incl. closing costs (2%–5%) | > |---|---:|---:|---:|---:|---:| > | Principal residence | 3% ($10,500) | $339,500 | $2,886 | Set by underwriting | $17,500–$28,000 | > | Second home | 10% ($35,000) | $315,000 | $2,707 | $5,413 | $47,500–$58,000 | > | Investment property | 15% ($52,500) | $297,500 | $2,579 | $15,472 | $75,000–$85,500 | > > Same rate for all three to keep the comparison simple; in practice second homes and especially investment properties are priced higher. Moving from a home you’ll live in to a rental adds about $57,472 in down payment and reserves on this price alone. Reserves don’t have to be cash in a checking account — lenders generally accept savings and retirement balances, with rules on how they are counted — but they must be documented. ## Why the rate is higher on a rental Fannie Mae adds loan-level price adjustments to every loan on an investment property and to some second-home loans, on top of the adjustments for credit score and loan-to-value. Lenders pass them on as a higher rate or as points, so a quote for a rental will usually be above the weekly average you see for owner-occupied loans. The size of the adjustment depends on your credit, down payment and lender, so there is no single figure to quote. What you can work out is the cost of each step: on the $297,500 rental loan above, every half a percentage point of rate adds about $102 a month. Compare offers on the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=350000&down=15) by changing the rate field. ## Counting the rent toward your income For a rental, Fannie Mae counts 75% of the gross monthly rent as income; the rest is an allowance for vacancies and upkeep. The lender then subtracts the property’s full payment (principal, interest, taxes, insurance and any HOA dues). A positive result helps you qualify; a negative one is added to your monthly debts in the [debt-to-income ratio](https://mortgage-math-us.com/buying/debt-to-income/). So the first question is how much rent the property needs to pay for itself on paper. On the example rental, the payment is $2,579 a month, so the rent has to be at least $2,579 ÷ 75% = **$3,438** before it stops counting against you. *How rent changes the qualifying picture on the example rental ($2,579 a month)* | Gross monthly rent | Counted (75%) | Monthly payment | Net rental income | Effect on qualifying | |---|---:|---:|---:|---:| | $2,050 | $1,538 | $2,579 | −$1,041 | Added to your monthly debts | | $2,600 | $1,950 | $2,579 | −$629 | Added to your monthly debts | | $3,100 | $2,325 | $2,579 | −$254 | Added to your monthly debts | | $3,600 | $2,700 | $2,579 | +$121 | Can offset the payment or count as income | At $2,050 of rent the property adds about $1,041 to your monthly debts, which your other income must carry. Lenders use a signed lease or an appraiser’s rent estimate for the figure, and how they treat the result can depend on your history as a landlord. A second home gets no rental credit at all, so its whole payment counts as debt. ## Reserves when you already own property Buying a second home or a rental while you own other financed properties adds a second reserve requirement: a share of the unpaid balances on those other properties, not counting the property you are buying or your own home. *Fannie Mae’s extra reserves for other financed properties* | Other financed properties you own | Extra reserves | |---|---:| | 1 to 4 | 2% of their combined balances | | 5 or 6 | 4% of their combined balances | | 7 to 10 | 6% of their combined balances | Say you own your home and two rentals with $400,000 owed on the rentals, and you buy the example property. The lender wants $15,472 for the new rental plus $8,000 for the others — **$23,472** in all. Fannie Mae also caps you at 10 financed properties when you buy a second home or investment property, counting your own home. ## FHA, VA and USDA: for homes you live in The government programs exist to help people buy the home they live in, so each one requires owner occupancy: - **FHA** insures loans only on your principal residence. You can buy a two- to four-unit building with FHA if you live in one unit — the closest an FHA loan comes to a rental. See the [FHA loans guide](https://mortgage-math-us.com/loan-types/fha-loans/). - **VA** requires you to live in the home you buy with the loan; a vacation home or pure rental doesn’t qualify. - **USDA** guaranteed loans require you to move in within 60 days and keep the home as your primary residence. If you later move and keep the old house as a rental, that is generally allowed once you have genuinely lived there as required. What matters is your honest intent when you sign. ## Occupancy fraud: the shortcut to avoid > **Watch out: Don’t call a rental your home** > > Telling a lender you’ll live in a property you plan to rent out — or calling a rental a second home — to get a smaller down payment or a lower rate is occupancy fraud. Your application and closing documents include occupancy statements you sign as true. A false statement can be treated as a default under the mortgage, and knowingly lying to a lender can be prosecuted as a federal crime. Lenders can check: they compare the address on your tax returns, driver’s license and mail with the property, and they look at the distance from your main home and whether the second home makes sense as one. ## Taxes on a second home vs a rental The IRS draws its own lines, separate from the lender’s. If you rent out a home you also use, it counts as a residence for the year when your personal use is more than the greater of 14 days or 10% of the days it is rented at a fair price. Rent it for fewer than 15 days and you don’t report the rent at all; rent it more and the expense rules in IRS Tax Topic 415 decide what you can deduct. Mortgage interest on one second home can be deductible as home mortgage interest if you itemize, within the $750,000 limit on total mortgage debt for your main and second home. On a true rental, interest and other costs are rental expenses instead. The rules have enough exceptions that a tax professional is worth a call before you buy. ## When a DSCR loan fits instead If your tax returns don’t show enough income to carry a rental, or you are buying through an LLC or already own 10 financed properties, a [DSCR loan](https://mortgage-math-us.com/loan-types/dscr-loans/) qualifies you on the property’s rent instead of your income. Terms are set by each lender and the rate is usually higher than on a conventional investment loan. For a second home you’ll use yourself, the conventional route is usually the cheaper one — and if extra cash at closing is the question, see [points or a bigger down payment](https://mortgage-math-us.com/blog/points-or-bigger-down-payment/). ## Frequently asked questions ### What is the minimum down payment on a second home? Fannie Mae allows up to 90% loan-to-value on a second home purchase, so at least 10% down — $35,000 on a $350,000 home. Lenders can ask for more, and PMI applies above 80% loan-to-value. ### How much do I need down on an investment property? At least 15% on a one-unit property bought with a Fannie Mae loan (the maximum LTV is 85%), plus 6 months of the payment in reserve. Two- to four-unit rentals and DSCR loans usually need more. ### Can I rent out my second home sometimes? Occasional renting is possible, but a second home must stay under your exclusive control, can’t be in a rental pool or timeshare, and the rent can’t be used to qualify for the loan. If renting is the main purpose, finance it as an investment property. ### Can I use rental income from the new property to qualify? For an investment property, yes: Fannie Mae counts 75% of the gross rent, minus the property’s payment. On our example the rent must be about $3,438 before the rental stops adding to your debts. ### Can I buy a vacation home with an FHA or VA loan? No. FHA and VA loans require you to live in the home as your residence, and USDA loans require you to move in within 60 days. A second home needs a conventional or other non-government loan. ### Is mortgage interest on a second home tax-deductible? It can be, if you itemize and the home counts as a qualified second home, within the $750,000 limit on mortgage debt across your main and second home. If you rent it out, the IRS personal-use test of 14 days or 10% of rental days decides how it is treated. ### How many mortgaged properties can I have? Fannie Mae allows up to 10 financed properties, including your own home, when you buy a second home or investment property, with extra reserves of 2%–6% of the balances on the others. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae maximum LTV, one-unit principal residence purchase; Fannie Mae maximum LTV, second home purchase; Fannie Mae maximum LTV, one-unit investment property purchase (Apr 1, 2026) - [Fannie Mae Selling Guide B3-4.1-01](https://selling-guide.fanniemae.com/sel/b3-4.1-01/minimum-reserve-requirements) — Fannie Mae minimum reserves, second home (DU loans); Fannie Mae minimum reserves: two- to four-unit principal residence, investment property, or cash-out refinance with DTI above 45% (DU loans); Fannie Mae extra reserves with one to four other financed properties (share of their combined unpaid balances) (Aug 7, 2024) - [Fannie Mae Selling Guide B3-3.8-02](https://selling-guide.fanniemae.com/sel/b3-3.8-02/rental-income-subject-property) — Fannie Mae: share of gross monthly rent counted as net rental income (subject property) (Sep 2, 2026) - [Fannie Mae Selling Guide B2-2-03](https://selling-guide.fanniemae.com/sel/b2-2-03/multiple-financed-properties-same-borrower) — Fannie Mae: most financed properties a borrower may have when buying a second home or investment property (DU) (Nov 5, 2025) - [USDA Rural Development](https://www.rd.usda.gov/media/file/download/usda-rd-sfh-guarantee-loan-program-101-jan-2026.pdf) — USDA guaranteed loan: borrower must move in within (FY2026) - [IRS Tax Topic 415](https://www.irs.gov/taxtopics/tc415) — A home you rent out counts as your residence if personal use exceeds the greater of this many days or 10% of the days rented; A home you rent out counts as your residence if personal use exceeds the greater of 14 days or this share of the days rented; Rent out a home you use as a residence for fewer than this many days and you don’t report the rental income (Sep 24, 2026) - [IRS Publication 936](https://www.irs.gov/pub/irs-pdf/p936.pdf) — Mortgage debt on which interest is deductible (loans after Dec 15, 2017) (Tax year 2025) - [Fannie Mae Selling Guide B2-1.1-01: Occupancy Types](https://selling-guide.fanniemae.com/sel/b2-1.1-01/occupancy-types) - [Fannie Mae Selling Guide B3-4.1-01: Minimum Reserve Requirements](https://selling-guide.fanniemae.com/sel/b3-4.1-01/minimum-reserve-requirements) - [VA: Purchase loan eligibility](https://www.va.gov/housing-assistance/home-loans/loan-types/purchase-loan/) - [IRS Tax Topic 415: Renting residential and vacation property](https://www.irs.gov/taxtopics/tc415) _General information, not financial advice._ --- # Buying a home with a co-signer > Co-signer, non-occupant co-borrower or co-owner: Fannie Mae’s limits, how their income and debts change your DTI, what they owe and how they get off. URL: https://mortgage-math-us.com/blog/buying-with-a-co-signer/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer A co-signer on a mortgage is usually a **non-occupant co-borrower**: they sign the note and are fully liable, and their income and debts both count. In our example, a buyer earning $54,000 a year has a debt-to-income ratio of **62%** on a $300,000 home; adding a parent earning $108,000 with their own mortgage brings it to **38%**. Fannie Mae allows up to 95% loan-to-value with a non-occupant borrower through its automated underwriting. The usual way to take the co-signer off later is a refinance in your name alone. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Fannie Mae max LTV with a non-occupant borrower (DU) | 95% | [Fannie Mae Selling Guide B2-2-04](https://selling-guide.fanniemae.com/sel/b2-2-04/guarantors-co-signers-or-non-occupant-borrowers-subject-transaction) | Sep 2, 2020 | | Fannie Mae max LTV with a non-occupant borrower (manual) | 90% | [Fannie Mae Selling Guide B2-2-04](https://selling-guide.fanniemae.com/sel/b2-2-04/guarantors-co-signers-or-non-occupant-borrowers-subject-transaction) | Sep 2, 2020 | | Occupant’s own DTI limit, manual underwriting | 43% | [Fannie Mae Selling Guide B2-2-04](https://selling-guide.fanniemae.com/sel/b2-2-04/guarantors-co-signers-or-non-occupant-borrowers-subject-transaction) | Sep 2, 2020 | | Fannie Mae automated DTI ceiling | 50% | [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) | Apr 2, 2025 | | On-time history that lets a co-signer drop the debt from their DTI | 12 months | [Fannie Mae Selling Guide B3-6-05](https://selling-guide.fanniemae.com/sel/b3-6-05/monthly-debt-obligations) | Aug 5, 2026 | ## Co-signer, co-borrower or co-owner: three different roles People say “co-signer” for anyone who helps on a mortgage, but lenders and title companies separate three roles. The difference is whether the person signs the promissory note (and owes the debt), appears on the title (and owns the home), and lives there. *Three ways someone can help you buy* | | Co-signer or guarantor | Non-occupant co-borrower | Co-owner on title only | |---|---|---|---| | Signs the note and owes the debt | Yes, jointly with you | Yes, jointly with you | No | | Owns part of the home | No | May or may not | Yes | | Lives in the home | No | No | Either | | Income and debts count for the loan | Yes | Yes | No | | Typical example | A parent backing a first purchase | A parent who also wants a share of the home | A partner with savings but no income to add | Fannie Mae’s Selling Guide treats the first two alike for underwriting: both sign the note and share liability, and its automated system weighs each person’s income, assets, debts and credit whether or not they will live in the home. Only a person on the note adds income. A co-owner who is only on the title owns a share but doesn’t help you qualify. The [debt-to-income guide](https://mortgage-math-us.com/buying/debt-to-income/) explains the ratio lenders apply to all of this. ## What Fannie Mae and FHA allow Conventional loans sold to Fannie Mae allow a non-occupant borrower on a principal residence, with tighter limits than a loan where everyone lives in the home: *Fannie Mae limits with a co-signer or non-occupant borrower* | Underwriting | Maximum loan-to-value | Debt-to-income test | |---|---:|---| | Desktop Underwriter (automated) | 95% | All borrowers’ income and debts together, up to the 50% DU ceiling | | Manual underwriting, using the non-occupant’s income | 90% | The occupant’s own debt-to-income can’t exceed 43%, on the occupant’s income alone | So with a co-signer, the smallest conventional down payment is 5% through automated underwriting rather than the 3% some first-time buyers can use, and 10% if the file is manually underwritten. A Community Seconds loan can take the combined ratio higher when the program allows it. FHA loans also accept non-occupant co-borrowers, with loan-to-value limits of their own set in HUD Handbook 4000.1 (section II.A.2.b, Loan-to-Value Limits). Those limits can differ from the standard 3.5% minimum down payment, so ask the lender to confirm the maximum loan for your situation before you make an offer. Whichever program you use, the co-signer has to qualify too: lenders pull their credit, verify their income and count their debts exactly as they do yours. ## How a co-signer’s income — and debts — change the math Say you earn $54,000 a year ($4,500 a month), pay $350 a month on a car and want a $300,000 home with 5% down. Your parent earns $108,000 and already pays $1,900 on their own mortgage and $450 on a car. > **Worked example: DTI on a $300,000 home, 5% down, at 7.24%** > > | | You alone | You + your parent | > |---|---:|---:| > | New housing payment (with taxes, insurance and PMI) | $2,430 | $2,430 | > | Other monthly debts | $350 | $2,700 | > | Gross monthly income | $4,500 | $13,500 | > | **Debt-to-income ratio** | **62%** | **38%** | With your parent on the note, the ratio is inside Freddie Mac’s 45% guideline. Under manual underwriting, though, your own ratio of 62% fails Fannie Mae’s 43% test for the occupant, so this file would need Desktop Underwriter approval. The co-signer’s debts matter as much as their income. At a 45% total debt-to-income ratio: *Price each setup supports at 45% DTI (5% down, 7.24%)* | Who is on the loan | Monthly income | Monthly debts | Housing budget | Home price | |---|---:|---:|---:|---:| | Occupant alone | $4,500 | $350 | $1,675 | $207,000 | | Occupant + co-borrower with no debts | $13,500 | $350 | $5,725 | $707,000 | | Occupant + co-borrower with the debts above | $13,500 | $2,700 | $3,375 | $417,000 | Your parent’s existing mortgage and car loan cost about $290,000 of buying power. A co-signer with a paid-off home adds far more than one with a large mortgage of their own. ## What the co-signer is on the hook for Co-signing a mortgage is not a reference. The FTC’s guidance on co-signing is plain: if the main borrower stops paying, the co-signer must repay the loan, and the lender can pursue the co-signer directly. For a mortgage that means: - **The whole debt.** Everyone who signs the note is liable for the full balance, not a share of it. - **Their credit.** The mortgage appears on their credit report, and your late payments become their late payments. - **Their own borrowing.** The payment counts in their debt-to-income ratio when they apply for credit. Fannie Mae lets a lender leave it out only when someone else who is obligated on the mortgage has made the payments, with 12 months of on-time history documented. - **No automatic ownership.** A co-signer who isn’t on the title owes the debt without owning any of the home. > **Watch out: Put the arrangement in writing** > > Agree who pays what, what happens if you sell, and how the co-signer will come off the loan. The note binds you both to the lender, but it says nothing about what you owe each other. ## Getting the co-signer off the loan A lender won’t simply delete a name from a note, because each borrower was part of the approval. There are three ways out. **Refinance in your own name.** You need to qualify alone at the time. In the example, your income would have to reach about $74,127 a year for the same payment to fit a 45% ratio. How long that takes depends on your raises: *Years until you qualify alone at 45% DTI (example raise rates, today’s payment held constant)* | Your pay rises | Years to qualify alone | Your salary then | |---|---:|---:| | 3% a year | 11 years | $74,749 | | 5% a year | 7 years | $75,983 | | 7% a year | 5 years | $75,738 | By year five you would owe about $268,952 — 90% of the original price — so a refinance then would likely still need PMI unless the home has gained value. Budget $8,069–$16,137 for costs at Freddie Mac’s 3%–6% range, and check whether it pays with [is refinancing worth it?](https://mortgage-math-us.com/blog/is-refinancing-worth-it/) **Assumption with a release of liability.** Some loans can be assumed — FHA and VA loans with the lender’s approval — and a written release frees the departing borrower. Most conventional fixed-rate loans have a due-on-sale clause and can’t be assumed. See [assumable mortgage](https://mortgage-math-us.com/glossary/assumable-mortgage/). **Sell the home.** Paying off the loan ends everyone’s liability. ## Alternatives to a co-signer A co-signer is one way to close the gap; others don’t tie a second person to the debt: - **A cash gift.** A relative’s gift toward the down payment lowers the loan and the payment without adding them to the note. Lenders ask for a [gift letter](https://mortgage-math-us.com/glossary/gift-letter/), and gifts up to $19,000 per recipient in 2026 need no gift tax return. - **Down-payment assistance.** State programs can add help without a co-signer; see [down-payment assistance programs](https://mortgage-math-us.com/blog/down-payment-assistance-programs/). - **Lower debts.** Paying off a car loan with a few payments left can lift your budget by the whole payment. - **A lower price.** On your own income, a 45% ratio supports about $207,000 in this example. ## Before anyone signs **Setting up a co-signed mortgage** 1. **Decide the role** — Co-signer only, co-borrower with a share of the title, or a gift instead. 2. **Check both credit reports** — The co-signer’s score, income and debts are part of the approval, so fix errors before you apply. 3. **Ask how the lender will underwrite** — Automated or manual decides whether 95% or 90% loan-to-value applies. 4. **Write a side agreement** — Payments, sale, death or divorce, and the exit plan. 5. **Set a refinance target** — The income or date at which you’ll try to qualify alone. ## Frequently asked questions ### Is a co-signer the same as a co-borrower on a mortgage? For underwriting, nearly. Both sign the note and are fully liable, and both add their income and debts. The difference is ownership: a co-signer usually isn’t on the title, while a co-borrower may be. ### How much down payment do I need with a co-signer? On a Fannie Mae conventional loan with a borrower who won’t live in the home, the maximum loan-to-value is 95% through automated underwriting — at least 5% down — and 90% if the loan is manually underwritten. ### Do the co-signer’s debts count against me? Yes. Lenders add every borrower’s debts and income together. In our example a parent’s mortgage and car loan cut the price the pair could afford by about $290,000 compared with a co-signer who owed nothing. ### Can a co-signer be removed from a mortgage? Not by request. The usual routes are refinancing in your own name, an assumption with a release of liability where the loan allows it (FHA and VA loans can be assumable), or selling the home. ### Will co-signing affect my parent’s ability to borrow? Yes. The mortgage shows on their credit report and counts in their debt-to-income ratio. Under Fannie Mae rules a lender can leave it out once you have made the payments yourself for 12 months with no late payments, documented by bank statements or canceled checks. ### Is a gift better than a co-signer? Often, if the helper can afford it. A gift lowers your loan without making them liable for it. You will need a gift letter, and gifts above $19,000 to one person in a year require the giver to file a gift tax return. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) — Fannie Mae maximum DTI, Desktop Underwriter loans (Apr 2, 2025) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: total debt payments below this share of gross income (Jan 22, 2026) - [Fannie Mae Selling Guide B2-2-04](https://selling-guide.fanniemae.com/sel/b2-2-04/guarantors-co-signers-or-non-occupant-borrowers-subject-transaction) — Fannie Mae manually underwritten loans using a non-occupant borrower’s income: highest DTI for the occupying borrower(s), on their income alone; Fannie Mae DU loans with a co-signer, guarantor or co-borrower who won’t live in the home: maximum LTV/CLTV/HCLTV; Fannie Mae manually underwritten loans using a non-occupant borrower’s income: maximum LTV/CLTV/HCLTV (Sep 2, 2020) - [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) — Typical refinance closing costs, low end (share of loan principal); Typical refinance closing costs, high end (share of loan principal) (Oct 28, 2026) - [IRS: What's new — Estate and gift tax](https://www.irs.gov/businesses/small-businesses-self-employed/whats-new-estate-and-gift-tax) — Annual gift tax exclusion per recipient (2026) (Tax year 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum down payment on some conventional loans; Minimum FHA down payment (Oct 28, 2026) - [Fannie Mae Selling Guide B3-6-05](https://selling-guide.fanniemae.com/sel/b3-6-05/monthly-debt-obligations) — Fannie Mae: a mortgage you are obligated on but someone else pays can be left out of your DTI with this many months of on-time payments documented (Aug 5, 2026) - [Fannie Mae Selling Guide B2-2-04: Guarantors, co-signers or non-occupant borrowers](https://selling-guide.fanniemae.com/sel/b2-2-04/guarantors-co-signers-or-non-occupant-borrowers-subject-transaction) - [FTC: Cosigning a loan FAQs](https://consumer.ftc.gov/articles/cosigning-loan-faqs) - [HUD Handbook 4000.1 (FHA Single Family Housing Policy Handbook)](https://www.hud.gov/sites/dfiles/OCHCO/documents/40001-hsgh-update15-052024.pdf) _General information, not financial advice._ --- # Down-payment assistance programs: how the states compare > State down-payment assistance side by side: typical amounts, percentage caps, forgivable vs repayable help, credit-score minimums and income limits. URL: https://mortgage-math-us.com/blog/down-payment-assistance-programs/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer Half of the state housing agencies with a dollar cap in our data set it between **$10,000 and $18,000**, and the median across those 29 states is $15,000. Where help is a share of the price or loan, the median is 5% — $15,000 on a $300,000 home. A 5% cap is the most common, and 16 of 27 states with a published minimum ask for a credit score of 640. The structure matters as much as the amount: a $10,000 repayable second at 2% adds about $64 a month, while forgivable help costs nothing if you stay long enough. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Connecticut CHFA Time To Own, up to | $25,000 | [Connecticut Housing Finance Authority: Time To Own](https://www.chfa.org/TimeToOwn) | Oct 26, 2026 | | Georgia Dream standard assistance (share of price) | 5% | [Georgia DCA: Georgia Dream](https://dca.georgia.gov/affordable-housing/home-ownership/georgia-dream-mortgage-products/georgia-dream) | Jul 8, 2026 | | Mississippi Trusty10 second mortgage rate | 2% | [Mississippi Home Corporation: MHC Mortgage Products](https://www.mshomecorp.com/mhc-programs/) | Oct 29, 2026 | | North Carolina assistance forgiven after | 15 years | [NC Housing Finance Agency: NC 1st Home Advantage Down Payment](https://www.nchfa.com/home-buyers/home-buyer-mortgage-products/nc-1st-home-advantage-down-payment) | Oct 29, 2026 | | Fannie Mae Community Seconds maximum CLTV | 105% | [Fannie Mae Selling Guide B5-5.1-02](https://selling-guide.fanniemae.com/sel/b5-5.1-02/community-seconds-loan-eligibility) | May 3, 2023 | | Deferred seconds left out of DTI when deferred at least | 5 years | [Fannie Mae Selling Guide B5-5.1-02](https://selling-guide.fanniemae.com/sel/b5-5.1-02/community-seconds-loan-eligibility) | May 3, 2023 | ## What the state data shows This comparison uses the statewide programs we track for each state housing finance agency, checked in October 2026 and linked in the sources below (the District of Columbia counts as a state here). The figures are program caps — the most you can get — not typical awards, and city, county and employer programs can add more. For what each type of help is and how to spot a scam, start with the [down-payment grants guide](https://mortgage-math-us.com/first-time-buyers/grants/); for the federal loans these programs sit on top of, see [first-time home buyer programs](https://mortgage-math-us.com/first-time-buyers/programs/). *State down-payment assistance at a glance (statewide agency programs)* | Measure | States with a figure | Median | Middle half of states | Full range | |---|---:|---:|---:|---| | Dollar caps | 29 | $15,000 | $10,000–$18,000 | $5,000 (Maine) to $202,000 (District of Columbia) | | Percentage caps | 32 | 5% | 4%–5% | 3% to 20% (Kansas) | | Forgiveness period | 13 | 10 years | 7 years–10 years | 5 years to 15 years | | Term of second loans | 12 | 12 years | 10 years–15 years | 10 years to 30 years | | Minimum credit score | 27 | 640 | 620–640 | 620 to 660 | | Income limit (dollar figure) | 16 | $152,400 | $135,400–$170,700 | $80,000 (Montana) to $275,400 (District of Columbia) | Two things stand out. First, amounts cluster tightly: half of the dollar caps sit between $10,000 and $18,000. The median of $15,000 covers an FHA minimum down payment of 3.5% on a home up to about $428,571, against a US median home value of $360,600 — help with the minimum, not with 20% down. Second, the rules that decide whether you qualify — credit score, income and price limits — vary more than the amounts. ## Dollar caps by state 29 states publish a flat dollar cap for at least one statewide program: *States by the largest dollar cap on statewide down-payment help* | Cap | States | Which states | |---|---:|---| | Up to $10,000 | 8 | [Alabama](https://mortgage-math-us.com/location/alabama/), [Florida](https://mortgage-math-us.com/location/florida/), [Georgia](https://mortgage-math-us.com/location/georgia/), [Maine](https://mortgage-math-us.com/location/maine/), [Michigan](https://mortgage-math-us.com/location/michigan/), [Mississippi](https://mortgage-math-us.com/location/mississippi/), [Pennsylvania](https://mortgage-math-us.com/location/pennsylvania/), [Vermont](https://mortgage-math-us.com/location/vermont/) | | $10,001–$15,000 | 13 | [Arkansas](https://mortgage-math-us.com/location/arkansas/), [Iowa](https://mortgage-math-us.com/location/iowa/), [Illinois](https://mortgage-math-us.com/location/illinois/), [Kentucky](https://mortgage-math-us.com/location/kentucky/), [Montana](https://mortgage-math-us.com/location/montana/), [North Carolina](https://mortgage-math-us.com/location/north-carolina/), [New Hampshire](https://mortgage-math-us.com/location/new-hampshire/), [New Jersey](https://mortgage-math-us.com/location/new-jersey/), [New York](https://mortgage-math-us.com/location/new-york/), [Rhode Island](https://mortgage-math-us.com/location/rhode-island/), [Tennessee](https://mortgage-math-us.com/location/tennessee/), [West Virginia](https://mortgage-math-us.com/location/west-virginia/), [Wyoming](https://mortgage-math-us.com/location/wyoming/) | | $15,001–$30,000 | 6 | [Arizona](https://mortgage-math-us.com/location/arizona/), [Colorado](https://mortgage-math-us.com/location/colorado/), [Connecticut](https://mortgage-math-us.com/location/connecticut/), [Massachusetts](https://mortgage-math-us.com/location/massachusetts/), [Minnesota](https://mortgage-math-us.com/location/minnesota/), [Utah](https://mortgage-math-us.com/location/utah/) | | More than $30,000 | 2 | [District of Columbia](https://mortgage-math-us.com/location/district-of-columbia/), [Oregon](https://mortgage-math-us.com/location/oregon/) | The two largest caps belong to unusual programs: DC Home Purchase Assistance Program (HPAP) gap financing in the [District of Columbia](https://mortgage-math-us.com/location/district-of-columbia/) ($202,000), and OHCS Down Payment Assistance through local organizations in [Oregon](https://mortgage-math-us.com/location/oregon/) ($60,000). Most other states cap help near the median of $15,000, and several add a larger award for lower incomes, first-generation buyers or certain professions. ## Percentage caps, converted to dollars 32 states set at least one program as a share of the price or loan amount. On a $300,000 home: *Percentage caps and what they are worth on a $300,000 home* | Cap | Worth on $300,000 | States | Which states | |---|---:|---:|---| | 3% | $9,000 | 4 | [Colorado](https://mortgage-math-us.com/location/colorado/), [North Carolina](https://mortgage-math-us.com/location/north-carolina/), [North Dakota](https://mortgage-math-us.com/location/north-dakota/), [New York](https://mortgage-math-us.com/location/new-york/) | | 3.5% | $10,500 | 3 | [California](https://mortgage-math-us.com/location/california/), [Ohio](https://mortgage-math-us.com/location/ohio/), [Oklahoma](https://mortgage-math-us.com/location/oklahoma/) | | 4% | $12,000 | 7 | [Alabama](https://mortgage-math-us.com/location/alabama/), [Arizona](https://mortgage-math-us.com/location/arizona/), [Louisiana](https://mortgage-math-us.com/location/louisiana/), [Missouri](https://mortgage-math-us.com/location/missouri/), [New Mexico](https://mortgage-math-us.com/location/new-mexico/), [Nevada](https://mortgage-math-us.com/location/nevada/), [South Carolina](https://mortgage-math-us.com/location/south-carolina/) | | 5% | $15,000 | 14 | [Delaware](https://mortgage-math-us.com/location/delaware/), [Florida](https://mortgage-math-us.com/location/florida/), [Georgia](https://mortgage-math-us.com/location/georgia/), [Iowa](https://mortgage-math-us.com/location/iowa/), [Indiana](https://mortgage-math-us.com/location/indiana/), [Maryland](https://mortgage-math-us.com/location/maryland/), [Montana](https://mortgage-math-us.com/location/montana/), [Nebraska](https://mortgage-math-us.com/location/nebraska/), [Oregon](https://mortgage-math-us.com/location/oregon/), [Pennsylvania](https://mortgage-math-us.com/location/pennsylvania/), [South Dakota](https://mortgage-math-us.com/location/south-dakota/), [Tennessee](https://mortgage-math-us.com/location/tennessee/), [Virginia](https://mortgage-math-us.com/location/virginia/), [Washington](https://mortgage-math-us.com/location/washington/) | | 6% | $18,000 | 2 | [Illinois](https://mortgage-math-us.com/location/illinois/), [Wisconsin](https://mortgage-math-us.com/location/wisconsin/) | | 8% | $24,000 | 1 | [Idaho](https://mortgage-math-us.com/location/idaho/) | | 20% | $60,000 | 1 | [Kansas](https://mortgage-math-us.com/location/kansas/) | Some programs apply the percentage to the loan amount rather than the price, which makes the dollar figure a little lower when you put money down. The outlier is [Kansas](https://mortgage-math-us.com/location/kansas/), where the Kansas Housing First Time Homebuyer 0% forgivable loan goes up to 20%. ## Four structures, and what you owe if you sell Assistance comes as a grant, a forgivable second loan, a deferred second loan or a repayable second loan. The difference shows up when you sell or refinance. Here is what you would owe under four real program structures from our data: *Amount still owed if you sell after 2, 5 or 8 years* | Program and structure | Assistance | After 2 years | After 5 years | After 8 years | |---|---:|---:|---:|---:| | Grant — Vermont VHFA First Generation | $15,000 | $0 | $0 | $0 | | Forgivable — Connecticut CHFA Time To Own | $25,000 | $20,000 | $12,500 | $5,000 | | Deferred — Florida Assist | $10,000 | $10,000 | $10,000 | $10,000 | | Repayable — Mississippi Trusty10 | $10,000 | $8,833 | $6,994 | $5,040 | Among the loans, the forgivable one is the best deal if you stay; the deferred loan is an interest-free debt you carry until you sell or refinance. Forgiveness periods vary widely: *How long forgivable help takes to be forgiven* | Forgiven after or over | States | Which states | |---|---:|---| | 5 years | 3 | [Florida](https://mortgage-math-us.com/location/florida/), [Louisiana](https://mortgage-math-us.com/location/louisiana/), [New Jersey](https://mortgage-math-us.com/location/new-jersey/) | | 7 years | 1 | [Ohio](https://mortgage-math-us.com/location/ohio/) | | 10 years | 7 | [Connecticut](https://mortgage-math-us.com/location/connecticut/), [Illinois](https://mortgage-math-us.com/location/illinois/), [Kansas](https://mortgage-math-us.com/location/kansas/), [Missouri](https://mortgage-math-us.com/location/missouri/), [New York](https://mortgage-math-us.com/location/new-york/), [Pennsylvania](https://mortgage-math-us.com/location/pennsylvania/), [Tennessee](https://mortgage-math-us.com/location/tennessee/) | | 15 years | 2 | [North Carolina](https://mortgage-math-us.com/location/north-carolina/), [South Carolina](https://mortgage-math-us.com/location/south-carolina/) | Some programs forgive a share each year, others all at once at the end. If you might move within the period, ask which kind yours is. ## The true cost of a repayable second Programs with a set monthly repayment in our data include those in [Minnesota](https://mortgage-math-us.com/location/minnesota/), [Mississippi](https://mortgage-math-us.com/location/mississippi/), [Nebraska](https://mortgage-math-us.com/location/nebraska/), [Pennsylvania](https://mortgage-math-us.com/location/pennsylvania/) and [Rhode Island](https://mortgage-math-us.com/location/rhode-island/). Their cost is mostly the monthly payment, not the interest: > **Worked example: A $10,000 second mortgage at 2% over 15 years (Mississippi Trusty10)** > > | | Amount | > |---|---:| > | Monthly payment | $64 | > | Total interest over the term | $1,583 | > | Added to debt-to-income on $6,000 a month of gross income | 1.1 percentage points | > | First-mortgage loan that payment could have supported at 7.24% | about $9,443 | The last line is the hidden cost. If your debt-to-income ratio is already at the lender’s limit, every dollar of second-mortgage payment comes out of the first-mortgage budget. Three repayable programs side by side: *Repayable assistance: payment and cost* | Program | Amount | Rate | Term | Payment | Interest | Debt-to-income on $6,000/mo | |---|---:|---:|---:|---:|---:|---:| | Mississippi — MHC Trusty10 | $10,000 | 2% | 15 years | $64 | $1,583 | +1.1 pts | | Nebraska — NIFA second loan (on a $250,000 price) | $12,500 | 1% | 10 years | $110 | $641 | +1.8 pts | | Pennsylvania — PHFA Keystone Advantage | $6,000 | 0% | 10 years | $50 | $0 | +0.8 pts | ## Credit scores and income limits Credit minimums are the most uniform rule. Of the 27 states with a published minimum in our data: *Minimum credit score for state down-payment help* | Minimum score | States | Which states | |---|---:|---| | 620 | 8 | [Delaware](https://mortgage-math-us.com/location/delaware/), [Kentucky](https://mortgage-math-us.com/location/kentucky/), [Montana](https://mortgage-math-us.com/location/montana/), [New Mexico](https://mortgage-math-us.com/location/new-mexico/), [Virginia](https://mortgage-math-us.com/location/virginia/), [Wisconsin](https://mortgage-math-us.com/location/wisconsin/), [West Virginia](https://mortgage-math-us.com/location/west-virginia/), [Wyoming](https://mortgage-math-us.com/location/wyoming/) | | 640 | 16 | [Alabama](https://mortgage-math-us.com/location/alabama/), [Arkansas](https://mortgage-math-us.com/location/arkansas/), [District of Columbia](https://mortgage-math-us.com/location/district-of-columbia/), [Florida](https://mortgage-math-us.com/location/florida/), [Iowa](https://mortgage-math-us.com/location/iowa/), [Illinois](https://mortgage-math-us.com/location/illinois/), [Louisiana](https://mortgage-math-us.com/location/louisiana/), [Maine](https://mortgage-math-us.com/location/maine/), [Missouri](https://mortgage-math-us.com/location/missouri/), [North Carolina](https://mortgage-math-us.com/location/north-carolina/), [Nevada](https://mortgage-math-us.com/location/nevada/), [Ohio](https://mortgage-math-us.com/location/ohio/), [Oklahoma](https://mortgage-math-us.com/location/oklahoma/), [South Carolina](https://mortgage-math-us.com/location/south-carolina/), [Tennessee](https://mortgage-math-us.com/location/tennessee/), [Vermont](https://mortgage-math-us.com/location/vermont/) | | 660 | 3 | [Pennsylvania](https://mortgage-math-us.com/location/pennsylvania/), [Rhode Island](https://mortgage-math-us.com/location/rhode-island/), [Utah](https://mortgage-math-us.com/location/utah/) | Income limits are harder to compare. Most are dollar limits that vary by county and household size; the 16 statewide or headline figures in our data run from $80,000 in [Montana](https://mortgage-math-us.com/location/montana/) to $275,400 in the [District of Columbia](https://mortgage-math-us.com/location/district-of-columbia/). Others are a share of area median income, from 80% to 120%. Check your county’s figure on your state agency’s site — the state pages linked here list each program’s limits. ## How assistance fits with your first mortgage Assistance is usually a second lien behind your mortgage, so it changes two ratios lenders check. Your [combined loan-to-value](https://mortgage-math-us.com/glossary/combined-loan-to-value/) can exceed 100% with an approved program: Fannie Mae’s Community Seconds allow up to 105% and Freddie Mac’s Home Possible loans up to 105% with Affordable Seconds. And under Fannie Mae’s rules, a Community Seconds loan with payments deferred for at least 5 years stays out of your [debt-to-income ratio](https://mortgage-math-us.com/glossary/debt-to-income-ratio/), while a repayable second’s payment counts in full. > **Tip: Compare the whole package** > > State programs usually pair assistance with the agency’s own first mortgage. Compare its rate and fees with a standard loan without help: a larger award attached to a costlier first mortgage can leave you worse off. ## Comparing offers in your state **How to compare down-payment assistance offers** 1. **Check eligibility first** — First-time buyer test, income limit for your county and household size, price limit and minimum credit score. 2. **Find the structure** — Grant, forgivable, deferred or repayable, and over how many years forgiveness runs. 3. **Price the monthly cost** — Add any repayable second’s payment to your debt-to-income ratio. 4. **Ask about the first mortgage** — Rate, fees and mortgage insurance on the loan the help is tied to. 5. **Model a sale or refinance** — Work out what you would owe after two, five and eight years. 6. **Use an approved lender** — State programs are offered only through lenders the agency has approved; its website lists them. Your state’s page — for example [California](https://mortgage-math-us.com/location/california/), [Texas](https://mortgage-math-us.com/location/texas/), [Florida](https://mortgage-math-us.com/location/florida/) or [New York](https://mortgage-math-us.com/location/new-york/) — lists its agency programs, and the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/) shows what the help does to your price range. For how FHA and conventional loans treat the first mortgage, see [FHA vs conventional](https://mortgage-math-us.com/blog/fha-vs-conventional/). ## Frequently asked questions ### How much down-payment assistance can I get? It depends on your state and program. Across the 29 states in our data with a dollar cap, the median is $15,000 and half of states fall between $10,000 and $18,000. Percentage-based programs have a median of 5% of the price or loan. ### What credit score do I need for state down-payment assistance? The most common minimum in our data is 640 — 16 of 27 states with a published minimum. The full range runs from 620 to 660, and some programs set a higher score for conventional loans. ### Do I have to pay back down-payment assistance? It depends on the structure. Grants are not repaid; forgivable loans are forgiven if you stay for the required period — 5 to 15 years in our data; deferred loans are repaid when you sell or refinance; and repayable seconds have a monthly payment. ### Does a repayable assistance loan affect how much house I can afford? Yes. Its payment counts in your debt-to-income ratio. A $10,000 second at 2% over 15 years costs $64 a month, which at today’s 7.24% average could otherwise support about $9,443 of first-mortgage loan. ### Can I use down-payment assistance if I am not a first-time buyer? Sometimes. Many programs use the federal test — no home owned in the past 3 years — but some states run separate programs for repeat buyers, such as [Indiana](https://mortgage-math-us.com/location/indiana/) and [Nevada](https://mortgage-math-us.com/location/nevada/) in our data, as long as you meet the income and price limits. ### Do I have to use the state agency’s mortgage to get its assistance? Usually. Most state programs pair the assistance with the agency’s own first mortgage, made through an approved lender. Compare that loan’s rate and fees with a loan without help. ## Sources - [MaineHousing: First Home Loan Program](https://www.mainehousing.org/programs-services/homebuyer/homebuyerdetail/first-home-loan-program) — MaineHousing First Home Advantage down payment and closing cost assistance, up to; MaineHousing First Home Loan minimum credit score (Oct 29, 2026) - [Vermont Housing Finance Agency: Homebuyer Programs](https://vhfa.org/homebuyers) — VHFA ASSIST down payment and closing-cost loan, up to; VHFA minimum credit score (640–680 depending on program), from; VHFA First Generation Homebuyer Grant (Oct 29, 2026) - [New Hampshire Housing: Mortgage Programs](https://www.nhhousing.org/homeownership/build-your-team/mortgage-programs/) — NH Housing downpayment and closing cost assistance, up to; NH Housing downpayment assistance second mortgage term; NH Housing Home Flex Plus and Home Preferred income limit, up to (Sep 16, 2026) - [Montana Board of Housing: Down Payment Assistance](https://commerce.mt.gov/Housing/Homeownership/Down-Payment-Assistance) — Montana Board of Housing down payment assistance, up to; Montana Board of Housing down payment assistance, up to (share of the sales price); Montana Board of Housing down payment assistance minimum credit score (all borrowers) (Oct 29, 2026) - [Minnesota Housing: Buy a Home and Refinance](https://www.mnhousing.gov/home/homeownership/buy-home-refinance) — Minnesota Housing Deferred Payment Loan Plus (Start Up), up to; Minnesota Housing Monthly Payment Loan repayment term; Minnesota Housing Start Up income limit, up to (varies by county) (Oct 29, 2026) - [IHDA Mortgage: Homebuyer programs](https://www.ihdamortgage.org/homebuyers) — IHDA deferred down payment assistance for first-time buyers, up to; IHDA deferred down payment assistance for first-time buyers, up to (share of the purchase price); IHDA forgivable down payment assistance is forgiven after (Oct 29, 2026) - [Michigan State Housing Development Authority: MI 10K DPA Loan](https://www.michigan.gov/mshda/pathway-to-housing/mi-10k-dpa-loan) — MSHDA MI 10K DPA loan, up to (Oct 29, 2026) - [NY Homes and Community Renewal: SONYMA Down Payment Assistance Loan](https://hcr.ny.gov/down-payment-assistance-loan-dpal) — SONYMA Down Payment Assistance Loan (DPAL), up to; SONYMA DPAL, share of the purchase price; SONYMA DPAL is forgiven after (Oct 29, 2026) - [MassHousing: Down Payment Assistance](https://www.masshousing.com/buy-a-home/programs/downpayment-assistance/) — MassHousing down payment assistance, up to (Oct 29, 2026) - [Oregon Housing and Community Services: Down Payment Assistance](https://www.oregon.gov/ohcs/homeownership/homebuyers/Pages/down-payment-assistance.aspx) — OHCS Down Payment Assistance through local organizations, up to; OHCS down payment assistance income limit (share of area median income) (Oct 29, 2026) - [Wyoming Community Development Authority: Homebuyers](https://www.wyomingcda.com/homebuyers/) — WCDA down payment assistance, up to; WCDA down payment assistance minimum credit score (Oct 29, 2026) - [Iowa Finance Authority bulletin, Sept 17, 2026 (linked from the down payment programs page)](https://t.e2ma.net/message/iojn2j/upsggnsd) — Iowa Finance Authority 5% second loan cap for reservations made on or after Nov 2, 2026 (Sep 17, 2026) - [PHFA: Purchase Assistance](https://www.phfa.org/programs/assistance.aspx) — PHFA Keystone Advantage Assistance Loan, up to; PHFA Keystone Forgivable in Ten Years (K-FIT), share of the price or appraised value; PHFA K-FIT assistance is forgiven over (Oct 29, 2026) - [NJHMFA: Homebuyers](https://www.nj.gov/dca/hmfa/homebuyers-and-renters/homebuyers/) — NJHMFA Down Payment Assistance Program, up to (depends on county); NJHMFA down payment assistance is forgiven after (Oct 29, 2026) - [Connecticut Housing Finance Authority: Time To Own](https://www.chfa.org/TimeToOwn) — CHFA Time To Own forgivable down payment assistance, up to; CHFA Time To Own: fully forgiven after (10% a year) (Oct 26, 2026) - [RIHousing: 15kDPA](https://www.rihousing.com/homebuyers/15k-dpa/) — RIHousing 15kDPA (0% loan, no monthly payments); RIHousing 15kDPA minimum credit score (Apr 30, 2026) - [Utah Housing Corporation: First-time Homebuyer Program Assistance (SB 240)](https://utahhousingcorp.org/homebuyer/sb240/) — Utah First-Time Homebuyer Assistance Program (new construction), up to (Oct 29, 2026) - [CHFA: Down Payment Assistance](https://www.chfainfo.com/homeownership/down-payment-assistance) — CHFA down payment assistance grant or second mortgage, capped at; CHFA Down Payment Assistance Grant, up to (share of the first mortgage) (Oct 29, 2026) - [Kentucky Housing Corporation: Down Payment Assistance](https://www.kyhousing.org/page/down-payment-assistance) — KHC Down Payment Assistance, up to; KHC Down Payment Assistance repayment term (Oct 29, 2026) - [West Virginia Housing Development Fund: Low Down Home Loan increase](https://www.wvhdf.com/wp-content/uploads/2026/01/Low-Down-Home-Loan-Increase_WVHDF_1.21.2026.pdf) — WVHDF Low Down Home Loan (down payment and closing-cost assistance), up to; WVHDF Low Down Home Loan term (Jan 22, 2026) - [Arizona Department of Housing: Programs for Homebuyers](https://housing.az.gov/general-public/programs-homebuyers) — Arizona Is Home down payment assistance (ADOH), buyers at or below 80% of area median income, up to; Arizona Is Home income limit (share of area median income) (Oct 29, 2026) - [Arkansas Development Finance Authority: Down Payment Assistance Program](https://adfa.arkansas.gov/programs/homeloans/down-payment-assistance-program/) — ADFA Down Payment Assistance Program, up to; ADFA Down Payment Assistance second mortgage term (Sep 11, 2026) - [Tennessee Housing Development Agency: Down Payment Assistance](https://thda.org/homebuyers/down-payment-assistance/) — THDA Great Choice Plus amortizing assistance, up to; THDA Great Choice Plus amortizing assistance, up to (share of the sales price); THDA Great Choice Plus deferred assistance is forgiven after (Oct 29, 2026) - [NC Housing Finance Agency: NC 1st Home Advantage Down Payment](https://www.nchfa.com/home-buyers/home-buyer-mortgage-products/nc-1st-home-advantage-down-payment) — NC 1st Home Advantage Down Payment (first-time buyers and military veterans); NCHFA down payment assistance is fully forgiven after (Oct 29, 2026) - [DC Department of Housing and Community Development: Home Purchase Assistance Program](https://dhcd.dc.gov/service/home-purchase-assistance-program) — DC Home Purchase Assistance Program (HPAP) gap financing, up to; HPAP income limit (share of median family income) (FY2027) - [Mississippi Home Corporation: MHC Mortgage Products](https://www.mshomecorp.com/mhc-programs/) — MHC Trusty10 second mortgage; MHC Trusty10 second mortgage repayment term; MHC Trusty10 second mortgage interest rate (Oct 29, 2026) - [Alabama Housing Finance Authority: Step Up](https://www.ahfa.com/programs/homeownership/available-programs/step-up) — AHFA Step Up down payment assistance, up to; AHFA Step Up down payment assistance (share of the sales price); AHFA Step Up second mortgage term (Oct 29, 2026) - [Georgia DCA: Georgia Dream](https://dca.georgia.gov/affordable-housing/home-ownership/georgia-dream-mortgage-products/georgia-dream) — Georgia Dream down payment assistance (standard), up to; Georgia Dream standard assistance, up to (share of the purchase price); Georgia Dream income limit, Atlanta metro, 1–2 person household (Jul 8, 2026) - [Florida Housing Finance Corporation: Homebuyer Loan Programs](https://www.floridahousing.org/programs/homebuyer-loan-program-wizards) — Florida Assist (Florida Housing) deferred second mortgage, up to; Florida Housing HFA Preferred/Advantage PLUS second mortgage, up to (share of the loan); Florida Housing HFA PLUS second mortgage forgiven over (20% a year) (Oct 29, 2026) - [WHEDA: Available Programs](https://www.wheda.com/homeownership-and-renters/home-buyers/available-programs) — WHEDA Easy Close Advantage DPA, up to (share of the purchase price); WHEDA Easy Close Advantage DPA term; WHEDA conventional first mortgage minimum credit score (Oct 29, 2026) - [Washington State Housing Finance Commission: Home buyers](https://heretohome.org/home-buyers/) — WSHFC Home Advantage down payment assistance, up to (share of the mortgage loan amount); WSHFC Home Advantage household income limit (statewide) (Oct 29, 2026) - [Idaho Housing and Finance Association: Down payment and closing cost assistance](https://www.idahohousing.com/homebuyers/down-payment-closing-cost-assistance/) — Idaho Housing down payment and closing cost assistance, up to (share of the sales price); Idaho Housing down payment assistance household income limit (Nov 20, 2025) - [North Dakota Housing Finance Agency: Homeownership](https://www.ndhousing.nd.gov/homeownership) — NDHFA DCA and Start assistance (share of the first mortgage) (Oct 29, 2026) - [Oregon Housing and Community Services: Flex Lending](https://www.oregon.gov/ohcs/homeownership/homebuyers/Pages/default.aspx) — OHCS Flex Lending FirstHome down payment assistance, up to (share of the loan amount) (Oct 29, 2026) - [Nevada Housing Division: Home Is Possible for First-Time Homebuyers](https://www.homeispossiblenv.org/home-possible-program) — Home Is Possible for First-Time Homebuyers down payment assistance, up to (share of the loan); Home Is Possible for First-Time Homebuyers minimum credit score (Oct 29, 2026) - [South Dakota Housing: Downpayment Assistance](https://www.sdhousing.org/ready-to-buy/available-programs/downpayment-assistance) — SD Housing Fixed Rate Plus down payment and closing-cost assistance, up to (share of the loan amount) (Oct 29, 2026) - [Iowa Finance Authority: Down payment and closing cost programs](https://opportunityiowa.gov/housing/homeownership-programs/down-payment-and-closing-costs-programs) — Iowa Finance Authority FirstHome and Homes for Iowans second loan, up to (share of the lower of sale price or appraised value) (Sep 25, 2026) - [IHCDA Homeownership Program Guide](https://www.in.gov/ihcda/files/HOD-Universal-Program-Guide-Final%2010.16.26.pdf) — IHCDA First Step down payment assistance (share of the purchase price) (Oct 16, 2026) - [Ohio Housing Finance Agency: Down Payment Assistance](https://ohiohome.org/partners/fillable/OHFA-DPA_Fillable.pdf) — OHFA down payment assistance, government loans (share of the purchase price); OHFA down payment assistance is forgiven after; OHFA minimum credit score (conventional, USDA and VA loans) (Jul 1, 2025) - [CalHFA: MyHome Assistance Program](https://www.calhfa.ca.gov/homebuyer/programs/myhome.htm) — CalHFA MyHome Assistance with an FHA loan, up to (share of price or appraised value) (Oct 29, 2026) - [Nebraska Investment Finance Authority: Homebuyer Assistance](https://www.nifa.org/homebuyers-renters/homebuyer-assistance) — NIFA Homebuyer Assistance second loan, up to (share of the purchase price); NIFA Homebuyer Assistance second loan term; NIFA Homebuyer Assistance second loan interest rate (Oct 26, 2026) - [Missouri Housing Development Commission: Next Step Learn More](https://mhdc.com/media/wf2onuss/next-step-learn-more_11182025.pdf) — MHDC Next Step cash assistance, forgivable second loan (share of the mortgage); MHDC Next Step cash assistance is fully forgiven after; MHDC Next Step minimum credit score (Oct 29, 2026) - [Virginia Housing: Plus Second Mortgage](https://www.virginiahousing.com/homebuyers/plus-second-mortgage) — Virginia Housing Plus Second Mortgage, up to (share of the purchase price) (Oct 29, 2026) - [Maryland Mortgage Program: MMP 1st Time Advantage](https://mmp.maryland.gov/home-loans/mmp-1st-time-advantage) — MMP 1st Time Advantage down payment loan, up to (share of the first mortgage) (Sep 4, 2026) - [Delaware State Housing Authority: Homeownership Loans](https://www.destatehousing.com/homeownership-loans/) — DSHA Take5 0% second mortgage (share of the first mortgage); DSHA Welcome Home and Open Door minimum credit score; DSHA Welcome Home income limit, New Castle County, 1–2 persons (Sep 23, 2026) - [Arizona Industrial Development Authority: HOME Plus](https://homeplusaz.com/) — HOME Plus (Arizona IDA) down payment and closing cost assistance, up to (Oct 29, 2026) - [Housing New Mexico: Programs for Individuals and Families brochure](https://housingnm.org/uploads/documents/%28WEB-READY%29_Programs_for_Individual_and_Families_Brochure_8-25-26.pdf) — Housing New Mexico FirstDown second mortgage, up to (share of the purchase price) (Aug 25, 2026) - [Kansas Housing Resources Corporation: First Time Homebuyer fact sheet](https://kshousingcorp.org/wp-content/uploads/2026/03/FTHB-Fact-Sheet-3-19-26.pdf) — Kansas Housing First Time Homebuyer 0% forgivable loan, up to (share of the purchase price); Kansas Housing First Time Homebuyer loan is forgiven if you stay in the home; Kansas Housing First Time Homebuyer income limit (share of area median income) (Mar 19, 2026) - [NC Housing Finance Agency: NC Home Advantage Mortgage](https://www.nchfa.com/home-buyers/buy-home/nc-home-advantage-mortgage) — NC Home Advantage Mortgage down payment assistance, up to (share of the loan amount); NC Home Advantage Mortgage minimum credit score; NC Home Advantage Mortgage income limit (Oct 29, 2026) - [SC Housing: Palmetto Home Advantage](https://schousing.sc.gov/homebuyers/programs-homebuyers/palmetto-home-advantage) — SC Housing Palmetto Home Advantage forgivable down payment assistance, up to (share of the loan amount); SC Housing Palmetto Home Advantage minimum credit score; SC Housing Palmetto Home Advantage borrower income limit (Oct 29, 2026) - [Oklahoma Housing Finance Agency: Homebuyers](https://www.ohfa.org/homebuyers/) — OHFA down payment and closing cost assistance (share of the total loan amount) (Oct 29, 2026) - [Louisiana Housing Corporation: HomeStart Assist](https://www.lhc.la.gov/homestartassist) — LHC HomeStart Assist forgivable second mortgage (share of the first mortgage); LHC HomeStart Assist second mortgage is fully forgiven after; LHC HomeStart Assist minimum credit score (Sep 10, 2026) - [SC Housing: SC Housing Homebuyer Program](https://schousing.sc.gov/homebuyers/programs-homebuyers/sc-housing-homebuyer-program) — SC Housing Homebuyer Program down payment assistance is forgiven after (Oct 29, 2026) - [RIHousing: Extra Assistance](https://www.rihousing.com/homebuyers/extra-assistance/) — RIHousing Extra Assistance second mortgage term (Apr 30, 2026) - [Iowa Finance Authority: FirstHome](https://opportunityiowa.gov/housing/homeownership-programs/firsthome-program) — Iowa Finance Authority FirstHome and Homes for Iowans minimum credit score (Aug 13, 2026) - [Utah Housing Corporation: Homeownership Programs](https://utahhousingcorp.org/homebuyer/homeownershipprograms/) — Utah Housing FirstHome loan minimum credit score (Oct 29, 2026) - [Kentucky Housing Corporation: Eligibility](https://www.kyhousing.org/page/eligibility) — KHC minimum credit score, FHA, VA and RHS loans (Oct 29, 2026) - [West Virginia Housing Development Fund: A guide to WVHDF mortgage programs](https://www.wvhdf.com/a-guide-to-west-virginia-housing-development-fund-mortgage-programs/) — WVHDF mortgage programs: minimum credit score, generally (Oct 29, 2026) - [Virginia Housing: Home Loans](https://www.virginiahousing.com/homebuyers/home-loans) — Virginia Housing FHA, VA and USDA loans: credit scores as low as (Oct 29, 2026) - [Housing New Mexico: Mortgage Programs](https://housingnm.org/individuals-and-families/homebuyers/mortgage-programs) — Housing New Mexico mortgage programs minimum credit score (Oct 29, 2026) - [Arkansas Development Finance Authority: StartSmart First-Time Home Buyer Program](https://adfa.arkansas.gov/programs/homeloans/startsmart-first-time-home-buyer-program/) — ADFA minimum credit score (StartSmart and Move-Up) (Jul 28, 2026) - [Tennessee Housing Development Agency: Great Choice Home Loan](https://thda.org/homebuyers/first-time-homebuyers/) — THDA Great Choice Home Loan minimum credit score (every borrower) (Oct 29, 2026) - [DC Housing Finance Agency: DC Open Doors](https://dchfa.org/homeownership/dc-open-doors/) — DCHFA DC Open Doors minimum credit score; DCHFA DC Open Doors income limit (Dec 4, 2025) - [Oklahoma Housing Finance Agency: Homeownership FAQ](https://www.ohfa.org/homeownership-faq/) — OHFA homebuyer programs minimum credit score; OHFA homebuyer income limit (DREAM program, government loans, statewide) (Oct 29, 2026) - [North Dakota Housing Finance Agency: Income and purchase price limits](https://www.ndhousing.nd.gov/income-and-purchase-price-limits) — NDHFA FirstHome and HomeAccess income limit, households of one or two (Jun 15, 2026) - [RIHousing: Homebuyers](https://www.rihousing.com/homebuyers/) — RIHousing Loan Center income limit, Providence area, households of one or two (Oct 29, 2026) - [Arkansas Development Finance Authority: Move-Up Loan Program](https://adfa.arkansas.gov/programs/homeloans/move-up-loan-program) — ADFA Move-Up qualifying income limit (Jul 28, 2026) - [HHFDC: Hale Kamaʻāina eligibility, income and purchase price requirements](https://dbedt.hawaii.gov/hhfdc/hale-kama%ca%bbaina-mortgage-program-eligibility-income-and-purchase-price-requirements/) — Hale Kamaʻāina income limit, Honolulu County, 1–2 person household (non-targeted) (Jun 13, 2026) - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [Fannie Mae Selling Guide B5-5.1-02](https://selling-guide.fanniemae.com/sel/b5-5.1-02/community-seconds-loan-eligibility) — Community Seconds payments deferred at least this long are left out of the debt-to-income ratio; Fannie Mae Community Seconds maximum combined LTV (May 3, 2023) - [Nevada Housing Division: Home Is Possible](https://www.homeispossiblenv.org/) — Home Is Possible (buyers who are not first-time) assistance, up to (share of the loan) (Oct 29, 2026) - [IHCDA: Homeownership programs](https://www.in.gov/ihcda/homebuyers/programs) — IHCDA Next Home down payment assistance, up to (share of the lesser of price or appraised value) (Oct 16, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [Freddie Mac Home Possible fact sheet](https://sf.freddiemac.com/docs/pdf/fact-sheet/home_possible_factsheet.pdf) — Freddie Mac Home Possible maximum TLTV with Affordable Seconds (Feb 1, 2026) - [42 U.S.C. 12704(14)](https://www.law.cornell.edu/uscode/text/42/12704) — First-time homebuyer: has not owned a home in the past (HUD/HOME statute) (Oct 28, 2026) - [CFPB: Where can I get money for a down payment on a home?](https://www.consumerfinance.gov/ask-cfpb/where-can-i-get-money-for-a-down-payment-on-a-home-en-123/) - [Fannie Mae Selling Guide B5-5.1-02, Community Seconds](https://selling-guide.fanniemae.com/sel/b5-5.1-02/community-seconds-loan-eligibility) _General information, not financial advice._ --- # Escrow accounts explained: how the money moves, and why your payment changes > How a mortgage escrow account works month by month, the two-month cushion, the annual analysis, and what happens with a shortage, deficiency or surplus. URL: https://mortgage-math-us.com/blog/escrow-accounts/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer Your servicer collects a twelfth of the year’s property tax and insurance with each payment, and may keep a cushion of no more than 2 months of deposits. Once a year it re-projects the account: if taxes rose, you face a **shortage**, usually spread over at least 12 months. In our example a 15% tax increase on a $300,000 home lifts the payment by $58 a month for a year, then settles $33 above where it started. A surplus of $50 or more must be refunded within 30 days. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Largest cushion a servicer may hold | 2 months | [CFPB, Regulation X 1024.17](https://www.consumerfinance.gov/rules-policy/regulations/1024/17/) | Oct 28, 2026 | | Large shortage spread over at least | 12 months | [12 CFR 1024.17(f)(3) (Regulation X)](https://www.consumerfinance.gov/rules-policy/regulations/1024/17/) | Oct 29, 2026 | | Surplus that must be refunded | $50 | [12 CFR 1024.17(f)(2) (Regulation X)](https://www.consumerfinance.gov/rules-policy/regulations/1024/17/) | Oct 29, 2026 | | Refund deadline after the analysis | 30 days | [12 CFR 1024.17(f)(2) (Regulation X)](https://www.consumerfinance.gov/rules-policy/regulations/1024/17/) | Oct 29, 2026 | | Annual statement due after the escrow year ends | 30 days | [12 CFR 1024.17 (Regulation X)](https://www.consumerfinance.gov/rules-policy/regulations/1024/17/) | Oct 29, 2026 | ## Escrow, month by month The short definition is in the [escrow account glossary entry](https://mortgage-math-us.com/glossary/escrow-account/). What matters for your budget is the rhythm: money goes in every month, but comes out in a few large bills. Take a $300,000 home with 20% down. At the national 0.89% tax ratio the yearly tax is $2,670, and insurance at $4.90 per $1,000 of value is $1,470. In this example the tax is billed in two halves, in months 5 and 11, and insurance renews in month 8. The servicer collects $345 a month and sets the opening balance at $1,035 so the account never dips below its cushion: *A year of escrow on a $300,000 home (deposits of $345 a month)* | Month | Deposit | Paid out | Balance after the month | |---|---:|---|---:| | Month 1 | $345 | — | $1,380 | | Month 2 | $345 | — | $1,725 | | Month 3 | $345 | — | $2,070 | | Month 4 | $345 | — | $2,415 | | Month 5 | $345 | $1,335 — Property tax, first half | $1,425 | | Month 6 | $345 | — | $1,770 | | Month 7 | $345 | — | $2,115 | | Month 8 | $345 | $1,470 — Homeowners insurance | $990 | | Month 9 | $345 | — | $1,335 | | Month 10 | $345 | — | $1,680 | | Month 11 | $345 | $1,335 — Property tax, second half | **$690** | | Month 12 | $345 | — | $1,035 | The lowest balance, in month 11, is $690 — exactly the cushion. The balance ends the year where it started, which is what a correctly projected account does. ## The cushion: why the low point isn’t zero Regulation X lets the servicer keep a cushion of up to one-sixth of the year’s escrow bills — 2 months of deposits, or $690 here — so a slightly higher bill doesn’t push the account negative. The limit applies to the lowest projected balance, not to the balance on any given day, which is why the account above holds far more than $690 just before each tax bill. State law or your mortgage documents can set a lower cushion, never a higher one. At closing, the initial escrow deposit on your Closing Disclosure is the amount needed to reach that projected path given when your first bills fall due. You receive an initial escrow statement at closing or within 45 days, and the servicer must pay bills on time from the account as long as your payments arrive within 30 days of the due date — even if that means advancing its own money. ## The annual escrow analysis Once a year the servicer runs the projection again with the latest tax and insurance bills, compares the result with what is actually in the account, and sends you an annual statement within 30 days of the end of the escrow year. The statement shows last year’s deposits and payments, next year’s projected bills, the new monthly deposit and any shortage or surplus. **How to check your escrow statement** 1. **Compare the bills with your own records** — Look up your tax bill on the county site and your insurance renewal; make sure the amounts and due dates match. 2. **Check any exemption** — If you filed for a homestead or other exemption, confirm the projection uses the reduced bill. 3. **Find the lowest projected balance** — It should not exceed the cushion of 2 months of deposits. 4. **Read the shortage or surplus line** — Note the repayment option and whether a lump-sum payment is offered. 5. **Call the servicer about errors** — A wrong tax figure or a missed exemption can be corrected before the new payment starts. ## Shortage, deficiency or surplus The analysis can end three ways, and Regulation X treats each one differently: *What the servicer may do after the annual analysis* | Result | What it means | What the servicer may do | |---|---|---| | Shortage | The balance is below the target the projection needs | Small (under one month’s deposit): leave it, ask for it within 30 days, or spread it over 12 months or more. One month’s deposit or more: leave it or spread it over at least 12 months | | Deficiency | The account is actually negative — the servicer advanced money | Small: leave it, ask for it within 30 days, or collect it in two or more monthly payments. One month’s deposit or more: leave it or collect it in at least 2 equal monthly payments | | Surplus | The balance is above the target | $50 or more: refund within 30 days if you are current. Less: refund it or credit next year | A shortage is a projection problem — there is still money in the account, just not enough for next year. A deficiency means the account went below zero and the servicer covered a bill. Both usually trace back to a bill that rose faster than the estimate, often the first tax bill after a sale or a reassessment. ## Worked example: a tax increase creates a shortage Now say the county reassesses the home and the yearly tax rises 15%, from $2,670 to $3,070. The second-half bill in month 11 arrives at the new level, so the account pays out $200 more than it collected and ends the year at $835. Next year’s projection needs a bigger deposit and a bigger cushion, and an opening balance of $1,135. > **Worked example: 15% tax increase on a $300,000 home, $240,000 loan at 7.24%** > > | | Before | Next 12 months | After the shortage is repaid | > |---|---:|---:|---:| > | Yearly property tax | $2,670 | $3,070 | $3,070 | > | Monthly escrow deposit | $345 | $378 | $378 | > | Shortage repayment ($300 over 12 months) | — | $25 | — | > | Principal and interest | $1,636 | $1,636 | $1,636 | > | **Total monthly payment** | **$1,981** | **$2,039** | **$2,014** | The shortage of $300 is the money paid out but not collected plus the larger cushion. That is less than one month’s escrow deposit, so the servicer may leave it in place, ask for it within 30 days, or spread it over at least 12 months. If you pay it in one lump sum, your payment goes straight to $2,014. The [property tax article](https://mortgage-math-us.com/blog/how-property-taxes-change-your-payment/) shows why bills jump after a purchase and how to check them before you buy. ## When the account has too much: surplus refunds The same arithmetic works in reverse. Suppose instead that a homestead exemption cuts the tax by 10% from the second-half bill onward. The account ends the year with more than next year’s projection needs — a surplus of **$200**. Because it is at least $50 and you are current, the servicer must send it to you within 30 days of the analysis. Your deposit also falls, to $323 a month. You count as current if the servicer receives each payment within 30 days of its due date. If you are behind, the servicer may keep the surplus in the account under your loan documents. ## Can you skip escrow? Many lenders require escrow, and federal rules require it on a higher-priced mortgage loan — one whose APR is 1.5% or more above the average prime offer rate (measured in percentage points) on a conforming-size first mortgage. On those loans you can’t ask to cancel the account until at least 5 years after closing, and only if the balance is below 80% of the original value and you aren’t behind. Where your lender allows a waiver, ask whether it changes the price of the loan. Then you are the one who saves $345 a month and pays $1,335 tax bills twice a year and a $1,470 insurance renewal on time; a missed premium can lead to force-placed coverage, as the [homeowners insurance article](https://mortgage-math-us.com/blog/homeowners-insurance-and-your-mortgage/) explains. Our [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=300000&down=20) shows the full payment with and without the escrow items. ## Frequently asked questions ### Why did my escrow payment go up? Usually because your property tax or insurance bill rose. The annual analysis raises the monthly deposit for the higher bills and, if the account paid more than it collected, adds a shortage repayment — in our example $58 a month for a year after a 15% tax increase. ### How much can my lender keep in escrow? The cushion — the lowest balance the projection allows — can be no more than one-sixth of the year’s escrow bills, or 2 months of deposits. On our example $300,000 home that is $690. State law or your loan documents can set a lower limit. ### Can I pay an escrow shortage in a lump sum? Usually yes — servicers generally offer it on the annual statement. Paying it removes the repayment from your monthly payment, so only the higher deposit remains. ### What is the difference between an escrow shortage and a deficiency? A shortage means the balance is below what next year’s projection needs but still positive. A deficiency means the account went negative and the servicer advanced money. Larger deficiencies must be collected in at least 2 equal monthly payments if the servicer collects them. ### When will I get my escrow surplus refund? If the surplus is $50 or more and your payments are current, within 30 days of the escrow analysis. Smaller surpluses can be refunded or credited against next year’s deposits. ### Can I remove escrow from my mortgage? It depends on your lender and loan. On a higher-priced mortgage loan the required escrow can’t be cancelled until 5 years after closing and only below 80% of the original value. Elsewhere, ask your servicer about its waiver rules. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [CFPB, Regulation X 1024.17](https://www.consumerfinance.gov/rules-policy/regulations/1024/17/) — Most an escrow account may hold as a cushion (one-sixth of annual escrow payments); Escrow surplus at or above this amount must be refunded to a current borrower; Escrow shortage of a month’s payment or more: if the servicer collects it, repayment is spread over at least (Oct 28, 2026) - [12 CFR 1026.35(a) (Regulation Z)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.35) — Higher-priced mortgage loan: APR at least this many percentage points above the average prime offer rate (first lien, conforming size); Higher-priced mortgage loan: required escrow account can’t be cancelled until at least this long after closing; Higher-priced mortgage loan: escrow cancellation also needs the balance below this share of the original value (Oct 29, 2026) - [CFPB: Regulation X 1024.17, Escrow accounts](https://www.consumerfinance.gov/rules-policy/regulations/1024/17/) - [CFPB: What is an escrow or impound account?](https://www.consumerfinance.gov/ask-cfpb/what-is-an-escrow-or-impound-account-en-140/) - [eCFR: 12 CFR 1026.35, Higher-priced mortgage loans](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.35) _General information, not financial advice._ --- # FHA vs conventional: which costs less over 5 and 10 years? > FHA or conventional? We total the upfront premium, MIP, PMI and interest at 3.5%, 5% and 10% down over 5 and 10 years, and show where credit tips it. URL: https://mortgage-math-us.com/blog/fha-vs-conventional/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer At the same interest rate, a conventional loan with mid-range PMI costs about **$8,245 less** than FHA over 10 years on a $350,000 home with 3.5% down, because FHA adds a 1.75% upfront premium and annual MIP that never cancels below 10% down. FHA comes out ahead when your PMI quote would be more than about $70 a month per $100,000 borrowed — which can happen with lower credit scores — or when the FHA rate is roughly 0.24 of a percentage point lower than the conventional quote. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | FHA upfront mortgage insurance premium | 1.75% | [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) | Feb 22, 2023 | | FHA annual MIP, under 5% down (30-year) | 0.55% | [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) | Feb 22, 2023 | | FHA annual MIP, 5% or more down (30-year) | 0.5% | [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) | Feb 22, 2023 | | Conventional PMI, low end (per $100,000 a month) | $30 per $100k a month | [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) | Oct 28, 2026 | | Conventional PMI, high end (per $100,000 a month) | $70 per $100k a month | [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) | Oct 28, 2026 | | PMI can be cancelled on request at | 80% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) | Oct 28, 2026 | ## Why the first payment is the wrong comparison Most FHA-versus-conventional comparisons stop at the monthly payment. That misses two things that only show up over time: FHA’s 1.75% upfront premium is added to your balance and you pay interest on it for as long as you keep the loan, and FHA’s annual premium keeps running after conventional PMI has been cancelled. So this post adds up everything each loan costs over five and ten years — interest, mortgage insurance and the upfront premium — on the same $350,000 home. The rules behind each loan are covered in our guides to [FHA loans](https://mortgage-math-us.com/loan-types/fha-loans/) and [conventional loans](https://mortgage-math-us.com/loan-types/conventional-loans/); here we only do the math. The assumptions, so you can check them: - **Rate:** both loans at today’s 30-year average of 7.24%. FHA quotes are often different; a section below shows what a lower FHA rate does. - **FHA insurance:** 1.75% upfront, financed. Annual MIP of 0.55% when you put down less than 5% and 0.5% with 5% or more, held level for simplicity. With 10% or more down it stops after 11 years; otherwise it lasts for the life of the loan. - **Conventional PMI:** Freddie Mac’s typical range of $30–$70 a month per $100,000 borrowed, cancelled when the original schedule reaches 80% of the purchase price and you ask your servicer to drop it. - **Same down payment** on both loans, so the cash you bring is identical. ## Monthly payment at 3.5%, 5% and 10% down *Principal, interest and mortgage insurance on a $350,000 home at 7.24% (PMI at the midpoint)* | Down payment | FHA payment | FHA total | Conventional payment | Conventional total | |---|---:|---:|---:|---:| | 3.5% ($12,250) | $2,342 + $155 MIP | **$2,497** | $2,302 + $169 PMI | **$2,471** | | 5% ($17,500) | $2,306 + $139 MIP | **$2,444** | $2,266 + $166 PMI | **$2,432** | | 10% ($35,000) | $2,184 + $131 MIP | **$2,316** | $2,147 + $158 PMI | **$2,304** | Taxes and insurance are the same on both loans, so they are left out here. FHA’s principal and interest is higher at every down payment because the loan includes the financed upfront premium of $5,911 at 3.5% down. Read more about how that premium works in the [UFMIP glossary entry](https://mortgage-math-us.com/glossary/upfront-mortgage-insurance-premium/). ## Total cost over five and ten years Total cost here means interest paid, plus mortgage insurance paid, plus the upfront premium you still owe when you sell or refinance. It is the money the loan costs you, not counting the principal you pay down. *Total cost of borrowing on a $350,000 home, same rate on both loans* | Down payment | Kept for | FHA | Conventional (PMI low – high) | Cheaper at PMI midpoint | |---|---|---:|---:|---| | 3.5% | 5 years | $136,370 | $125,167 – $133,273 | Conventional by $7,150 | | 3.5% | 10 years | $258,418 | $242,067 – $258,279 | Conventional by $8,245 | | 5% | 5 years | $133,419 | $123,221 – $131,201 | Conventional by $6,208 | | 5% | 10 years | $252,739 | $238,304 – $254,264 | Conventional by $6,455 | | 10% | 5 years | $126,397 | $116,736 – $124,296 | Conventional by $5,881 | | 10% | 10 years | $239,437 | $224,155 – $237,133 | Conventional by $8,792 | > **Worked example: 3.5% down, kept for 10 years** > > | | FHA | Conventional | > |---|---:|---:| > | Loan amount | $343,661 | $337,750 | > | Interest over 10 years | $233,931 | $229,908 | > | Mortgage insurance over 10 years | $18,576 | $20,265 | > | Upfront premium still owed | $5,911 | $0 | > | **Total cost** | **$258,418** | **$250,173** | > > On the conventional loan, PMI is paid for 11 years and 8 months if the original schedule is your only path to 80% — longer than ten years at this down payment, so it runs for the whole period. FHA’s annual MIP of $155 a month would carry on for the life of the loan. Over five years the gap at 3.5% down is $7,150; over ten it grows to $8,245. At 10% down, conventional PMI on the original schedule can be dropped after 8 years and 7 months — inside the ten-year window — while FHA’s annual premium runs for 11 years even at that down payment. ## Where your credit score tips the balance Freddie Mac’s $30–$70 range is a typical spread, not a cap. PMI is priced mainly on your credit score and down payment, so a borrower with a lower score can be quoted more than the top of the range, while FHA charges every borrower the same premium for a given loan size, term and down payment. That gives you one number to look for on a conventional Loan Estimate. At 3.5% down, held for ten years, conventional stays cheaper as long as PMI costs less than about **$70 a month per $100,000 borrowed**. That break-even sits right at the top of Freddie Mac’s typical range. At 5% down the break-even is about $66. If your quote is higher, FHA is likely the cheaper loan, before any rate difference. > **Tip: Ask for the PMI figure in dollars** > > Your Loan Estimate shows mortgage insurance on page 1. Divide it by the loan amount in hundreds of thousands to compare it with the break-even above. The [PMI guide](https://mortgage-math-us.com/buying/pmi/) explains how lenders price it and how to get it removed early. Credit also changes the rate itself. Our [credit score guide](https://mortgage-math-us.com/buying/credit-score/) covers the minimum scores for each loan and how lenders price lower scores. ## If the FHA rate is lower Lenders price FHA and conventional loans separately, so the two quotes you get on the same day often carry different rates. The table treats that gap as an example assumption — it is not an offer — and reruns the 3.5% down, ten-year case against a conventional loan at today’s average with mid-range PMI. *10-year cost at 3.5% down when the FHA rate is lower (example rates)* | FHA rate | FHA 10-year cost | Cheaper loan | |---|---:|---| | Same rate (7.24%) | $258,418 | Conventional by $8,245 | | 0.125 point lower (7.115%) | $254,081 | Conventional by $3,908 | | 0.25 point lower (6.99%) | $249,749 | FHA by $424 | | 0.5 point lower (6.74%) | $241,104 | FHA by $9,069 | On these numbers, an FHA rate about **0.24 of a point** below the conventional rate erases conventional’s advantage. Compare the two Loan Estimates from the same day, because rates move daily. ## When debt-to-income decides it Sometimes cost doesn’t matter because only one loan will approve you. Say you earn $115,000 a year with $650 a month of other debts and buy the $350,000 home with 3.5% down. Adding property tax at 0.89% and average insurance, the FHA loan gives a housing ratio of 30.3% and a debt-to-income ratio of 37.0%; the conventional loan, with PMI at the midpoint, gives a debt-to-income ratio of 36.8%. The FHA file passes both of FHA’s manual-underwriting limits without compensating factors: 31% for housing and 43% in total. The conventional ratio is above Fannie Mae’s 36% manual limit and inside the 45% allowed with strong credit and reserves. Both programs’ automated systems can approve higher ratios — Fannie Mae’s Desktop Underwriter goes up to 50% — so this matters most when your file needs a manual review. Our post on [how lenders calculate debt-to-income](https://mortgage-math-us.com/blog/how-lenders-calculate-debt-to-income/) shows which payments go into the ratio. ## The refinance exit from FHA With less than 10% down, the usual way to stop paying MIP is to [refinance into a conventional loan](https://mortgage-math-us.com/refinancing/refinance-to-remove-pmi/) once you have 20% equity. If the home’s value didn’t change at all, the 3.5%-down FHA loan reaches 80% of the purchase price after about 12 years and 4 months of scheduled payments — well past the ten-year mark used in the tables. Rising values or extra payments shorten that. Refinancing has its own price: typically 3%–6% of the new loan. On a $280,000 refinance that is $8,400–$16,800, which takes 55–109 months of saved MIP to recover unless the new rate is also lower. Planning on a refinance to fix FHA’s cost is a bet on rates and prices, so judge FHA on the cost you would pay if you kept it. ## How to compare your own quotes **How to compare FHA and conventional Loan Estimates** 1. **Request both on the same day** — Ask one or two lenders for an FHA and a conventional Loan Estimate with the same down payment and closing date, so rate moves don’t distort the comparison. 2. **Pull out four numbers** — The rate, the loan amount (FHA’s includes the upfront premium), the monthly mortgage insurance and any points. 3. **Check PMI against the break-even** — Convert the PMI to dollars per $100,000 a month and compare it with the figure in the credit section above. 4. **Pick a holding period** — Use five years if you may move or refinance soon, ten or more if you plan to stay. 5. **Total the cost** — Interest, mortgage insurance and upfront premium over that period; the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=350000&down=3.5) gives the monthly figures and amortization. [Open the mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/) ## Frequently asked questions ### Is FHA or conventional cheaper with 3.5% down? At the same rate and mid-range PMI, conventional is cheaper over 10 years by about $8,245 on a $350,000 home in our example. FHA wins if your PMI quote is above roughly $70 a month per $100,000 borrowed, or if the FHA rate is around 0.24 of a point lower. ### Does FHA mortgage insurance ever go away? Only if you start with a loan-to-value of 90% or less — 10% down or more — in which case annual MIP ends after 11 years. With less down it lasts for the life of the loan, and the usual way out is a refinance. ### When can I drop PMI on a conventional loan? You can ask your servicer to cancel it once your balance is scheduled to reach 80% of the original value, and it ends automatically at 78% if you are current. In our 10%-down example that is about 8 years and 7 months on the original schedule. ### Why is the FHA loan amount higher than the price minus my down payment? Because the 1.75% upfront premium is usually added to the loan. On $350,000 with 3.5% down that adds $5,911, which you repay with interest. ### Should I choose FHA if my credit score is low? It deserves a close look. Conventional PMI and rates are priced on your score, while FHA’s premium is the same for every borrower at a given down payment. Get both quotes and check the PMI against the break-even figure in this post. ### Is a 5% down conventional loan better than 3.5% down FHA? Usually on cost: the conventional loan has no upfront premium and its PMI can be cancelled. It does need $5,250 more cash on a $350,000 home, and lower scores pay more for PMI. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA upfront mortgage insurance premium; FHA annual MIP, 30-year loan, more than 95% LTV; FHA annual MIP, 30-year loan, 95% LTV or less (Feb 22, 2023) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) — Ask your servicer to cancel PMI at this share of original value; PMI ends automatically at this share of original value (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) — FHA manual underwriting debt-to-income ratio (no compensating factors); FHA manual underwriting housing ratio (no compensating factors) (Oct 8, 2026) - [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) — Fannie Mae maximum DTI, manually underwritten loans; Fannie Mae maximum DTI, manual underwriting with strong credit and reserves; Fannie Mae maximum DTI, Desktop Underwriter loans (Apr 2, 2025) - [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) — Typical refinance closing costs, low end (share of loan principal); Typical refinance closing costs, high end (share of loan principal) (Oct 28, 2026) - [HUD Mortgagee Letter 2023-05: Reduction of FHA annual MIP](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) - [CFPB: Understand the different kinds of loans available](https://www.consumerfinance.gov/owning-a-home/loan-options/) - [CFPB: When can I remove private mortgage insurance (PMI)?](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) _General information, not financial advice._ --- # Homeowners insurance and your mortgage > What lenders require you to insure, what the premium adds to your payment, how escrow handles it, flood zones, force-placed rules and rising premiums. URL: https://mortgage-math-us.com/blog/homeowners-insurance-and-your-mortgage/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer Every mortgage lender requires homeowners insurance that covers the home on a replacement-cost basis, and Fannie Mae caps the deductible at 5% of the coverage amount. At the national average of $4.90 per $1,000 of value, a $350,000 home costs about **$143 a month**, usually collected through escrow. In a FEMA high-risk flood zone you also need flood insurance, and if your coverage lapses your servicer can buy a policy for you — after at least 45 days of written notice. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Average premium per $1,000 of home value | $4.90 per $1,000 | [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) | 2023 data | | Average annual premium (Freddie Mac borrowers) | $1,522/yr | [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) | 2023 data | | Largest deductible Fannie Mae allows | 5% | [Fannie Mae Selling Guide B7-3-02](https://selling-guide.fanniemae.com/sel/b7-3-02/property-insurance-requirements-one-four-unit-properties) | Aug 5, 2026 | | NFIP building coverage limit | $250,000 | [FloodSmart (FEMA NFIP): Buy a flood insurance policy](https://www.floodsmart.gov/get-insured/buy-a-policy) | Oct 29, 2026 | | Notice before force-placed insurance is charged | 45 days | [12 CFR 1024.37 (Regulation X)](https://www.consumerfinance.gov/rules-policy/regulations/1024/37/) | Oct 29, 2026 | | Refund deadline once you show coverage | 15 days | [12 CFR 1024.37 (Regulation X)](https://www.consumerfinance.gov/rules-policy/regulations/1024/37/) | Oct 29, 2026 | ## What your lender requires you to insure The house secures the loan, so the lender wants it rebuilt if it burns down. Most conventional loans follow Fannie Mae’s Selling Guide, which sets these minimums for one- to four-unit homes: *Fannie Mae’s property insurance requirements, with an example $300,000 dwelling policy* | Requirement | What it means | Example | |---|---|---| | Replacement-cost coverage | The policy pays to rebuild, not the depreciated value; roofs may be insured on a different basis | $300,000 to rebuild the house | | Named perils covered | At least fire or lightning, explosion, windstorm (including named storms), hail, smoke, aircraft, vehicles, riot or civil commotion | A policy that excludes wind needs a separate wind policy | | Deductible cap | Each deductible no more than 5% of the coverage amount | Up to $15,000 | | Flood, if in a high-risk zone | A separate flood policy (see below) | — | FHA, VA and USDA loans have their own versions of the same rules, and lenders can add requirements of their own. In practice the lender is usually named on the policy as mortgagee, so insurance checks for major damage are made out to you and the lender together. A higher deductible lowers the premium, but the cap means you can’t trade it up indefinitely — and it is money you need to have if you file a claim. A $15,000 deductible on a $300,000 policy is the most a Fannie Mae loan allows. ## What insurance adds to the monthly payment Freddie Mac’s research puts the average premium for its borrowers at $1,522/yr, or $4.90 per $1,000 of home value. Applied to a range of prices, with 10% down and today’s 7.24% average rate: *Homeowners insurance at $4.90 per $1,000 of value, and the payment if your quote is double the average* | Home price | Yearly premium | Monthly | Full payment (PITI + PMI) | Full payment if the premium doubles | |---|---:|---:|---:|---:| | $250,000 | $1,225 | $102 | $1,933 | $2,035 | | $350,000 | $1,715 | $143 | $2,707 | $2,850 | | $500,000 | $2,450 | $204 | $3,867 | $4,071 | | $750,000 | $3,675 | $306 | $5,800 | $6,106 | Averages hide a lot. In Texas the average premium is $3,489/yr, about $291 a month against $127 for the national figure — see the [Texas guide](https://mortgage-math-us.com/location/texas/). Coastal wind, wildfire and hail risk, the age of the roof and your claims history all move the price, so get a real quote before you settle on a budget. Our [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=350000&ins=1715) lets you replace the average with your own figure. ## How the premium moves through escrow Most borrowers pay insurance through an [escrow account](https://mortgage-math-us.com/glossary/escrow-account/). At closing you pay the first year’s premium in full, as a prepaid item, and fund the escrow account; from then on, a twelfth of the premium rides along with each mortgage payment and the servicer pays the renewal bill. > **Worked example: Insurance through escrow on a $350,000 home** > > | Item | Amount | > |---|---:| > | First-year premium paid at closing ($4.90 per $1,000 of value) | $1,715 | > | Largest insurance cushion the escrow account may hold (2 months) | $286 | > | Added to each monthly payment | $143 | > | Full monthly payment with 10% down | $2,707 | Federal rules require the servicer to pay the premium on time from escrow as long as your mortgage payment is no more than 30 days overdue — even if the account is short. If you pay insurance yourself instead, the renewal is on you, and missing it can lead to force-placed coverage. The [escrow accounts article](https://mortgage-math-us.com/blog/escrow-accounts/) walks through the annual analysis. ## When the premium goes up A renewal at a higher price hits an escrow account twice. The new premium raises next year’s monthly deposit, and the bill the servicer already paid at the higher price leaves the account short — plus the cushion grows by a sixth of the increase. Servicers that collect a shortage in installments must spread it over at least 12 months, so the first year after an increase costs more than the years after. *Rough effect of a premium increase on a $1,715 policy* | Premium increase | New premium | Approximate escrow shortage | Payment change, first year | Payment change after that | |---|---:|---:|---:|---:| | +10% | $1,887 | $200 | +$31 | +$14 | | +25% | $2,144 | $500 | +$77 | +$36 | | +50% | $2,573 | $1,000 | +$155 | +$71 | A 25% jump — $429 a year on this policy — is enough to make shopping worthwhile. Ask your agent about a higher deductible within your lender’s cap, discounts for a new roof or bundled policies, and quotes from other insurers. If you switch, send the new declarations page to your servicer so it pays the right company. ## Flood insurance: a separate policy Standard homeowners policies don’t cover flooding. If the home is in a FEMA special flood hazard area — zones beginning with A or V — and the loan comes from a federally regulated lender or is sold to Fannie Mae or Freddie Mac, flood insurance is required. The National Flood Insurance Program covers up to $250,000 for the building and $100,000 for contents. Fannie Mae requires coverage equal to the lowest of the home’s replacement cost, the NFIP maximum or the loan balance. For a $400,000 home with a $360,000 loan and an example $300,000 replacement cost, that is **$250,000** — the NFIP maximum. A new NFIP policy usually takes 30 days to start, but there is no wait when it is bought as part of a mortgage closing. Outside high-risk zones flood cover is optional, but standard homeowners policies still exclude flooding there. ## Force-placed insurance: what your servicer must do first If your coverage lapses, the servicer can buy a policy to protect the loan and charge you for it. The CFPB notes this is typically more expensive than coverage you buy yourself. Regulation X sets the steps: **Before a servicer can charge you for force-placed insurance** 1. **First written notice** — At least 45 days before any charge, telling you coverage appears to have lapsed and how to show proof. 2. **Reminder notice** — At least 30 days after the first notice and at least 15 days before the charge. 3. **Charge, if you don’t respond** — Charges must be bona fide and reasonable, tied to the servicer’s actual cost. 4. **Cancellation and refund** — Within 15 days of receiving proof that you had coverage, the servicer must cancel the policy and refund premiums and fees for any overlap. If you have an escrow account, the servicer generally can’t force-place a policy just because the account is short — it has to keep paying your premium. Flood insurance is handled under separate federal flood rules. ## Insurers of last resort When private insurers won’t write a policy, several states run backstop plans. They can satisfy a lender, but coverage is narrower and you may need to add policies: - **California FAIR Plan:** a basic fire policy with residential limits up to $3,000,000 per location; other perils need a separate “difference in conditions” policy. - **Florida Citizens Property Insurance:** you are generally ineligible if a private insurer offers coverage at no more than 20% above Citizens’ premium. - **Texas Windstorm Insurance Association:** wind and hail cover for the 14 first-tier coastal counties and part of Harris County. Check with your lender before you rely on one: the combined policies still have to meet the requirements in the table at the top. ## Keep the policy and the loan in step - **Quote insurance as soon as you have a contract.** The premium affects your payment and the lender needs proof before closing. - **Read the deductibles.** Wind and hurricane deductibles are often percentages of the dwelling limit. - **Watch renewal notices.** Compare the new premium with the escrow analysis and shop if it jumps. - **Tell your servicer about any change** of insurer or policy number straight away. For the cash you need on closing day, see [how to lower your closing costs](https://mortgage-math-us.com/blog/how-to-lower-closing-costs/). ## Frequently asked questions ### Do I need homeowners insurance to get a mortgage? Yes. Lenders require it for the life of the loan, on a replacement-cost basis, covering at least fire, wind, hail and other named perils. Proof of coverage is a condition of closing. ### How much does homeowners insurance add to a mortgage payment? At the national average of $4.90 per $1,000 of value, about $143 a month on a $350,000 home, or 5.3% of the full payment with 10% down. Your quote can be much higher in high-risk areas. ### What is the highest deductible my lender will accept? For loans that follow Fannie Mae’s rules, each deductible can be no more than 5% of the coverage amount — $15,000 on a $300,000 policy. Lenders may set lower limits. ### Why did my mortgage payment go up when my insurance renewed? The higher premium raises your monthly escrow deposit, and the servicer usually paid the renewal before collecting enough, creating a shortage. Servicers collecting a shortage in installments must spread it over at least 12 months. ### What happens if my homeowners insurance is cancelled? Your servicer can buy force-placed insurance and charge you, but only after sending a notice at least 45 days before the charge and a reminder at least 15 days before it. Show proof of new coverage and it must cancel and refund any overlap within 15 days. ### Do I need flood insurance if I’m not in a flood zone? Lenders require it only in FEMA special flood hazard areas, but standard policies exclude flooding everywhere. NFIP coverage goes up to $250,000 for the building, and a new policy usually takes 30 days to start. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value; Average annual homeowners insurance premium (Freddie Mac borrowers) (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Fannie Mae Selling Guide B7-3-02](https://selling-guide.fanniemae.com/sel/b7-3-02/property-insurance-requirements-one-four-unit-properties) — Fannie Mae: largest property insurance deductible allowed (share of the coverage amount) (Aug 5, 2026) - [CFPB, Regulation X 1024.17](https://www.consumerfinance.gov/rules-policy/regulations/1024/17/) — Most an escrow account may hold as a cushion (one-sixth of annual escrow payments); Escrow rules: you count as current if the servicer receives each payment within this long of its due date; Escrow shortage of a month’s payment or more: if the servicer collects it, repayment is spread over at least (Oct 28, 2026) - [FloodSmart (FEMA NFIP): Buy a flood insurance policy](https://www.floodsmart.gov/get-insured/buy-a-policy) — NFIP building coverage limit, homeowners; NFIP contents coverage limit, homeowners; NFIP flood insurance usually takes effect this long after purchase (Oct 29, 2026) - [Texas Department of Insurance](https://www.tdi.texas.gov/general/texas-homeowners-insurance-market-overview.html) — Average Texas homeowners insurance premium (2025 (preliminary)) - [12 CFR 1024.37 (Regulation X)](https://www.consumerfinance.gov/rules-policy/regulations/1024/37/) — Force-placed insurance: first written notice at least this long before the servicer charges you; Force-placed insurance: reminder notice at least this long before the charge (and at least 30 days after the first notice); Servicer must cancel force-placed insurance and refund overlapping premiums within this long of receiving proof of your own coverage (Oct 29, 2026) - [California Department of Insurance: California FAIR Plan](https://www.insurance.ca.gov/01-consumers/200-wrr/California-FAIR-Plan.cfm) — California FAIR Plan residential coverage limit per location (Oct 29, 2026) - [Citizens Property Insurance Corporation: Clearinghouse](https://www.citizensfla.com/clearinghouse) — Citizens Property Insurance: a homeowner is generally ineligible if a private offer is no more than this much above Citizens’ premium (Oct 29, 2026) - [Texas Windstorm Insurance Association](https://www.twia.org/coverage-eligibility/) — First-tier coastal counties in the TWIA windstorm area (Oct 28, 2026) - [Fannie Mae Selling Guide B7-3-02: Property Insurance Requirements](https://selling-guide.fanniemae.com/sel/b7-3-02/property-insurance-requirements-one-four-unit-properties) - [Fannie Mae Selling Guide B7-3-06: Flood Insurance Requirements](https://selling-guide.fanniemae.com/sel/b7-3-06/flood-insurance-requirements-all-property-types) - [CFPB: Regulation X 1024.37, Force-placed insurance](https://www.consumerfinance.gov/rules-policy/regulations/1024/37/) - [CFPB: What is an escrow or impound account?](https://www.consumerfinance.gov/ask-cfpb/what-is-an-escrow-or-impound-account-en-140/) _General information, not financial advice._ --- # How a mortgage rate lock works > What a rate lock covers, how long to lock, what can still change your rate, how locks tie into Loan Estimate timing, and what a rate move costs. URL: https://mortgage-math-us.com/blog/how-a-rate-lock-works/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer A rate lock holds your interest rate, and the points or credits tied to it, until a set date — typically 30, 45 or 60 days — as long as your loan and application don’t change. If you lock after your Loan Estimate, the lender must send a revised one within 3 business days. Without a lock, a move of just a quarter point before closing would add about **$58 a month** to a $340,000 30-year loan at today’s 7.24% average. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Typical rate lock periods | 30, 45 or 60 days | [CFPB](https://www.consumerfinance.gov/ask-cfpb/whats-a-lock-in-or-a-rate-lock-en-143/) | Oct 28, 2026 | | Revised Loan Estimate after you lock | 3 business days | [12 CFR 1026.19(e)(3)(iv)(D)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-C/section-1026.19) | Oct 29, 2026 | | Last revised Loan Estimate before closing | 4 business days | [12 CFR 1026.19(e)(4)(ii)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-C/section-1026.19) | Oct 29, 2026 | | Closing Disclosure before closing | 3 business days | [CFPB](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) | Oct 28, 2026 | | 30-year fixed average used here | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | ## What a lock covers — and what it doesn’t A [rate lock](https://mortgage-math-us.com/glossary/rate-lock/) is the lender’s promise to honor a specific price for your loan: an interest rate plus any discount points or lender credit that go with it. The CFPB describes it as a rate that won’t change between the offer and closing, provided you close within the lock period and your application stays the same. That last condition does a lot of work. The lock is priced for a particular loan — amount, down payment, loan type, credit score, property and occupancy. Change any of those and the lender can reprice the loan, lock or no lock. And a lock is only as good as its date: if closing slips past it, you need an extension or a new lock at whatever the market offers that day. Some lenders lock when they issue the Loan Estimate, some don’t. The top of page 1 says whether the rate is locked and until when; if it isn’t, the CFPB notes, the rate can change at any time. For what drives the rate in the first place, see [how mortgage rates work](https://mortgage-math-us.com/buying/mortgage-rates/). ## Choosing a lock length The CFPB says locks are typically available for 30, 45 or 60 days, sometimes longer, and that extending one can be expensive. Longer locks protect you for more time but may be priced higher, so ask each lender what its shorter and longer locks cost — the Loan Estimate doesn’t show it. The lock has to outlast the disclosure clock as well as underwriting, the appraisal and the title work. These are the federal timing rules that sit inside every lock: *Federal timing rules a lock has to fit around* | Step | Rule | What it means for the lock | |---|---|---| | Loan Estimate after application | Within 3 business days | A lock offered with it shows on page 1 | | You say you want to proceed | Within 10 business days, or the lender may revise the estimate | Locking early doesn’t stop the clock on this | | Lock after the first estimate | Revised Loan Estimate within 3 business days | Shows the locked rate, points and credits | | Changed circumstance | Revised estimate within 3 business days of the lender learning of it | A repriced lock arrives this way | | Last revised Loan Estimate | Must reach you at least 4 business days before closing | Late repricing can push the closing date | | Earliest closing after the first estimate | At least 7 business days after it is delivered or mailed | Sets the shortest possible lock you could use | | Closing Disclosure | At least 3 business days before closing | A new wait starts if the APR rises by more than 0.125% | The disclosure deadlines count business days, while a lock’s length is usually counted in calendar days, so a 30-day lock covers only about four working weeks. If your purchase contract allows a longer closing, size the lock to the contract date plus a cushion. ## How the lock shows up on your Loan Estimate Before you lock, the points and lender credits on your [Loan Estimate](https://mortgage-math-us.com/buying/loan-estimate/) can still change, because the rules let the lender revise them when the rate is locked. Once you lock, discount points fall under the zero-tolerance category: they can’t go up at closing unless something on the list of valid changed circumstances happens, such as a change you asked for or new information about your credit, income or the property. If the lender does reprice the lock for a valid reason, it must document it with a revised Loan Estimate within 3 business days. It can’t send a revised Loan Estimate after the Closing Disclosure has been issued; changes after that point appear on a corrected Closing Disclosure instead. ## What can change a locked rate *Common reasons a locked loan is repriced* | What changes | Why it matters | How to avoid it | |---|---|---| | Loan amount or down payment | The price depends on loan size and loan-to-value | Settle your down payment before you lock | | Loan type or term | A different product is a different price | Choose the product first, then lock | | Appraisal higher or lower than expected | The loan-to-value ratio moves | Leave room in your budget for a low appraisal | | Credit score | A new loan or a missed payment can drop your score | Don’t open credit or miss payments before closing | | Income the lender can’t document | Your debt-to-income ratio changes | Hand over pay records and explanations early | | Job change | Lenders re-verify employment close to closing — Fannie Mae within 10 business days of the note date | Tell your lender before you change jobs | | Closing delayed past the lock date | The lock expires | Lock long enough, and ask about extensions in advance | Lenders also need documents to be current: Fannie Mae requires credit, income, employment and asset documents to be no more than 4 months old on the note date, so a long delay can mean new paperwork as well as a new lock. ## What a rate move costs while you wait In the latest week alone Freddie Mac’s average fell from 7.32% to 7.24% — 0.08 percentage point, worth about $18 a month on this loan. Here is what moves of different sizes would do to a $340,000 30-year fixed loan, starting from today’s 7.24% average: > **Worked example: A $340,000 30-year fixed loan if the rate rises before you lock** > > | Rate rise (percentage points) | New rate | Principal and interest | Extra a month | Extra a year | Extra over 5 years | DTI change on $9,000 a month | > |---|---:|---:|---:|---:|---:|---:| > | +0.125 | 7.37% | $2,346 | +$29 | +$347 | +$1,733 | +0.3 pts | > | +0.25 | 7.49% | $2,375 | +$58 | +$695 | +$3,474 | +0.6 pts | > | +0.5 | 7.74% | $2,433 | +$116 | +$1,396 | +$6,982 | +1.3 pts | > | +0.75 | 7.99% | $2,492 | +$175 | +$2,104 | +$10,520 | +1.9 pts | > | +1 | 8.24% | $2,552 | +$235 | +$2,818 | +$14,089 | +2.6 pts | > > At today’s rate the payment is $2,317, which is 25.7% of $9,000 in gross monthly income. Every quarter point adds about $58 a month. Two things follow. First, even small moves add up over a loan’s life, and a lock removes that risk for the weeks before closing. Second, a bigger rise can do more than raise the payment — it can push your [debt-to-income ratio](https://mortgage-math-us.com/buying/debt-to-income/) over a lender’s limit. If you are near the edge, lock as soon as you have a contract. The [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/) shows how much room you have. > **Tip: Lock the loan you’ll actually close** > > Settle the loan type, down payment and points before you lock. Changing any of them later lets the lender reprice, which can undo the protection you paid for with the lock. ## Extensions, relocks and float-downs No federal rule sets what a lender charges for these, so terms vary by lender. Get them in writing when you lock. - **Extensions.** If closing slips, many lenders will extend the lock for a fee or a slightly higher rate. The CFPB warns that extensions can be expensive; ask the price per extra day or week before you choose a lock length. - **Expired locks.** If a lock lapses, the lender may relock you at the current market rate — and some use the worse of the original and current rate. Ask which policy applies. - **Float-downs.** Some lenders sell a one-time option to take a lower rate if the market falls by a set amount before closing. It costs money up front, so it is a bet on rates falling; compare its price with the monthly figures above. - **Paying for a lower rate.** Buying points at lock time is a separate choice; see [points or a bigger down payment](https://mortgage-math-us.com/blog/points-or-bigger-down-payment/) for when it pays. ## When to lock: a checklist **How to lock your mortgage rate** 1. **Shop before you lock** — Compare Loan Estimates from several lenders on the same day; credit checks within 45 days count as one inquiry. 2. **Sign the purchase contract** — Most borrowers lock once they have a property and a closing date. 3. **Pick a lock that covers the contract date plus a cushion** — Ask what longer locks and extensions cost. 4. **Get the lock in writing** — Rate, points or credits, the expiration date and the extension policy. 5. **Check the revised Loan Estimate** — It should arrive within 3 business days if you locked after the first one. 6. **Keep your file stable until closing** — No new credit, job changes or large unexplained deposits without telling your lender. 7. **Review the Closing Disclosure** — It arrives at least 3 business days before closing; confirm the rate matches your lock. [Open the mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/) ## Frequently asked questions ### How long does a mortgage rate lock last? Typically 30, 45 or 60 days, according to the CFPB, and sometimes longer. Longer locks can cost more, and extensions can be expensive, so choose a lock that covers your contract’s closing date with some room. ### Does locking my rate cost money? It can. Longer locks may be priced higher, extensions can be expensive and some lenders charge a separate lock fee. The Loan Estimate doesn’t show what other lock periods cost, so the CFPB suggests asking. ### Can my rate change after I lock? Yes, if your application changes — a different loan amount or down payment, a new credit score, an appraisal above or below the estimate, or income the lender can’t document — or if the lock expires before closing. ### What happens if my rate lock expires? You can extend it, usually for a fee or a higher rate, or relock at the current market rate. Some lenders relock at the worse of the old and new rates. Ask about the policy when you lock. ### Do I get a new Loan Estimate when I lock? If the rate wasn’t locked when you got your first Loan Estimate, the lender must send a revised one within 3 business days of the lock, showing the locked rate, points and credits. It must reach you at least 4 business days before closing. ### How much does a rate increase cost if I don’t lock? On a $340,000 30-year loan at today’s 7.24% average, a quarter-point rise adds about $58 a month and a half-point rise about $116 — $1,396 a year. ### What is a float-down option? An option some lenders sell that lets you take a lower rate once if the market falls by a set amount before closing. Terms and costs vary by lender; no federal rule requires or prices it. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average; 30-year fixed rate, previous week (Week of Oct 29, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/whats-a-lock-in-or-a-rate-lock-en-143/) — Typical rate lock periods (Oct 28, 2026) - [12 CFR 1026.19(e)(3)(iv)(D)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-C/section-1026.19) — Revised Loan Estimate due within this many business days after you lock a rate that was floating; Lender may revise the Loan Estimate if you indicate intent to proceed after more than this many business days; Revised Loan Estimate due within this many business days of learning of a changed circumstance (Oct 29, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-loan-estimate-en-1995/) — Lender must send the Loan Estimate within this many business days of your application (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) — You receive the Closing Disclosure at least this many business days before closing (Oct 28, 2026) - [12 CFR 1026.22](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-C/section-1026.22) — APR change that triggers a new 3-business-day wait (regular loans) (Oct 28, 2026) - [Fannie Mae Selling Guide B3-3.1-04](https://selling-guide.fanniemae.com/sel/b3-3.1-04/verbal-verification-employment) — Fannie Mae: employment re-verified no more than this many business days before the note date (Oct 7, 2026) - [Fannie Mae Selling Guide B1-1-03](https://selling-guide.fanniemae.com/sel/b1-1-03/allowable-age-credit-documents-and-federal-income-tax-returns) — Fannie Mae: credit, income, employment and asset documents may be no older than this on the note date (Apr 2, 2025) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-exactly-happens-when-a-mortgage-lender-checks-my-credit-en-2005/) — Mortgage credit checks within this window count as one inquiry (Aug 28, 2026) - [CFPB: What’s a lock-in or a rate lock?](https://www.consumerfinance.gov/ask-cfpb/whats-a-lock-in-or-a-rate-lock-en-143/) - [eCFR: 12 CFR 1026.19, Loan Estimate timing and revisions](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-C/section-1026.19) - [CFPB: Loan Estimate explainer](https://www.consumerfinance.gov/owning-a-home/loan-estimate/) _General information, not financial advice._ --- # How lenders calculate debt-to-income, line by line > The income lenders count — salary, hourly, overtime, rent — and the debts they add, worked through a full two-borrower DTI worksheet with real rules. URL: https://mortgage-math-us.com/blog/how-lenders-calculate-debt-to-income/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer Lenders divide your monthly debts, including the new housing payment, by **qualifying** gross income — and qualifying income is often less than what you earn. Overtime and bonuses need at least 12 months of history (2 years recommended) and are averaged; rent from a leased property counts at 75% of the lease minus its costs; and a deferred student loan is charged at 1% of the balance. In the two-earner worksheet below, those rules produce $12,121 of monthly income, $950 of debts plus a $3,480 housing payment, and a **36.5%** debt-to-income ratio. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Shortest overtime or bonus history (Fannie Mae) | 12 months | [Fannie Mae Selling Guide B3-3.3-02](https://selling-guide.fanniemae.com/sel/b3-3.3-02/bonus-commission-overtime-and-tip-income) | Mar 4, 2026 | | Share of the lease counted as rental income | 75% | [Fannie Mae Selling Guide B3-3.8-02](https://selling-guide.fanniemae.com/sel/b3-3.8-02/rental-income-subject-property) | Sep 2, 2026 | | Deferred student loan payment (share of balance) | 1% | [Fannie Mae Selling Guide B3-6-05](https://selling-guide.fanniemae.com/sel/b3-6-05/monthly-debt-obligations) | Aug 5, 2026 | | Card with no reported payment (share of balance) | 5% | [Fannie Mae Selling Guide B3-6-05](https://selling-guide.fanniemae.com/sel/b3-6-05/monthly-debt-obligations) | Aug 5, 2026 | | Installment debts count with more payments left than | 10 | [Fannie Mae Selling Guide B3-6-05](https://selling-guide.fanniemae.com/sel/b3-6-05/monthly-debt-obligations) | Aug 5, 2026 | | Highest DTI in Fannie Mae’s automated system | 50% | [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) | Apr 2, 2025 | ## The formula is simple; the inputs are not Debt-to-income (DTI) is monthly debts divided by gross monthly income. Our [debt-to-income guide](https://mortgage-math-us.com/buying/debt-to-income/) covers the limits for each loan type and the basic math. This post is about the two numbers that go into it, because that is where borrowers and lenders most often disagree. On the income side, a lender counts only what it can document and expects to continue. On the debt side, it adds payments from your credit report using fixed rules — sometimes a payment you don’t actually make. The rules below are Fannie Mae’s, which apply to the many conventional loans sold to it; FHA, VA and USDA have their own versions with the same structure. ## Salary and hourly pay **Salaried income** is the simplest line: annual salary ÷ 12. A $78,000 salary is $6,500 a month, confirmed with a recent pay stub, W-2s and a verbal check with your employer within 10 business days of closing. **Hourly income** is the hourly rate × hours per week × 52 ÷ 12. At $28 an hour and 40 hours a week that is $4,853.33 a month — not $4,480, which is what you get from multiplying a week by four. If your hours vary, expect the lender to average them over your recent history rather than use your best weeks. Income with an end date — a contract, alimony that stops, benefits that run out — must be expected to continue for at least 3 years from the application. Income that ends sooner usually isn’t counted, however large. ## Overtime, bonus and commission Variable pay is where qualifying income most often drops below your actual income. Fannie Mae recommends a 2-year history and accepts a shorter one, but no less than 12 months, when other factors are strong. The lender then compares this year with last year: - **Rising or level:** average year-to-date earnings with last year’s, divided by the months covered. - **Falling:** the income is only usable once it has stabilized, and then only at the lower, recent level. *Overtime counted for a borrower 9 months into the year, by trend* | Trend | Last year | This year so far | Monthly income counted | |---|---:|---:|---| | Rising | $7,200 ($600/mo) | $6,300 ($700/mo) | $642.86 (average of both periods) | | Level | $7,200 ($600/mo) | $5,400 ($600/mo) | $600.00 (average of both periods) | | Falling | $7,200 ($600/mo) | $3,600 ($400/mo) | $0 unless the lender documents that it has stabilized; then year-to-date ÷ months since then ($400.00 if stable all year) | Bonuses follow the same logic: an annual bonus is turned into a monthly figure by dividing by 12, after averaging across the years the lender reviews. ## Self-employment and rental income If you own 25% or more of a business, you are self-employed in the lender’s eyes, and your income comes from tax returns after a cash-flow analysis — usually averaged over 2 years. That process has its own rules and is worked through in our post on [mortgages for the self-employed](https://mortgage-math-us.com/blog/mortgages-for-the-self-employed/). **Rental income** from a property you own but don’t live in is a net figure. When the property isn’t yet on your tax return, Fannie Mae counts 75% of the lease and subtracts the property’s full mortgage payment, taxes, insurance and association dues (PITIA). A positive result is added to income; a negative one is added to your debts. For a condo leased at $1,900 a month with $1,300 of PITIA: $1,900 × 75% = $1,425, minus $1,300, leaves $125 of income. Once the property appears on Schedule E, the lender works from the tax return instead. ## The debt side: what gets added Lenders build the debt column from your credit report and the application, then apply a few fixed rules: - **Installment loans** count when more than 10 payments remain. A loan with fewer left can be dropped unless it significantly affects your ability to pay. - **Credit cards** count at the minimum payment on the report. If no payment is reported, the lender uses 5% of the balance unless you document a lower one. - **Student loans** count even in deferment. If no payment is reported, Fannie Mae uses 1% of the balance or a fully amortizing payment; a documented $0 income-driven payment can be used as $0. FHA uses 0.5% of the balance when the reported payment is zero. - **Leases**, such as a car lease, count however few months remain. ## The full worksheet Say two co-borrowers want a $450,000 home with 10% down. One is salaried, one is paid hourly with regular overtime, and they own a leased condo. > **Worked example: Two-borrower DTI worksheet, $450,000 home, 10% down at today’s 7.24% average** > > | Line | Rule | Monthly | > |---|---|---:| > | Borrower 1 salary | $78,000 ÷ 12 | $6,500.00 | > | Borrower 2 base pay | $28 × 40 hours × 52 ÷ 12 | $4,853.33 | > | Borrower 2 overtime | ($7,200 + $6,300) ÷ 21 months | $642.86 | > | Net rental income | $1,900 × 75% − $1,300 | $125.00 | > | **Qualifying income** | | **$12,121.19** | > | New housing payment | Principal, interest, tax, insurance, PMI | $3,480.07 | > | Car loan (22 payments left) | More than 10 remain | $465.00 | > | Furniture loan (7 payments left) | 10 or fewer remain | $0.00 | > | Card with reported minimum | Minimum payment | $55.00 | > | Card, $2,400 balance, no payment reported | 5% of balance | $120.00 | > | Deferred student loan, $31,000 | 1% of balance | $310.00 | > | **Total monthly debts, including housing** | | **$4,430.07** | > | **Housing ratio** | Housing ÷ income | **28.7%** | > | **Debt-to-income ratio** | All debts ÷ income | **36.5%** | At 36.5%, this household is within the 50% that Fannie Mae’s Desktop Underwriter can approve and above the 36% limit for a manually underwritten loan (within the 45% allowed there with strong credit and reserves). Run the same household in the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?income=145500&debts=950) to see the price at each limit. ## What moves the ratio Small rule changes swing the result by more than most borrowers expect. Each row changes one line of the worksheet and keeps everything else, including the housing payment. *The same household under different treatments* | Change | Qualifying income | Other debts | DTI | |---|---:|---:|---:| | The worksheet as calculated | $12,121 | $950 | **36.5%** | | Overtime falling and not yet stable, so not counted | $11,478 | $950 | **38.6%** | | Student loan payment of $0 documented under an income-driven plan | $12,121 | $640 | **34.0%** | | Student loan at FHA’s 0.5% rule (FHA loan only) | $12,121 | $795 | **35.3%** | | Rental lease of $1,600 instead of $1,900 | $11,996 | $1,050 | **37.8%** | | Car loan paid off before applying | $12,121 | $485 | **32.7%** | Losing the overtime alone moves the ratio to 38.6%. That is why a lender asks about a pay cut, a change of shift or a new job before closing — and why a [pre-approval](https://mortgage-math-us.com/buying/pre-approval/) built on income that later can’t be documented can fall apart. > **Tip: Fix the debt side first** > > The debt lines are the easiest to change before you apply: ask your student loan servicer for a letter showing your actual payment, get card issuers to report a minimum payment, and pay off loans that are close to their last payment. ## Build your own worksheet **How to calculate your DTI the way a lender will** 1. **List each income source separately** — Salary, hourly base pay, overtime, bonus, self-employment, rent and other income, each with the documents that prove it. 2. **Apply the history rules** — Average variable pay over at least 12 months, drop anything that is falling and unstable or ends within 3 years. 3. **Convert everything to monthly gross** — Annual ÷ 12, hourly × hours × 52 ÷ 12, rent at 75% of the lease minus PITIA. 4. **Pull your credit report** — Every account on it is a candidate for the debt column; note which installment loans have 10 or fewer payments left. 5. **Fill the gaps the rules fill** — 5% of card balances with no payment, 1% of deferred student loans. 6. **Add the new housing payment and divide** — Include tax, insurance, mortgage insurance and HOA dues; compare the result with the limits in the [DTI guide](https://mortgage-math-us.com/buying/debt-to-income/). [Open the affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/) ## Frequently asked questions ### Do lenders use gross or net income for DTI? Gross — income before taxes and deductions. That is why a ratio that looks acceptable to a lender can still feel tight on take-home pay. ### How do lenders count overtime for a mortgage? They want at least 12 months of history (2 years is recommended) and average it. If this year is running below last year, the overtime only counts once it has stabilized, and then at the lower level. ### How is hourly income calculated for a mortgage? Hourly rate × hours per week × 52 ÷ 12. At $28 an hour for 40 hours that is $4,853.33 a month. If your hours vary, lenders look at your history rather than a single good week. ### Does rental income count toward qualifying for a mortgage? Yes, as a net figure. For a leased property not yet on your tax return, Fannie Mae counts 75% of the lease and subtracts the full PITIA; a loss is added to your debts instead. ### Why does my lender count a student loan I’m not paying? Deferred loans still count. Fannie Mae uses 1% of the balance or a fully amortizing payment, and FHA uses 0.5% of the balance when the reported payment is zero. On $31,000 that is $310 or $155 a month. ### Can a loan with only a few payments left be left out? Under Fannie Mae’s rules an installment loan with 10 or fewer payments remaining can be excluded unless it significantly affects your ability to pay. Lease payments always count. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Fannie Mae Selling Guide B3-3.8-02](https://selling-guide.fanniemae.com/sel/b3-3.8-02/rental-income-subject-property) — Fannie Mae: share of gross monthly rent counted as net rental income (subject property) (Sep 2, 2026) - [Fannie Mae Selling Guide B3-6-05](https://selling-guide.fanniemae.com/sel/b3-6-05/monthly-debt-obligations) — Fannie Mae: monthly payment counted for a deferred or forbearance student loan, share of balance; Fannie Mae: installment debts count in DTI when more than this many payments remain; Fannie Mae: monthly payment counted for a revolving account with no reported payment, share of balance (Aug 5, 2026) - [HUD Mortgagee Letter 2021-13](https://www.hud.gov/sites/dfiles/OCHCO/documents/2021-13hsgml.pdf) — FHA: monthly payment counted for a student loan reported at $0, share of balance (Jun 17, 2021) - [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) — Fannie Mae maximum DTI, Desktop Underwriter loans; Fannie Mae maximum DTI, manually underwritten loans; Fannie Mae maximum DTI, manual underwriting with strong credit and reserves (Apr 2, 2025) - [Fannie Mae Selling Guide B3-3.3-02](https://selling-guide.fanniemae.com/sel/b3-3.3-02/bonus-commission-overtime-and-tip-income) — Fannie Mae: shortest history for bonus, overtime, commission or tip income (with positive factors); Fannie Mae: recommended history for bonus, overtime, commission or tip income (Mar 4, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Fannie Mae Selling Guide B3-3.1-04](https://selling-guide.fanniemae.com/sel/b3-3.1-04/verbal-verification-employment) — Fannie Mae: employment re-verified no more than this many business days before the note date (Oct 7, 2026) - [Fannie Mae Selling Guide B3-3.1-01](https://selling-guide.fanniemae.com/sel/b3-3.1-01/general-income-information) — Fannie Mae: income with an end date must be expected to continue at least (Oct 7, 2026) - [Fannie Mae Selling Guide B3-3.5-01](https://selling-guide.fanniemae.com/sel/b3-3.5-01/underwriting-factors-and-documentation-self-employed-borrower) — Fannie Mae: ownership share in a business that makes a borrower self-employed; Fannie Mae: history of self-employment earnings generally required (Dec 13, 2023) - [Fannie Mae Selling Guide B3-3.3-02: Bonus, commission, overtime and tip income](https://selling-guide.fanniemae.com/sel/b3-3.3-02/bonus-commission-overtime-and-tip-income) - [Fannie Mae Selling Guide B3-3.8-04: Rental income from non-subject property](https://selling-guide.fanniemae.com/sel/b3-3.8-04/rental-income-non-subject-property) - [Fannie Mae Selling Guide B3-6-05: Monthly debt obligations](https://selling-guide.fanniemae.com/sel/b3-6-05/monthly-debt-obligations) _General information, not financial advice._ --- # How much house can I afford on $100,000 a year? > A $100,000 household with a car loan and student debt: the home price at the 36%, 45% and 50% DTI limits, 5% vs 10% down, and FHA vs conventional. URL: https://mortgage-math-us.com/blog/how-much-house-can-i-afford-on-100k/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer With no other debts, $100,000 a year supports a home of about **$323,000** with 10% down at today’s 7.24% average, keeping housing at Freddie Mac’s 30% guideline. Add a $525 car payment and $60,000 of deferred student loans — counted at $600 a month under Fannie Mae’s rule — and the lender ceiling at a 45% debt-to-income ratio lands near **$339,000**; at 36% it is only $242,000. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | 30-year fixed average used here | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | Fannie Mae manual-underwriting DTI limit | 36% | [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) | Apr 2, 2025 | | Fannie Mae manual limit with strong credit and reserves | 45% | [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) | Apr 2, 2025 | | Fannie Mae automated DTI ceiling | 50% | [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) | Apr 2, 2025 | | Fannie Mae payment for a deferred student loan | 1% | [Fannie Mae Selling Guide B3-6-05](https://selling-guide.fanniemae.com/sel/b3-6-05/monthly-debt-obligations) | Aug 5, 2026 | | FHA payment for a student loan reported at $0 | 0.5% | [HUD Mortgagee Letter 2021-13](https://www.hud.gov/sites/dfiles/OCHCO/documents/2021-13hsgml.pdf) | Jun 17, 2021 | ## A $100,000 household, debts included Say the $100,000 comes from two salaries, $58,000 and $42,000. One partner has a $525 car payment; the other has $60,000 of student loans in deferment, so the credit report shows no payment. Together those debts count as $1,125 a month under Fannie Mae’s rules — 13.5% of gross pay before the house is counted. Lenders measure everything against gross monthly income of $8,333. The table shows how much of it each conventional limit leaves for housing after those debts, and the price that budget buys at 7.24% with property tax at 0.89%, insurance at $4.90 per $1,000 and PMI at the midpoint of Freddie Mac’s range. *Home price for a $100,000 household with $1,125 of monthly debts* | Limit | Total debt allowed | A month | Left for housing | Price, 5% down | Price, 10% down | |---|---:|---:|---:|---:|---:| | Fannie Mae manual underwriting | 36% | $3,000 | $1,875 | $232,000 | **$242,000** | | Fannie Mae manual, strong credit and reserves | 45% | $3,750 | $2,625 | $324,000 | **$339,000** | | Fannie Mae Desktop Underwriter | 50% | $4,167 | $3,042 | $376,000 | **$393,000** | The spread is wide: the same household could be told $242,000 by one lender and $393,000 by another, depending on how the file is underwritten. With no debts, Freddie Mac’s 30% housing guideline alone points to about $323,000 — a price that reaches the state median home value in 23 of 51 states and DC at the national tax rate. Without the debts, the 45% limit would allow about $485,000; the car and student loans take about $146,000 off that. The [debt-to-income guide](https://mortgage-math-us.com/buying/debt-to-income/) walks through how the ratio itself is calculated. ## How the student loans are counted matters more than the balance A deferred loan has no payment today, but lenders still count one, and the rule depends on the program. Fannie Mae uses 1% of the balance (or a fully amortizing payment from the loan terms); FHA uses 0.5% of the balance when the reported payment is zero. A documented income-driven payment can replace the percentage rule. *Price for the household under different student-loan treatments (with the $525 car payment)* | Student loans counted as | A month | Loan and limit | Left for housing | Price | |---|---:|---|---:|---:| | Deferred, Fannie Mae rule (1% of the balance) | $600 | Conventional, 45% DTI, 10% down | $2,625 | $339,000 | | Reported at $0, FHA rule (0.5% of the balance) | $300 | FHA, 31%/43% manual limits | $2,583 | $312,000 | | Income-driven plan, documented payment of $180 | $180 | Conventional, 45% DTI, 10% down | $3,045 | $394,000 | | No student loans | $0 | Conventional, 45% DTI, 10% down | $3,225 | $417,000 | Getting a documented income-driven payment of $180 on file instead of the 1% rule adds about $55,000 of buying power at the conventional limit. If the loans are deferred only because the borrower is between plans, it can pay to enroll and get the servicer’s payment letter before applying. Under FHA’s manual limits the 31% housing cap binds before the total-debt limit does, so for this household the student loans don’t lower the FHA price at all — the cap does. ## The car payment: pay it down, pay it off or leave it A $525 car payment removes about $68,000 of price at today’s rate. Three ways to handle it: - **Leave it.** If the ratio still fits with room to spare, keeping cash for the down payment and reserves is often the better use of money. - **Pay it down to 10 or fewer payments.** Fannie Mae can leave an installment loan out of the ratio at that point, though a lender may still count a large payment that affects your ability to pay. - **Pay it off.** This frees the full $525 a month, but only helps if the cash isn’t needed for closing. > **Watch out: Don’t add debt during the loan process** > > A new car loan or store card between pre-approval and closing changes your ratio and can change the approval. Wait until after closing for big purchases. ## 5% or 10% down, conventional or FHA At this income, the household could choose between a smaller down payment with mortgage insurance or a larger one. Here is the same $350,000 home three ways, with the debt-to-income ratio each one produces for this household: > **Worked example: A $350,000 home at 7.24%, three ways** > > | | Conventional, 5% down | Conventional, 10% down | FHA, 3.5% down | > |---|---:|---:|---:| > | Down payment | $17,500 | $35,000 | $12,250 | > | Loan amount | $332,500 | $315,000 | $343,661 | > | Principal and interest | $2,266 | $2,147 | $2,342 | > | Mortgage insurance | $166 | $158 | $158 | > | Property tax and insurance | $403 | $403 | $403 | > | **Monthly housing cost** | **$2,835** | **$2,707** | **$2,902** | > | Student loans counted | $600 | $600 | $300 | > | Debt-to-income ratio | 47.5% | 46.0% | 44.7% | > | Approvable under | Desktop Underwriter only (50%) | Desktop Underwriter only (50%) | Above FHA’s 43% manual limit | Going from 5% to 10% down costs $17,500 more in cash and saves $128 a month. It also moves the date PMI ends automatically — when the balance is scheduled to reach 78% of the price — from year 13 to year 10 of the loan. Either way, budget closing costs of $7,000–$17,500 (2%–5% of the price) on top, and keep reserves after closing; a bigger down payment that empties your savings is not a safer loan. FHA shows the lower debt-to-income ratio even though its monthly cost is close to the 5% conventional loan, because it counts the deferred student loans at half the rate Fannie Mae does. FHA’s premium of 0.55% a year stays for the life of the loan with less than 10% down, while conventional PMI comes off on the schedule above — so over many years conventional usually wins if the ratios work. The [down payment guide](https://mortgage-math-us.com/buying/down-payment/) compares more down-payment levels. ## One income or two on the application Couples sometimes ask whether to leave the partner with debts off the loan. Every borrower’s income counts, but so does every borrower’s debt. If only the $58,000 earner with the car loan applied, the budget would be the lower of 30% of that income and 45% minus the car payment: about $1,450 a month, or a $187,000 home. Applying together, with both debts counted and housing held to the 30% guideline, supports about $323,000. In this example, applying together is the stronger application, even with the student loans counted. The answer flips when one partner’s debts are large relative to their income, or when their credit score is low enough to raise the rate or mortgage insurance for both. A loan officer can price the file both ways before you commit. ## Steps for a two-income application **How to get the most accurate approval on $100,000** 1. **Pull both credit reports** — Check every debt each of you carries and dispute errors before a lender sees them. 2. **Get student-loan payment letters** — If either loan is deferred or on an income-driven plan, ask the servicer for a letter showing the payment that will apply. 3. **Decide what to do with the car loan** — Run the ratio with the car payment, with it paid down to 10 payments and with it gone. 4. **Choose the down payment** — Compare 5% and 10% down on monthly cost, cash left for reserves and how soon PMI comes off. 5. **Ask lenders to price conventional and FHA** — The student-loan rules differ, so the same household can qualify for different amounts. 6. **Set your own ceiling** — Pick a payment that works on take-home pay, then get pre-approved at that price, not the maximum. [Open the affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/) Try the [affordability calculator with this household’s numbers](https://mortgage-math-us.com/tools/affordability-calculator/?income=100000&debts=1125&down=10) and change the debts to match yours. ## Where this leaves a $100,000 household Plan around $323,000 if you carry no other debts, and expect lender approvals between $242,000 and $393,000 with a car loan and deferred student loans like these. The two biggest levers are how the student loans are documented and whether the car loan stays. For a smaller budget, see [what $75,000 buys](https://mortgage-math-us.com/blog/how-much-house-can-i-afford-on-75k/); for higher-cost markets and the jump to 20% down, see [what $150,000 buys](https://mortgage-math-us.com/blog/how-much-house-can-i-afford-on-150k/). ## Frequently asked questions ### Can I afford a $350,000 house on $100,000 a year? With 10% down at today’s 7.24% average, a $350,000 home costs about $2,707 a month with taxes, insurance and PMI — 32.5% of gross pay. That is above Freddie Mac’s 30% guideline; with $1,125 of other debts the total ratio is 46.0%. ### How do lenders count deferred student loans? Fannie Mae uses 1% of the balance or a fully amortizing payment from the loan terms. FHA uses 0.5% of the outstanding balance when the reported payment is zero. A documented income-driven payment can be used instead in many cases. ### What DTI do I need for a conventional loan? Fannie Mae allows up to 36% on manually underwritten loans, up to 45% with strong credit and reserves, and up to 50% through Desktop Underwriter. Approval at the top end depends on the rest of the file. ### Is it better to put 5% or 10% down on $100,000 a year? On a $350,000 home, 10% down needs $17,500 more cash and saves about $128 a month in principal, interest and PMI. If the extra cash would empty your reserves, 5% down and earlier PMI removal through extra payments can be the safer route. ### How much cash should a $100,000 household have before buying? On a $350,000 home, 5% down is $17,500 and 10% down $35,000, plus closing costs of about $7,000–$17,500. Keep an emergency fund after closing as well — the CFPB suggests 3–6 months of expenses. ### Should both partners be on the mortgage? Usually, if both incomes are needed to qualify. Each borrower’s income and debts are counted, so a partner with large debts or a low score can reduce the approval. Ask a lender to run it both ways. ### Does a car payment stop me from getting a mortgage? No, but it reduces the price. At today’s rate, $525 a month is worth about $68,000 of home price. Fannie Mae can leave out an installment loan with 10 or fewer payments left. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) — Fannie Mae maximum DTI, manually underwritten loans; Fannie Mae maximum DTI, manual underwriting with strong credit and reserves; Fannie Mae maximum DTI, Desktop Underwriter loans (Apr 2, 2025) - [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) — FHA manual underwriting housing ratio (no compensating factors); FHA manual underwriting debt-to-income ratio (no compensating factors) (Oct 8, 2026) - [Fannie Mae Selling Guide B3-6-05](https://selling-guide.fanniemae.com/sel/b3-6-05/monthly-debt-obligations) — Fannie Mae: monthly payment counted for a deferred or forbearance student loan, share of balance; Fannie Mae: installment debts count in DTI when more than this many payments remain (Aug 5, 2026) - [HUD Mortgagee Letter 2021-13](https://www.hud.gov/sites/dfiles/OCHCO/documents/2021-13hsgml.pdf) — FHA: monthly payment counted for a student loan reported at $0, share of balance (Jun 17, 2021) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment; Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA upfront mortgage insurance premium; FHA annual MIP, 30-year loan, more than 95% LTV (Feb 22, 2023) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) — PMI ends automatically at this share of original value (Oct 28, 2026) - [CFPB: What is a debt-to-income ratio?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-debt-to-income-ratio-en-1791/) - [CFPB: Decide how much you want to spend on a home](https://www.consumerfinance.gov/owning-a-home/prepare/decide-how-much-you-want-spend/) - [Fannie Mae Selling Guide B3-6-03: Monthly housing expense](https://selling-guide.fanniemae.com/sel/b3-6-03/monthly-housing-expense-subject-property) _General information, not financial advice._ --- # How much house can I afford on $150,000 a year? > On $150,000 a year, see the price 20% down buys at today’s rate, which big-city medians it reaches, and when a home needs a jumbo loan. URL: https://mortgage-math-us.com/blog/how-much-house-can-i-afford-on-150k/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer On $150,000 a year, a housing payment at Freddie Mac’s 30% guideline is $3,750 a month — enough for a home of about **$568,000** with 20% down and no PMI at today’s 7.24% average. That reaches the median home value in 11 of the 20 large cities we track; stretching to a 45% debt ratio reaches 17. A jumbo loan starts only above $1,040,938 with 20% down, beyond what this income supports on its own. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | 30-year fixed average used here | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | Freddie Mac housing-cost guideline | 30% | [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) | Jan 22, 2026 | | Freddie Mac total-debt guideline | 45% | [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) | Jan 22, 2026 | | 2026 baseline conforming loan limit | $832,750 | [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) | 2026 limit | | 2026 high-cost area ceiling | $1,249,125 | [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) | 2026 limit | | You can ask to cancel PMI at | 80% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) | Oct 28, 2026 | ## What $150,000 buys with 20% down Gross monthly income at $150,000 is $12,500. With 20% down there is no PMI, so every dollar of the budget goes to principal, interest, property tax and insurance. The table uses today’s 7.24% average for a 30-year fixed loan, property tax at the national ratio of 0.89% and insurance at $4.90 per $1,000, and assumes no other debts. *Home price on $150,000 a year with 20% down* | Budget rule | Share of gross pay | Monthly housing budget | Home price | 20% down payment | Loan amount | |---|---:|---:|---:|---:|---:| | Freddie Mac housing guideline | 30% | $3,750 | **$568,000** | $113,600 | $454,400 | | Fannie Mae manual-underwriting DTI | 36% | $4,500 | **$682,000** | $136,400 | $545,600 | | Freddie Mac total-debt guideline | 45% | $5,625 | **$852,000** | $170,400 | $681,600 | | Fannie Mae automated maximum | 50% | $6,250 | **$947,000** | $189,400 | $757,600 | The first row is the comfortable figure. The others are lender limits on *all* debts, so a car payment or student loans come straight out of them — the [$100,000 post](https://mortgage-math-us.com/blog/how-much-house-can-i-afford-on-100k/) shows how much that costs. Notice the cash column: at this income, saving the down payment is usually harder than qualifying for the payment. And every loan in the last column stays under the $832,750 [conforming loan limit](https://mortgage-math-us.com/glossary/conforming-loan-limit/), so none of these is a [jumbo loan](https://mortgage-math-us.com/loan-types/jumbo-loans/). ## Which big-city medians $150,000 reaches The national figures hide how much prices vary between cities. The table re-runs the 30% budget with 20% down using each city’s own median home value and property-tax ratio from the Census Bureau’s American Community Survey. “Stretch” means the city’s median fits only if you push total debt to 45% with no other debts. *$150,000 vs the median home value in 20 large cities (20% down, 30% budget)* | City | Median home value | Effective property tax | Price you can afford | Reaches the median? | 20% down on the median | |---|---:|---:|---:|---|---:| | [San Diego](https://mortgage-math-us.com/location/san-diego-ca/) | $980,700 | 0.62% | $588,000 | No | $196,140 | | [Seattle](https://mortgage-math-us.com/location/seattle-wa/) | $950,800 | 0.79% | $575,000 | No | $190,160 | | [Los Angeles](https://mortgage-math-us.com/location/los-angeles-ca/) | $947,900 | 0.65% | $586,000 | No | $189,580 | | [New York](https://mortgage-math-us.com/location/new-york-ny/) | $778,600 | 0.86% | $570,000 | Stretch | $155,720 | | [Washington](https://mortgage-math-us.com/location/washington-dc/) | $733,400 | 0.63% | $587,000 | Stretch | $146,680 | | [Boston](https://mortgage-math-us.com/location/boston-ma/) | $722,800 | 0.62% | $588,000 | Stretch | $144,560 | | [Denver](https://mortgage-math-us.com/location/denver-co/) | $636,400 | 0.48% | $599,000 | Stretch | $127,280 | | [Miami](https://mortgage-math-us.com/location/miami-fl/) | $598,200 | 0.86% | $570,000 | Stretch | $119,640 | | [Austin](https://mortgage-math-us.com/location/austin-tx/) | $571,000 | 1.31% | $539,000 | Stretch | $114,200 | | [Tampa](https://mortgage-math-us.com/location/tampa-fl/) | $494,400 | 0.82% | $573,000 | Yes | $98,880 | | [Atlanta](https://mortgage-math-us.com/location/atlanta-ga/) | $462,200 | 1.01% | $560,000 | Yes | $92,440 | | [Las Vegas](https://mortgage-math-us.com/location/las-vegas-nv/) | $458,300 | 0.49% | $598,000 | Yes | $91,660 | | [Phoenix](https://mortgage-math-us.com/location/phoenix-az/) | $454,900 | 0.4% | $605,000 | Yes | $90,980 | | [Raleigh](https://mortgage-math-us.com/location/raleigh-nc/) | $450,300 | 0.72% | $580,000 | Yes | $90,060 | | [Nashville](https://mortgage-math-us.com/location/nashville-tn/) | $438,800 | 0.56% | $593,000 | Yes | $87,760 | | [Charlotte](https://mortgage-math-us.com/location/charlotte-nc/) | $431,900 | 0.69% | $583,000 | Yes | $86,380 | | [Chicago](https://mortgage-math-us.com/location/chicago-il/) | $341,200 | 1.51% | $527,000 | Yes | $68,240 | | [Dallas](https://mortgage-math-us.com/location/dallas-tx/) | $340,400 | 1.45% | $531,000 | Yes | $68,080 | | [Houston](https://mortgage-math-us.com/location/houston-tx/) | $301,200 | 1.43% | $532,000 | Yes | $60,240 | | [Columbus](https://mortgage-math-us.com/location/columbus-oh/) | $279,900 | 1.27% | $542,000 | Yes | $55,980 | The comfortable budget reaches the median in 11 of 20 cities, and the stretch budget in 17. In the most expensive market, [San Diego](https://mortgage-math-us.com/location/san-diego-ca/), the median is $980,700, and 20% down alone would be $196,140. Property taxes shift the answer too: the cities with the highest tax ratios on the list — Chicago, Dallas and Houston — buy noticeably less house on the same payment than low-tax cities do. Each city page has local taxes, insurance and assistance programs. ## Buying the median home in New York New York is the most expensive city on the list whose median fits at the 45% stretch level. Here is what a home at its median value of $778,600 costs each month, with the city’s property-tax ratio of 0.86%: > **Worked example: A $778,600 home in New York at 7.24%** > > | | 20% down | 10% down | > |---|---:|---:| > | Down payment | $155,720 | $77,860 | > | Principal and interest | $4,245 | $4,776 | > | Property tax | $558 | $558 | > | Homeowners insurance | $318 | $318 | > | PMI | — | $350 | > | **Monthly total** | **$5,121** | **$6,002** | > | Share of gross pay | 41.0% | 48.0% | With 20% down the payment takes 41.0% of gross pay, which a lender can approve with few other debts but which leaves less room than the 30% guideline suggests. Closing costs of 2%–5% add $15,600–$38,900 to the cash you need. See the [New York page](https://mortgage-math-us.com/location/new-york-ny/) for local insurance and tax details. ## If 20% down is out of reach Putting 20% down avoids PMI, but it is not a requirement. On the same $3,750 budget, a smaller down payment buys less house because part of the payment goes to PMI and interest on a larger loan: *Price on the $3,750 budget by down payment* | Down payment | Home price | Cash for the down payment | PMI a month | |---|---:|---:|---:| | 5% | $463,000 | $23,150 | $220 | | 10% | $485,000 | $48,500 | $218 | | 15% | $509,000 | $76,350 | $216 | | 20% | $568,000 | $113,600 | None | With 10% down, the price is $83,000 less than with 20% down, and you need far less cash up front. PMI can be cancelled on request once the balance reaches 80% of the original value and ends automatically at 78% — around year 10 on the regular schedule, sooner with extra payments. The [PMI guide](https://mortgage-math-us.com/buying/pmi/) covers the cancellation rules. Waiting years to save 20% can cost more than PMI if prices or rents rise meanwhile, so compare the two honestly. If part of the down payment will come from a relative, the lender will want a gift letter and a paper trail for the funds, and the money has to be in place before closing — not promised after it. ## Where the conforming loan limit sits Loans up to the conforming limit can be bought by Fannie Mae and Freddie Mac; anything larger is a jumbo loan with its own, usually stricter, rules. For 2026 the baseline limit for a one-unit home is $832,750, so with 20% down a jumbo starts above a price of $1,040,938, and with 10% down above $925,278. Even at Fannie Mae’s 50% ceiling with no other debts, $150,000 supports about $947,000 with 20% down — a loan of $757,600, still $75,150 under the baseline limit. For most $150,000 households, a jumbo loan only enters the picture with a large down payment from savings or the sale of another home. High-cost counties have higher limits, up to $1,249,125. Among the cities above, the limit is $1,249,125 in Los Angeles County, $1,104,000 in San Diego County and $862,500 in Denver County, so buyers there can borrow more before crossing into jumbo territory. The [jumbo loans guide](https://mortgage-math-us.com/loan-types/jumbo-loans/) explains how jumbo underwriting differs. ## The income a jumbo-size home takes Working backwards shows how far the jumbo threshold is from a $150,000 salary. The table prices a home whose loan sits exactly at the limit and asks what income would carry its payment at today’s rate: *Income needed for a home at the conforming limit (national tax and insurance ratios)* | Home | Price | Monthly payment | Income at the 30% guideline | Income at a 45% DTI, no other debts | |---|---:|---:|---:|---:| | Loan at the baseline limit, 20% down | $1,040,938 | $6,872 | $275,000 | $183,000 | | Loan at the baseline limit, 10% down | $925,278 | $7,156 | $286,000 | $191,000 | | Loan at the high-cost ceiling, 20% down | $1,561,406 | $10,308 | $412,000 | $275,000 | At this income, then, the conforming limit is a ceiling you are unlikely to reach — the binding constraints are the down payment and the debt ratio, not the loan size. ## Planning a purchase on $150,000 **How to plan a high-cost-market purchase on $150,000** 1. **Set the payment, not the price** — Start from $3,750 a month at the 30% guideline and subtract any other debts you want to keep paying comfortably. 2. **Check the local numbers** — Swap in your city’s property-tax ratio, insurance quotes and any HOA dues; they move the price by tens of thousands. 3. **Decide on the down payment** — Weigh 20% down and no PMI against 10% down, a smaller cash outlay and PMI that comes off later. 4. **Know your county’s conforming limit** — If the loan you need is near it, a slightly larger down payment can keep you in a conforming loan. 5. **Get pre-approved at your number** — Ask for a pre-approval at the price you chose rather than the lender’s maximum. [Open the affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/) Open the [affordability calculator with $150,000 and 20% down](https://mortgage-math-us.com/tools/affordability-calculator/?income=150000&down=20) to try your own taxes and debts. For smaller incomes, see [what $75,000 buys](https://mortgage-math-us.com/blog/how-much-house-can-i-afford-on-75k/). ## Frequently asked questions ### Can I afford a $700,000 house on $150,000 a year? With 20% down at today’s 7.24% average, a $700,000 home costs about $4,621 a month with national-average taxes and insurance — 37.0% of gross pay. That is above Freddie Mac’s 30% guideline, but within the debt-ratio limits lenders can approve if you have few other debts. ### Do I need 20% down on $150,000 a year? No. Conventional loans allow as little as 3% down for eligible buyers. With less than 20% down you pay PMI, which you can ask to remove at 80% of the original value. ### When does my loan become a jumbo loan? When it exceeds the conforming limit for your county: $832,750 for a one-unit home in most of the country in 2026, and up to $1,249,125 in high-cost areas. With 20% down, that is a price above $1,040,938 at the baseline limit. ### Is $150,000 enough to buy in an expensive city? It depends on the city. At the 30% guideline with 20% down, $150,000 reaches the median home value in 11 of the 20 large cities in our table; the most expensive medians need a larger income, savings for a bigger down payment, or a smaller home than the median. ### How much should I save on a $150,000 salary? For a $568,000 home with 20% down, plan for $113,600 plus closing costs of $11,400–$28,400 (2%–5% per the CFPB), and keep reserves after closing. ### Should I take a 15-year mortgage on $150,000 a year? It costs much more each month. On the $454,400 loan for a $568,000 home, principal and interest would be $3,983 a month at the 15-year average of 6.6%, against $3,097 on a 30-year loan at 7.24%. The higher payment means a smaller home on the same budget, in exchange for far less interest over the life of the loan. ### Does a higher income get a better mortgage rate? Not directly. Rates depend mainly on credit score, down payment, loan type and loan size. Income affects how much you can borrow, and a larger down payment can lower both the rate and the mortgage insurance. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average; 15-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income; Freddie Mac guidance: total debt payments below this share of gross income (Jan 22, 2026) - [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) — Fannie Mae maximum DTI, manually underwritten loans; Fannie Mae maximum DTI, Desktop Underwriter loans (Apr 2, 2025) - [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) — 2026 baseline conforming loan limit (one-unit); 2026 high-cost area conforming ceiling (one-unit) (2026 limit) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=160XX00US3651000) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=160XX00US3651000) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price); Minimum down payment on some conventional loans (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) — Ask your servicer to cancel PMI at this share of original value; PMI ends automatically at this share of original value (Oct 28, 2026) - [FHFA: Conforming Loan Limit Values](https://www.fhfa.gov/data/conforming-loan-limit) — Conforming loan limit, Los Angeles County (one unit); Conforming loan limit, San Diego County (one unit); Conforming loan limit, Denver County (one unit) (2026) - [CFPB: Understand the different kinds of loans available](https://www.consumerfinance.gov/owning-a-home/explore/understand-the-different-kinds-of-loans-available/) - [CFPB: Decide how much you want to spend on a home](https://www.consumerfinance.gov/owning-a-home/prepare/decide-how-much-you-want-spend/) - [CFPB: Explore interest rates](https://www.consumerfinance.gov/owning-a-home/explore-rates/) _General information, not financial advice._ --- # How much house can I afford on $50,000 a year? > On a $50,000 salary, see the home price FHA, 3%-down conventional, USDA and VA loans support at today’s rate, and how debts and assistance change it. URL: https://mortgage-math-us.com/blog/how-much-house-can-i-afford-on-50k/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer On $50,000 a year — $4,167 a month before tax — keeping housing at Freddie Mac’s 30% guideline gives a payment budget of about $1,250. At today’s 7.24% average that buys a home of roughly **$148,000–$151,000** with an FHA or 3%-down conventional loan, once taxes, insurance and mortgage insurance are counted. Every $100 of monthly car or card payments you carry takes about $12,000 off that price. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | 30-year fixed average used here | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | Freddie Mac housing-cost guideline | 30% | [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) | Jan 22, 2026 | | FHA manual underwriting DTI limit | 43% | [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) | Oct 8, 2026 | | FHA minimum down payment | 3.5% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | | Lowest conventional down payment | 3% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | | FHA annual MIP with less than 5% down | 0.55% | [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) | Feb 22, 2023 | ## What $50,000 a year buys, loan by loan With a $1,250 monthly budget, the loan program decides how much of it goes to the house and how much to fees and insurance. The table holds the budget fixed and changes only the loan: 30-year fixed at today’s 7.24% average, property tax at the national ratio of 0.89% and insurance at $4.90 per $1,000. For 3% down we use the top of Freddie Mac’s typical PMI range ($70 per $100k a month), because PMI costs more the smaller your down payment; for 10% down, the midpoint. FHA, USDA and VA upfront fees are added to the loan. *Home price on $50,000 a year at a $1,250 housing budget, no other debts* | Loan | Cash for the down payment | Monthly mortgage insurance | Home price | |---|---:|---:|---:| | Conventional, 3% down | $4,440 | $100 PMI | **$148,000** | | FHA, 3.5% down | $5,285 | $68 MIP | **$151,000** | | Conventional, 10% down | $16,200 | $73 PMI | $162,000 | | USDA, 0% down (eligible rural areas) | $0 | $44 annual fee | $150,000 | | VA, 0% down (eligible service members and veterans) | $0 | None | $154,000 | The low-down-payment options land within a few thousand dollars of each other, so on this income the choice is less about price and more about cash, credit score and what happens later. USDA and VA loans buy the most because there is no down payment to save and, for VA, no monthly insurance — but only if you qualify. For the other loans, [state and local buyer programs](https://mortgage-math-us.com/first-time-buyers/programs/) can cover much of the cash, as shown further down. USDA also sets its own housing ratio of 29% of repayment income, a little below the 30% guideline used here. > $148,000–$151,000 > The home price a $50,000 income supports with an FHA or 3%-down conventional loan at today’s average rate. ## Why a car payment costs more on $50,000 Lenders cap your total debt-to-income ratio, so every monthly debt is subtracted from the room left for housing. The same $350 car payment is 8.4% of gross pay at $50,000 but only 4.2% at $100,000 — on a smaller income it eats a bigger slice of the budget, and at today’s rate it removes about $41,000 of purchase price. The [debt-to-income guide](https://mortgage-math-us.com/buying/debt-to-income/) explains which debts count. *Housing room and price on $50,000 with other monthly debts* | Other debts a month | Share of gross pay | Room at 36% DTI (conventional) | Price, 3% down | Room under FHA’s 31%/43% manual limits | Price, FHA | |---|---:|---:|---:|---:|---:| | $0 | 0.0% | $1,500 | $178,000 | $1,292 | $156,000 | | $150 | 3.6% | $1,350 | $160,000 | $1,292 | $156,000 | | $300 | 7.2% | $1,200 | $142,000 | $1,292 | $156,000 | | $450 | 10.8% | $1,050 | $124,000 | $1,292 | $156,000 | | $600 | 14.4% | $900 | $107,000 | $1,192 | $144,000 | FHA’s manual limits use two ratios. The 31% housing cap binds first, so small debts don’t change the FHA price at all; only once your other debts pass about $500 a month does the 43% total limit start to shrink the budget. Fannie Mae’s 36% manual limit has no separate housing cap, so each dollar of debt counts from the first. Automated underwriting can approve higher ratios on both programs, but at $50,000 the higher figure usually means a payment that leaves little for savings. > **Tip: Paying off a small balance can raise your budget** > > Fannie Mae leaves an installment loan out of the ratio when 10 or fewer payments remain. If a car or personal loan is close to that, ask a lender whether paying it down first changes your approval. ## FHA or 3% down conventional? Both programs let you buy with very little down, and both add mortgage insurance. The [FHA loan guide](https://mortgage-math-us.com/loan-types/fha-loans/) and the [conventional loan guide](https://mortgage-math-us.com/loan-types/conventional-loans/) cover the rules; here is what each costs on the same home. > **Worked example: FHA vs conventional on a $150,000 home at 7.24%** > > | | Conventional, 3% down | FHA, 3.5% down | > |---|---:|---:| > | Down payment | $4,500 | $5,250 | > | Loan amount | $145,500 | $147,283 (with the 1.75% upfront premium) | > | Principal and interest | $992 | $1,004 | > | Mortgage insurance | $102 | $68 | > | Property tax and insurance | $173 | $173 | > | **Monthly total** | **$1,266** | **$1,244** | FHA comes out about $22 a month cheaper here at the start, mainly because its premium is lower than PMI at the top of Freddie Mac’s range. The bigger difference comes later. PMI on a conventional loan ends automatically when the balance is scheduled to reach 78% of the original value, while FHA’s annual premium stays for the life of the loan unless you start with at least 10% down, in which case it ends after 11 years. FHA is often the easier approval with a modest score: it allows 3.5% down from a score of 580, while conventional PMI gets expensive at lower scores. ## Closing the cash gap with assistance On this budget the down payment is rarely the biggest hurdle — closing costs are. On a $150,000 home, 3% down plus closing costs of 2%–5% comes to $7,500–$12,000 before moving costs and an emergency cushion. State housing finance agencies run down-payment assistance programs aimed at exactly this gap, usually as a forgivable or deferred second loan. A few examples from states where home prices are lower: *State down-payment assistance on a $150,000 home (examples)* | State | Assistance from the state agency | Up to, on a $150,000 home | Covers 3% down plus low-end closing costs? | |---|---|---:|---| | West Virginia | $12,000 | $12,000 | Yes | | Mississippi | $10,000 | $10,000 | Yes | | Arkansas | $15,000 | $15,000 | Yes | | Kentucky | $12,500 | $12,500 | Yes | | Alabama | 4% of the price, up to $10,000 | $6,000 | Part | | Indiana | 5% of the price | $7,500 | Yes | | Ohio | 3.5% of the price (government-backed loans) | $5,250 | Part | At this price, 5 of these 7 programs would cover the low-end cash need on its own. Each program has income and price limits, credit-score minimums and repayment terms that differ from state to state, and many require a homebuyer education course. The [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/) shows how they stack with FHA and conventional loans, and the [down-payment grants guide](https://mortgage-math-us.com/first-time-buyers/grants/) explains what happens to the second loan when you sell or refinance. ## How far $50,000 goes in the lowest-cost states Home values and property taxes vary more than incomes do. The table runs the FHA budget again with each state’s own property-tax ratio from the Census Bureau and compares the price with the state’s median home value. It lists the states where $50,000 comes closest. *FHA price on $50,000 vs the state median home value (30% budget, 3.5% down)* | State | Effective property tax | Price you can afford | State median home value | Price as a share of the median | |---|---:|---:|---:|---:| | [West Virginia](https://mortgage-math-us.com/location/west-virginia/) | 0.52% | $157,000 | $170,800 | 92% | | [Mississippi](https://mortgage-math-us.com/location/mississippi/) | 0.65% | $154,000 | $186,500 | 83% | | [Arkansas](https://mortgage-math-us.com/location/arkansas/) | 0.52% | $157,000 | $215,600 | 73% | | [Louisiana](https://mortgage-math-us.com/location/louisiana/) | 0.53% | $156,000 | $223,200 | 70% | | [Oklahoma](https://mortgage-math-us.com/location/oklahoma/) | 0.75% | $153,000 | $222,100 | 69% | | [Alabama](https://mortgage-math-us.com/location/alabama/) | 0.38% | $159,000 | $233,300 | 68% | | [Kentucky](https://mortgage-math-us.com/location/kentucky/) | 0.71% | $154,000 | $226,000 | 68% | At the comfortable budget, $50,000 does not reach the state median home value anywhere. It comes closest in West Virginia, where it reaches 92% of the median, and falls furthest short in Hawaii, at 18%. The median covers every owner-occupied home, though, not just starter homes, so smaller or older homes below it are where most $50,000 buyers shop. In a low-tax state, the budget also stretches a little further, because less of each payment goes to the county. ## A plan for buying on $50,000 **How to buy a home on a $50,000 income** 1. **Check your ratios first** — Add your monthly debts to a target housing payment of $1,250 and divide by $4,167. Keep the total near 36% if you can. 2. **Pick the loan that fits your cash and credit** — Compare FHA and a 3%-down conventional loan on full monthly cost, and check USDA eligibility if you are buying outside a city. 3. **Look up your state agency’s programs** — Down-payment assistance usually has to be arranged with a participating lender before you go under contract. 4. **Take a homebuyer education course** — Many assistance programs require it, and Fannie Mae requires it above 95% loan-to-value when every borrower is a first-time buyer. 5. **Get pre-approved at the price you planned** — Lenders may approve more than your budget; the pre-approval letter should match the payment you chose, not the maximum. 6. **Compare Loan Estimates** — Ask at least two or three lenders for estimates on the same day and compare the rate, the fees and the mortgage insurance. [Open the affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/) The [affordability calculator with $50,000 filled in](https://mortgage-math-us.com/tools/affordability-calculator/?income=50000&down=3.5) lets you add your own debts, taxes and HOA dues. ## How $50,000 compares with higher incomes The math scales almost in a straight line with income: double the pay and you roughly double the price, if debts stay the same. *Comfortable home price by income (30% housing budget, today’s average rate)* | Income | Monthly housing budget | FHA, 3.5% down | Conventional, 10% down | |---|---:|---:|---:| | $50,000 (this post) | $1,250 | $151,000 | $162,000 | | [$75,000](https://mortgage-math-us.com/blog/how-much-house-can-i-afford-on-75k/) | $1,875 | $226,000 | $242,000 | | [$100,000](https://mortgage-math-us.com/blog/how-much-house-can-i-afford-on-100k/) | $2,500 | $302,000 | $323,000 | | [$150,000](https://mortgage-math-us.com/blog/how-much-house-can-i-afford-on-150k/) | $3,750 | $452,000 | $485,000 | At higher incomes the questions shift — from assistance and mortgage insurance to the size of the down payment, the conforming loan limit and high-cost markets. Each post above runs the same math for its income with its own set of trade-offs. ## Frequently asked questions ### Can I buy a house on $50,000 a year with no down payment? Yes, if you qualify for a VA loan (service members, veterans and some surviving spouses) or a USDA loan (eligible rural and suburban areas, with an income limit of 115% of the area median). Otherwise FHA needs 3.5% down and some conventional loans 3%, and state down-payment assistance can cover part or all of that. ### Can I afford a $200,000 house on $50,000 a year? At today’s average rate of 7.24% with 3.5% down on an FHA loan, a $200,000 home costs about $1,658 a month with taxes and insurance — 39.8% of gross monthly pay, compared with Freddie Mac’s 30% guideline. It is above FHA’s 31% manual housing limit; a lower-tax area, a lower rate or a larger down payment would bring it closer. ### How much do I need saved to buy on $50,000? On a $150,000 home, plan for $7,500–$12,000 for 3% down and closing costs, which the CFPB puts at 2%–5% of the price. Keep an emergency fund on top — the CFPB suggests 3–6 months of expenses. ### What credit score do I need on a $50,000 income? Income doesn’t change the score rules. FHA allows 3.5% down from a score of 580; Fannie Mae’s minimum for a manually underwritten fixed-rate loan is 620. State assistance programs often set their own minimums, so check before you apply. ### Does a $50,000 income qualify for HomeReady or Home Possible? It may. Fannie Mae’s HomeReady caps income at 80% of the area median income, and Freddie Mac’s Home Possible at 80%, so $50,000 falls under the limit in many areas. Both allow 3% down; the limit for your address is on Fannie Mae’s and Freddie Mac’s lookup tools. ### Should I use gross or take-home pay to budget? Lenders use gross pay. Your own budget runs on take-home pay, and on $50,000 the difference is large. If $1,250 a month feels tight after taxes, savings and transport, aim for a smaller payment than the guideline. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) — Fannie Mae maximum DTI, manually underwritten loans (Apr 2, 2025) - [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) — FHA manual underwriting housing ratio (no compensating factors); FHA manual underwriting debt-to-income ratio (no compensating factors); FHA minimum score for maximum financing (Oct 8, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum down payment on some conventional loans; Minimum FHA down payment; Typical closing costs, low end (share of purchase price) (Oct 28, 2026) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA upfront mortgage insurance premium; FHA annual MIP, 30-year loan, more than 95% LTV; FHA annual MIP lasts this long when the starting LTV is 90% or less (Feb 22, 2023) - [USDA Rural Development](https://www.rd.usda.gov/media/file/download/usda-rd-sfh-guarantee-loan-program-101-jan-2026.pdf) — USDA guaranteed loan upfront guarantee fee; USDA guaranteed loan annual fee (FY2026) - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) — VA funding fee, first use, less than 5% down (Apr 7, 2023) - [West Virginia Housing Development Fund: Low Down Home Loan increase](https://www.wvhdf.com/wp-content/uploads/2026/01/Low-Down-Home-Loan-Increase_WVHDF_1.21.2026.pdf) — WVHDF Low Down Home Loan (down payment and closing-cost assistance), up to (Jan 22, 2026) - [Mississippi Home Corporation: MHC Mortgage Products](https://www.mshomecorp.com/mhc-programs/) — MHC Trusty10 second mortgage (Oct 29, 2026) - [Arkansas Development Finance Authority: Down Payment Assistance Program](https://adfa.arkansas.gov/programs/homeloans/down-payment-assistance-program/) — ADFA Down Payment Assistance Program, up to (Sep 11, 2026) - [Kentucky Housing Corporation: Down Payment Assistance](https://www.kyhousing.org/page/down-payment-assistance) — KHC Down Payment Assistance, up to (Oct 29, 2026) - [Alabama Housing Finance Authority: Step Up](https://www.ahfa.com/programs/homeownership/available-programs/step-up) — AHFA Step Up down payment assistance, up to; AHFA Step Up down payment assistance (share of the sales price) (Oct 29, 2026) - [IHCDA Homeownership Program Guide](https://www.in.gov/ihcda/files/HOD-Universal-Program-Guide-Final%2010.16.26.pdf) — IHCDA First Step down payment assistance (share of the purchase price) (Oct 16, 2026) - [Ohio Housing Finance Agency: Down Payment Assistance](https://ohiohome.org/partners/fillable/OHFA-DPA_Fillable.pdf) — OHFA down payment assistance, government loans (share of the purchase price) (Jul 1, 2025) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [USDA Rural Development](https://www.rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-guaranteed-loan-program) — USDA guaranteed loan down payment; USDA guaranteed loan income limit (share of area median income) (Oct 28, 2026) - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/loan-types/purchase-loan/) — VA purchase loan down payment (price at or below appraised value) (Jan 7, 2026) - [USDA Rural Development, HB-1-3555 Chapter 11](https://www.rd.usda.gov/files/3555-1chapter11.pdf) — USDA guaranteed loan: housing payment ratio (share of repayment income) (Nov 25, 2025) - [Fannie Mae Selling Guide B3-6-05](https://selling-guide.fanniemae.com/sel/b3-6-05/monthly-debt-obligations) — Fannie Mae: installment debts count in DTI when more than this many payments remain (Aug 5, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) — PMI ends automatically at this share of original value (Oct 28, 2026) - [Fannie Mae Selling Guide B2-2-06](https://selling-guide.fanniemae.com/sel/b2-2-06/homeownership-education-and-housing-counseling) — Fannie Mae requires homebuyer education above this LTV when all borrowers are first-time buyers (Nov 5, 2025) - [Fannie Mae Selling Guide B3-5.1-01](https://selling-guide.fanniemae.com/sel/b3-5.1-01/general-requirements-credit-scores) — Fannie Mae minimum score, manually underwritten fixed-rate loans (Apr 22, 2026) - [Fannie Mae Selling Guide B5-6-01](https://selling-guide.fanniemae.com/sel/b5-6-01/homeready-mortgage-loan-and-borrower-eligibility) — Fannie Mae HomeReady income limit (share of area median income) (Jun 4, 2025) - [Freddie Mac Home Possible fact sheet](https://sf.freddiemac.com/docs/pdf/fact-sheet/home_possible_factsheet.pdf) — Freddie Mac Home Possible income limit (share of area median income) (Feb 1, 2026) - [CFPB: Understand loan options](https://www.consumerfinance.gov/owning-a-home/loan-options/) - [CFPB: Decide how much you want to spend on a home](https://www.consumerfinance.gov/owning-a-home/prepare/decide-how-much-you-want-spend/) - [CFPB: What is a debt-to-income ratio?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-debt-to-income-ratio-en-1791/) _General information, not financial advice._ --- # How much house can I afford on $75,000 a year? > On a $75,000 salary, see the home price your income supports at today’s rates under three debt-to-income limits, with taxes, insurance and PMI counted. URL: https://mortgage-math-us.com/blog/how-much-house-can-i-afford-on-75k/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Quick answer On $75,000 a year with no other debts, keeping housing under Freddie Mac’s 30% guideline means a full payment of about $1,875 a month — enough for a home of roughly **$242,000** with 10% down at the 7.24% average rate. Lenders may approve more: at Fannie Mae’s 50% automated limit the ceiling is near $404,000, but that leaves little room for anything else. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | 30-year fixed average used here | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | Freddie Mac housing-cost guideline | 30% | [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) | Jan 22, 2026 | | Fannie Mae manual-underwriting DTI limit | 36% | [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) | Apr 2, 2025 | | Fannie Mae automated DTI ceiling | 50% | [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) | Apr 2, 2025 | | US property tax ratio used | 0.89% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) | 2024 ACS 1-year | | Insurance per $1,000 of value used | $4.90 per $1,000 | [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) | 2023 data | ## The short answer: three budgets for a $75,000 income A $75,000 salary is $6,250 a month before tax. Lenders and housing agencies express affordability as a share of that gross figure, and the share you choose changes the answer more than anything else. The table uses a 30-year fixed loan at today’s 7.24% average, 10% down, property tax at the national ratio of 0.89%, insurance at $4.90 per $1,000 and PMI at the midpoint of Freddie Mac’s range. *Home price on $75,000 a year with no other debts* | Budget rule | Share of gross pay | Monthly housing budget | Home price (10% down) | |---|---:|---:|---:| | Freddie Mac housing guideline | 30% | $1,875 | **$242,000** | | Fannie Mae manual-underwriting DTI | 36% | $2,250 | $291,000 | | Freddie Mac total-debt guideline | 45% | $2,813 | $364,000 | | Fannie Mae automated maximum | 50% | $3,125 | $404,000 | The first row is the one to plan around. The last two are **lender ceilings**, and because they cover *all* debts, they only apply to housing if you owe nothing else. Approval at those levels is possible, but housing would then take up to half of your gross pay before taxes, savings and everyday costs. > $242,000 > A comfortable price for a $75,000 household with 10% down and no other debts at today’s average rate. ## How lenders turn $75,000 into a monthly budget Two ratios do the work. The **housing ratio** divides the whole housing payment — principal, interest, taxes, insurance, mortgage insurance and HOA dues — by gross monthly income. The **debt-to-income ratio (DTI)** adds every other monthly obligation that shows on a credit report: auto loans, student loans, minimum card payments, child support. Freddie Mac’s consumer guidance says housing should ideally stay under 30% and total debt under 45%. Fannie Mae’s Selling Guide sets the hard limits for most conventional loans: 36% for manually underwritten files, up to 45% with strong credit and reserves, and 50% for loans approved by its Desktop Underwriter system. > **Rule: What counts as income** > > Lenders use stable, documented gross income — salary, and overtime or bonuses with a track record. A $75,000 salary counts in full; income from a side business needs a documented history before a lender will count it. ## What the monthly payment includes At the comfortable budget, here is where the $1,875 goes on a $242,000 home with 10% down: > **Worked example: Monthly cost at $242,000, 10% down, 7.24% for 30 years** > > | Part of the payment | Monthly | > |---|---:| > | Principal and interest on $217,800 | $1,484 | > | Property tax (0.89% a year) | $179 | > | Homeowners insurance | $99 | > | PMI | $109 | > | **Total** | **$1,872** | PMI ends automatically once the balance is scheduled to reach 78% of the original value, so this payment falls later in the loan. Taxes and insurance, on the other hand, tend to rise over time and are often collected through escrow. ## How other debts shrink the price Every dollar of monthly debt comes straight out of the DTI budget. A $300 car payment, for example, removes $300 a month that could otherwise have gone to housing — and at today’s rate that is a meaningful slice of purchase price. *Home price on $75,000 with other monthly debts (10% down)* | Other debts a month | Housing at 36% DTI | Price | Housing at 45% DTI | Price | |---|---:|---:|---:|---:| | $0 | $2,250 | $291,000 | $2,813 | $364,000 | | $300 | $1,950 | $252,000 | $2,513 | $325,000 | | $600 | $1,650 | $213,000 | $2,213 | $286,000 | | $900 | $1,350 | $175,000 | $1,913 | $247,000 | > **Tip: Pay off a small balance before applying** > > If a loan has only a few payments left, paying it off can lift your housing budget by the full monthly payment. Ask your lender to run the numbers both ways. ## Down payment changes the answer The same monthly budget buys more house with a bigger down payment, because less of it goes to principal, interest and PMI. Cash needed at closing rises much faster, though: you also need closing costs, which the CFPB puts at 2% to 5% of the price. *Price at the 30% guideline ($1,875 a month) by down payment* | Down payment | Home price | Down payment cash | Closing costs (2%–5%) | PMI? | |---|---:|---:|---:|---| | 3% | $227,000 | $6,810 | $4,500–$11,400 | Yes | | 10% | $242,000 | $24,200 | $4,800–$12,100 | Yes | | 20% | $284,000 | $56,800 | $5,700–$14,200 | No | Conventional loans can start at 3% down and FHA loans at 3.5%; VA and USDA loans allow 0% down for eligible buyers. Many state agencies add down-payment assistance on top — Texas programs offer 2%–5% of the loan, for example. ## How much the interest rate matters Rates move every week. Freddie Mac’s survey is the benchmark, and your own quote depends on credit, down payment, loan type and points. Here is what the comfortable budget buys at different rates: *Price at the 30% guideline by interest rate (10% down)* | Rate | Home price | Change vs today | |---|---:|---:| | 6.24% | $263,000 | +$21,000 | | 6.74% | $252,000 | +$10,000 | | 7.24% (today’s average) | $242,000 | — | | 7.74% | $233,000 | −$9,000 | | 8.24% | $224,000 | −$18,000 | A rate one percentage point lower adds about $21,000 of buying power on the same budget, which is why it pays to improve your credit score, compare several Loan Estimates and consider whether buying points makes sense for how long you’ll keep the loan. ## Where $75,000 goes furthest Property taxes vary widely by state, so the same budget supports different prices. The table keeps everything else equal and swaps in each state’s ratio of median property taxes to median home value from the Census Bureau, then compares the result with the state’s median home value. *Comfortable price on $75,000 by state (30% housing budget, 10% down)* | State | Effective property tax | Price you can afford | State median home value | Covers the median? | |---|---:|---:|---:|---| | Ohio | 1.22% | $234,000 | $239,800 | No | | Texas | 1.31% | $232,000 | $313,200 | No | | North Carolina | 0.61% | $250,000 | $333,000 | No | | Florida | 0.75% | $246,000 | $396,900 | No | | Arizona | 0.43% | $255,000 | $426,000 | No | | Illinois | 1.92% | $218,000 | $280,700 | No | | New Jersey | 1.89% | $219,000 | $496,000 | No | | California | 0.71% | $247,000 | $759,500 | No | Insurance is held at the national average here; in states with high premiums, such as Texas, the real budget is tighter. The [Texas guide](https://mortgage-math-us.com/location/texas/) shows the state’s own insurance and tax figures. ## Estimate your own number **How to work out what you can afford** 1. **Start from gross monthly income** — Divide your annual pay by 12; include only income a lender can document. 2. **Pick a housing budget** — Multiply by 0.30 for a comfortable target (Freddie Mac’s guideline), then subtract nothing else yet. 3. **Check your debt-to-income ratio** — Add your other monthly debts to that housing budget and divide by gross monthly income; keep it at or below 45% if you can. 4. **Price in taxes, insurance and PMI** — Use your state’s property tax ratio and a real insurance quote; PMI applies below 20% down on a conventional loan. 5. **Convert the budget to a price** — Use the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/) and adjust the price until the total matches your budget. 6. **Get pre-approved** — A lender’s verified figure replaces your estimate and tells sellers you can close. [Open the mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/) ## The bottom line On $75,000 a year, plan around a home near $242,000 with 10% down at today’s rates, and treat anything above $364,000 as a stretch that only works with no other debts. Lower taxes, a bigger down payment or a lower rate push the number up; car payments, high insurance and HOA dues pull it down. For other incomes, see the [buying hub](https://mortgage-math-us.com/buying/), which runs the same maths at $50,000, $100,000 and $150,000. ## Frequently asked questions ### Can I afford a $300,000 house on $75,000 a year? At today’s average rate of 7.24% and 10% down, a $300,000 home costs about $2,320 a month with taxes, insurance and PMI. That is 37.1% of gross monthly pay — above Freddie Mac’s 30% guideline. ### What debt-to-income ratio do lenders allow? For most conventional loans Fannie Mae allows 36% on manually underwritten files, up to 45% with strong credit and reserves, and 50% through its automated Desktop Underwriter. On $75,000 a year that is $2,250, $2,813 and $3,125 a month for all debts including housing. ### How much should I have saved on a $75,000 salary? With 10% down on a $242,000 home, plan for $24,200 down plus $4,800–$12,100 in closing costs (2%–5% per the CFPB), and keep an emergency reserve after closing. ### Does my credit score change how much I can afford? Yes, through the rate and mortgage insurance. A higher score usually earns a lower rate and cheaper PMI, and one percentage point of rate is worth about $21,000 of price on this budget. ### Should I use gross or take-home pay? Lenders use gross income for their ratios, but your own budget runs on take-home pay. If the payment that fits the 30% gross guideline still feels tight after taxes, savings and childcare, aim lower. ### Is an FHA loan easier to qualify for on $75,000? FHA allows a 3.5% down payment with a score of 580 or higher, but adds an upfront premium of 1.75% and annual mortgage insurance, often 0.55% a year for the life of the loan. Compare its full monthly cost with a conventional quote. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income; Freddie Mac guidance: total debt payments below this share of gross income (Jan 22, 2026) - [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) — Fannie Mae maximum DTI, manually underwritten loans; Fannie Mae maximum DTI, Desktop Underwriter loans; Fannie Mae maximum DTI, manual underwriting with strong credit and reserves (Apr 2, 2025) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price); Minimum down payment on some conventional loans (Oct 28, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US39) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US39) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US48) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US48) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US37) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US37) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US12) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US12) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US04) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US04) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US17) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US17) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US34) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US34) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US06) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US06) — Median value of owner-occupied homes (2024 ACS 1-year) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) — PMI ends automatically at this share of original value (Oct 28, 2026) - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/loan-types/purchase-loan/) — VA purchase loan down payment (price at or below appraised value) (Jan 7, 2026) - [Texas Department of Housing and Community Affairs](https://welcomehome.tdhca.texas.gov/uploads/My-First-Texas-Home-Program-Matrix-TMS.pdf) — TDHCA My First Texas Home assistance, low end (share of loan); TDHCA My First Texas Home assistance, high end (share of loan) (Program matrix Aug 17, 2026) - [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) — FHA minimum score for maximum financing (Oct 8, 2026) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA upfront mortgage insurance premium; FHA annual MIP, 30-year loan, more than 95% LTV (Feb 22, 2023) _General information, not financial advice._ --- # How property taxes change your mortgage payment > Property tax on the median home in every state, the share of the payment it takes, why the bill can jump after you buy, and how escrow catches up. URL: https://mortgage-math-us.com/blog/how-property-taxes-change-your-payment/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer On the US median home value of $360,600, the national effective property tax rate of 0.89% works out to about $3,209 a year, or **$267 a month** — 9.6% of a full payment with 10% down at today’s 7.24% average. By state, the monthly tax on a median-priced home ranges from $74 in Alabama to $781 in New Jersey. Your own bill depends on the local rate, your assessment, exemptions and caps — and it can rise after you buy. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | US effective property tax rate | 0.89% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) | 2024 ACS 1-year | | US median home value | $360,600 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) | 2024 ACS 1-year | | US median real estate taxes paid | $3,211/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) | 2024 ACS 1-year | | Most an escrow cushion can hold | 2 months | [CFPB, Regulation X 1024.17](https://www.consumerfinance.gov/rules-policy/regulations/1024/17/) | Oct 28, 2026 | | Large escrow shortages spread over at least | 12 months | [12 CFR 1024.17(f)(3) (Regulation X)](https://www.consumerfinance.gov/rules-policy/regulations/1024/17/) | Oct 29, 2026 | ## Property tax on a median-priced home, state by state The Census Bureau’s American Community Survey reports what homeowners actually pay in real estate taxes and what their homes are worth. Dividing one by the other gives an effective tax rate that already reflects local rates, assessment practices and exemptions. The table applies each state’s rate to its own median home value and shows the share of a full monthly payment it takes — principal, interest, tax, insurance at $4.90 per $1,000 and PMI — with 10% down at today’s 7.24% average. *Property tax on the median-priced home, ranked by monthly tax* | State | Effective rate | Median home value | Tax a year | Tax a month | Share of the payment | |---|---:|---:|---:|---:|---:| | [New Jersey](https://mortgage-math-us.com/location/new-jersey/) | 1.89% | $496,000 | $9,374 | $781 | 18.4% | | [New Hampshire](https://mortgage-math-us.com/location/new-hampshire/) | 1.46% | $458,800 | $6,698 | $558 | 14.8% | | [Connecticut](https://mortgage-math-us.com/location/connecticut/) | 1.66% | $396,900 | $6,589 | $549 | 16.5% | | [New York](https://mortgage-math-us.com/location/new-york/) | 1.45% | $449,800 | $6,522 | $544 | 14.7% | | [Massachusetts](https://mortgage-math-us.com/location/massachusetts/) | 1% | $607,400 | $6,074 | $506 | 10.6% | | [California](https://mortgage-math-us.com/location/california/) | 0.71% | $759,500 | $5,392 | $449 | 7.8% | | [Illinois](https://mortgage-math-us.com/location/illinois/) | 1.92% | $280,700 | $5,389 | $449 | 18.6% | | [Vermont](https://mortgage-math-us.com/location/vermont/) | 1.42% | $352,800 | $5,010 | $417 | 14.5% | | [Rhode Island](https://mortgage-math-us.com/location/rhode-island/) | 1.07% | $455,700 | $4,876 | $406 | 11.3% | | [Washington](https://mortgage-math-us.com/location/washington/) | 0.79% | $602,200 | $4,757 | $396 | 8.6% | | [District of Columbia](https://mortgage-math-us.com/location/district-of-columbia/) | 0.63% | $733,400 | $4,620 | $385 | 7.0% | | [Maryland](https://mortgage-math-us.com/location/maryland/) | 0.95% | $436,300 | $4,145 | $345 | 10.2% | | [Texas](https://mortgage-math-us.com/location/texas/) | 1.31% | $313,200 | $4,103 | $342 | 13.5% | | [Alaska](https://mortgage-math-us.com/location/alaska/) | 1.06% | $376,500 | $3,991 | $333 | 11.2% | | [Oregon](https://mortgage-math-us.com/location/oregon/) | 0.78% | $497,500 | $3,881 | $323 | 8.5% | | [Nebraska](https://mortgage-math-us.com/location/nebraska/) | 1.42% | $263,100 | $3,736 | $311 | 14.5% | | [Wisconsin](https://mortgage-math-us.com/location/wisconsin/) | 1.25% | $294,700 | $3,684 | $307 | 13.0% | | [Minnesota](https://mortgage-math-us.com/location/minnesota/) | 1.02% | $344,600 | $3,515 | $293 | 10.8% | | [Pennsylvania](https://mortgage-math-us.com/location/pennsylvania/) | 1.16% | $277,600 | $3,220 | $268 | 12.1% | | [Maine](https://mortgage-math-us.com/location/maine/) | 0.91% | $341,900 | $3,111 | $259 | 9.8% | | [Michigan](https://mortgage-math-us.com/location/michigan/) | 1.18% | $254,200 | $3,000 | $250 | 12.3% | | [Kansas](https://mortgage-math-us.com/location/kansas/) | 1.25% | $238,700 | $2,984 | $249 | 13.0% | | [Florida](https://mortgage-math-us.com/location/florida/) | 0.75% | $396,900 | $2,977 | $248 | 8.2% | | [South Dakota](https://mortgage-math-us.com/location/south-dakota/) | 1.02% | $289,600 | $2,954 | $246 | 10.8% | | [Montana](https://mortgage-math-us.com/location/montana/) | 0.69% | $425,400 | $2,935 | $245 | 7.6% | | [Iowa](https://mortgage-math-us.com/location/iowa/) | 1.29% | $227,300 | $2,932 | $244 | 13.3% | | [Ohio](https://mortgage-math-us.com/location/ohio/) | 1.22% | $239,800 | $2,926 | $244 | 12.7% | | [Virginia](https://mortgage-math-us.com/location/virginia/) | 0.71% | $403,500 | $2,865 | $239 | 7.8% | | [Colorado](https://mortgage-math-us.com/location/colorado/) | 0.49% | $574,600 | $2,816 | $235 | 5.5% | | [Utah](https://mortgage-math-us.com/location/utah/) | 0.49% | $545,200 | $2,671 | $223 | 5.5% | | [North Dakota](https://mortgage-math-us.com/location/north-dakota/) | 0.96% | $266,100 | $2,555 | $213 | 10.3% | | [Georgia](https://mortgage-math-us.com/location/georgia/) | 0.74% | $343,300 | $2,540 | $212 | 8.1% | | [Hawaii](https://mortgage-math-us.com/location/hawaii/) | 0.27% | $875,900 | $2,365 | $197 | 3.1% | | [Nevada](https://mortgage-math-us.com/location/nevada/) | 0.47% | $455,500 | $2,141 | $178 | 5.3% | | [North Carolina](https://mortgage-math-us.com/location/north-carolina/) | 0.61% | $333,000 | $2,031 | $169 | 6.8% | | [Missouri](https://mortgage-math-us.com/location/missouri/) | 0.79% | $254,400 | $2,010 | $167 | 8.6% | | [Wyoming](https://mortgage-math-us.com/location/wyoming/) | 0.57% | $339,500 | $1,935 | $161 | 6.4% | | [Idaho](https://mortgage-math-us.com/location/idaho/) | 0.43% | $446,400 | $1,920 | $160 | 4.9% | | [Arizona](https://mortgage-math-us.com/location/arizona/) | 0.43% | $426,000 | $1,832 | $153 | 4.9% | | [Indiana](https://mortgage-math-us.com/location/indiana/) | 0.74% | $243,500 | $1,802 | $150 | 8.1% | | [New Mexico](https://mortgage-math-us.com/location/new-mexico/) | 0.63% | $279,900 | $1,763 | $147 | 7.0% | | [Delaware](https://mortgage-math-us.com/location/delaware/) | 0.47% | $371,600 | $1,747 | $146 | 5.3% | | [Oklahoma](https://mortgage-math-us.com/location/oklahoma/) | 0.75% | $222,100 | $1,666 | $139 | 8.2% | | [Kentucky](https://mortgage-math-us.com/location/kentucky/) | 0.71% | $226,000 | $1,605 | $134 | 7.8% | | [Tennessee](https://mortgage-math-us.com/location/tennessee/) | 0.45% | $332,600 | $1,497 | $125 | 5.1% | | [South Carolina](https://mortgage-math-us.com/location/south-carolina/) | 0.45% | $299,500 | $1,348 | $112 | 5.1% | | [Mississippi](https://mortgage-math-us.com/location/mississippi/) | 0.65% | $186,500 | $1,212 | $101 | 7.2% | | [Louisiana](https://mortgage-math-us.com/location/louisiana/) | 0.53% | $223,200 | $1,183 | $99 | 5.9% | | [Arkansas](https://mortgage-math-us.com/location/arkansas/) | 0.52% | $215,600 | $1,121 | $93 | 5.8% | | [West Virginia](https://mortgage-math-us.com/location/west-virginia/) | 0.52% | $170,800 | $888 | $74 | 5.8% | | [Alabama](https://mortgage-math-us.com/location/alabama/) | 0.38% | $233,300 | $887 | $74 | 4.3% | Nationally the median homeowner pays $3,211 a year in property tax. Your county’s rate can be well above or below your state’s average, so use these figures to compare places, not to budget for a specific home. Each state page has its own tax, insurance and transfer-tax figures. ## Rate vs dollars: why the rankings differ A high rate does not always mean a high bill. The highest effective rates are in Illinois, New Jersey and Connecticut, while the biggest dollar bills on a median-priced home are in New Jersey, New Hampshire and Connecticut. Hawaii has the lowest effective rate, 0.27%, but the highest median home value, so the tax on a median-priced home there is about $2,365 a year — more than in 18 states with higher rates but cheaper homes. The share of the payment tells you how much the tax shapes affordability. It is highest in Illinois, where tax is 18.6% of the payment on a median-priced home, and lowest in Hawaii, at 3.1%. In high-share states the tax takes a bigger slice of what you can afford, and any rise in the rate or the assessment moves the whole payment noticeably. ## What a higher tax rate does to the same home Take one $400,000 home with 10% down and change only the tax rate: > **Worked example: A $400,000 home at three tax rates (10% down, 7.24%, 30 years)** > > | | Hawaii rate (0.27%) | US rate (0.89%) | Illinois rate (1.92%) | > |---|---:|---:|---:| > | Principal, interest and PMI | $2,633 | $2,633 | $2,633 | > | Property tax | $90 | $297 | $640 | > | Homeowners insurance | $163 | $163 | $163 | > | **Monthly total** | **$2,887** | **$3,093** | **$3,437** | > | Price a $2,500 budget buys | $346,000 | $323,000 | $291,000 | The tax difference alone is $550 a month on the same house. Turned around, a $2,500 monthly budget buys $55,000 more home at the lowest rate than at the highest. Lenders count the tax in your housing payment and [debt-to-income ratio](https://mortgage-math-us.com/buying/debt-to-income/), so a high-tax area lowers what you qualify for as well as what you pay. The [payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/) lets you pick a state’s rate. ## How the tax on your home is set Most local governments tax a home in three steps. An assessor estimates its market value; a state rule turns that into an assessed or taxable value; and each taxing body — county, city, school district — applies its rate, often quoted in mills (dollars per $1,000 of assessed value). Some states tax only a fraction of value: Georgia assesses at 40% of fair market value, Missouri residential property at 19%, and South Carolina an owner-occupied home at 4% against 6% for second homes. A low assessment ratio doesn’t mean low taxes; the rate is set with it in mind. Values are updated on a schedule that varies by state and county, from every year to every few years. When a new assessment arrives you can usually appeal it within a short window if it overstates the home’s value or contains errors, such as the wrong square footage. A [property tax](https://mortgage-math-us.com/glossary/property-tax/) bill can also rise without any change in value if a taxing body raises its rate or voters approve a new levy. ## Why the bill can jump after you buy Several states limit how fast a home’s taxable value can grow each year. Over time, that cap can leave a long-time owner’s taxable value far below market value. When the home sells, many of these limits reset, and the buyer is taxed on a value closer to the purchase price — so **the seller’s tax bill is not a reliable guide to yours**. *Examples of yearly limits on taxable value or tax growth* | State | Yearly limit | What it applies to | |---|---:|---| | [California](https://mortgage-math-us.com/location/california/) | 2% | Base-year value set at purchase (Proposition 13) | | [Florida](https://mortgage-math-us.com/location/florida/) | 3% | Homesteads only (Save Our Homes); resets for a new owner | | [Michigan](https://mortgage-math-us.com/location/michigan/) | 5% | Taxable value; uncapped after a transfer of ownership | | [Arizona](https://mortgage-math-us.com/location/arizona/) | 5% | Limited (taxable) value | | [Arkansas](https://mortgage-math-us.com/location/arkansas/) | 5% | A homestead’s taxable value | | [Oregon](https://mortgage-math-us.com/location/oregon/) | 3% | Maximum assessed value (Measure 50) | | [New Mexico](https://mortgage-math-us.com/location/new-mexico/) | 3% | Taxable value of a home; reset to market value at sale | | [Oklahoma](https://mortgage-math-us.com/location/oklahoma/) | 3% | A homestead’s fair cash value | | [Maryland](https://mortgage-math-us.com/location/maryland/) | 10% | Taxable assessment, through the Homestead Tax Credit (local caps can be lower) | | [District of Columbia](https://mortgage-math-us.com/location/district-of-columbia/) | 10% | A home’s taxable assessment | | [Nevada](https://mortgage-math-us.com/location/nevada/) | 3% | The tax bill on an owner’s primary residence | Ask the listing agent or the county for the current assessed value, the exemptions the seller receives and how the county will value the home after the sale. In California, a supplemental bill can follow a purchase to cover the gap between the old and new assessed values for the rest of the tax year. ## Homestead exemptions: a discount you have to claim Many states reduce the taxable value of an owner’s main home through a [homestead exemption](https://mortgage-math-us.com/glossary/homestead-exemption/), and it usually isn’t automatic: you file once with the county, often by a deadline in the first months of the year after you buy. A few examples: - **Florida:** up to $50,000 off assessed value, plus the Save Our Homes cap. - **Texas:** a $140,000 exemption from school district taxes, with $60,000 more for owners 65 or older or disabled. - **District of Columbia:** a $91,950 reduction in assessed value, worth $781.58 a year for tax year 2026. - **Idaho:** 50% of the home’s value, up to $125,000. - **Utah:** 45% of a primary residence’s market value is exempt. - **California:** a $7,000 homeowners’ exemption on assessed value. The exemption lowers your bill, and a lender estimating your escrow before closing may use the seller’s exempt bill. If you don’t qualify yet, or don’t file, the first bill in your name can be higher than the estimate. ## When taxes rise: how escrow catches up Many borrowers pay property tax through an [escrow account](https://mortgage-math-us.com/glossary/escrow-account/): the servicer collects one-twelfth of the yearly tax and insurance with each payment and pays the bills when due. Once a year it analyzes the account and resets the monthly amount. If the tax went up during the year, the account will have paid out more than it collected — a shortage. > **Worked example: A $900 yearly tax increase on a $400,000 home** > > | | Monthly | > |---|---:| > | Escrow before the increase (tax and insurance) | $460 | > | New escrow for the higher tax ($900 ÷ 12) | +$75 | > | Shortage of $1,050 repaid over 12 months | +$88 | > | **Increase in the payment for the first year** | **+$163** | > | Increase after the shortage is repaid | +$75 | The shortage here is the $900 the account paid out but never collected, plus $150 to restore a cushion of up to 2 months on the higher total. Because that is more than one month’s escrow payment ($460), the servicer can either leave it in place or collect it in equal installments over at least 12 months; it cannot demand it all at once. Only a shortage smaller than one month’s escrow payment can be called in within 30 days. You can usually ask to pay a shortage in one lump sum instead, so the monthly payment rises only by the new tax. The [escrow accounts post](https://mortgage-math-us.com/blog/escrow-accounts/) covers the annual statement in detail. ## Check the tax before you make an offer **How to estimate the property tax on a home you want to buy** 1. **Look up the current bill and assessed value** — County assessor and treasurer websites usually show both, along with any exemptions on the property. 2. **Estimate the tax after the sale** — In states with assessment caps, apply the local rate to the price you plan to pay, not to the seller’s capped value. 3. **Find the homestead exemption and its deadline** — Note what you will qualify for and when you must file. 4. **Ask when values are reassessed** — A reassessment soon after you buy can change the bill more than any rate change. 5. **Budget the full payment** — Use the higher tax estimate in your payment and debt-to-income calculation, not the listing’s figure. ## Frequently asked questions ### How much of my mortgage payment is property tax? On the US median home value of $360,600 at the national effective rate of 0.89%, property tax is about $267 a month, or 9.6% of a full payment with 10% down at today’s average rate. By state, the share on a median-priced home ranges from 3.1% in Hawaii to 18.6% in Illinois. ### Which state has the highest property taxes? By effective rate, Illinois, at 1.92% of home value. By dollars paid on a median-priced home, New Jersey, at about $9,374 a year. Census figures for each state are in the table above. ### Why did my mortgage payment go up if my rate is fixed? A fixed rate locks principal and interest only. If your property tax or insurance rises, the servicer raises the escrow part of the payment at its annual analysis and may add a monthly amount to repay any shortage, spread over at least 12 months when the shortage is a month’s escrow payment or more. ### Will my property taxes go up after I buy a house? They can. In states that cap yearly increases, such as California (2%) and Florida (3% for homesteads), the cap generally resets when the home sells, so a buyer is taxed on a value closer to the purchase price than the seller was. ### Do I have to apply for a homestead exemption? Usually yes. Many counties require a one-time application, often due early in the year after you buy. Without it, you pay tax on the full assessed value. ### Can I appeal my property tax assessment? Yes. Assessment notices list a deadline and process for appeals. Appeals work best with evidence: recent sales of similar homes or errors in the property record. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [CFPB, Regulation X 1024.17](https://www.consumerfinance.gov/rules-policy/regulations/1024/17/) — Most an escrow account may hold as a cushion (one-sixth of annual escrow payments); Escrow shortage of a month’s payment or more: if the servicer collects it, repayment is spread over at least; Escrow shortage of less than a month’s escrow payment: the servicer may ask for repayment within (Oct 28, 2026) - [Georgia Department of Revenue: Property Tax Homestead Exemptions](https://dor.georgia.gov/property-tax-homestead-exemptions) — Georgia assessed value as a share of fair market value (Oct 29, 2026) - [State Tax Commission of Missouri: Assessor Manual, General Information](https://stc.mo.gov/wp-content/uploads/sites/5/2026/06/Chapter-2-Final-Revised-06-01-2026.pdf) — Missouri residential property is assessed at (share of market value) (Jun 1, 2026) - [South Carolina Department of Revenue: Property Tax Exemptions](https://dor.sc.gov/property/property-tax-exemptions) — South Carolina assessment ratio for an owner-occupied legal residence (Oct 29, 2026) - [SCDOR Individual Property Tax manual, Chapter 5 (S.C. Code § 12-43-220)](https://dor.sc.gov/sites/dor/files/Documents/Policy%20Manuals/SCTIED-2025-Chapter%205.pdf) — South Carolina assessment ratio for second homes, vacation homes and other real property (2025) - [California State Board of Equalization: California Property Tax, An Overview (Publication 29)](https://www.boe.ca.gov/proptaxes/pdf/pub29.pdf) — Proposition 13: most a property’s base-year value can rise in a year (Mar 1, 2025) - [Florida Department of Revenue: Save Our Homes Assessment Limitation and Portability (PT-112)](https://www.floridarevenue.com/property/Documents/pt112.pdf) — Save Our Homes: most a homestead’s assessed value can rise in a year (or the CPI change, if lower) (Aug 1, 2024) - [Michigan State Tax Commission: Transfer of Ownership Guidelines](https://www.michigan.gov/taxes/-/media/Project/Websites/taxes/STC/TransferOwnershipGuidelines.pdf?rev=adadcab40aed4a6687c992bc54162095&hash=51B779B1E461FCD1C080DC370276348C) — Michigan cap on yearly taxable value increases (or the inflation rate, if lower) (Feb 25, 2025) - [Arizona Constitution, Article 9, Section 18](https://www.azleg.gov/viewDocument/?docName=https%3A%2F%2Fwww.azleg.gov%2Fconst%2F9%2F18.htm) — Arizona: most a property’s limited (taxable) value can rise in a year (Oct 29, 2026) - [Arkansas DFA Assessment Coordination Division: Property Tax Relief](https://www.dfa.arkansas.gov/office/arkansas-assessment-coordination-division/real-property/property-tax-relief/) — Arkansas: most a homestead’s taxable value can rise in a year (Amendment 79) (Dec 3, 2025) - [Oregon Department of Revenue: Oregon Property Tax Statistics FY 2025-26](https://www.oregon.gov/dor/programs/gov-research/Documents/FY%202025-26%20Oregon%20Property%20Tax%20Statistics%20Report-UA.pdf) — Oregon yearly limit on growth in a property's maximum assessed value (Measure 50) (FY 2025-26) - [New Mexico Legislative Finance Committee: Property Taxes in New Mexico](https://www.nmlegis.gov/Entity/LFC/Documents/Revenue_Reports/Property%20Taxes%20in%20NM%20brief_FINAL.pdf) — New Mexico yearly limit on growth in a home's taxable value (reset to market value at sale) (May 15, 2024) - [Wagoner County Assessor: What is the 3%/5% limitation](https://wagonercounty.ok.gov/179/What-is-the-3-5-Limitation-cap) — Oklahoma yearly cap on increases in a homestead's fair cash value (5% for other property) (Oct 29, 2026) - [Maryland SDAT: Homestead Tax Credit](https://dat.maryland.gov/realproperty/Pages/Maryland-Homestead-Tax-Credit.aspx) — Maryland Homestead Tax Credit: yearly cap on taxable assessment increases (state tax, local caps can be lower) (Oct 29, 2026) - [DC Office of Tax and Revenue: Real Property Tax Reliefs, Credits, and Deductions](https://otr.cfo.dc.gov/page/real-property-tax-reliefs-credits-and-deductions) — DC assessment cap: most a home’s taxable assessment can rise in a year; DC homestead deduction (reduction in assessed value), tax year 2026; Annual tax saving from the DC homestead deduction, tax year 2026 (Oct 29, 2026) - [Clark County Assessor: Tax Abatement (NRS 361.4723)](https://www.clarkcountynv.gov/government/assessor/general_information/tax-abatement) — Nevada property tax abatement: yearly cap on the tax bill of an owner's primary residence (Oct 29, 2026) - [Florida Department of Revenue: Homestead Exemption (PT-113)](https://www.floridarevenue.com/property/Documents/pt113.pdf) — Florida homestead exemption, up to (Aug 1, 2025) - [Texas Comptroller](https://comptroller.texas.gov/taxes/property-tax/exemptions/) — School district residence homestead exemption; Additional school homestead exemption, age 65+ or disabled (Dec 11, 2025) - [Idaho State Tax Commission: Property Tax Homeowner’s Exemption](https://tax.idaho.gov/taxes/property/homeowners/exemption/) — Idaho homeowner’s exemption (share of the value of the home and up to one acre); Idaho homeowner’s exemption, up to (Jul 24, 2023) - [Utah State Tax Commission: Primary Residential Exemption](https://tax.utah.gov/propertytax/tax-relief/primary-residential-exemption/) — Utah primary residential exemption (share of market value exempt from property tax) (Oct 29, 2026) - [California State Board of Equalization: Homeowners’ Exemption (Publication 800-6)](https://boe.ca.gov/pdf/pub800-6.pdf) — California homeowners’ exemption (assessed value) (Jun 1, 2023) - [CFPB: Why did my monthly mortgage payment go up or change?](https://www.consumerfinance.gov/ask-cfpb/why-did-my-monthly-mortgage-payment-go-up-or-change-en-213/) - [California State Board of Equalization: Supplemental assessments](https://www.boe.ca.gov/proptaxes/supplemental-assessment/) _General information, not financial advice._ --- # How to lower your closing costs > Five ways to cut what you pay at closing — shopping services, lender credits, seller concessions, the closing date and assistance — with the numbers. URL: https://mortgage-math-us.com/blog/how-to-lower-closing-costs/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer On a $330,000 purchase, closing costs of 2%–5% come to $6,600–$16,500. The biggest levers are a seller credit — up to **$9,900** on a conventional loan with 5% down, more with FHA or a larger down payment — and a lender credit, which on this loan is worth about $3,135 for a slightly higher rate. Shopping the services you’re allowed to choose and closing late in the month trim the rest. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Typical closing costs, low end | 2% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | | Typical closing costs, high end | 5% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | | Seller limit, conventional, under 10% down | 3% | [Fannie Mae Selling Guide B3-4.1-02](https://selling-guide.fanniemae.com/sel/b3-4.1-02/interested-party-contributions-ipcs) | May 7, 2025 | | Seller limit, FHA | 6% | [FDIC Affordable Mortgage Lending Guide (summary of HUD Handbook 4000.1)](https://www.fdic.gov/resources/bankers/affordable-mortgage-lending-center/guide/part-1-docs/203b-mortgage-insurance-program.pdf) | Oct 29, 2026 | | VA limit on seller concessions | 4% | [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) | Oct 28, 2026 | | Tolerance on lender-listed services | 10% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-my-final-mortgage-costs-increase-from-what-was-on-my-loan-estimate-en-172/) | Sep 11, 2024 | ## What you can cut, and what you can only move Closing costs are a mix of fees, taxes and prepaid bills. The [closing costs guide](https://mortgage-math-us.com/buying/closing-costs/) explains each line; for lowering the total, it helps to sort them by who controls the price. *Which closing costs respond to which lever* | Cost (Loan Estimate section) | Who sets the price | How to lower it | |---|---|---| | Origination charges and points (A) | The lender | Compare lenders; take a lender credit; skip points | | Services you cannot shop for — appraisal, credit report (B) | The lender’s chosen providers | Compare whole Loan Estimates between lenders | | Services you can shop for — title, settlement (C) | You choose, often from the lender’s list | Get your own quotes | | Taxes and government fees (E) | State and local law | Who pays can be negotiated; the rate can’t | | Prepaids — interest, insurance, taxes (F) | Your loan, policy and calendar | Pick the closing date; shop insurance | | Initial escrow deposit (G) | Tax and insurance due dates | Can’t be cut, only timed | Any of the costs can be paid by someone else — the seller, through a credit on the contract, or the lender, through a higher rate. Those two levers are usually worth far more than trimming individual fees. ## Lever 1: shop the services you’re allowed to shop for Page 2 of the [Loan Estimate](https://mortgage-math-us.com/buying/loan-estimate/) splits third-party services into those you can’t shop for and those you can. For the second group, the CFPB says you can save money by shopping separately; the lender must give you a list of providers, and you can look beyond it after checking with the lender. There is a trade-off in where you shop. If you pick a provider from the lender’s list, those charges and recording fees together can’t rise by more than 10% at closing — on an example $3,000 estimate, no more than $300. If you choose a provider who isn’t on the list, that protection doesn’t apply, so get a firm written quote. Mortgage credit checks within 45 days count as a single inquiry, so comparing several lenders on the same day costs little. Compare the totals in section A and the bottom line of page 2, not just the rate. ## Lever 2: trade a little rate for a lender credit A [lender credit](https://mortgage-math-us.com/glossary/lender-credit/) is a rebate toward your costs paid for with a higher interest rate — points in reverse. How much rate one point’s worth of credit costs is set by each lender; the table uses three example values for a $3,135 credit (1% of a $313,500 loan), starting from today’s 7.24% average. *A $3,135 lender credit on a $313,500 loan — example rate increases* | Rate increase for the credit (percentage points) | New rate | Extra a month | Credit stays ahead for | Net after 5 years | Net after 10 years | |---|---:|---:|---:|---:|---:| | +0.125 | 7.37% | $27 | 7 yr 10 mo | +$1,159 | −$827 | | +0.25 | 7.49% | $53 | 3 yr 11 mo | −$818 | −$4,793 | | +0.375 | 7.62% | $80 | 2 yr 7 mo | −$2,796 | −$8,765 | “Net” counts the credit, minus the extra payments and the slightly higher balance you would owe if you sold or refinanced. At the middle assumption, the credit pays $3,135 up front and costs $53 a month plus a slightly slower paydown, so it stays ahead for about 3 years and 11 months. If you are likely to sell or refinance before then, the credit wins; if you’ll keep the loan for decades, paying the costs yourself does. ## Lever 3: ask the seller to pay — within your loan’s limit Sellers can agree to credit you money at closing, and in a slow market that is often the cheapest dollar you will find. Each loan program caps how much a seller, builder or agent can contribute, measured against the price (or the appraised value, if lower): *Seller-paid costs allowed on a $330,000 purchase* | Loan | Limit | Maximum on this price | Covers 2%–5% closing costs? | |---|---:|---:|---| | Conventional, under 10% down | 3% | $9,900 | Low-end costs, not the high end | | Conventional, 10%–24.99% down | 6% | $19,800 | All of it, even at the high end | | Conventional, 25% or more down | 9% | $29,700 | All of it, even at the high end | | Conventional, investment property | 2% | $6,600 | Low-end costs, not the high end | | FHA | 6% | $19,800 | All of it, even at the high end | | VA | No limit on closing-cost credits; other concessions up to 4% of reasonable value | $13,200 in concessions | Closing costs, plus extras such as the funding fee | A conventional credit can cover closing costs and prepaids, but not the down payment or reserves. Anything above the limit, or above your actual costs, is treated as a price reduction and can shrink the loan the lender will make. VA doesn’t limit credits for the loan’s closing costs and caps other concessions — paying your funding fee or debts, for example — at 4% of the home’s reasonable value. For points the seller pays, see [points or a bigger down payment](https://mortgage-math-us.com/blog/points-or-bigger-down-payment/). > **Tip: Ask for the credit in the offer** > > A seller credit has to be written into the purchase contract. Asking for a credit instead of a lower price keeps cash in your pocket on closing day, while a price cut lowers the loan and the payment slightly. Your agent and lender can show both. ## Lever 4: choose the closing date At closing you prepay interest from the closing day to the end of that month; your first regular payment then comes due on the first of the month after next. Closing late in the month shrinks that prepaid amount. > **Worked example: Prepaid interest on a $313,500 loan at 7.24%, in a 30-day month** > > | Closing day | Days of interest paid at closing | Prepaid interest | > |---|---:|---:| > | Day 2 | 29 | $1,803 | > | Day 10 | 21 | $1,306 | > | Day 20 | 11 | $684 | > | Day 28 | 3 | $187 | > > Daily interest is about $62. Closing on day 28 instead of day 2 cuts the cash you need by roughly $1,617. This lowers your cash to close, not your total cost: you pay interest for every day you have the loan either way. It is still worth doing when cash is tight — and it can be paired with the other levers. ## Lever 5: closing-cost assistance Many state and local housing agencies help with closing costs as well as the down payment, usually for first-time or income-qualified buyers. A few examples from our data: - **Washington, DC:** the Home Purchase Assistance Program offers closing-cost help of up to $4,000. - **San Diego:** a middle-income closing-cost grant of up to $10,000. - **Texas:** TDHCA’s My First Texas Home assistance of 2%–5% of the loan can go toward the down payment and closing costs — see the [Texas guide](https://mortgage-math-us.com/location/texas/). Most programs require homebuyer education and set income and price limits. Our [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/) and [down-payment assistance roundup](https://mortgage-math-us.com/blog/down-payment-assistance-programs/) show what to look for. ## No-closing-cost offers: what you give up A “no-closing-cost” mortgage is the lender-credit lever pushed to the limit: the rate rises until the credit covers the lender’s fees and third-party charges. You still pay prepaids and the escrow deposit, and taxes and government fees may or may not be covered. The [no-closing-cost refinance guide](https://mortgage-math-us.com/refinancing/no-closing-cost-refinance/) compares that route over 3, 5 and 10 years; the same math applies to a purchase. It makes most sense when you expect to move or refinance within a few years, or when the cash would otherwise force a smaller down payment and higher PMI. Ask each lender for its no-cost rate alongside its par rate on the same day. ## Your closing-cost checklist **How to lower your closing costs, in order** 1. **Get Loan Estimates from several lenders on the same day** — Same loan type, down payment and lock period; credit checks within 45 days count as one inquiry. 2. **Ask each lender to price a credit** — Request the rate with no points, with points and with a lender credit, and compare them over how long you’ll keep the loan. 3. **Negotiate a seller credit in the contract** — Stay within your loan’s limit and below your actual costs. 4. **Shop the services in section C** — Get quotes for title and settlement, and check whether the provider is on the lender’s list. 5. **Shop homeowners insurance** — The first year’s premium is paid at closing; see [homeowners insurance and your mortgage](https://mortgage-math-us.com/blog/homeowners-insurance-and-your-mortgage/). 6. **Set the closing date late in the month** — If cash is tight, it cuts prepaid interest. 7. **Check the Closing Disclosure** — It arrives at least 3 business days before closing; compare every section with your Loan Estimate. [Open the closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/) ## Frequently asked questions ### What is the easiest way to lower closing costs? Ask the seller for a credit and the lender for a credit. On a $330,000 conventional purchase with 5% down the seller can pay up to $9,900, and a lender credit of $3,135 costs only a slightly higher rate. Shopping services and the closing date save less but cost nothing. ### Can the seller pay all my closing costs? Often, if the credit stays within your loan’s limit: 3% of the price for a conventional loan with less than 10% down, 6% with 10%–24.99% down, 6% for FHA. VA doesn’t limit credits for closing costs. Credits can’t exceed your actual costs. ### Is a no-closing-cost mortgage worth it? It is if you’ll sell or refinance before the higher rate costs more than the credit saved — about 3 years and 11 months in our example, assuming the rate rises 0.25 percentage point for a credit worth one point. Over decades, paying the costs yourself usually wins. ### Does closing at the end of the month save money? It lowers the cash you bring, because you prepay fewer days of interest — about $1,617 less on day 28 than day 2 on a $313,500 loan. It doesn’t lower the total interest on the loan. ### Can I roll closing costs into my mortgage on a purchase? Generally not directly, because the loan is limited by the price and the minimum down payment. Seller and lender credits do the same job, and FHA and VA let you finance the upfront mortgage insurance premium or funding fee. ### Which closing costs can’t be negotiated? Transfer and recording taxes are set by state and local law, though who pays them can be negotiated. The escrow deposit depends on your tax and insurance due dates. Both still appear on the Loan Estimate in sections E and G. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/how-should-i-use-lender-credits-and-points-also-called-discount-points-en-136/) — Cost of one discount point (share of loan amount) (Oct 19, 2023) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-my-final-mortgage-costs-increase-from-what-was-on-my-loan-estimate-en-172/) — Cumulative limit on increases for recording fees and lender-listed services (Sep 11, 2024) - [Fannie Mae Selling Guide B3-4.1-02](https://selling-guide.fanniemae.com/sel/b3-4.1-02/interested-party-contributions-ipcs) — Fannie Mae: most an interested party may pay toward closing costs, principal residence or second home, LTV/CLTV above 90%; Fannie Mae: most an interested party may pay toward closing costs, principal residence or second home, LTV/CLTV 75.01–90%; Fannie Mae: most an interested party may pay toward closing costs, principal residence or second home, LTV/CLTV 75% or less (May 7, 2025) - [FDIC Affordable Mortgage Lending Guide (summary of HUD Handbook 4000.1)](https://www.fdic.gov/resources/bankers/affordable-mortgage-lending-center/guide/part-1-docs/203b-mortgage-insurance-program.pdf) — FHA: most a seller or other interested party may contribute toward your costs (share of the lower of price or appraised value) (Oct 29, 2026) - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) — VA limit on seller concessions (share of the home’s reasonable value) (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-exactly-happens-when-a-mortgage-lender-checks-my-credit-en-2005/) — Mortgage credit checks within this window count as one inquiry (Aug 28, 2026) - [DC Department of Housing and Community Development: Home Purchase Assistance Program](https://dhcd.dc.gov/service/home-purchase-assistance-program) — HPAP closing cost assistance, up to (FY2027) - [San Diego Housing Commission: First-Time Homebuyer](https://www.sdhc.org/housing-opportunities/first-time-homebuyer/) — San Diego Housing Commission middle-income closing-cost grant (Feb 1, 2026) - [Texas Department of Housing and Community Affairs](https://welcomehome.tdhca.texas.gov/uploads/My-First-Texas-Home-Program-Matrix-TMS.pdf) — TDHCA My First Texas Home assistance, low end (share of loan); TDHCA My First Texas Home assistance, high end (share of loan) (Program matrix Aug 17, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) — You receive the Closing Disclosure at least this many business days before closing (Oct 28, 2026) - [CFPB: Loan Estimate explainer](https://www.consumerfinance.gov/owning-a-home/loan-estimate/) - [Fannie Mae Selling Guide B3-4.1-02: Interested Party Contributions](https://selling-guide.fanniemae.com/sel/b3-4.1-02/interested-party-contributions-ipcs) - [VA: Funding fee and closing costs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) _General information, not financial advice._ --- # How to pay for a home renovation > HELOC, home equity loan, cash-out refinance, FHA 203(k), Fannie Mae HomeStyle or savings: the cost of one $60,000 project each way, and who each suits. URL: https://mortgage-math-us.com/blog/how-to-pay-for-a-home-renovation/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer If you have enough equity and a low-rate mortgage you want to keep, a **home equity loan or HELOC** is usually the cheapest way to borrow: $60,000 over 15 years at an example 8.25% costs about **$582 a month**. A cash-out refinance makes sense mainly when your current rate is at or above today’s 7.24% average. If equity is thin or you’re buying a fixer-upper, an **FHA 203(k)** or **Fannie Mae HomeStyle** loan lends against the value after the work. Savings remain the cheapest option of all when the project can wait. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Prime rate, the base for most HELOCs | 7% | [Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/) | Oct 28, 2026 | | 30-year fixed average, used for refinance examples | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | FHA Limited 203(k) maximum repair cost | $75,000 | [HUD Mortgagee Letter 2024-13](https://www.hud.gov/sites/dfiles/OCHCO/documents/2024-13hsgml.pdf) | Jul 9, 2024 | | FHA Standard 203(k) minimum repair cost | $5,000 | [HUD Program Comparison Fact Sheet (203(k), HomeStyle, CHOICERenovation)](https://www.hud.gov/sites/dfiles/SFH/documents/MO_203k_Program_Comparison_FS.pdf) | Nov 4, 2024 | | HomeStyle renovation cost cap (share of as-completed value) | 75% | [Fannie Mae Selling Guide B5-3.2-02](https://selling-guide.fanniemae.com/sel/b5-3.2-02/homestyle-renovation-mortgages-loan-and-borrower-eligibility) | Dec 10, 2025 | | Refinance costs, low end (Freddie Mac) | 3% | [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) | Oct 28, 2026 | ## Start with two numbers: the project cost and your usable equity Every financing choice for a renovation comes down to what you can borrow against and what it does to the mortgage you already have. Before you call a lender, write down: 1. **The project cost**, from written bids, plus a cushion for surprises. 2. **Your usable equity** — the home’s value times the lender’s combined loan-to-value (CLTV) limit, minus what you owe. Lenders set their own CLTV limits; 80% is used here as an example. On a $400,000 home with $220,000 owed, that leaves $100,000 — plenty for a $60,000 kitchen and bath remodel. On a $320,000 home with $262,000 owed, it leaves $0. The [how much equity can you borrow](https://mortgage-math-us.com/home-equity/how-much-equity/) guide walks through the math. Those two households need different answers, and so does a buyer who wants to fix up a home before moving in. ## One $60,000 project, four ways to pay Take the first household: a $400,000 home, $220,000 left on a 4% mortgage with 25 years to go, and a $60,000 project. The HELOC rate is the prime rate (7%) plus an example 1-point margin; the home equity loan rate is an example one point above today’s 30-year average, rounded. Neither is a quote. *Paying for a $60,000 renovation with $100,000 of usable equity* | Option | Rate | Monthly cost | Interest if you use the full term | Replaces your mortgage? | |---|---|---|---:|---| | Savings | — | none once the work is paid for | $0 | No | | HELOC | 8% variable (example) | $400 interest-only for 10 years, then $502 | $108,447 | No | | Home equity loan, 15 years | 8.25% fixed (example) | $582 | $44,775 | No | | Cash-out refinance, 30 years | 7.24% on the whole loan | $804 more than today | $290,786 more than the old loan | Yes | Three things stand out: - **The cash-out refinance is the most expensive by far** in this case, because it moves $220,000 from 4% to 7.24% as well as funding the work. Its extra interest is about 6 times the home equity loan’s. The effective rate behind that is worked out in [is refinancing worth it?](https://mortgage-math-us.com/blog/is-refinancing-worth-it/) - **The home equity loan has the lower total interest** of the two second-lien options here, because it is repaid over 15 years instead of up to 30 years.** Its payment is fixed. The [home equity loan guide](https://mortgage-math-us.com/home-equity/home-equity-loan/) covers terms and costs. - **The HELOC has the lowest starting payment** but the most interest if you only pay interest during the draw period. Paying principal from the start closes most of that gap. How the line works is in the [HELOC guide](https://mortgage-math-us.com/home-equity/heloc/). If your current mortgage rate is at or above today’s average, the picture changes: a cash-out refinance no longer reprices a cheap loan, and it can beat a second lien. [Cash-out refinance vs HELOC](https://mortgage-math-us.com/home-equity/cash-out-vs-heloc/) runs that comparison. ## Match the loan to how the contractor gets paid Renovations are paid in stages — a deposit, then payments as work is finished. A home equity loan hands you the whole amount at closing and charges interest on all of it from day one. A HELOC charges interest only on what you have drawn. Say the contractor is paid in thirds: at the start, after three months and at completion after six months. Interest during those six months comes to about $2,475 on the home equity loan and $1,200 on the HELOC. The gap is modest; the bigger benefit is that a HELOC leaves unused credit for overruns without a second application. > **Watch out: Lines can be frozen** > > A lender can freeze or reduce a HELOC if the home’s value drops significantly or your finances change materially. Don’t count on undrawn credit to finish a project that is already under way — the [HELOC guide](https://mortgage-math-us.com/home-equity/heloc/) explains when a freeze is allowed. ## Renovation mortgages: lending on the after-repair value Equity loans are limited by what the home is worth *today*. Two mainstream programs instead size the loan on what it will be worth *after* the work, and pay the contractor from an escrow account as the work is inspected: *Renovation mortgage programs compared* | | FHA Limited 203(k) | FHA Standard 203(k) | Fannie Mae HomeStyle Renovation | |---|---|---|---| | Renovation amount | Up to $75,000 | At least $5,000 | Up to 75% of the as-completed value | | Type of work | Non-structural repairs | Structural work allowed | Any permanent improvement meeting local codes | | 203(k) consultant | Optional | Required | Not required | | Time to finish | 9 months | 12 months | 15 months from closing | | Who can use it | Owner-occupants | Owner-occupants | Principal residences, one-unit second homes and investment properties | | Down payment | From 3.5% | From 3.5% | From 3% for eligible buyers | | Mortgage insurance | FHA MIP, usually for the life of the loan | FHA MIP, usually for the life of the loan | PMI above 80% LTV, cancellable | Both work for a purchase or a refinance. FHA caps the base loan at 110% of the after-improved value and applies its usual loan-to-value limits; HomeStyle uses the as-completed appraisal, and if you can’t live in the home during the work it can finance up to 6 months of payments. The trade-off for both is process: detailed bids, an appraisal on plans, inspections before each draw, and contractors the lender accepts. ## When equity is thin: borrowing against the finished home Now the second household. The home is worth $320,000, they owe $262,000 — 82% of its value — and an 80% CLTV cap leaves nothing for a HELOC or home equity loan. The same $60,000 project is expected to lift the value to $390,000. > **Worked example: HomeStyle refinance on a $390,000 as-completed value** > > | | Amount | > |---|---:| > | Current balance | $262,000 | > | Renovation budget | $60,000 | > | Closing costs (3%, financed) | $9,660 | > | **New loan** | **$331,660** | > | Loan as a share of the as-completed value | 85% | > | HomeStyle renovation cap (75% of $390,000) | $292,500 | > | Principal and interest at 7.24%, 30 years | $2,260 | > | PMI (example rate) | $166 | The renovation budget is far below the cap, so the loan-to-value ratio is what the lender will focus on. Because the whole mortgage is replaced, this route makes most sense when the current rate is close to today’s average — otherwise the repricing cost shown in the first table applies here too. ## Buying a fixer-upper: 203(k) or HomeStyle For a buyer, a renovation mortgage avoids a second loan right after closing. Say a home costs $300,000, needs $60,000 of work and should be worth $380,000 when done. The project fits under the $75,000 Limited 203(k) cap if the work is non-structural. *Buying at $300,000 with $60,000 of work (example rate 7.24% for both)* | | FHA 203(k), 3.5% down | HomeStyle, 5% down | |---|---:|---:| | Price plus renovation | $360,000 | $360,000 | | Down payment | $12,600 | $18,000 | | Loan amount | $353,480 (with 1.75% upfront MIP) | $342,000 | | Principal and interest | $2,409 | $2,331 | | Mortgage insurance | $159 MIP | $171 PMI (example) | | **Monthly total before taxes and insurance** | **$2,568** | **$2,502** | At the same rate, **HomeStyle** costs $66 a month less here. FHA needs less cash up front and is more forgiving on credit, while HomeStyle’s PMI can be cancelled later; actual FHA and conventional quotes often differ, so compare both Loan Estimates. The [FHA loans guide](https://mortgage-math-us.com/loan-types/fha-loans/) covers the credit and MIP rules. ## Paying cash, or part cash Savings carry no interest, no lien and no closing costs. If the project can wait, saving $1,000 a month covers $60,000 in 60 months. The 15-year home equity loan above costs $44,775 in interest — about 45 months of that saving. Paying part in cash and borrowing the rest shrinks every number in the first table. > **Tip: Keep an emergency cushion** > > Don’t drain the account you rely on for job loss or repairs. Renovations often uncover extra work, and a project stalled halfway can cost more than borrowing would have. If you do borrow against the home, interest on a home equity loan or HELOC is tax-deductible only when the money is used to buy, build or substantially improve the home that secures it — a renovation usually qualifies. The [home equity interest guide](https://mortgage-math-us.com/home-equity/home-equity-interest-deduction/) has the limits. ## Which option fits which situation *Who each option suits* | Option | Best fit | |---|---| | Savings | Projects that can wait, or the first part of any project | | Home equity loan | A fixed-price project, plenty of equity and a low-rate first mortgage to keep | | HELOC | Work paid in stages or with an uncertain final cost, and room for a variable rate | | Cash-out refinance | A current rate at or above today’s average, and a large project | | FHA Limited or Standard 203(k) | Buying or refinancing with little equity or a modest credit score; owner-occupants only | | Fannie Mae HomeStyle | Little equity today but strong value after the work; also second homes and rentals | **Before you sign a contractor’s agreement** 1. **Get written bids** — Two or three detailed bids give lenders and appraisers something to work from. 2. **Check your equity and rate** — Usable equity at a lender’s CLTV limit, and your current rate against today’s average. 3. **Price two routes** — Ask for Loan Estimates on a second lien and on a renovation mortgage or refinance. 4. **Line up the draw schedule** — Renovation loans pay contractors after inspections; agree the timetable before work starts. 5. **Keep a reserve** — Hold back cash or credit for the surprises renovations tend to find. ## Frequently asked questions ### What is the cheapest way to finance a renovation? Savings, if the project can wait. Among loans, a second lien usually costs less than refinancing when your current rate is below today’s 7.24% average: in our example a 15-year home equity loan for $60,000 costs $44,775 in interest, against $290,786 of extra interest for a cash-out refinance. ### Can I get a renovation loan without much equity? Yes. FHA 203(k) and Fannie Mae HomeStyle loans are sized on the home’s value after the work. HomeStyle allows renovation costs up to 75% of the as-completed value, and FHA caps the base loan at 110% of the after-improved value. ### What is the difference between a Limited and a Standard 203(k)? A Limited 203(k) covers non-structural work up to $75,000 and must be finished within 9 months. A Standard 203(k) covers larger projects including structural work, starts at $5,000, requires an FHA-approved 203(k) consultant and allows 12 months. ### Can I use a renovation loan on a rental property? Not with FHA: 203(k) loans are for owner-occupants. Fannie Mae HomeStyle Renovation also allows one-unit second homes and one-unit investment properties. ### Is a HELOC or a home equity loan better for a remodel? A HELOC suits work paid in stages or an uncertain budget, since you pay interest only on what you draw. A home equity loan suits a fixed-price contract and a fixed payment. In our example the HELOC starts at $400 a month interest-only and the 15-year loan at $582. ### Is the interest on a renovation loan tax-deductible? Mortgage interest on a renovation mortgage follows the usual home mortgage rules. For home equity loans and HELOCs, the IRS allows the deduction only when the money buys, builds or substantially improves the home that secures the loan, within the $750,000 debt limit, and only if you itemize. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/) — Bank prime loan rate (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) — Example HELOC draw period (CFPB); HELOC repayment period, often up to (CFPB) (Aug 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) — Typical refinance closing costs, low end (share of loan principal) (Oct 28, 2026) - [Fannie Mae Selling Guide B5-3.2-02](https://selling-guide.fanniemae.com/sel/b5-3.2-02/homestyle-renovation-mortgages-loan-and-borrower-eligibility) — Fannie Mae HomeStyle Renovation: renovation costs may not exceed this share of the as-completed value (purchases: of the lesser of price plus renovation costs or as-completed value); Fannie Mae HomeStyle Renovation: payments (PITIA) that may be financed when the home can’t be lived in during the work (Dec 10, 2025) - [HUD Mortgagee Letter 2024-13](https://www.hud.gov/sites/dfiles/OCHCO/documents/2024-13hsgml.pdf) — FHA Limited 203(k): most the total rehabilitation costs may be; FHA 203(k): base loan amount may not exceed this share of the after-improved value; FHA Limited 203(k): repairs must be finished within (Jul 9, 2024) - [HUD Program Comparison Fact Sheet (203(k), HomeStyle, CHOICERenovation)](https://www.hud.gov/sites/dfiles/SFH/documents/MO_203k_Program_Comparison_FS.pdf) — FHA Standard 203(k): minimum renovation cost (Nov 4, 2024) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment; Minimum down payment on some conventional loans (Oct 28, 2026) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA upfront mortgage insurance premium; FHA annual MIP, 30-year loan, more than 95% LTV (Feb 22, 2023) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Fannie Mae FAQs: HomeStyle Renovation](https://singlefamily.fanniemae.com/learning-center/originating-and-underwriting/faqs-homestyle-renovation) — Fannie Mae HomeStyle Renovation: work must be completed within this long of closing (Oct 29, 2026) - [IRS Publication 936](https://www.irs.gov/pub/irs-pdf/p936.pdf) — Mortgage debt on which interest is deductible (loans after Dec 15, 2017) (Tax year 2025) - [HUD: Program comparison fact sheet — 203(k), HomeStyle and CHOICERenovation](https://www.hud.gov/sites/dfiles/SFH/documents/MO_203k_Program_Comparison_FS.pdf) - [Fannie Mae: HomeStyle Renovation mortgage (consumer page)](https://yourhome.fanniemae.com/buy/homestyle-renovation) - [IRS Publication 936, Home Mortgage Interest Deduction](https://www.irs.gov/publications/p936) _General information, not financial advice._ --- # Is refinancing worth it? Start with what you want it to do > Refinancing to cut the rate, drop FHA insurance, shorten the term or take cash out: each goal has its own test, worked out at today’s rates. URL: https://mortgage-math-us.com/blog/is-refinancing-worth-it/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer It depends on the goal. To **cut your rate**, a refinance one point lower on a $340,000 balance saves $303 a month and is fully paid back in about **3 years 1 month** with costs at 3% of the loan. To **drop FHA mortgage insurance**, it can pay even at the same rate. To **shorten the term**, compare it with paying extra on the loan you have. To **take cash out**, judge the effective rate on the new money: $50,000 taken from a 3.75% loan costs about **19.33%** a year. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | 30-year fixed average used as the new rate | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | 15-year fixed average used for the shorter term | 6.6% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | Refinance costs, low end (Freddie Mac) | 3% | [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) | Oct 28, 2026 | | Refinance costs, high end (Freddie Mac) | 6% | [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) | Oct 28, 2026 | | FHA annual MIP on most 30-year loans | 0.55% | [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) | Feb 22, 2023 | | Fannie Mae cash-out limit (one-unit home) | 80% | [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) | Apr 1, 2026 | ## Name the goal before you look at rates “Rates are down, should I refinance?” is the wrong first question. A refinance replaces your loan with a new one and charges you 3%–6% of the principal to do it, so it is worth it only if it does a specific job better than the cheaper alternatives. There are four common jobs, and each has its own pass-or-fail number. *Four reasons to refinance and the test for each* | Your goal | What “worth it” means | The number to check | Cheaper alternative to rule out first | |---|---|---|---| | Lower the rate | Savings repay the costs before you move or refinance again | Full break-even month vs years you’ll stay | None — but shop several lenders | | Drop mortgage insurance | Payment without MIP or PMI is lower, net of costs | Payment change and break-even | Cancelling PMI on a conventional loan | | Pay the loan off sooner | Less total interest after closing costs | Interest + costs vs prepaying | Extra principal on the current loan | | Take cash out | The money costs less than other ways to borrow it | Effective rate on the new money | A HELOC or home equity loan | The examples below use today’s 7.24% 30-year and 6.6% 15-year averages as the new rates, and closing costs at the low end of Freddie Mac’s range unless stated. Your current rate is an example set relative to today’s average. The [break-even guide](https://mortgage-math-us.com/refinancing/break-even/) explains the formula behind the numbers. ## Goal 1: a lower rate — measured against how long you’ll stay Rate cuts are where most people start, and the test is simple: do the savings repay the costs before the loan ends for you — by a sale, a move or another refinance? > **Worked example: A one-point cut on $340,000 with 27 years left** > > | | Current loan | New 30-year loan | > |---|---:|---:| > | Rate | 8.24% | 7.24% | > | Principal and interest | $2,620 | $2,317 | > | Monthly saving | | $303 | > | Closing costs (3%, paid in cash) | | $10,200 | > | Simple break-even (costs ÷ saving) | | 2 years 10 months | > | Full break-even (counts the balance you still owe) | | 3 years 1 month | The full break-even comes later than the simple one because the new loan starts over at 30 years and pays down principal more slowly at first. Even so, the lower rate means $14,734 less interest over the life of the new loan than the old one would have charged. Costs matter as much as the rate. At the high end of the range the same refinance costs $20,400 and takes 6 years 5 months to pay back: *Net gain or loss on the $340,000 refinance by how long you keep the loan* | You keep the new loan for | Costs at 3% ($10,200) | Costs at 6% ($20,400) | |---|---:|---:| | 2 years | −$3,506 | −$13,706 | | 4 years | +$2,926 | −$7,274 | | 7 years | +$11,923 | +$1,723 | | 10 years | +$19,854 | +$9,654 | If you can’t say with some confidence that you’ll stay past the break-even month, the refinance is a bet, not a saving. Try your own figures in the [refinance break-even calculator](https://mortgage-math-us.com/tools/refinance-break-even-calculator/?balance=340000&cur=8.24&rem=27&new=7.24&term=30&costs=10200&stay=7), which opens with this example filled in. ## Goal 2: dropping FHA mortgage insurance Here the rate can stay the same and the refinance still pays. If your FHA loan started above 90% of the home’s value — less than 10% down — the annual [mortgage insurance premium](https://mortgage-math-us.com/glossary/mortgage-insurance-premium/) of 0.55% generally lasts for the life of the loan. It doesn’t cancel at 20% equity the way PMI does, so refinancing into a conventional loan with at least 20% equity is the usual way out. Say you owe $285,000 on an FHA loan at a rate equal to today’s 7.24% average, with 28 years left, and your home is now worth $380,000 — so you owe 75% of its value. This year’s MIP adds about **$131 a month** to $1,982 of principal and interest. - **Same rate, same 28 years left:** the payment falls by exactly the MIP. $8,550 of costs pay back in 5 years 6 months, and over the remaining term you end up $20,394 ahead — roughly $28,944 of MIP you no longer pay, less the costs. - **Same rate, new 30-year term:** the payment falls further, to $1,942 ($171 less), but two extra years of payments add $33,214 of interest. Counting costs, you finish $12,820 behind over the life of the loan. - **How much rate you can give up:** on the matched term, the new loan could carry up to 7.92% — about 0.68 of a percentage point above your current rate — before the payment went up. The [guide to refinancing out of PMI or MIP](https://mortgage-math-us.com/refinancing/refinance-to-remove-pmi/) covers the FHA rules and why most conventional borrowers can cancel PMI with a letter instead. ## Goal 3: paying the loan off sooner A shorter term raises the payment, so there is no monthly saving to divide costs by. The right comparison is with the free alternative: keep your loan and send the same extra amount as principal each month. Say you owe $220,000 with 25 years left at 7.74%. A 15-year refinance at today’s 6.6% average raises the payment by $268. *Same extra money, two ways to pay off $220,000 sooner* | Option | Monthly payment | Paid off in | Interest | Closing costs | Interest + costs | |---|---:|---:|---:|---:|---:| | Keep the loan as it is | $1,660 | 25 years | $278,084 | $0 | $278,084 | | Keep it and pay $268 extra a month | $1,929 | 17 years 4 months | $179,250 | $0 | $179,250 | | Refinance into a 15-year at 6.6% | $1,929 | 15 years | $127,139 | $6,600 | $133,739 | Here **the 15-year refinance** costs $45,510 less than paying extra on the loan you have. The 15-year refinance wins when its rate is well below your current one, because a lower rate works on every dollar of the balance for the whole term. When the gap is small, prepaying usually wins: there are no closing costs, and you can stop paying extra in a tight month — a 15-year payment is a contract. You can test the prepaying side in the [extra payment calculator](https://mortgage-math-us.com/tools/extra-payment-calculator/?loan=220000&rate=7.74&term=25&extra=268). The trade-offs of the two terms are set out in [15-year vs 30-year mortgage](https://mortgage-math-us.com/blog/15-year-vs-30-year-mortgage/). ## Goal 4: taking cash out — find the real rate on the new money A [cash-out refinance](https://mortgage-math-us.com/glossary/cash-out-refinance/) doesn’t only price the cash you take. It reprices your whole balance. If your current rate is below today’s, that is the hidden cost. > **Worked example: $50,000 out of a $240,000 loan at 3.75%, home worth $420,000** > > | | Keep the old loan | Cash-out refinance | > |---|---:|---:| > | Loan amount | $240,000 | $298,700 (incl. $8,700 costs) | > | Rate | 3.75% | 7.24% | > | Years left | 25 | 30 | > | Principal and interest | $1,234 | $2,036 | > | Extra interest over the loan’s life | | $303,954 | > | **Effective rate on the $50,000** | | **19.33%** | The effective rate is the interest rate at which $50,000 received today equals every extra payment you make because of it — the $802 monthly increase for 25 years, then five more years of the full payment. It is higher than the new loan’s headline rate of 7.24% because the refinance also moves $240,000 from 3.75% to today’s rate. The new loan is 71% of the home’s value, inside Fannie Mae’s 80% cash-out limit, so it qualifies; the question is whether the money is worth that price. Compare the effective rate with a home equity line of credit, which is usually priced at the prime rate (7%) plus a margin and leaves your first mortgage alone. The [cash-out refinance vs HELOC](https://mortgage-math-us.com/home-equity/cash-out-vs-heloc/) guide runs that comparison in detail. If your current rate is *above* today’s, the logic flips and the cash-out may be the cheaper option. ## The scorecard: what to compare besides the payment A lower monthly payment is the number lenders lead with and the least reliable guide to whether a refinance pays. Put the four examples side by side: *The four examples on the same measures* | Goal | Payment change | Costs | Full break-even | Lifetime interest change | |---|---:|---:|---:|---:| | Lower the rate | −$303 | $10,200 | 3 years 1 month | −$14,734 | | Drop FHA MIP | −$131 | $8,550 | 5 years 6 months | $0 (and $28,944 of MIP gone) | | Shorten to 15 years | +$268 | $6,600 | 2 years 4 months | −$150,945 | | Take $50,000 cash out | +$802 | $8,700 (rolled in) | not a saving | +$303,954 | Three things explain most of the gaps between “lower payment” and “better deal”: - **Total interest.** The cash-out adds $303,954 of lifetime interest — the price of the cash plus the repricing of the old balance. A rate cut that restarts a loan with many years already paid off can add interest too. - **The reset term.** Each new 30-year loan adds back the years you had already paid. Ask whether the lender offers a term that matches the years you have left, as the FHA example shows. - **Costs.** 3%–6% of the loan is a wide range — $10,200–$20,400 on $340,000. Compare the [Loan Estimates](https://mortgage-math-us.com/glossary/loan-estimate/) from several lenders line by line; lender fees and points are where offers differ most. > **Tip: Count only the costs the refinance creates** > > Prepaid interest, a new escrow deposit and insurance aren’t refinance costs — you pay them either way, and the old escrow balance usually comes back to you. Leave them out of the break-even math. ## Deciding in six steps **How to decide whether to refinance** 1. **Write down the goal** — Lower rate, no mortgage insurance, earlier payoff or cash. Then name the cheaper alternative you’ll compare against. 2. **Pull your current numbers** — Balance, rate and months left from your statement, plus a realistic estimate of the home’s value. 3. **Get Loan Estimates on the same day** — Ask two or three lenders for the same loan amount and term, and total sections A, B, C and E. 4. **Run the full break-even** — Use the payment saving and the balance you’ll owe, not the payment alone. 5. **Compare totals over the years you’ll stay** — Interest plus costs for the refinance against the alternative over that period. 6. **Check the warning signs** — A planned move, a prepayment penalty or a loan that is nearly paid off can turn a good-looking deal into a loss. The last step has its own guide: [when not to refinance](https://mortgage-math-us.com/refinancing/when-not-to-refinance/) walks through the six situations where a refinance usually loses money. ## Frequently asked questions ### How much lower does my rate need to be to refinance? There is no fixed rule — it depends on costs and how long you stay. In our example a one-point cut on $340,000 pays back in 3 years 1 month with costs at 3% of the loan, but takes 6 years 5 months at 6%. A smaller cut stretches both. ### Does refinancing restart my mortgage? Only if you choose a new 30-year term. Ask whether the lender offers a term that matches the years you have left: that keeps your payoff date while still lowering the rate. Restarting at 30 years lowers the payment more but adds payments at the end. ### Should I refinance to get rid of PMI? Usually not on a conventional loan: you can ask your servicer to cancel PMI at 80% of the original value, and it ends automatically at 78%. FHA annual MIP on loans with less than 10% down generally lasts for the life of the loan, so a refinance to conventional is the usual way out. ### Is it worth refinancing into a 15-year loan? Compare it with paying the same extra amount on your current loan. In our example the 15-year refinance at 6.6% costs $133,739 in interest and fees, against $179,250 for prepaying a 7.74% loan — the refinance wins by $45,510. ### What does a refinance cost? Freddie Mac puts typical refinance costs at 3%–6% of the loan principal — $10,200–$20,400 on a $340,000 loan. Rolling them into the loan avoids paying cash but adds interest and pushes the break-even later. ### Is a cash-out refinance a good way to borrow? Only if the effective rate on the cash beats the alternatives. Taking $50,000 out of a 3.75% loan at today’s 7.24% average costs about 19.33% a year on the new money in our example, because the whole balance moves to the higher rate. ### How soon can I refinance after buying? It depends on the loan. A Fannie Mae cash-out refinance generally requires the existing first mortgage to be at least 12 months old, and an FHA Streamline needs 210 days since closing and 6 payments made. Check your note for a prepayment penalty as well. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average; 15-year fixed rate, national weekly average (Week of Oct 29, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) — Typical refinance closing costs, low end (share of loan principal); Typical refinance closing costs, high end (share of loan principal) (Oct 28, 2026) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA annual MIP, 30-year loan, more than 95% LTV; FHA annual MIP ends after 11 years when the starting LTV is at or below (Feb 22, 2023) - [Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/) — Bank prime loan rate (Oct 28, 2026) - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae cash-out refinance maximum LTV, one-unit principal residence (Apr 1, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) — Ask your servicer to cancel PMI at this share of original value; PMI ends automatically at this share of original value (Oct 28, 2026) - [Fannie Mae Selling Guide B2-1.3-03](https://selling-guide.fanniemae.com/sel/b2-1.3-03/cash-out-refinance-transactions) — Fannie Mae cash-out: existing first mortgage must be at least (Dec 10, 2025) - [FDIC Affordable Mortgage Lending Guide (summary of HUD Handbook 4000.1)](https://www.fdic.gov/system/files/2024-07/streamline-refinance.pdf) — FHA Streamline: days that must pass since the current loan closed; FHA Streamline: monthly payments already made (Oct 28, 2026) - [Freddie Mac: Costs of refinancing](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) - [CFPB: Loan Estimate explainer](https://www.consumerfinance.gov/owning-a-home/loan-estimate/) _General information, not financial advice._ --- # Getting a mortgage after bankruptcy or foreclosure > Waiting periods for Fannie Mae, VA and USDA loans after Chapter 7, Chapter 13, foreclosure or a short sale, the exceptions, and what to do meanwhile. URL: https://mortgage-math-us.com/blog/mortgage-after-bankruptcy-or-foreclosure/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer For a conventional loan sold to Fannie Mae, the wait is 4 years after a Chapter 7 discharge, 2 years after a Chapter 13 discharge, 4 years after a short sale or deed-in-lieu and 7 years after a foreclosure — cut to as little as 2 years with documented extenuating circumstances. Government loans are shorter: VA generally disregards a bankruptcy discharged more than 2 years ago, and USDA treats a Chapter 7 or foreclosure as no longer adverse after 36 months. During a Chapter 13 plan, VA and USDA can both approve a new loan after 12 months of on-time payments, with court or trustee approval. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Fannie Mae wait after Chapter 7 | 4 years | [Fannie Mae Selling Guide B3-5.3-07](https://selling-guide.fanniemae.com/sel/b3-5.3-07/significant-derogatory-credit-events-waiting-periods-and-re-establishing-credit) | Aug 7, 2019 | | Fannie Mae wait after foreclosure | 7 years | [Fannie Mae Selling Guide B3-5.3-07](https://selling-guide.fanniemae.com/sel/b3-5.3-07/significant-derogatory-credit-events-waiting-periods-and-re-establishing-credit) | Aug 7, 2019 | | Fannie Mae wait after a short sale or deed-in-lieu | 4 years | [Fannie Mae Selling Guide B3-5.3-07](https://selling-guide.fanniemae.com/sel/b3-5.3-07/significant-derogatory-credit-events-waiting-periods-and-re-establishing-credit) | Aug 7, 2019 | | VA: bankruptcy older than this may be disregarded | 2 years | [U.S. Department of Veterans Affairs: Credit standards FAQ](https://homeloans.va.gov/CreditStandards/runtime/faq/020100000050.html) | Oct 29, 2026 | | USDA: Chapter 7 no longer adverse after | 36 months | [USDA Rural Development HB-1-3555, Chapter 10 (Attachment 10-A)](https://www.rd.usda.gov/sites/default/files/RD-SFH-3555CHAPTER10.pdf) | Mar 19, 2020 | | USDA: foreclosure or short sale no longer adverse after | 36 months | [USDA Rural Development HB-1-3555, Chapter 10 (Attachment 10-A)](https://www.rd.usda.gov/sites/default/files/RD-SFH-3555CHAPTER10.pdf) | Mar 19, 2020 | ## Waiting periods by loan type Each loan program sets its own clock, measured from the discharge or dismissal date of a bankruptcy, or the completion date of a foreclosure, short sale or deed-in-lieu. The table puts the official periods side by side. *Waiting periods after a significant credit event* | Event | Fannie Mae | Fannie Mae, extenuating circumstances | VA | USDA guaranteed | |---|---|---|---|---| | Chapter 7 bankruptcy | 4 years | 2 years | Generally 2 years; 12 months at the earliest | 3 years | | Chapter 13, discharged | 2 years | 2 years (no reduction) | — | Completed plan accepted; recent completions need more documentation | | Chapter 13, still paying | Clock starts at discharge or dismissal | — | After 12 months of on-time plan payments, with trustee or court approval | After 12 months of on-time payments, with court or trustee permission | | Chapter 13, dismissed | 4 years | 2 years | — | — | | More than one bankruptcy in seven years | 5 years | 3 years | — | — | | Foreclosure | 7 years | 3 years, with limits | Not disqualifying in itself; judged like a bankruptcy | 3 years | | Short sale or deed-in-lieu | 4 years | 2 years | Not set separately — ask the lender | 3 years | A dash means the program’s rules don’t set a separate period for that case, so it falls under the lender’s general credit review. **FHA** sets its periods in HUD’s Single Family Housing Policy Handbook 4000.1, which HUD updates regularly. They aren’t listed here; ask an FHA lender to check your dates against the current handbook, and see our [FHA loans guide](https://mortgage-math-us.com/loan-types/fha-loans/) for the program’s other rules. ## Chapter 7 vs Chapter 13: why the chapter matters A **Chapter 7** bankruptcy usually wipes out most unsecured debts within months, and the clock starts at discharge. For a conventional loan the wait is 4 years, or 2 years if the bankruptcy was caused by circumstances beyond your control. A **Chapter 13** repays creditors through a court-approved plan over several years. Because you are already making regular payments, government programs let you apply before the plan ends: VA and USDA can both approve a new loan after 12 months of on-time payments, in both cases with permission from the trustee or the court. Fannie Mae waits for the end of the case — only 2 years after a discharge, but 4 years if the case was dismissed without completing the plan. That difference is worth knowing if your plan is in trouble: on a conventional loan, finishing a Chapter 13 instead of having it dismissed brings your next mortgage 2 years closer. ## Foreclosure, short sale and deed-in-lieu How the home was given up matters as much as when. Under Fannie Mae’s rules a [short sale](https://mortgage-math-us.com/glossary/short-sale/) or deed-in-lieu means a 4-year wait, while a completed [foreclosure](https://mortgage-math-us.com/glossary/foreclosure/) means 7 years — 3 years longer. If you are behind on payments now and talking to your servicer, that gap is a reason to ask about alternatives to foreclosure early. Even with extenuating circumstances, a foreclosure brings extra limits between years 3 and 7: > **Worked example: Foreclosure completed September 16, 2024, extenuating circumstances documented, buying a $300,000 home** > > | | Fannie Mae | > |---|---| > | Earliest closing with extenuating circumstances | September 16, 2027 | > | Maximum loan-to-value until year 7 | 90% | > | Minimum down payment on $300,000 | $30,000 | > | Allowed transactions | Buying a principal residence, or a limited cash-out refinance | > | Second homes, investment property, cash-out refinance | Not until September 16, 2031 | > | Without extenuating circumstances | Not until September 16, 2031 | > > A short sale or deed-in-lieu completed the same day would allow a Fannie Mae loan from September 16, 2028, or September 16, 2026 with extenuating circumstances. A USDA loan would be possible without a credit exception from September 16, 2027. VA rules say a previous foreclosure doesn’t disqualify you on its own; the lender weighs it the same way as a bankruptcy. If the earlier loan was a VA loan and the VA paid a claim, though, that entitlement can’t be restored until the loss is repaid — see [using a VA loan twice](https://mortgage-math-us.com/blog/using-a-va-loan-twice/). ## Your dates, worked out Here is the earliest date each program would consider a new loan for someone whose Chapter 7 bankruptcy was discharged on June 2, 2025. *Earliest dates after a Chapter 7 discharged June 2, 2025* | Loan | Standard | Earlier, if | |---|---|---| | Fannie Mae conventional | June 2, 2029 | June 2, 2027 with documented extenuating circumstances | | VA | June 2, 2027 | June 2, 2026 if credit is re-established and the cause was beyond your control | | USDA guaranteed | June 2, 2028 | Sooner only with a lender credit exception or an automated Accept | The first program that opens up in this case does so on June 2, 2027. Fannie Mae measures to the date the new loan is disbursed (on manually underwritten loans) and USDA to the date you apply, so allow for the weeks between application and closing. These are program minimums: individual lenders can be stricter, and a pre-approval only follows if the rest of the file — income, debts and a rebuilt credit history — works too. ## Extenuating circumstances: what counts Fannie Mae defines extenuating circumstances as **nonrecurring events beyond your control** that caused a sudden, significant and prolonged drop in income or a catastrophic rise in financial obligations. The documents it gives as examples — a layoff notice, severance papers, medical reports and bills, a divorce decree — show the kind of events that fit. By that definition, events within your control don’t qualify, and you must show you had no reasonable option other than to default. The lender has to document the claim: - papers confirming the event, such as a layoff notice, medical records or a divorce decree; - evidence of why you couldn’t solve the problem, such as insurance papers, listing agreements on a home you tried to sell, or tax returns from before, during and after a job loss; - a written explanation from you showing you had no reasonable option other than to default. USDA uses similar language — temporary, beyond your control and unlikely to recur — and lets the lender approve an exception without sending it to USDA. VA’s rules ask the same question when a bankruptcy is between 12 months and 2 years old. > **Note: Shorter isn’t always cheaper** > > Coming back early with extenuating circumstances usually means manual underwriting or tighter limits, like Fannie Mae’s 90% loan-to-value cap after a foreclosure. Waiting a little longer can mean a lower rate and more loan options. ## What to do while you wait The waiting period is the minimum, not a guarantee. Lenders also want to see that you have re-established credit and a clean payment record since the event. Use the time: **How to prepare for a mortgage after bankruptcy or foreclosure** 1. **Get your papers together** — The discharge or dismissal order, the bankruptcy schedules, the foreclosure or short-sale settlement and, if it applies, every document for extenuating circumstances. 2. **Check your credit reports** — Make sure discharged debts show a zero balance and the dates are right; a wrong date can add months to your wait. 3. **Rebuild with small, regular credit** — One or two accounts paid on time every month, with low balances, show the payment history lenders look for. Our [credit score guide](https://mortgage-math-us.com/buying/credit-score/) shows how scores affect pricing. 4. **Keep rent and every bill on time** — A late payment after a bankruptcy is hard to explain away. 5. **Save a down payment and reserves** — Money in the bank offsets risk in underwriting and may be required, as with the $30,000 minimum down in the foreclosure example. 6. **Talk to a HUD-approved housing counselor** — Free or low-cost help with budgets and credit; call 800-569-4287 for a referral. ## When you apply Tell the lender about the bankruptcy or foreclosure up front; it is on your credit report and the application asks about it. Expect to provide the court documents, a letter of explanation and evidence of your payment history since. Ask which program and which underwriting route — automated or manual — the lender plans to use, because the waiting periods and documentation differ. Then run the numbers like any other buyer: the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/) shows what your income supports, and our guides to [VA loans](https://mortgage-math-us.com/loan-types/va-loans/) and [USDA loans](https://mortgage-math-us.com/loan-types/usda-loans/) cover the programs with the shortest waits. ## Frequently asked questions ### How long after a Chapter 7 bankruptcy can I get a mortgage? 4 years from the discharge for a Fannie Mae conventional loan, or 2 years with documented extenuating circumstances. VA generally disregards a bankruptcy discharged more than 2 years ago, and USDA treats it as no longer adverse after 36 months. ### Can I get a mortgage while still in Chapter 13? With VA and USDA loans, yes: VA and USDA can both approve a new loan after 12 months of on-time payments in the plan, with permission from the trustee or court. Fannie Mae’s waiting period only starts once the case is discharged or dismissed. ### How long after a foreclosure can I buy a house? For a Fannie Mae loan, 7 years from completion, or 3 years with extenuating circumstances and a maximum loan-to-value of 90%. USDA treats a foreclosure as no longer adverse after 36 months; VA weighs it like a bankruptcy. ### Is a short sale better than a foreclosure for buying again? For a Fannie Mae loan, yes: 4 years after a short sale or deed-in-lieu against 7 years after a foreclosure, and 2 years instead of 3 years with extenuating circumstances. ### What counts as extenuating circumstances? Nonrecurring events beyond your control that caused a sudden, significant and prolonged loss of income or a catastrophic increase in obligations — a layoff or serious illness, for example. You need documents proving the event and a written explanation. ### When does the waiting period start? On the discharge or dismissal date of the bankruptcy, or the completion date of the foreclosure, short sale or deed-in-lieu. Fannie Mae counts to the new loan’s disbursement date on manually underwritten loans; USDA counts to your application date. ## Sources - [Fannie Mae Selling Guide B3-5.3-07](https://selling-guide.fanniemae.com/sel/b3-5.3-07/significant-derogatory-credit-events-waiting-periods-and-re-establishing-credit) — Fannie Mae waiting period after a Chapter 7 or Chapter 11 bankruptcy (from discharge or dismissal); Fannie Mae waiting period after a Chapter 7 or Chapter 11 bankruptcy, with documented extenuating circumstances; Fannie Mae waiting period after a Chapter 13 bankruptcy discharge (Aug 7, 2019) - [U.S. Department of Veterans Affairs: Credit standards FAQ](https://homeloans.va.gov/CreditStandards/runtime/faq/020100000050.html) — VA: a bankruptcy discharged more than this long ago may be disregarded (Oct 29, 2026) - [38 CFR 36.4340(g)(2)](https://www.ecfr.gov/current/title-38/chapter-I/part-36/subpart-B/section-36.4340) — VA: after a bankruptcy discharge within this period, approval is generally not possible; VA: during a Chapter 13 plan, months of satisfactory payments before a new loan can be considered (trustee or judge must approve) (Jul 16, 2026) - [USDA Rural Development HB-1-3555, Chapter 10 (Attachment 10-A)](https://www.rd.usda.gov/sites/default/files/RD-SFH-3555CHAPTER10.pdf) — USDA guaranteed loan: a Chapter 7 bankruptcy discharged more than this long before application is not adverse credit; USDA guaranteed loan: a foreclosure, deed-in-lieu or short sale this long before application is not adverse credit; USDA guaranteed loan: months of a Chapter 13 plan with on-time payments before a new loan (plus court or trustee permission) (Mar 19, 2020) - [HUD](https://www.hud.gov/stat/sfh/housing-counseling) — HUD housing counseling referral line (Oct 28, 2026) - [Fannie Mae Selling Guide B3-5.3-07: Significant derogatory credit events — waiting periods](https://selling-guide.fanniemae.com/sel/b3-5.3-07/significant-derogatory-credit-events-waiting-periods-and-re-establishing-credit) - [38 CFR 36.4340: VA underwriting standards (bankruptcy and foreclosure)](https://www.ecfr.gov/current/title-38/chapter-I/part-36/subpart-B/section-36.4340) - [USDA Rural Development HB-1-3555, Chapter 10: Credit analysis](https://www.rd.usda.gov/sites/default/files/RD-SFH-3555CHAPTER10.pdf) - [HUD: Single Family Housing Policy Handbook 4000.1](https://www.hud.gov/hud-partners/single-family-handbook-4000-1) _General information, not financial advice._ --- # Getting a mortgage when you’re self-employed > How lenders turn two years of self-employed tax returns into qualifying income, when one year can work, what falling income does, and the non-QM options. URL: https://mortgage-math-us.com/blog/mortgages-for-the-self-employed/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer If you own 25% or more of a business, lenders generally want a 2-year history of self-employment income, taken from your tax returns rather than your revenue. They start with net profit, add back non-cash deductions such as depreciation and business use of your home, and average the two years: in our Schedule C example that turns $78,400 and $86,900 of profit into **$7,721 a month** of qualifying income. If income is falling, expect the lender to lean on the lower year. Borrowers whose returns understate their income look at bank-statement loans, which are non-QM. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Ownership share that makes you self-employed | 25% | [Fannie Mae Selling Guide B3-3.5-01](https://selling-guide.fanniemae.com/sel/b3-3.5-01/underwriting-factors-and-documentation-self-employed-borrower) | Dec 13, 2023 | | Self-employment history generally required | 2 years | [Fannie Mae Selling Guide B3-3.5-01](https://selling-guide.fanniemae.com/sel/b3-3.5-01/underwriting-factors-and-documentation-self-employed-borrower) | Dec 13, 2023 | | Business age for one year of returns or no business returns | 5 years | [Fannie Mae Selling Guide B3-3.5-01](https://selling-guide.fanniemae.com/sel/b3-3.5-01/underwriting-factors-and-documentation-self-employed-borrower) | Dec 13, 2023 | | Total-debt guideline used for the price examples | 45% | [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) | Jan 22, 2026 | | 30-year average rate used | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | ## Who lenders treat as self-employed Under Fannie Mae’s Selling Guide, anyone with a 25% or greater ownership interest in a business is self-employed. That covers sole proprietors and independent contractors who file a Schedule C, partners in a partnership or LLC, and owners of S corporations and corporations. If you own less than that share, your income from the business is treated differently, through your Schedule K-1. The difference from a salaried borrower is the source of the number. An employee’s qualifying income comes from pay stubs and W-2s; yours comes from tax returns and a **cash-flow analysis**, a worksheet (Fannie Mae’s is Form 1084) that rebuilds your spendable income from the return. Everything else — the [debt-to-income ratio](https://mortgage-math-us.com/buying/debt-to-income/), credit and down payment — works the same way. Our post on [how lenders calculate debt-to-income](https://mortgage-math-us.com/blog/how-lenders-calculate-debt-to-income/) covers the rest of the worksheet. ## The two-year rule, and when one year works Fannie Mae generally requires a 2-year history of your earnings. There are two ways a shorter record can work: - **Under 2 years in business:** the lender can count the income if your most recent signed personal and business returns show a full year from the current business, and you had income at the same level or higher in the same or a similar line of work before that. - **One year of returns instead of two:** allowed for some loans when the business has existed for at least 5 years and you have owned 25% or more of it for that whole time. Business tax returns can sometimes be skipped too. With two years of signed personal returns, the lender may waive the business returns if you are paying the down payment, closing costs and reserves from personal funds, you have been in the same business for at least 5 years, and your personal returns show self-employment income rising over the two years. ## From tax return to qualifying income The lender starts with your net profit or loss, then adjusts for items that reduce taxable income without costing you cash. For a Schedule C, Fannie Mae requires these recurring items to be **added back**: depreciation, depletion, business use of a home, amortization and casualty losses. **Non-recurring income** is subtracted, as is the meals and entertainment exclusion reported on the return. The lender also measures year-to-year trends in gross income, expenses and taxable income. That is the step where a strong second year helps and a weak one hurts. > **Worked example: Two years of Schedule C income for a sole proprietor** > > | Line | Year before last | Last year | > |---|---:|---:| > | Net profit (Schedule C) | $78,400 | $86,900 | > | Add back depreciation | $7,200 | $6,400 | > | Add back business use of home | $3,100 | $3,300 | > | **Cash flow** | **$88,700** | **$96,600** | > | Two-year average | | $92,650 | > | **Qualifying income a month** | | **$7,721** | > > Cash flow rose from one year to the next, so the lender can average the two years. With $450 a month of other debts and Freddie Mac’s 45% total-debt guideline, that income supports a home of about $391,000 with 10% down at today’s 7.24% average, including property tax, insurance and PMI. The add-backs are easy to overlook when you estimate your own income. In this example they raise qualifying income by $833 a month compared with net profit alone. ## When your income is falling A falling year can shrink a self-employed file quickly. Fannie Mae’s rules require the lender to look at the trend and to count only income that is stable and likely to continue. In practice that means a lender may average the years only if it is satisfied the drop has stopped, and otherwise use the lower, recent year — or not count the income at all if the decline continues. *The same business with a falling second year* | Scenario | Cash flow, older → recent | Basis the lender uses | Monthly income | Price supported | |---|---|---|---:|---:| | Rising (the example above) | $88,700 → $96,600 | Two-year average | $7,721 | $391,000 | | Falling, average used | $96,600 → $84,000 | Two-year average, if the lender is satisfied the drop has stopped | $7,525 | $380,000 | | Falling, recent year used | $96,600 → $84,000 | Lower, most recent year | $7,000 | $349,000 | Compared with the rising example, qualifying on a falling $84,000 year costs about $42,000 of buying power. If a dip had a one-off cause — a lost contract you have replaced, a year of heavy equipment purchases — write a letter explaining it and bring a year-to-date profit-and-loss statement that shows the recovery. > **Watch out: Your tax strategy is your mortgage strategy** > > Every deduction that lowers your tax bill also lowers your qualifying income, apart from the add-backs. If you plan to buy in the next two years, talk to your tax preparer about the trade-off before you file. ## The deduction trade-off, in dollars *Extra deductions taken in both years (same business, no add-back)* | Extra deductions | Qualifying income a month | Price supported | Change | |---|---:|---:|---:| | None | $7,721 | $391,000 | — | | $5,000 a year | $7,304 | $367,000 | −$24,000 | | $10,000 a year | $6,888 | $343,000 | −$48,000 | | $20,000 a year | $6,054 | $294,000 | −$97,000 | Each $10,000 of extra deductions a year costs about $48,000 of purchase price in this example. Run your own figures in the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?income=92700&debts=450). ## Using business money for the down payment Money in a business account can go toward your down payment and closing costs, but the lender has to be satisfied that taking it out won’t hurt the business. Fannie Mae lets the lender ask for several months of recent business account statements or a current balance sheet to judge that. Moving the money to a personal account well before you apply, with a clear paper trail, makes the file simpler — and paying from personal funds is one of the conditions for skipping business tax returns described above. The same caution applies to cash flow. If the business needs that cash to operate, a lender may question whether your income can continue at the level the returns show. ## When tax returns don’t show your income Some borrowers have healthy cash flow but returns that show little profit, often because of heavy deductions or a new business. Two kinds of loans exist outside Fannie Mae and Freddie Mac’s rules for them: - **Bank-statement loans** qualify you on deposits into your business or personal accounts over a period of statements instead of tax returns. They are [non-QM loans](https://mortgage-math-us.com/glossary/non-qm-loan/): made outside the Qualified Mortgage rules, with rates, fees, down payments and reserve requirements set by each lender. Compare them carefully with a conventional quote, and check the points and fees. - **DSCR loans** are for investors buying rental property. They qualify the property on its rent covering the payment, not on your personal income, so self-employment documentation matters less — see [DSCR investor loans](https://mortgage-math-us.com/loan-types/dscr-loans/). A bank-statement loan on a home you will live in still has to meet the federal ability-to-repay rule, which requires the lender to make a good-faith determination that you can repay. Non-QM lenders meet it with different documents, not with none. ## Getting your file ready **How to prepare a self-employed mortgage application** 1. **Collect two years of signed returns** — Personal returns with all schedules, and business returns for a partnership or corporation, unless your lender confirms they can be waived. 2. **Find your add-backs** — Note depreciation, depletion, business use of home, amortization and casualty losses on each return. 3. **Average the cash flow** — Add the two years’ adjusted figures, divide by 24, and compare with last year alone. 4. **Prepare for questions about trends** — A year-to-date profit-and-loss statement and a short explanation of any dip. 5. **Separate business and personal money** — Use personal funds for the down payment and closing costs where you can, and document any business funds you use. 6. **Get pre-approved early** — A [pre-approval](https://mortgage-math-us.com/buying/pre-approval/) tests the income calculation months before you make an offer. ## Frequently asked questions ### How many years of tax returns do I need for a mortgage if I’m self-employed? Generally two years of personal returns, plus business returns for a partnership or corporation. One year can be enough for some loans if the business has existed for at least 5 years and you have owned 25% or more of it for that whole time. ### Can I get a mortgage after one year of self-employment? Possibly, if your latest returns show a full year from the business and you earned the same or more in the same or a similar line of work before. Lenders weigh these files case by case. ### What do lenders add back for self-employed income? For a Schedule C, Fannie Mae requires depreciation, depletion, business use of a home, amortization and casualty losses to be added back. Non-recurring income is subtracted. ### Do lenders use gross or net self-employment income? Net — your net profit after business expenses, adjusted by the add-backs and averaged, usually over 2 years. In our example that is $7,721 a month from profits of $78,400 and $86,900. ### What happens if my self-employment income went down last year? The lender looks at the trend. It may average the two years if the decline has stopped, use the lower recent year, or not count the income if it is still falling. In our example the lower year costs about $42,000 of buying power. ### Do 1099 contractors count as self-employed for a mortgage? If you are paid on 1099 forms and report the income on Schedule C, lenders analyze it the same way as a sole proprietor’s: net profit plus the allowed add-backs, averaged over your returns, rather than the gross amounts on the 1099s. ### Are bank-statement loans a good idea? They can help when your tax returns understate your cash flow, but they are non-QM loans with terms set by each lender. Compare the rate, fees and down payment with a conventional quote based on your returns. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: total debt payments below this share of gross income (Jan 22, 2026) - [Fannie Mae Selling Guide B3-3.5-01](https://selling-guide.fanniemae.com/sel/b3-3.5-01/underwriting-factors-and-documentation-self-employed-borrower) — Fannie Mae: history of self-employment earnings generally required; Fannie Mae: business age that allows one year of tax returns, or waiving business returns; Fannie Mae: ownership share in a business that makes a borrower self-employed (Dec 13, 2023) - [Fannie Mae Selling Guide B3-3.5-01: Self-employed borrower documentation](https://selling-guide.fanniemae.com/sel/b3-3.5-01/underwriting-factors-and-documentation-self-employed-borrower) - [Fannie Mae Selling Guide B3-3.6-03: Schedule C income](https://selling-guide.fanniemae.com/sel/b3-3.6-03/income-or-loss-reported-irs-form-1040-schedule-c) - [CFPB: What is a Qualified Mortgage?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-qualified-mortgage-en-1789/) _General information, not financial advice._ --- # Points or a bigger down payment: where extra cash at closing saves more > Extra cash at closing? Compare discount points, a bigger down payment and keeping reserves over 3, 5, 7 and 10 years, with and without PMI. URL: https://mortgage-math-us.com/blog/points-or-bigger-down-payment/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer On a $400,000 home at today’s 7.24% average, an extra $8,000 that lifts you from 18% to 20% down removes PMI and cuts the payment by **$219 a month**; putting it down stays ahead for about 10 years, 10 months. Below the 20% line, points overtake the bigger down payment after about 5 years, 9 months, assuming each point lowers the rate by an example 0.25 percentage point. If the cash is your only cushion, keeping it as reserves comes first. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | 30-year fixed average used here | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | Cost of one discount point | 1% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/how-should-i-use-lender-credits-and-points-also-called-discount-points-en-136/) | Oct 19, 2023 | | PMI ends automatically at | 78% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) | Oct 28, 2026 | | Typical PMI cost, low end | $30 per $100k a month | [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) | Oct 28, 2026 | | Typical PMI cost, high end | $70 per $100k a month | [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) | Oct 28, 2026 | | Qualified Mortgage points-and-fees cap | 3% | [CFPB, Federal Register 90 FR 57890](https://www.federalregister.gov/documents/2025/12/15/2025-22773/truth-in-lending-regulation-z-annual-threshold-adjustments-credit-cards-hoepa-and-qualified) | 2026 threshold | ## Three uses for the same $8,000 Say you are buying a $400,000 home with a 30-year fixed loan, you have the down payment and closing costs covered, and $8,000 is left over. You can: - **Buy discount points.** Each point costs 1% of the loan and lowers the rate. The [mortgage points guide](https://mortgage-math-us.com/buying/mortgage-points/) covers the break-even on points alone; here they compete with two other uses. - **Put it toward the down payment.** A smaller loan means a smaller payment and, if it takes you to 20% down on a conventional loan, no [private mortgage insurance](https://mortgage-math-us.com/buying/pmi/). - **Keep it.** Cash in the bank earns little, but it pays for a broken furnace without a credit card. The comparisons below use today’s 7.24% average for every option, PMI at the midpoint of Freddie Mac’s $30–$70 per $100k a month range, and PMI ending automatically when the balance reaches 78% of the price. “Ahead” means the payments you saved plus the lower balance you would owe if you sold or refinanced at that point, minus the $8,000 you spent. Interest the cash could earn in savings is left out, which flatters points and the down payment slightly. > **Note: The one number no rule sets** > > How much a point lowers your rate is set by each lender on each day — the CFPB says it depends on the lender, the loan and the market. The tables assume 0.25 percentage point per point as an example, and the [section on that assumption](#per-point) shows what changes when it is smaller or larger. It is not a quote. ## Below 20% down: points vs a slightly smaller loan Start with 10% down ($360,000 loan). The extra cash buys $8,000 ÷ $3,600 per point = 2.22 points, or lifts the down payment to 12%, which still leaves you paying PMI. *10% down on a $400,000 home, plus $8,000 of extra cash — money ahead of keeping the cash* | Option | Loan | Rate | P&I + PMI | PMI a month | 3 years | 5 years | 7 years | 10 years | |---|---:|---:|---:|---:|---:|---:|---:|---:| | Keep $8,000 as reserves | $360,000 | 7.24% | $2,633 | $180 | $0 | $0 | $0 | $0 | | Buy 2.22 points | $360,000 | 6.68% | $2,499 | $180 | −$1,972 | +$2,069 | +$6,113 | +$13,406 | | Put down 12% instead | $352,000 | 7.24% | $2,575 | $176 | +$1,856 | +$3,061 | +$4,234 | +$8,206 | Points cut the payment by $134 a month; the smaller loan by $59. The down payment is ahead immediately because the $8,000 is still yours as equity, while points are a cost you recover month by month — they pass the keep-the-cash line after 4 years and pass the bigger down payment after 5 years, 9 months. At ten years points come out ahead in this example. The catch is that the bigger down payment barely moves PMI here. Two more percent down lowers the loan-to-value ratio, but you are still above 80%, so the insurance stays until the balance is paid down. ## When the cash gets you to 20%: the PMI line Now say you already have 18% down ($328,000 loan). The same $8,000 takes you to exactly 20% — or buys 2.44 points. *18% down on a $400,000 home, plus $8,000 of extra cash — money ahead of keeping the cash* | Option | Loan | Rate | P&I + PMI | PMI a month | 3 years | 5 years | 7 years | 10 years | |---|---:|---:|---:|---:|---:|---:|---:|---:| | Keep $8,000 as reserves | $328,000 | 7.24% | $2,399 | $164 | $0 | $0 | $0 | $0 | | Buy 2.44 points | $328,000 | 6.63% | $2,265 | $164 | −$1,972 | +$2,888 | +$6,931 | +$12,960 | | Put down 20% instead | $320,000 | 7.24% | $2,181 | None | +$7,616 | +$11,677 | +$12,754 | +$14,302 | Crossing 20% removes about $164 a month of PMI on top of the smaller loan, so the payment drops by $219 against $134 for points. Without the extra cash, PMI would run until about 4 years, 6 months into the loan (4 years, 1 month with points, because a lower rate pays the balance down a little faster). Points only catch up once that PMI has gone: in this example they overtake the down payment after 10 years, 11 months. > $219 > Monthly saving when $8,000 moves a $400,000 purchase from 18% to 20% down, against $134 from buying points with the same cash. The [down payment guide](https://mortgage-math-us.com/buying/down-payment/) shows what each down payment level costs a month on its own; the point here is that the last few percent before 20% are the most valuable dollars you can put down. ## The assumption that decides it: what a point buys If a point buys less than 0.25 percentage point, points lose ground; if it buys more, they gain. The table runs both scenarios with three example values. *Money ahead from buying points, by rate cut per point (example assumptions)* | Rate cut per point | 10% down: new rate | after 5 years | after 10 years | 18% down: new rate | after 5 years | after 10 years | |---|---:|---:|---:|---:|---:|---:| | 0.125 point | 6.96% | −$2,962 | +$2,629 | 6.94% | −$2,470 | +$2,579 | | 0.25 point (used above) | 6.68% | +$2,069 | +$13,406 | 6.63% | +$2,888 | +$12,960 | | 0.375 point | 6.41% | +$7,093 | +$23,970 | 6.33% | +$8,238 | +$23,303 | For comparison, the bigger down payment is ahead by +$3,061 after five years and +$8,206 after ten in the 10% case, and by +$11,677 and +$14,302 when it removes PMI. Those figures don’t depend on the assumption — they come straight from today’s rate and the PMI estimate. Two limits matter. A lender can only sell so many points: on a Qualified Mortgage of this size, total points and fees generally can’t exceed 3% of the loan — $10,800 on $360,000, and origination fees count toward it. And quotes move daily, so compare the price of points on Loan Estimates issued the same day. ## What keeping the cash as reserves is worth Points and a bigger down payment both turn cash into something you can’t easily get back: a lower rate, or home equity that you can reach only by selling, refinancing or borrowing against the house. Reserves stay liquid. At 10% down the full payment on this home — principal, interest, tax at the national 0.89% ratio, insurance and PMI — is about $3,093 a month, so $8,000 covers roughly 2.6 months of payments. The CFPB suggests an emergency cushion of 3 to 6 months of expenses; three months of this payment alone is $9,280. Lenders also count [reserves](https://mortgage-math-us.com/glossary/reserves/) when they underwrite, and [second homes and rentals](https://mortgage-math-us.com/blog/buying-a-second-home-or-rental/) need more of them. > **Tip: Fund the cushion first** > > If spending the extra cash would leave you with less than a few months of payments in the bank, keep it. A lower rate is worth little if a job loss or repair forces you onto a credit card at a far higher rate. ## Other ways the same cash can work - **Ask the seller to pay for points.** Seller credits can buy points within your loan program’s limits on interested-party contributions, which leaves your own cash for the down payment. See [how to lower your closing costs](https://mortgage-math-us.com/blog/how-to-lower-closing-costs/) for those limits. - **Remove PMI later instead.** On a conventional loan you can ask to cancel PMI once the balance reaches 80% of the original value, and extra principal payments get you there sooner — the [extra payment calculator](https://mortgage-math-us.com/tools/extra-payment-calculator/) shows when. - **Consider the term.** If the goal is less interest overall, a shorter term may do more than either option; see [15-year vs 30-year](https://mortgage-math-us.com/blog/15-year-vs-30-year-mortgage/). ## Run it on your own quotes **How to choose between points, a bigger down payment and reserves** 1. **Set your reserve floor** — Decide how many months of payments you want in the bank after closing, and only consider spending cash above that. 2. **Ask for three quotes from the same lender, on the same day** — Your planned down payment with no points, the same with the extra cash spent on points, and the bigger down payment with no points. 3. **Check where you sit against 20%** — If the extra cash crosses 20% down on a conventional loan, PMI disappears; that usually decides it. 4. **Compare the monthly saving and the cost** — Divide the points’ cost by their monthly saving for the simple break-even, and add the PMI you avoid to the down-payment option. 5. **Match it to how long you’ll keep the loan** — Use your shortest, likely and longest plans; the option that wins in all three is the safe choice. [Open the mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/) You can test the PMI line directly in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=400000&down=20): switch the down payment between 18 and 20 and watch the PMI line disappear. ## Frequently asked questions ### Is it better to buy points or put more money down? If the extra money takes you to 20% down on a conventional loan, putting it down usually wins for years because PMI disappears — in our $400,000 example it saves $219 a month against $134 for points. Below 20%, points tend to win only if you keep the loan well past their break-even. ### How many points can I buy with my extra cash? Divide the cash by 1% of the loan amount. $8,000 buys 2.22 points on a $360,000 loan. Lenders may cap points, and on a Qualified Mortgage total points and fees generally can’t exceed 3% of a loan this size. ### Does a 20% down payment get a lower interest rate too? Often it can, because conventional pricing changes with the loan-to-value ratio, but by how much depends on the lender and your credit. Ask for quotes at both down payments on the same day; our tables give the same rate to both so the PMI effect shows on its own. ### Should I drain my savings to reach 20% down? Not if it leaves you without a cushion. The CFPB suggests keeping 3 to 6 months of expenses, and PMI can be cancelled later — on request at 80% of the original value, or automatically at 78%. ### What about an FHA loan? FHA mortgage insurance doesn’t end at 20% down. The line that matters is the starting loan-to-value: at or below 90% (10% or more down), annual MIP ends after 11 years; with less down it generally lasts as long as the loan. ### Are points or a bigger down payment better for taxes? Points are prepaid interest and can be deductible if you itemize, under the IRS rules in Publication 936; a down payment is not deductible. For most buyers the tax effect is small next to the PMI and rate differences — see our mortgage points guide for the IRS tests. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/how-should-i-use-lender-credits-and-points-also-called-discount-points-en-136/) — Cost of one discount point (share of loan amount) (Oct 19, 2023) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) — PMI ends automatically at this share of original value; Ask your servicer to cancel PMI at this share of original value (Oct 28, 2026) - [CFPB, Federal Register 90 FR 57890](https://www.federalregister.gov/documents/2025/12/15/2025-22773/truth-in-lending-regulation-z-annual-threshold-adjustments-credit-cards-hoepa-and-qualified) — Qualified Mortgage points-and-fees cap (loans of $137,958 or more) (2026 threshold) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — CFPB: emergency cushion, low end (months of expenses); CFPB: emergency cushion, high end (months of expenses) (Oct 28, 2026) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA annual MIP ends after 11 years when the starting LTV is at or below; FHA annual MIP lasts this long when the starting LTV is 90% or less (Feb 22, 2023) - [CFPB: How should I use lender credits and points?](https://www.consumerfinance.gov/ask-cfpb/how-should-i-use-lender-credits-and-points-also-called-discount-points-en-136/) - [CFPB: When can I remove PMI from my loan?](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) _General information, not financial advice._ --- # Pre-approval vs pre-qualification: which one do you need, and when? > When a pre-qualification is enough, when you need a pre-approval, what sellers expect, and a dated timeline from first estimate to closing day. URL: https://mortgage-math-us.com/blog/pre-approval-vs-pre-qualification/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer Use a **pre-qualification** while you are still budgeting — it is a quick estimate built on what you tell a lender. Get a **pre-approval** once you are within a few months of making offers, or earlier if you want to find credit problems in time to fix them: the lender checks your documents and credit, and sellers take it more seriously. Neither is a loan offer. Shop several lenders within 45 days so the credit checks count as one, and remember that pay stubs and statements must be no more than 4 months old when you close on a Fannie Mae loan. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Mortgage credit checks counted as one inquiry | 45 days | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-exactly-happens-when-a-mortgage-lender-checks-my-credit-en-2005/) | Aug 28, 2026 | | Oldest income and asset documents at closing (Fannie Mae) | 4 months | [Fannie Mae Selling Guide B1-1-03](https://selling-guide.fanniemae.com/sel/b1-1-03/allowable-age-credit-documents-and-federal-income-tax-returns) | Apr 2, 2025 | | Pieces of information that make a mortgage application | 6 | [CFPB: Regulation Z § 1026.2(a)(3)(ii)](https://www.consumerfinance.gov/rules-policy/regulations/1026/2/) | Oct 29, 2026 | | Loan Estimate due after an application | 3 business days | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-loan-estimate-en-1995/) | Oct 28, 2026 | | Employment re-checked before the note date | 10 business days | [Fannie Mae Selling Guide B3-3.1-04](https://selling-guide.fanniemae.com/sel/b3-3.1-04/verbal-verification-employment) | Oct 7, 2026 | ## Which one you need right now Lenders don’t use the two words consistently, a point the CFPB makes itself: some issue a “prequalification” on unverified information and a “preapproval” only after checking documents, while others blur the line. Our [pre-approval guide](https://mortgage-math-us.com/buying/pre-approval/) covers the documents and the credit check. This post is about the decision — which letter fits where you are. *The letter that fits your stage* | Where you are | What to get | Why | |---|---|---| | Six months or more from buying, still saving | Pre-qualification, or just a calculator | A rough price range is all you need; your documents will be out of date by the time you buy | | Unsure about your credit | Pre-approval, early | The CFPB notes that getting preapproved earlier can show credit problems in time to correct them | | Touring homes, offer likely within a couple of months | Pre-approval | Agents and sellers expect a lender to have checked your file before they take an offer seriously | | Comparing lenders | Pre-approvals from two or three lenders | Credit checks within 45 days count as one inquiry | | Income from self-employment, commission or rentals | Pre-approval, with tax returns | A pre-qualification can’t test the income calculation that decides your amount | ## What each letter is worth A **pre-qualification** is only as good as the numbers you give the lender. If you round up your income or forget a car loan, the estimate will be wrong in a way no one has checked. Its value is speed: it tells you whether a price range is plausible before you spend time on documents. Some lenders check credit even at this stage, so ask before you agree. A **pre-approval** is worth more because someone has verified the inputs. Expect a lender to have read your pay stubs, W-2s or tax returns and bank statements and pulled your credit — often running the file through an automated underwriting system. That is what lets a seller treat your offer as financeable. In the CFPB’s words, a preapproval letter “is not a guaranteed loan offer,” but it should give sellers in your area enough to take it seriously. Neither letter commits the lender. The final decision comes after you have a property: an appraisal, title work, updated documents and a last look at your credit and job. One protection applies at both stages, though: if a lender tells you that you don’t qualify, the CFPB says it must give you an adverse action notice, even if you never filed a formal application. > **Tip: Ask what was verified** > > Before you rely on a letter, ask the lender three questions: did you pull my credit, did you review my income and asset documents, and did you run the file through automated underwriting? Three yeses make it a pre-approval, whatever the letter is called. ## What sellers and agents expect A pre-approval letter is the document that usually travels with an offer. The CFPB describes it as giving the seller confidence that you can get the financing, and it lets the seller compare offers on more than price. The CFPB’s advice is to ask a local real estate agent or housing counselor what sellers in your area expect, because practice differs from market to market. Two habits help. Ask the lender whether it can issue a letter for the exact offer price rather than your maximum, so you don’t reveal your ceiling. And keep the letter current — an expired date or stale documents can make a seller doubt an otherwise strong offer. ## A dated timeline, from first estimate to closing Here is how the steps line up for a buyer who starts looking in January. The dates come from the rules each step follows; your lender’s timing will vary. *Example timeline (weekends skipped; holidays not counted)* | Date | Step | Rule behind the date | |---|---|---| | Mon, Jan 11, 2027 | Pre-qualification | An estimate from the figures you report; no documents | | Mon, Feb 1, 2027 | Pre-approval, first credit check | Lender reviews pay stubs, tax forms, statements and credit | | Thu, Mar 18, 2027 | End of the rate-shopping window | Other mortgage credit checks by this date count as one inquiry (45 days) | | Mon, Mar 22, 2027 | Offer accepted, full application | Giving the lender the 6 pieces of information that make an application | | Thu, Mar 25, 2027 | Loan Estimate due | Within 3 business days of the application | | From Thu, Apr 15, 2027 | Employment re-verified | No more than 10 business days before the note date | | Thu, Apr 29, 2027 | Closing | Closing Disclosure received at least 3 business days before | From the first estimate to the closing table takes about 15 weeks here. The pre-approval stage does the heavy lifting; once you have an accepted offer, giving the lender the 6 pieces of information that make a formal application — your name, income, Social Security number, the property address, its estimated value and the loan amount — starts the clock on the [Loan Estimate](https://mortgage-math-us.com/buying/loan-estimate/). ## Using the 45-day shopping window Mortgage credit checks made within 45 days of each other are recorded as a single inquiry, according to the CFPB. In the timeline above, a first pull on Mon, Feb 1, 2027 leaves until Thu, Mar 18, 2027 to get pre-approved by other lenders at no extra cost to your score. Use it by applying to two or three lenders in the same week, with the same loan type, down payment and price, so the letters are comparable. A pre-approval doesn’t lock a rate — see [rate locks](https://mortgage-math-us.com/glossary/rate-lock/) — so compare the lenders again with Loan Estimates once you have a property. Our [credit score guide](https://mortgage-math-us.com/buying/credit-score/) explains how scores change your rate. ## When a pre-approval goes stale On loans sold to Fannie Mae, your credit report and your income, employment and asset documents can be no more than 4 months old on the date you sign the note. The expiry date on the letter is the lender’s own; this rule decides how long the documents behind it stay usable. *Latest closing date before a document must be replaced (4-month limit)* | Document dated | Must be replaced if the note is signed after | |---|---| | Jan 15, 2027 | May 15, 2027 | | Feb 26, 2027 | Jun 26, 2027 | | Apr 30, 2027 | Aug 30, 2027 | In the timeline, a pay stub dated Fri, Jan 29, 2027 is still within the limit on the closing date. The fix is simple: send the latest pay stub and statement whenever they arrive, so the file never ages out. ## What changes after the pre-approval Once you are under contract, the pre-approval becomes a full loan file. The lender orders the appraisal, which you must receive at least 3 business days before closing; re-verifies your job within 10 business days of the note date; and many lenders check your credit again. Your rate stays floating until you lock it, typically for 30, 45 or 60 days. The approval amount can also change. A different loan type, a smaller down payment, a property with higher taxes or HOA dues, or a new monthly debt all change the [debt-to-income math](https://mortgage-math-us.com/blog/how-lenders-calculate-debt-to-income/) behind your letter. If anything in your finances moves between pre-approval and closing, tell the lender before it finds out from the file. **How to move from pre-qualification to pre-approval** 1. **Run your own numbers first** — Use the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/) to set a price range before any lender does. 2. **Pull your credit reports** — Fix errors before a lender sees them. 3. **Collect current documents** — Recent pay stubs, W-2s or tax returns, and recent statements for every bank and investment account. 4. **Apply to two or three lenders in one week** — Stay inside the 45-day window and ask each what it verified. 5. **Keep the file fresh** — Send new pay stubs and statements as they arrive, and avoid new debt until after closing. ## Frequently asked questions ### Is pre-qualification the same as pre-approval? Not usually. A pre-qualification is generally an estimate based on what you report; a pre-approval is based on documents and a credit check. The CFPB notes that lenders use the terms inconsistently, so ask what the lender actually verified. ### Do I need a pre-approval to make an offer? Not legally, but many sellers and agents expect one because it shows a lender has checked your file. Ask a local agent what is normal where you are buying. ### Does pre-qualification affect my credit score? Only if the lender pulls your credit, which some do at this stage. Mortgage credit checks within 45 days of each other count as one inquiry, so shopping in that window costs no more than applying once. ### How long is a pre-approval good for? The lender sets the expiry date. On Fannie Mae loans your income, asset and credit documents must be no more than 4 months old when you sign the note, so expect to refresh them if your search runs long. ### Can a pre-approval be denied later? Yes. Final approval depends on the appraisal, updated documents, a re-check of your employment within 10 business days of closing and often a new credit pull. New debt or a change in income can lower or end it. ### When does a pre-approval become a real application? When you give the lender the 6 pieces of information Regulation Z lists — including a property address — the lender must send a Loan Estimate within 3 business days. ## Sources - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-exactly-happens-when-a-mortgage-lender-checks-my-credit-en-2005/) — Mortgage credit checks within this window count as one inquiry (Aug 28, 2026) - [Fannie Mae Selling Guide B1-1-03](https://selling-guide.fanniemae.com/sel/b1-1-03/allowable-age-credit-documents-and-federal-income-tax-returns) — Fannie Mae: credit, income, employment and asset documents may be no older than this on the note date (Apr 2, 2025) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-loan-estimate-en-1995/) — Lender must send the Loan Estimate within this many business days of your application (Oct 28, 2026) - [Fannie Mae Selling Guide B3-3.1-04](https://selling-guide.fanniemae.com/sel/b3-3.1-04/verbal-verification-employment) — Fannie Mae: employment re-verified no more than this many business days before the note date (Oct 7, 2026) - [CFPB: Regulation Z § 1026.2(a)(3)(ii)](https://www.consumerfinance.gov/rules-policy/regulations/1026/2/) — Pieces of information that make a mortgage application under Regulation Z (name, income, SSN, property address, value estimate, loan amount) (Oct 29, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) — You receive the Closing Disclosure at least this many business days before closing (Oct 28, 2026) - [CFPB, Regulation B 1002.14](https://www.consumerfinance.gov/rules-policy/regulations/1002/14) — Lender must give you the appraisal at least this long before closing (or promptly) (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/whats-a-lock-in-or-a-rate-lock-en-143/) — Typical rate lock periods (Oct 28, 2026) - [CFPB: Prequalification letter vs preapproval letter](https://www.consumerfinance.gov/ask-cfpb/whats-the-difference-between-a-prequalification-letter-and-a-preapproval-letter-en-127/) - [CFPB: Regulation Z § 1026.2 (definition of application)](https://www.consumerfinance.gov/rules-policy/regulations/1026/2/) - [Fannie Mae Selling Guide B1-1-03: Allowable age of credit documents](https://selling-guide.fanniemae.com/sel/b1-1-03/allowable-age-credit-documents-and-federal-income-tax-returns) _General information, not financial advice._ --- # Reverse mortgage pros and cons > The real trade-offs of a HECM reverse mortgage: no monthly payment against a growing balance, three worked scenarios, what heirs face and the alternatives. URL: https://mortgage-math-us.com/blog/reverse-mortgage-pros-and-cons/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The main advantage of a HECM reverse mortgage is cash from your home with **no monthly loan payment**, for as long as you live there and keep up taxes, insurance and repairs. The main drawback is a **balance that compounds**: $120,000 taken at closing on a $450,000 home grows to about $292,010 in 10 years at an example 7.24% plus the 0.5% annual insurance premium, and passes the home’s value in year 16 if prices stay flat. Upfront costs of $15,000 and the shrinking inheritance are the other big costs. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Youngest borrower must be at least | 62 years | [24 CFR 206.33](https://www.ecfr.gov/current/title-24/subtitle-B/chapter-II/subchapter-B/part-206/subpart-B) | Oct 7, 2026 | | Upfront mortgage insurance (share of the maximum claim amount) | 2% | [HUD Mortgagee Letter 2017-12](https://www.hud.gov/sites/documents/17-12ml.pdf) | Oct 2, 2017 | | Annual mortgage insurance (share of the balance) | 0.5% | [HUD Mortgagee Letter 2017-12](https://www.hud.gov/sites/documents/17-12ml.pdf) | Oct 2, 2017 | | Origination fee cap | $6,000 | [24 CFR 206.31](https://www.ecfr.gov/current/title-24/subtitle-B/chapter-II/subchapter-B/part-206/subpart-B) | Oct 7, 2026 | | Heirs can settle by selling for at least | 95% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/will-my-children-be-able-to-keep-my-home-after-i-die-if-i-have-a-reverse-mortgage-loan-en-242/) | Aug 28, 2026 | | Heirs’ time to act after a due-and-payable notice | 30 days | [CFPB](https://www.consumerfinance.gov/ask-cfpb/will-my-children-be-able-to-keep-my-home-after-i-die-if-i-have-a-reverse-mortgage-loan-en-242/) | Aug 28, 2026 | ## Pros and cons at a glance The [reverse mortgage guide](https://mortgage-math-us.com/loan-types/reverse-mortgages/) covers the rules — who qualifies, the $1,249,125 limit, how payouts work. This post weighs the trade-offs with numbers, using one example: a $450,000 home owned by a borrower who is at least 62. *HECM reverse mortgage pros and cons* | Pros | Cons | |---|---| | No monthly principal and interest payment | The balance grows every month, with interest and mortgage insurance compounding | | Flexible payout: lump sum, monthly payments, a line of credit or a mix | Upfront costs of about $15,000 here — 3.3% of the value — before third-party closing costs | | You can stay in the home as long as you meet the loan terms | You must keep paying property taxes, insurance and upkeep, or the loan can come due | | Non-recourse: you or your heirs never owe more than the home’s value | Less equity to leave to heirs, to move with or to borrow against later | | FHA mortgage insurance guarantees you receive the loan advances you expect | Counseling is required before you go ahead | | Can replace an existing mortgage payment | Leaving the home for more than 12 months for health reasons can make the loan due | The rest of this post puts numbers on the two biggest rows: how fast the balance grows, and what that leaves. ## Three ways the balance can grow How you draw the money matters more than anything else you control. Each scenario below starts with the same $15,000 of financed upfront costs — the 2% initial premium ($9,000) and the maximum origination fee for this value ($6,000) — and accrues interest at an example 7.24% plus 0.5% a year of mortgage insurance, 7.74% in all. The rate equals today’s 30-year fixed average for illustration only; HECM rates are set differently, and the next section shows what a point either way does. *Loan balance by year on a $450,000 home, by how the money is drawn* | How you draw | Total drawn | Year 5 | Year 10 | Year 15 | Year 20 | |---|---:|---:|---:|---:|---:| | Lump sum: $120,000 at closing to pay off an old mortgage | $120,000 | $198,548 | $292,010 | $429,468 | $631,630 | | $1,000 a month for 15 years | $180,000 | $95,042 | $212,762 | $385,896 | $567,548 | | Standby line: nothing until $40,000 in year 8 | $40,000 | $22,061 | $82,540 | $121,394 | $178,537 | > **Worked example: Why the lump sum grows fastest** > > | | Amount | > |---|---:| > | Financed upfront costs | $15,000 | > | Paid out at closing | $120,000 | > | Starting balance | $135,000 | > | Yearly growth at 7.74%, compounded monthly | about $10,828 in year one | > | Balance after 10 years | $292,010 | > | Balance after 20 years | $631,630 | A lump sum starts compounding on the whole amount at once. Monthly payments draw more in total — $180,000 — yet the balance after 20 years is $64,083 lower than the lump sum’s, because each payment compounds for less time. A line kept on standby costs the least: only the upfront costs grow until you need the money. How much you can draw in each form depends on your age, rates and the home’s value — the guide explains the limits. ## How much equity is left Equity is what remains for you to move with, or for your heirs. Here is the lump-sum scenario with home values flat and with values rising at 2.4% a year, the latest 12-month change in FHFA’s house price index (an assumption, not a forecast): *Lump-sum scenario: balance against the home’s value* | | Loan balance | Equity if values stay flat | Home value at 2.4% a year | Equity at that growth | |---|---:|---:|---:|---:| | Year 5 | $198,548 | $251,452 | $506,655 | $308,107 | | Year 10 | $292,010 | $157,990 | $570,443 | $278,432 | | Year 15 | $429,468 | $20,532 | $642,261 | $212,794 | | Year 20 | $631,630 | −$181,630 | $723,122 | $91,492 | With flat prices the balance passes the home’s value in year 16; with prices rising at 2.4% a year it does so in year 23. A negative figure doesn’t mean anyone pays the difference — that is what the FHA insurance is for — but it does mean there is nothing left to inherit. ## How much the rate matters The upfront costs are fixed once you close. The rate keeps working for as long as the loan lasts. On the same $120,000 lump sum: *Lump-sum balance at different example rates (plus 0.5% MIP)* | Example rate | Year 10 | Year 15 | |---|---:|---:| | 6.24% | $264,380 | $369,979 | | 7.24% (example used above) | $292,010 | $429,468 | | 8.24% | $322,501 | $498,460 | One percentage point higher adds about $68,992 to the 15-year balance — about 5 times the $15,000 of upfront costs. Compare offers on rate and margin, not only on fees. HUD notes that fixed-rate HECMs pay out only as a single lump sum; every other payout plan has an adjustable rate. ## What happens to your heirs When the last borrower dies or moves out for good, the loan becomes due. Heirs get a due-and-payable notice and have 30 days to buy the home, sell it or turn it over to the lender; the CFPB says the time may be extended up to 6 months to sell or arrange a loan. Take the lump-sum scenario after 20 years with flat prices: the balance is $631,630 on a $450,000 home. - **To keep the home**, the CFPB says heirs must repay the full balance — $631,630 — usually with a new mortgage or savings. - **To sell**, they can settle the loan by selling for at least 95% of the appraised value — $427,500 here — even though the balance is $181,630 higher than the value. FHA insurance absorbs the shortfall. - **To walk away**, they can hand the home to the lender. Either way, nothing is owed from the rest of the estate. > **Note: Spouses are a special case** > > A spouse who isn’t a borrower on the HECM may be able to stay in the home after the borrower dies, if they meet HUD’s conditions. Have both spouses attend counseling and ask the lender to document the spouse’s status. ## Who it suits — and who it doesn’t A reverse mortgage tends to fit when: - You plan to stay in the home for many years and want to keep it. - You have a mortgage payment you would like to eliminate, or income that doesn’t cover rising costs. - Leaving the home’s full value to heirs is not a priority, or they understand the trade. - You can comfortably pay taxes, insurance and upkeep for the long term. It tends to fit badly when you may move within a few years (the upfront costs then buy little), when a younger partner isn’t on the loan, or when the property tax and insurance bills are already a strain. ## Alternatives: a HELOC, downsizing and others The same $120,000 can come from other places, each with its own trade-off: *Getting $120,000 from a $450,000 home without a reverse mortgage* | Alternative | What it costs you | The catch | |---|---|---| | HELOC at an example 8% (prime 7% plus 1 point) | $800 a month interest-only for 10 years, then $1,004 | Requires income to qualify; payments rise when repayment starts; the line can be frozen | | Downsizing to a $300,000 home | No new debt; frees about $150,000 before selling and moving costs | You move; transaction costs; a smaller home | | Property tax relief for older owners | Lower tax bills where your state offers it, as in [Colorado](https://mortgage-math-us.com/location/colorado/) | Rules and income limits vary by state | | Selling and renting | Frees all the equity | Rent rises over time; you give up the home | The [HELOC guide](https://mortgage-math-us.com/home-equity/heloc/) explains how lines are priced and repaid, and [the risks of borrowing against your home](https://mortgage-math-us.com/home-equity/home-equity-risks/) apply to every option here. A [HELOC payment calculator](https://mortgage-math-us.com/tools/heloc-payment-calculator/?value=450000&balance=0&draw=120000) shows the payments for your own numbers. ## Before you apply: counseling **The steps before a HECM closes** 1. **Talk to a HUD-approved counselor** — Required for every HECM; call HUD’s referral line at 800-569-4287. Bring your spouse and, ideally, your heirs. 2. **Review the alternatives with the counselor** — Counseling covers eligibility, costs and other options; it doesn’t commit you to a loan. 3. **Compare at least two lenders** — Rate, margin, origination fee (capped at $6,000) and third-party costs. 4. **Choose how to draw** — Lump sum, monthly payments, line of credit or a mix, using the scenarios above as a guide. 5. **Budget for the costs that stay** — Taxes, insurance, HOA dues and repairs for as long as you live there. ## Frequently asked questions ### What is the biggest disadvantage of a reverse mortgage? The balance grows every month. In our example $120,000 taken at closing grows to about $292,010 after 10 years and $631,630 after 20, at an example 7.24% plus 0.5% annual MIP, leaving less equity for you and your heirs. ### What is the main advantage of a reverse mortgage? No monthly loan payment. You can turn equity into cash — as a lump sum, monthly payments or a line of credit — and stay in the home as long as you keep up taxes, insurance and repairs. ### Can a reverse mortgage leave my heirs in debt? No. A HECM is non-recourse: if the balance exceeds the home’s value, heirs can settle by selling for at least 95% of the appraised value, and FHA insurance covers the rest. To keep the home, they must repay the full balance. ### How much does a reverse mortgage cost upfront? On a $450,000 home, the 2% initial premium is $9,000 and the maximum origination fee is $6,000, so $15,000 before third-party closing costs. They can be financed into the loan rather than paid in cash, which means they compound with the balance. ### Is a HELOC better than a reverse mortgage? It costs less upfront and leaves more equity, but it needs income to qualify and requires payments — $800 a month interest-only on $120,000 at an example 8% in our example. A reverse mortgage needs no payment but grows the debt. ### Do I need counseling for a reverse mortgage? Yes. Every HECM borrower must complete counseling with a HUD-approved counselor before applying. HUD’s referral line is 800-569-4287. ## Sources - [HUD Mortgagee Letter 2025-22](https://www.hud.gov/sites/dfiles/hudclips/documents/2025-22hsgml.pdf) — 2026 HECM maximum claim amount (2026 limit) - [HUD Mortgagee Letter 2017-12](https://www.hud.gov/sites/documents/17-12ml.pdf) — HECM initial mortgage insurance premium (share of maximum claim amount); HECM annual mortgage insurance premium (share of balance) (Oct 2, 2017) - [24 CFR 206.31](https://www.ecfr.gov/current/title-24/subtitle-B/chapter-II/subchapter-B/part-206/subpart-B) — HECM origination fee: lenders may always charge up to; HECM origination fee cap; HECM origination fee: share of the first $200,000 of the maximum claim amount (Oct 7, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/will-my-children-be-able-to-keep-my-home-after-i-die-if-i-have-a-reverse-mortgage-loan-en-242/) — Heirs can settle a HECM larger than the home’s value by selling for at least this share of the appraised value; Heirs have this long after a HECM due-and-payable notice to buy, sell or turn over the home; Heirs’ time to sell a home or get their own loan after a HECM due-and-payable notice may be extended up to (Aug 28, 2026) - [FHFA House Price Index](https://www.fhfa.gov/news/news-release/fhfa-house-price-index-up-0.3-percent-in-august-up-2.4-percent-from-last-year) — US house prices, 12-month change (FHFA HPI) (August 2026) - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/) — Bank prime loan rate (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) — Example HELOC draw period (CFPB); HELOC repayment period, often up to (CFPB) (Aug 28, 2026) - [HUD](https://www.hud.gov/stat/sfh/housing-counseling) — HUD housing counseling referral line (Oct 28, 2026) - [CFPB: Reverse mortgages](https://www.consumerfinance.gov/consumer-tools/reverse-mortgages/) - [HUD: FHA reverse mortgage for seniors (HECM)](https://www.hud.gov/hud-partners/single-family-hecmhome) _General information, not financial advice._ --- # Can you use a VA loan twice? > Yes. How VA entitlement is restored, how to hold two VA loans at once, how the county limit caps your zero-down loan, and the second-use funding fee. URL: https://mortgage-math-us.com/blog/using-a-va-loan-twice/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer Yes — you can use a VA loan as many times as your entitlement allows. Sell the home and pay off the loan and you can have your full entitlement restored; keep the first VA loan and you can still buy again with your **remaining entitlement**, which is 25% of the county loan limit minus what you used. With a $320,000 first loan in a county at the $832,750 baseline, that supports about **$512,750** with no down payment. Later use costs a 3.3% funding fee with less than 5% down, against 2.15% the first time. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | VA guaranty on loans above $144,000 | 25% | [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/loan-limits/) | Aug 12, 2025 | | 2026 baseline county loan limit (one unit) | $832,750 | [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) | 2026 limit | | Funding fee, later use, under 5% down | 3.3% | [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) | Apr 7, 2023 | | Funding fee, first use, under 5% down | 2.15% | [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) | Apr 7, 2023 | | Funding fee, 5% to under 10% down (any use) | 1.5% | [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) | Apr 7, 2023 | | Basic entitlement shown on a COE | $36,000 | [U.S. Department of Veterans Affairs: VA home loan limits](https://www.va.gov/housing-assistance/home-loans/loan-limits/) | Aug 12, 2025 | ## The benefit is reusable — the limit is entitlement The VA says it plainly: you can use your home loan benefit again after you sell or refinance a home you bought with a VA-backed loan. What decides how — and how much you can borrow without a down payment — is **entitlement**, the amount the VA will guarantee to your lender on your behalf. The basics of the program, from eligibility to residual income, are in our [VA loans guide](https://mortgage-math-us.com/loan-types/va-loans/). This post covers only the second time: getting entitlement back, holding two VA loans at once, and what a repeat purchase costs. ## Full or remaining: what your COE tells you Your Certificate of Eligibility (COE) shows a basic entitlement — $36,000 on the VA’s own example — and any entitlement already charged to an earlier loan. For loans above $144,000 the VA guarantees up to 25% of the loan, so a lender can usually lend about 4 times your available entitlement with no money down. - **Full entitlement** means none is tied up: you’ve never used the benefit, or it has been restored. The VA sets no loan limit for you; the lender decides what you can afford. - **Remaining entitlement** means part is still in use, usually because you still own a home with a VA loan on it. The VA’s guarantee is then based on your county’s loan limit. The VA’s method for remaining entitlement is simple: multiply the county’s one-unit loan limit by 25% and subtract the entitlement you’ve already used. The [VA entitlement](https://mortgage-math-us.com/glossary/va-entitlement/) glossary entry defines the terms. ## Four ways to get entitlement back *How each path affects your entitlement (VA eligibility rules)* | Your situation | What happens to entitlement | Limits | |---|---|---| | You sold the home and paid off the VA loan | Can be fully restored | Request restoration with your next COE | | You paid the loan off in full but kept the home (for example, refinanced into a conventional loan) | Can be restored | One-time restoration — you can do this only once | | A qualified veteran buyer assumes your loan and substitutes their own entitlement | Can be restored | The buyer must be an eligible veteran willing to use their entitlement | | You still own the home and still have the VA loan | Stays in use | You can buy again with remaining entitlement | You request restoration through the same COE application your lender submits, online or with VA Form 26-1880. If none of the first three applies, you aren’t stuck: the last row is what lets you buy at a new duty station, for example, while renting out the old home. > **Watch out: The one-time restoration is easy to waste** > > Refinancing a VA loan into a conventional loan and asking for restoration while you keep the house uses your single “repaid but not sold” restoration. Selling a home and paying off its VA loan doesn’t count against it. ## Keeping the first home and buying another You can hold two VA loans at the same time. The new home must be one you will live in; the earlier one can become a rental. If you want a vacation home or a pure investment property instead, a VA loan won’t cover it — see [second home vs investment property mortgages](https://mortgage-math-us.com/blog/buying-a-second-home-or-rental/). The cap on the second loan comes from your remaining entitlement. > **Worked example: First VA loan of $320,000 kept; second home of $600,000 in a county at the $832,750 baseline** > > | Step | Amount | > |---|---:| > | Entitlement used by the first loan (25% of $320,000) | $80,000 | > | County limit × 25% | $208,188 | > | Remaining entitlement | $128,188 | > | Zero-down loan it supports (4 × remaining) | **$512,750** | > | Down payment on $600,000 if the lender wants 25% covered | $21,813 | > | Funding fee ($578,188 loan, $21,813 down, later use: 3.3%) | $19,080 | > | Principal and interest with the fee financed, at today’s 7.24% average | $4,070 | > > The down-payment line assumes the lender wants the guaranty plus your cash to cover 25% of the price, as many do; your lender’s rule may differ. In a county at the $1,249,125 high-cost ceiling, the same buyer could borrow up to $929,125 with no down payment, so this home would need no down payment at all. Look at the funding fee in that example. The required down payment is under 5% of the price, so the later-use rate of 3.3% applies. Raising the down payment to 5% — another $8,188 — drops the fee to 1.5% and cuts it by $10,530, so here it saves more in funding fee than the extra cash it takes. ## How the county limit sets your zero-down amount The bigger your first VA loan, the less room is left for the second. The table uses the $832,750 one-unit limit that applies in most counties and the $1,249,125 ceiling in the most expensive ones. *Second-loan room while the first VA loan is still open* | First VA loan | Entitlement used | Remaining (baseline county) | Zero-down loan, baseline county | Zero-down loan, high-cost ceiling | |---|---:|---:|---:|---:| | $200,000 | $50,000 | $158,188 | $632,750 | $1,049,125 | | $300,000 | $75,000 | $133,188 | $532,750 | $949,125 | | $400,000 | $100,000 | $108,188 | $432,750 | $849,125 | | $500,000 | $125,000 | $83,188 | $332,750 | $749,125 | County limits are reset each year with the [conforming loan limit](https://mortgage-math-us.com/glossary/conforming-loan-limit/), so your remaining entitlement can change from one year to the next without you doing anything. Check your county’s figure before you shop, and ask the lender to run the numbers from your COE. ## The funding fee the second time The [VA funding fee](https://mortgage-math-us.com/glossary/va-funding-fee/) is higher for later use only when you put down less than 5%. At 5% or more the rate is the same whether it’s your first VA loan or your fifth. *Funding fee on a $400,000 purchase, first use vs later use* | Down payment | Loan | First use | Later use | Extra for later use | |---|---:|---:|---:|---:| | 0% ($0) | $400,000 | 2.15% = $8,600 | 3.3% = $13,200 | +$4,600 | | 5% ($20,000) | $380,000 | 1.5% = $5,700 | 1.5% = $5,700 | Same | | 10% ($40,000) | $360,000 | 1.25% = $4,500 | 1.25% = $4,500 | Same | With nothing down, a repeat buyer pays $13,200 instead of $8,600. You can finance the fee, but it then accrues interest for the life of the loan. Veterans who receive VA compensation for a service-connected disability, and the other groups the VA exempts, pay no funding fee on any use. Refinances follow their own rates: a VA cash-out refinance is 2.15% the first time and 3.3% after that, and an Interest Rate Reduction Refinance Loan (IRRRL) is 0.5% — see [streamline refinances](https://mortgage-math-us.com/refinancing/streamline-refinance/). ## If an earlier VA loan ended badly Under VA rules a past foreclosure doesn’t by itself disqualify you, but if the VA paid a claim on your earlier loan, that entitlement can’t be restored until the government’s loss is repaid in full — even if the debt was waived or discharged in bankruptcy. In practice you would buy with whatever remaining entitlement you have, which may mean a down payment. Waiting periods and re-establishing credit are covered in our post on [getting a mortgage after bankruptcy or foreclosure](https://mortgage-math-us.com/blog/mortgage-after-bankruptcy-or-foreclosure/). ## Steps to use your benefit again **How to reuse your VA home loan benefit** 1. **Get an updated COE** — Ask your lender to request it, or apply online; ask for restoration at the same time if you sold the old home or paid off the loan. 2. **Read the entitlement figures** — Note any entitlement still charged to an open loan. 3. **Find your county’s limit** — Multiply it by 25%, subtract the used entitlement, and multiply what is left by 4 for your zero-down ceiling. 4. **Decide on the down payment** — Compare the cash needed with the funding fee saved at 5% and 10% down. 5. **Plan for both payments** — If you keep the first home, lenders count its mortgage payment in your debts; ask how much of the rent, if any, they can count against it. 6. **Price the new loan** — Use the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=600000&down=0) with the funding fee added to the loan. ## Frequently asked questions ### How many times can you use a VA loan? There is no set number. You can reuse the benefit whenever you have entitlement available — restored in full after you sell and pay off the earlier loan, or remaining entitlement while an earlier loan is still open. ### Can I have two VA loans at the same time? Yes, if you have enough remaining entitlement and you will live in the new home. In a county at the $832,750 baseline limit, keeping a $320,000 VA loan leaves room for about $512,750 with no down payment. ### What is the one-time restoration of entitlement? If you have repaid a VA loan in full but still own the home — usually after refinancing into a conventional loan — the VA can restore your entitlement once. Restoration after you sell the home and pay off the loan has no such limit. ### Is the VA funding fee higher the second time? On a purchase, only with less than 5% down: 3.3% instead of 2.15%. With 5% to under 10% down it is 1.5%, and with 10% or more 1.25%, for first and later use alike. ### Does a VA loan limit apply when I buy again? Not if your entitlement has been fully restored — the VA sets no limit with full entitlement. With remaining entitlement, your zero-down amount is based on the county loan limit, from $832,750 in most counties up to $1,249,125 in high-cost areas. ### Can I get my entitlement back if someone assumes my VA loan? Only if the buyer is a qualified veteran who agrees to substitute their own entitlement. If a non-veteran assumes the loan, your entitlement stays tied up until the loan is paid off. ## Sources - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/loan-limits/) — VA guaranty on loans above $144,000 (share of the loan amount); VA basic entitlement (guaranty on loans of $144,000 or less) (Aug 12, 2025) - [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) — 2026 baseline conforming loan limit (one-unit); 2026 high-cost area conforming ceiling (one-unit) (2026 limit) - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) — VA funding fee, first use, less than 5% down; VA funding fee, after first use, less than 5% down; VA funding fee, 5% to under 10% down (Apr 7, 2023) - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [VA: Eligibility for VA home loan programs (restoring entitlement)](https://www.va.gov/housing-assistance/home-loans/eligibility/) - [VA: Loan limits and entitlement](https://www.va.gov/housing-assistance/home-loans/loan-limits/) - [VA: Funding fee and closing costs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) - [38 CFR 36.4340: Underwriting standards (prior VA foreclosures)](https://www.ecfr.gov/current/title-38/chapter-I/part-36/subpart-B/section-36.4340) _General information, not financial advice._ --- # Ability-to-repay rule > The ability-to-repay rule makes most mortgage lenders verify in good faith that you can afford the loan. The eight factors and which loans are exempt. URL: https://mortgage-math-us.com/glossary/ability-to-repay/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **The ability-to-repay rule** is the Regulation Z requirement (12 CFR 1026.43) that a lender make a reasonable, good-faith determination, based on verified information, that you can repay a mortgage before making it. It applies to most closed-end consumer loans secured by a home. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Construction phase exempt if no longer than | 12 months | [12 CFR 1026.43](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43) | Oct 22, 2026 | ## The eight factors The lender must consider and verify: 1. Your current or reasonably expected income or assets, other than the home itself 2. Your employment status, if it relies on job income 3. The monthly payment on the loan 4. Payments on any other loan taken out at the same time 5. Mortgage-related costs such as property taxes, insurance and HOA dues 6. Your current debts, alimony and child support 7. Your [debt-to-income ratio](https://mortgage-math-us.com/glossary/debt-to-income-ratio/) or [residual income](https://mortgage-math-us.com/glossary/residual-income/) 8. Your credit history On an adjustable-rate or teaser-rate loan, the payment must be figured at the higher of the introductory rate and the fully indexed rate, not the teaser alone. The [debt-to-income guide](https://mortgage-math-us.com/buying/debt-to-income/) shows how lenders run the numbers. ## Which loans it covers Purchase loans, refinances and closed-end home equity loans are covered. HELOCs and timeshare loans are outside the rule; reverse mortgages, short-term bridge loans and a construction phase of 12 months or less are exempt from its repayment test. Loans for rental property you won’t live in are business credit and not covered. Most lenders show compliance by making a [Qualified Mortgage](https://mortgage-math-us.com/glossary/qualified-mortgage/); others make [non-QM loans](https://mortgage-math-us.com/glossary/non-qm-loan/) under the general standard. ## Sources - [12 CFR 1026.43](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43) — Construction phase of a construction-to-permanent loan is exempt from the ability-to-repay rule if no longer than (Oct 22, 2026) - [CFPB: What is the ability-to-repay rule?](https://www.consumerfinance.gov/ask-cfpb/what-is-the-ability-to-repay-rule-en-1787/) - [eCFR: 12 CFR 1026.43 (ability to repay and qualified mortgages)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43) _General information, not financial advice._ --- # Adjustable-rate mortgage (ARM) > An adjustable-rate mortgage has a rate fixed for a few years, then resets with an index plus a margin, within caps. How ARM names work, with an example. URL: https://mortgage-math-us.com/glossary/adjustable-rate-mortgage/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **An adjustable-rate mortgage (ARM)** is a home loan whose interest rate can change. Most ARMs keep an introductory rate for several years, then reset at set intervals to an [index](https://mortgage-math-us.com/glossary/arm-index/) plus a [margin](https://mortgage-math-us.com/glossary/arm-margin/), limited by [rate caps](https://mortgage-math-us.com/glossary/rate-caps/). ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Index on Fannie Mae ARMs | 30-day average SOFR | [Fannie Mae Selling Guide B2-1.4-02](https://selling-guide.fanniemae.com/sel/b2-1.4-02/adjustable-rate-mortgages-arms) | Dec 10, 2025 | | Caps on a 5/6 ARM (first/periodic/lifetime) | 2/1/5 | [Fannie Mae Standard ARM Plan Matrix](https://singlefamily.fanniemae.com/media/6951/display) | Oct 1, 2021 | | Caps on 7/6 and 10/6 ARMs | 5/1/5 | [Fannie Mae Standard ARM Plan Matrix](https://singlefamily.fanniemae.com/media/6951/display) | Oct 1, 2021 | ## Reading names like 5/6 and 7/6 The first number is how many years the starting rate lasts; the second is how often it adjusts afterwards. A 5/6 ARM is fixed for five years and then changes every six months. Fannie Mae’s standard ARMs use the 30-day average SOFR as the index, with caps of 2/1/5 on a 5/6 and 5/1/5 on 7/6 and 10/6 loans. ## Example: the first reset Say a $300,000 5/6 ARM starts at an example rate of 6.5%. The payment is $1,896 for five years, after which $280,833 is still owed. If rates have climbed, the first adjustment can add up to 2 percentage points, taking the rate to 8.5% and the payment to $2,261. The lifetime cap means the rate can never pass 11.5%. Rates can fall too, but plan for the worst case. The [fixed vs adjustable guide](https://mortgage-math-us.com/loan-types/fixed-vs-adjustable-rate/) and [ARM risks explained](https://mortgage-math-us.com/blog/arm-risks-explained/) show when an ARM can make sense compared with a [fixed-rate mortgage](https://mortgage-math-us.com/glossary/fixed-rate-mortgage/). ## Sources - [Fannie Mae Standard ARM Plan Matrix](https://singlefamily.fanniemae.com/media/6951/display) — Rate caps on a Fannie Mae 5/6 ARM (first/periodic/lifetime); Rate caps on Fannie Mae 7/6 and 10/6 ARMs (first/periodic/lifetime) (Oct 1, 2021) - [Fannie Mae Selling Guide B2-1.4-02](https://selling-guide.fanniemae.com/sel/b2-1.4-02/adjustable-rate-mortgages-arms) — Index on Fannie Mae ARMs (Dec 10, 2025) - [CFPB: What is the difference between a fixed-rate and adjustable-rate mortgage (ARM) loan?](https://www.consumerfinance.gov/ask-cfpb/what-is-the-difference-between-a-fixed-rate-and-adjustable-rate-mortgage-arm-loan-en-100/) - [CFPB: Consumer Handbook on Adjustable-Rate Mortgages (CHARM booklet)](https://files.consumerfinance.gov/f/documents/cfpb_charm_booklet.pdf) _General information, not financial advice._ --- # Amortization > Amortization is how a fixed mortgage payment pays off a loan: mostly interest at first, mostly principal later. Definition and worked example. URL: https://mortgage-math-us.com/glossary/amortization/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **Amortization** is the process of repaying a loan in equal scheduled payments that each cover that month’s interest and part of the principal, so the balance reaches zero at the end of the term. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | 30-year fixed average (used in the example) | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | 15-year fixed average | 6.6% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | ## How it works Interest is charged on the balance you still owe, so early payments are mostly interest and later ones mostly principal, even though the payment itself never changes on a fixed-rate loan. An amortization schedule lists every payment with that split and the balance left afterwards. ## Example On a $300,000 30-year loan at 7.24%, the monthly principal and interest payment is $2,044. The first payment includes $1,810 of interest and only $234 of principal. Across the first year you pay $21,625 in interest and $2,909 in principal, and the balance doesn’t fall below half the original loan until year 22. Extra principal payments shorten the schedule — see the [extra payment calculator](https://mortgage-math-us.com/tools/extra-payment-calculator/). ## Related terms - [Principal](https://mortgage-math-us.com/glossary/principal/) and [interest rate](https://mortgage-math-us.com/glossary/interest-rate/) - [Loan term](https://mortgage-math-us.com/glossary/loan-term/) and [fixed-rate mortgage](https://mortgage-math-us.com/glossary/fixed-rate-mortgage/) - [Interest-only loan](https://mortgage-math-us.com/glossary/interest-only-loan/), where the balance doesn’t amortize during the interest-only period ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average; 15-year fixed rate, national weekly average (Week of Oct 29, 2026) - [CFPB: How does paying down a mortgage work?](https://www.consumerfinance.gov/ask-cfpb/how-does-paying-down-a-mortgage-work-en-1943/) _General information, not financial advice._ --- # Appraisal > An appraisal is an independent opinion of a home’s value that a lender uses to size the loan. What it covers, your right to a copy and low-value options. URL: https://mortgage-math-us.com/glossary/appraisal/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer An **appraisal** is a written, independent opinion of how much a property is worth, based on its features and condition and on recent sales of comparable homes nearby. Lenders use it to confirm the home is enough security for the loan, and you have a right to a free copy promptly after it’s done, or at least 3 business days before closing, whichever comes first. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Copy of the appraisal due before closing (or promptly) | 3 business days | [CFPB, Regulation B 1002.14](https://www.consumerfinance.gov/rules-policy/regulations/1002/14) | Oct 28, 2026 | ## When the value comes in low Lenders measure [loan-to-value](https://mortgage-math-us.com/glossary/loan-to-value-ratio/) against the lower of the price and the appraised value. Say you agree to pay $360,000 with 10% down, a $324,000 loan, and the appraisal says $345,000. Your LTV rises from 90% to 93.9%, which can mean costlier mortgage insurance or a smaller loan. Your options: renegotiate the price, cover the $15,000 gap in cash, ask the lender for a reconsideration of value with better comparable sales, or cancel under an appraisal [contingency](https://mortgage-math-us.com/glossary/contingency/) if your contract has one. ## What it isn’t An appraisal protects the lender’s collateral. It isn’t a [home inspection](https://mortgage-math-us.com/glossary/home-inspection/): the appraiser notes obvious condition problems but doesn’t test the roof, wiring or plumbing for you. Some loans skip the appraisal when Fannie Mae or Freddie Mac accepts the value from its own data, a value acceptance or appraisal waiver. The lender usually chooses the appraiser, and you usually pay the appraisal fee as a closing cost. More in the [appraisal and inspection guide](https://mortgage-math-us.com/buying/appraisal-and-inspection/). ## Related terms - [Down payment](https://mortgage-math-us.com/glossary/down-payment/), which you may need to raise after a low value ## Sources - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [CFPB, Regulation B 1002.14](https://www.consumerfinance.gov/rules-policy/regulations/1002/14) — Lender must give you the appraisal at least this long before closing (or promptly) (Oct 28, 2026) - [CFPB: What are appraisals and why do I need to look at them?](https://www.consumerfinance.gov/ask-cfpb/what-are-appraisals-and-why-do-i-need-to-look-at-them-en-167/) _General information, not financial advice._ --- # Annual percentage rate (APR) > APR is the yearly cost of a mortgage including the interest rate plus points and lender fees. How it differs from the rate, with a worked example. URL: https://mortgage-math-us.com/glossary/apr/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **APR** (annual percentage rate) is the yearly cost of a mortgage expressed as a percentage, combining the interest rate with points, mortgage broker fees and other finance charges you pay to get the loan. It is a broader measure of cost than the [interest rate](https://mortgage-math-us.com/glossary/interest-rate/) alone. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | 30-year fixed average (used in the example) | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | Cost of one discount point | 1% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/how-should-i-use-lender-credits-and-points-also-called-discount-points-en-136/) | Oct 19, 2023 | | APR change that restarts the closing wait | 0.125% | [12 CFR 1026.22](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-C/section-1026.22) | Oct 28, 2026 | ## APR vs the interest rate Your monthly payment is set by the interest rate. The APR doesn’t change the payment; it spreads the loan’s upfront finance charges over the term so two offers with different fees can be compared on one scale. A loan with no points and few fees has an APR close to its rate. Third-party costs such as the appraisal or title insurance generally aren’t included. ## Example Take a $300,000 30-year loan at 7.24% with one [discount point](https://mortgage-math-us.com/glossary/discount-points/) ($3,000) and $2,000 of other lender charges. The payment is $2,044 a month either way, but you effectively receive only $295,000. Solving for the rate at which that amount produces the same payment gives an APR of about 7.41%, or 0.17 percentage points above the note rate. Because the APR assumes you keep the loan for the full term, upfront fees cost more per year than it shows if you sell or refinance early. ## Where it appears The APR is in the Comparisons section on page 3 of the [Loan Estimate](https://mortgage-math-us.com/glossary/loan-estimate/) and on the [Closing Disclosure](https://mortgage-math-us.com/glossary/closing-disclosure/). If it rises by more than 0.125% on a regular loan after you get the Closing Disclosure, you get a new waiting period before closing. See the [Loan Estimate guide](https://mortgage-math-us.com/buying/loan-estimate/) for the rest of the form. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/how-should-i-use-lender-credits-and-points-also-called-discount-points-en-136/) — Cost of one discount point (share of loan amount) (Oct 19, 2023) - [12 CFR 1026.22](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-C/section-1026.22) — APR change that triggers a new 3-business-day wait (regular loans) (Oct 28, 2026) - [CFPB: What is the difference between a mortgage interest rate and an APR?](https://www.consumerfinance.gov/ask-cfpb/what-is-the-difference-between-a-mortgage-interest-rate-and-an-apr-en-135/) _General information, not financial advice._ --- # Index (ARM) > An ARM index is the market benchmark rate an adjustable mortgage follows. The new rate is the index plus a fixed margin, held in check by rate caps. URL: https://mortgage-math-us.com/glossary/arm-index/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **The index** on an adjustable-rate mortgage is a benchmark interest rate that moves with general market conditions. At each adjustment, the lender adds your fixed [margin](https://mortgage-math-us.com/glossary/arm-margin/) to the index’s current value to set the new rate, subject to any [rate caps](https://mortgage-math-us.com/glossary/rate-caps/). ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Index on Fannie Mae ARMs | 30-day average SOFR | [Fannie Mae Selling Guide B2-1.4-02](https://selling-guide.fanniemae.com/sel/b2-1.4-02/adjustable-rate-mortgages-arms) | Dec 10, 2025 | | Caps on a 5/6 ARM (first/periodic/lifetime) | 2/1/5 | [Fannie Mae Standard ARM Plan Matrix](https://singlefamily.fanniemae.com/media/6951/display) | Oct 1, 2021 | ## Which index your loan uses The lender picks the index when you apply, and it generally stays the same for the life of the loan. Fannie Mae’s standard ARMs use the 30-day average SOFR. You’ll find the index and margin in the Adjustable Interest Rate (AIR) table on page 2 of the [Loan Estimate](https://mortgage-math-us.com/glossary/loan-estimate/) and in your [promissory note](https://mortgage-math-us.com/glossary/promissory-note/). ## Example: index plus margin Take a 5/6 ARM with an example starting rate of 6.5%, a margin of 2.75 percentage points and caps of 2/1/5, so the first reset can go no higher than 8.5%. - If the index is 4.5% on the change date, the fully indexed rate is 7.25%, and that becomes your rate: 7.25%. - If the index is 6.25%, index plus margin is 9%, but the initial cap holds the rate at 8.5%. Later resets can push it higher, up to the lifetime cap. The index is the only part of the formula that moves, so it drives every payment change on an [adjustable-rate mortgage](https://mortgage-math-us.com/glossary/adjustable-rate-mortgage/). The [fixed vs adjustable guide](https://mortgage-math-us.com/loan-types/fixed-vs-adjustable-rate/) covers how to judge that risk. ## Sources - [Fannie Mae Standard ARM Plan Matrix](https://singlefamily.fanniemae.com/media/6951/display) — Rate caps on a Fannie Mae 5/6 ARM (first/periodic/lifetime) (Oct 1, 2021) - [Fannie Mae Selling Guide B2-1.4-02](https://selling-guide.fanniemae.com/sel/b2-1.4-02/adjustable-rate-mortgages-arms) — Index on Fannie Mae ARMs (Dec 10, 2025) - [CFPB: For an ARM, what are the index and margin, and how do they work?](https://www.consumerfinance.gov/ask-cfpb/for-an-adjustable-rate-mortgage-arm-what-are-the-index-and-margin-and-how-do-they-work-en-1949/) _General information, not financial advice._ --- # Margin (ARM) > An ARM margin is the fixed number of percentage points added to the index to set your adjustable rate. It never changes, so compare it before you sign. URL: https://mortgage-math-us.com/glossary/arm-margin/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **The margin** is the number of percentage points the lender adds to the [index](https://mortgage-math-us.com/glossary/arm-index/) to set the rate on an adjustable-rate mortgage after its fixed period. It is written into the loan agreement and doesn’t change after closing. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Index on Fannie Mae ARMs | 30-day average SOFR | [Fannie Mae Selling Guide B2-1.4-02](https://selling-guide.fanniemae.com/sel/b2-1.4-02/adjustable-rate-mortgages-arms) | Dec 10, 2025 | | Caps on a 5/6 ARM (first/periodic/lifetime) | 2/1/5 | [Fannie Mae Standard ARM Plan Matrix](https://singlefamily.fanniemae.com/media/6951/display) | Oct 1, 2021 | ## Why the margin outlasts the starting rate The starting rate lasts a few years; the margin applies at every reset for the rest of the loan. Two ARMs with the same starting rate can cost very different amounts later if their margins differ, and margins vary by lender and loan. ## Example: two margins, same start Two $300,000 5/6 ARMs both start at an example 6.5%, and $280,833 is owed when the fixed period ends. Suppose the index (30-day average SOFR on Fannie Mae loans) is 4.5% at the first reset: | Margin | New rate | New payment | |---|---|---| | 2.75 points | 7.25% | $2,030 | | 3.25 points | 7.75% | $2,121 | The higher margin costs $91 a month, or $1,096 a year, at that index level — and the gap returns at every adjustment. Both resets stay under the initial cap in 2/1/5. ## Where to find it The margin is listed with the index in the Adjustable Interest Rate (AIR) table on page 2 of the [Loan Estimate](https://mortgage-math-us.com/glossary/loan-estimate/). Compare it alongside the [rate caps](https://mortgage-math-us.com/glossary/rate-caps/) when shopping for an [adjustable-rate mortgage](https://mortgage-math-us.com/glossary/adjustable-rate-mortgage/); the [fixed vs adjustable guide](https://mortgage-math-us.com/loan-types/fixed-vs-adjustable-rate/) and [ARM risks explained](https://mortgage-math-us.com/blog/arm-risks-explained/) walk through the rest. ## Sources - [Fannie Mae Selling Guide B2-1.4-02](https://selling-guide.fanniemae.com/sel/b2-1.4-02/adjustable-rate-mortgages-arms) — Index on Fannie Mae ARMs (Dec 10, 2025) - [Fannie Mae Standard ARM Plan Matrix](https://singlefamily.fanniemae.com/media/6951/display) — Rate caps on a Fannie Mae 5/6 ARM (first/periodic/lifetime) (Oct 1, 2021) - [CFPB: For an ARM, what are the index and margin, and how do they work?](https://www.consumerfinance.gov/ask-cfpb/for-an-adjustable-rate-mortgage-arm-what-are-the-index-and-margin-and-how-do-they-work-en-1949/) _General information, not financial advice._ --- # Assumable mortgage > An assumable mortgage is one a buyer can take over from the seller, keeping its rate and balance. Which loans qualify, the approval step and the cash gap. URL: https://mortgage-math-us.com/glossary/assumable-mortgage/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **An assumable mortgage** is a home loan that a buyer can take over from the seller — keeping its interest rate, remaining balance and remaining term — instead of getting a new loan. The lender or servicer generally must approve the buyer first. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | VA funding fee on an assumption | 0.5% | [U.S. Department of Veterans Affairs: VA funding fee and loan closing costs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) | Apr 7, 2023 | | 30-year fixed average (for comparison) | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | ## Which loans can be assumed FHA-insured mortgages are assumable, and for loans made since late 1989 the buyer must pass a credit review. VA loans can be assumed with approval, and the buyer pays a [VA funding fee](https://mortgage-math-us.com/glossary/va-funding-fee/) of 0.5% — $1,250 on a $250,000 balance. Unless the buyer is an eligible veteran who substitutes their own [entitlement](https://mortgage-math-us.com/glossary/va-entitlement/), the seller’s entitlement stays tied up in the loan. Most conventional fixed-rate loans contain a [due-on-sale clause](https://mortgage-math-us.com/glossary/due-on-sale-clause/) and can’t be assumed. ## The cash gap The buyer takes over the balance, not the price. On a $400,000 home with $250,000 left on a loan at an example 3.5% with 25 years to go, the payment is $1,252 — versus $1,704 for a new 30-year loan of the same size at 7.24%. But the buyer must cover the seller’s $150,000 of equity with cash or a second loan. Sellers should get a written release of liability; without one, they can stay responsible if the buyer defaults. The [VA loans guide](https://mortgage-math-us.com/loan-types/va-loans/) and [FHA loans guide](https://mortgage-math-us.com/loan-types/fha-loans/) cover each program. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [U.S. Department of Veterans Affairs: VA funding fee and loan closing costs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) — VA funding fee on a loan assumption (Apr 7, 2023) - [HUD Handbook 4155.1, Chapter 7: Assumptions](https://www.hud.gov/sites/documents/4155-1_7.pdf) - [VA Form 26-6381: Application for assumption approval and/or release from personal liability](https://www.va.gov/forms/26-6381/) _General information, not financial advice._ --- # Automated underwriting > Automated underwriting is software that weighs your credit, income, debts and assets against an agency’s risk model and gives a recommendation in minutes. URL: https://mortgage-math-us.com/glossary/automated-underwriting/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **Automated underwriting** is software that evaluates a mortgage application against an agency’s risk model and returns a recommendation within minutes. Fannie Mae’s Desktop Underwriter (DU) and Freddie Mac’s Loan Product Advisor (LPA) handle most conventional loans; FHA files are scored by FHA’s TOTAL Mortgage Scorecard, and USDA uses its Guaranteed Underwriting System. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Highest DTI with a DU approval | 50% | [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) | Apr 2, 2025 | | Fannie Mae DTI limit without DU (manual) | 36% | [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) | Apr 2, 2025 | ## How it weighs a file Instead of applying fixed cutoffs one at a time, the system looks at the whole file together: credit score and history, [debt-to-income ratio](https://mortgage-math-us.com/glossary/debt-to-income-ratio/), loan-to-value, [reserves](https://mortgage-math-us.com/glossary/reserves/), loan type and property. Strength in one area can offset weakness in another, which is why DU can approve a DTI up to 50%, while a manually underwritten Fannie Mae loan starts at 36%, and why Fannie Mae sets no fixed minimum score for DU files. The findings also list what the lender must verify before closing. ## When the answer is “refer” A DU recommendation of Approve/Eligible means the loan meets Fannie Mae’s risk standards, subject to verification. A Refer with Caution, or a Refer from FHA’s scorecard, isn’t a denial: where the program allows, the lender can send the file to [manual underwriting](https://mortgage-math-us.com/glossary/manual-underwriting/), or restructure the loan with a bigger down payment or a paid-off debt and resubmit. Since the result depends on what’s in your file, errors on your credit report matter; check them before applying, as the [pre-approval guide](https://mortgage-math-us.com/buying/pre-approval/) explains. ## Related terms - [Underwriting](https://mortgage-math-us.com/glossary/underwriting/), the full review process ## Sources - [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) — Fannie Mae maximum DTI, Desktop Underwriter loans; Fannie Mae maximum DTI, manually underwritten loans (Apr 2, 2025) - [Fannie Mae: Desktop Underwriter](https://singlefamily.fanniemae.com/applications-technology/desktop-underwriter-desktop-originator) _General information, not financial advice._ --- # Balloon payment > A balloon payment is a large lump sum due at the end of a loan whose regular payments didn’t pay it off. How it is built, the risks and the rules. URL: https://mortgage-math-us.com/glossary/balloon-payment/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A balloon payment** is a larger-than-usual, one-time payment due at the end of a loan, because the regular payments were too small to pay off the balance by the due date. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | 30-year fixed average (used in the example) | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | ## How a balloon loan is built A common design figures the payment as if the loan ran 30 years but makes the whole balance due much sooner. Take a $300,000 loan at 7.24% with payments of $2,044 set on a 30-year schedule but due after seven years. Over those 84 payments you pay $171,738, yet $274,447 — about 91% of the original loan — is still owed in one lump sum. [Interest-only loans](https://mortgage-math-us.com/glossary/interest-only-loan/) can end the same way — see the [interest-only mortgages guide](https://mortgage-math-us.com/loan-types/interest-only-mortgages/). Borrowers usually plan to sell or [refinance](https://mortgage-math-us.com/glossary/refinance/) before the balloon is due, but that can fail if the home loses value, rates rise or your income drops. If you can’t pay, you could lose the home. ## Rules that limit balloons Balloon payments aren’t allowed in a [Qualified Mortgage](https://mortgage-math-us.com/glossary/qualified-mortgage/), with limited exceptions for certain small lenders. High-cost mortgages generally can’t include them either. A loan with a balloon must say so in the Loan Terms table on page 1 of the [Loan Estimate](https://mortgage-math-us.com/glossary/loan-estimate/), with the amount and due date, so check that line before you sign. The [amortization](https://mortgage-math-us.com/glossary/amortization/) schedule of a fully amortizing loan shows the balance reaching zero instead. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [CFPB: What is a balloon payment? When is one allowed?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-balloon-payment-when-is-one-allowed-en-104/) _General information, not financial advice._ --- # Break-even point > The break-even point is how many months of lower payments it takes to recover a refinance’s closing costs. The formula, an example and its limits. URL: https://mortgage-math-us.com/glossary/break-even-point/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **The break-even point** of a refinance is the number of months it takes for the monthly savings to add up to the closing costs: closing costs ÷ monthly savings. If you sell or refinance again before that month, the refinance has cost you more than it saved. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Typical refinance costs, low end (used in the example) | 3% | [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) | Oct 28, 2026 | | 30-year fixed average (new rate in the example) | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | ## Example You owe $300,000 with 28 years left at an example rate of 8.24%. Refinancing into a 30-year loan at 7.24% lowers principal and interest by $245 a month. Closing costs at 3% come to $9,000, paid in cash. Break-even: $9,000 ÷ $245 = 37 months. Keep the new loan longer than that and the refinance comes out ahead. ## Where the simple formula falls short - **Term reset.** Restarting at 30 years lowers the payment partly by stretching the debt, so compare balances too, not just payments. - **Rolled-in costs.** Financing the costs means you pay interest on them, which pushes break-even later. - **Points.** The same test tells you whether buying [discount points](https://mortgage-math-us.com/glossary/discount-points/) pays. VA writes the idea into law: an [IRRRL](https://mortgage-math-us.com/glossary/irrrl/) must recoup its costs within 36 months. The [refinance break-even calculator](https://mortgage-math-us.com/tools/refinance-break-even-calculator/) runs the fuller comparison, and the [break-even guide](https://mortgage-math-us.com/refinancing/break-even/) explains the method. ## Related terms - [Refinance](https://mortgage-math-us.com/glossary/refinance/) ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) — Typical refinance closing costs, low end (share of loan principal) (Oct 28, 2026) - [38 U.S.C. 3709](https://www.govinfo.gov/link/uscode/38/3709) — VA IRRRL: fees and closing costs must be recouped within (Oct 28, 2026) - [CFPB: Should I refinance? (handout)](https://files.consumerfinance.gov/f/documents/cfpb_should_i_refinance_handout.pdf) _General information, not financial advice._ --- # Cash-out refinance > A cash-out refinance replaces your mortgage with a bigger loan and pays you the difference in cash. Maximum loan-to-value by loan type, with an example. URL: https://mortgage-math-us.com/glossary/cash-out-refinance/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A cash-out refinance** replaces your mortgage with a larger new first mortgage and pays you the difference, minus closing costs, in cash. How much you can take depends on the loan type’s maximum loan-to-value ratio — 80% for a Fannie Mae loan on a one-unit primary home. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Fannie Mae maximum LTV, one-unit primary home | 80% | [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) | Apr 1, 2026 | | FHA maximum LTV | 80% | [HUD Mortgagee Letter 2019-11](https://www.hud.gov/sites/dfiles/OCHCO/documents/19-11ml.pdf) | Aug 1, 2019 | | VA maximum LTV (lenders may set lower) | 100% | [38 CFR 36.4306](https://www.ecfr.gov/current/title-38/chapter-I/part-36/subpart-B/section-36.4306) | Oct 22, 2026 | | Fannie Mae: existing first mortgage at least | 12 months | [Fannie Mae Selling Guide B2-1.3-03](https://selling-guide.fanniemae.com/sel/b2-1.3-03/cash-out-refinance-transactions) | Dec 10, 2025 | ## Example > **Worked example: A $400,000 home with $220,000 owed** > > At 80% LTV the new loan can be $320,000. That pays off the old mortgage and leaves $100,000; after closing costs of about $9,600 at 3%, you’d receive roughly $90,400. ## Limits by loan type *Maximum cash-out LTV, one-unit primary home* | Loan | Maximum LTV | |---|---| | Fannie Mae conventional | 80% | | FHA | 80% | | VA | 100%, though many lenders set their own lower cap | Fannie Mae also requires the existing first mortgage to be at least 12 months old. A VA cash-out loan can replace a non-VA mortgage. ## What you trade The whole balance gets the new rate, so a cash-out refinance can cost more than a [HELOC](https://mortgage-math-us.com/glossary/heloc/) or [home equity loan](https://mortgage-math-us.com/glossary/home-equity-loan/) when your current rate is low. On your main home you can still cancel within 3 business days of closing under the [right of rescission](https://mortgage-math-us.com/glossary/right-of-rescission/). The [cash-out refinance guide](https://mortgage-math-us.com/refinancing/cash-out-refinance/) and [cash-out vs HELOC](https://mortgage-math-us.com/home-equity/cash-out-vs-heloc/) compare the options. ## Sources - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae cash-out refinance maximum LTV, one-unit principal residence (Apr 1, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) — Typical refinance closing costs, low end (share of loan principal) (Oct 28, 2026) - [HUD Mortgagee Letter 2019-11](https://www.hud.gov/sites/dfiles/OCHCO/documents/19-11ml.pdf) — FHA cash-out refinance maximum loan-to-value (Aug 1, 2019) - [38 CFR 36.4306](https://www.ecfr.gov/current/title-38/chapter-I/part-36/subpart-B/section-36.4306) — VA refinance (including cash-out) maximum loan-to-value allowed by VA (Oct 22, 2026) - [Fannie Mae Selling Guide B2-1.3-03](https://selling-guide.fanniemae.com/sel/b2-1.3-03/cash-out-refinance-transactions) — Fannie Mae cash-out: existing first mortgage must be at least (Dec 10, 2025) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) — Right to cancel a refinance or home equity loan on your principal home (Aug 8, 2024) - [Fannie Mae Selling Guide B2-1.3-03: Cash-out refinance transactions](https://selling-guide.fanniemae.com/sel/b2-1.3-03/cash-out-refinance-transactions) - [VA: Cash-out refinance loan](https://www.va.gov/housing-assistance/home-loans/loan-types/cash-out-loan/) _General information, not financial advice._ --- # Cash to close > Cash to close is the amount you bring to closing: down payment plus closing costs, minus your deposit and any credits. How the number is built. URL: https://mortgage-math-us.com/glossary/cash-to-close/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **Cash to close** is the amount you must pay at closing: your down payment plus closing costs, minus money you’ve already paid, such as the earnest money deposit, and any credits from the lender or seller. It appears on page 1 of the Loan Estimate and the Closing Disclosure, and the Closing Disclosure shows the full calculation on page 3. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Closing costs, low end of the CFPB range (used in the example) | 2% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | | Closing Disclosure arrives before closing | 3 business days | [CFPB](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) | Oct 28, 2026 | ## From price to cash to close *Example: $360,000 purchase with 10% down* | Line | Amount | |---|---| | Down payment (10%) | $36,000 | | Closing costs at 2% of the price | $7,200 | | Earnest money already paid (1% in this example) | −$3,600 | | Seller credit toward closing costs | −$3,000 | | **Cash to close** | **$36,600** | The deposit is subtracted because you’ve already paid it, but it still counts toward the purchase. The CFPB says you’ll typically pay the balance by cashier’s check or wire transfer; ask your closing agent which they accept, and confirm any wiring instructions with them by phone. ## Why the figure moves The Loan Estimate shows an *estimated* cash to close. It changes if closing costs shift, the closing date changes the prepaid interest, or you renegotiate credits after an inspection. On the Closing Disclosure, which arrives at least 3 business days before closing, the “Calculating Cash to Close” table puts the Loan Estimate figure next to the final one and flags each line that changed. Estimate yours with the [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/). ## Related terms - [Closing costs](https://mortgage-math-us.com/glossary/closing-costs/) and [down payment](https://mortgage-math-us.com/glossary/down-payment/) - [Earnest money](https://mortgage-math-us.com/glossary/earnest-money/) and [seller concessions](https://mortgage-math-us.com/glossary/seller-concessions/) ## Sources - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price) (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) — You receive the Closing Disclosure at least this many business days before closing (Oct 28, 2026) - [CFPB: Loan Estimate explainer](https://www.consumerfinance.gov/owning-a-home/loan-estimate/) _General information, not financial advice._ --- # Closing costs > Closing costs are the lender fees, third-party charges, government taxes and prepaid items you pay to complete a mortgage, on top of the down payment. URL: https://mortgage-math-us.com/glossary/closing-costs/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **Closing costs** are all the charges you pay at closing to get a mortgage and transfer the home: lender fees, third-party services such as the appraisal and title insurance, government recording fees and taxes, and prepaid interest, insurance and escrow deposits. The CFPB puts them at about 2% to 5% of the purchase price, on top of the down payment. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Typical closing costs, low end (CFPB) | 2% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | | Typical closing costs, high end (CFPB) | 5% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | | Closing Disclosure arrives before closing | 3 business days | [CFPB](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) | Oct 28, 2026 | ## Where they’re listed Every lender itemizes closing costs on page 2 of the Loan Estimate in the same lettered sections: A for the lender’s origination charges, B and C for services you can’t or can shop for, E for taxes and government fees, F for prepaids and G for the initial escrow deposit. The Closing Disclosure, which you receive at least 3 business days before closing, repeats the layout with final figures, so you can compare line by line. ## What the range means in dollars On a $360,000 home, about the US median home value, the CFPB range works out to $7,200–$18,000. Where you land depends mostly on your state’s [transfer tax](https://mortgage-math-us.com/glossary/transfer-tax/) and any mortgage tax, the loan amount (which drives points and title premiums), and how many days of prepaid interest fall before your first payment. The [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/) builds the estimate for your state. ## Related terms - [Cash to close](https://mortgage-math-us.com/glossary/cash-to-close/), the amount you actually bring - [Prepaid items](https://mortgage-math-us.com/glossary/prepaid-items/), paid ahead at closing - [Lender credit](https://mortgage-math-us.com/glossary/lender-credit/) and [seller concessions](https://mortgage-math-us.com/glossary/seller-concessions/), two ways to cover them ## Sources - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) — You receive the Closing Disclosure at least this many business days before closing (Oct 28, 2026) - [CFPB: Loan Estimate explainer](https://www.consumerfinance.gov/owning-a-home/loan-estimate/) _General information, not financial advice._ --- # Closing Disclosure > The Closing Disclosure is the five-page form with your final mortgage terms and closing costs, sent before closing so you can check them. URL: https://mortgage-math-us.com/glossary/closing-disclosure/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A Closing Disclosure** is the five-page form your lender must give you at least 3 business days before you close on most mortgages, listing the final loan terms, projected payments, closing costs and cash to close. It replaced the HUD-1 settlement statement and final Truth in Lending disclosure for most home loans. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Received at least this long before closing | 3 business days | [CFPB](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) | Oct 28, 2026 | | APR increase that restarts the wait (regular loans) | 0.125% | [12 CFR 1026.22](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-C/section-1026.22) | Oct 28, 2026 | | Limit on increases for the 10% category | 10% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-my-final-mortgage-costs-increase-from-what-was-on-my-loan-estimate-en-172/) | Sep 11, 2024 | ## What restarts the waiting period Most last-minute corrections just mean a revised form at or before closing. Three changes require a new disclosure and a fresh 3 business days wait: the APR rises by more than 0.125% on a regular loan, the loan product changes (say, from fixed to adjustable), or a prepayment penalty is added. ## Checking it against the Loan Estimate Lay it next to your [Loan Estimate](https://mortgage-math-us.com/glossary/loan-estimate/) and compare the loan amount, rate, monthly payment, [cash to close](https://mortgage-math-us.com/glossary/cash-to-close/) and each fee. > **Worked example: The 10% tolerance check** > > Recording fees and services from the lender’s list totaled $2,000 on the Loan Estimate. The limit allows up to $2,200. If the Closing Disclosure shows $2,350 with no changed circumstance, the lender owes you $150. The [Loan Estimate and Closing Disclosure guide](https://mortgage-math-us.com/buying/loan-estimate/) explains each page; for the closing itself, see [closing](https://mortgage-math-us.com/glossary/closing/). ## Sources - [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-my-final-mortgage-costs-increase-from-what-was-on-my-loan-estimate-en-172/) — Cumulative limit on increases for recording fees and lender-listed services (Sep 11, 2024) - [CFPB](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) — You receive the Closing Disclosure at least this many business days before closing (Oct 28, 2026) - [12 CFR 1026.22](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-C/section-1026.22) — APR change that triggers a new 3-business-day wait (regular loans) (Oct 28, 2026) - [CFPB: When do I get a Closing Disclosure?](https://www.consumerfinance.gov/ask-cfpb/when-do-i-get-a-closing-disclosure-en-179/) - [CFPB: Closing Disclosure explainer](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) _General information, not financial advice._ --- # Closing (settlement) > Closing, or settlement, is the last step in buying or refinancing a home: you sign the loan papers, pay closing costs and take ownership. What to expect. URL: https://mortgage-math-us.com/glossary/closing/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **Closing**, also called settlement, is the last step in buying and financing a home: you sign the loan documents, pay your [closing costs](https://mortgage-math-us.com/glossary/closing-costs/) and the rest of your down payment, and ownership transfers to you. Once you sign, you are responsible for the mortgage. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Closing Disclosure at least this long before closing | 3 business days | [CFPB](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) | Oct 28, 2026 | | Typical closing costs, low end | 2% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | | Typical closing costs, high end | 5% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | | Right to cancel a refinance of your main home | 3 business days | [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) | Aug 8, 2024 | ## Before the closing table You must receive the [Closing Disclosure](https://mortgage-math-us.com/glossary/closing-disclosure/) at least 3 business days before closing. Compare it line by line with your [Loan Estimate](https://mortgage-math-us.com/glossary/loan-estimate/) and ask about anything that changed. Closing costs typically run 2% to 5% of the price — $7,220 to $18,050 on a $361,000 home. Your [cash to close](https://mortgage-math-us.com/glossary/cash-to-close/) adds the down payment and subtracts deposits and credits. Confirm wiring instructions by phone with your settlement agent, using a number you already know, before sending money. ## At the table A settlement agent — usually a title or escrow company, or a closing attorney in some states — runs the closing. You’ll sign the [promissory note](https://mortgage-math-us.com/glossary/promissory-note/) (your promise to repay), the mortgage or [deed of trust](https://mortgage-math-us.com/glossary/deed-of-trust/) (which makes the home collateral) and many other forms, and the seller signs the deed. Don’t sign if the terms differ from what you expected or you don’t understand them. On a refinance of your main home, you generally have 3 business days after closing to cancel, so the money isn’t paid out until that ends. The [closing costs guide](https://mortgage-math-us.com/buying/closing-costs/) breaks down each fee. ## Sources - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) — You receive the Closing Disclosure at least this many business days before closing (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) — Right to cancel a refinance or home equity loan on your principal home (Aug 8, 2024) - [CFPB: What is a mortgage closing? What happens at the closing?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-mortgage-closing-what-happens-at-the-closing-en-176/) - [CFPB: What can I expect in the mortgage closing process?](https://www.consumerfinance.gov/ask-cfpb/im-about-to-close-on-a-real-estate-purchase-transaction-with-a-mortgage-what-can-expect-in-the-mortgage-closing-process-en-1905/) _General information, not financial advice._ --- # Combined loan-to-value (CLTV) > Combined loan-to-value (CLTV) adds every loan secured by a home and divides by its value. How CLTV differs from LTV and HCLTV, with a HELOC example. URL: https://mortgage-math-us.com/glossary/combined-loan-to-value/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **Combined loan-to-value (CLTV)** is the total of all loans secured by a home (the first mortgage plus any home equity loan, drawn HELOC balance or other second lien) divided by the home’s value, or by the lower of price and appraised value on a purchase. Lenders use it to limit total borrowing against a property. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Fannie Mae CLTV limit with a Community Seconds loan | 105% | [Fannie Mae Selling Guide B5-5.1-02](https://selling-guide.fanniemae.com/sel/b5-5.1-02/community-seconds-loan-eligibility) | May 3, 2023 | | Freddie Mac TLTV limit with Affordable Seconds | 105% | [Freddie Mac Home Possible fact sheet](https://sf.freddiemac.com/docs/pdf/fact-sheet/home_possible_factsheet.pdf) | Feb 1, 2026 | | Fannie Mae cash-out refinance limit (LTV, CLTV and HCLTV) | 80% | [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) | Apr 1, 2026 | ## Example with a HELOC Your home is worth $400,000. You owe $280,000 on the first mortgage, an LTV of 70%, and you have a $60,000 [HELOC](https://mortgage-math-us.com/glossary/heloc/) with $20,000 drawn. Fannie Mae counts only the drawn HELOC balance in CLTV, so CLTV is 75%. A related measure, HCLTV (home equity combined LTV), counts the full credit line whether you use it or not, which gives 85%. ## Where CLTV limits show up - **Cash-out and home equity borrowing.** Fannie Mae caps a cash-out refinance on a one-unit home you live in at 80% across LTV, CLTV and HCLTV, and home equity lenders set their own combined limits. The [equity guide](https://mortgage-math-us.com/home-equity/how-much-equity/) shows how much you could borrow. - **Down-payment assistance.** A second loan from an assistance program can push the total above 100%: Fannie Mae allows a CLTV of up to 105% with a Community Seconds loan, and Freddie Mac up to 105% with Affordable Seconds. ## Related terms - [Loan-to-value ratio](https://mortgage-math-us.com/glossary/loan-to-value-ratio/) and [home equity loan](https://mortgage-math-us.com/glossary/home-equity-loan/) - [Down-payment assistance](https://mortgage-math-us.com/glossary/down-payment-assistance/) ## Sources - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae cash-out refinance maximum LTV, one-unit principal residence (Apr 1, 2026) - [Fannie Mae Selling Guide B5-5.1-02](https://selling-guide.fanniemae.com/sel/b5-5.1-02/community-seconds-loan-eligibility) — Fannie Mae Community Seconds maximum combined LTV (May 3, 2023) - [Freddie Mac Home Possible fact sheet](https://sf.freddiemac.com/docs/pdf/fact-sheet/home_possible_factsheet.pdf) — Freddie Mac Home Possible maximum TLTV with Affordable Seconds (Feb 1, 2026) - [Fannie Mae Selling Guide B2-1.2-02: Combined loan-to-value (CLTV) ratios](https://selling-guide.fanniemae.com/sel/b2-1.2-02/combined-loan-value-cltv-ratios) _General information, not financial advice._ --- # Conforming loan limit > The conforming loan limit is the largest mortgage Fannie Mae and Freddie Mac may buy. The 2026 baseline and high-cost figures and how FHFA updates them. URL: https://mortgage-math-us.com/glossary/conforming-loan-limit/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **The conforming loan limit** is the maximum original loan amount Fannie Mae and Freddie Mac may buy, set each year by the Federal Housing Finance Agency (FHFA). For 2026 it is $832,750 for a one-unit home in most counties and up to $1,249,125 in high-cost areas. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | 2026 baseline, one-unit home | $832,750 | [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) | 2026 limit | | 2026 high-cost ceiling, one-unit home | $1,249,125 | [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) | 2026 limit | | 2025 baseline, one-unit home | $806,500 | [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) | 2025 limit | ## How FHFA sets the number The Housing and Economic Recovery Act (HERA) ties the baseline to the change in average US home prices measured by FHFA. The 2026 baseline is $26,250 above the 2025 figure of $806,500, an increase of about 3.3%. Counties with high median home values get a higher limit, capped at 150% of the baseline. Alaska, Hawaii, Guam and the US Virgin Islands have their own higher limits, and limits for two- to four-unit properties are higher too. ## What the limit decides A loan above your county’s limit is a [jumbo loan](https://mortgage-math-us.com/glossary/jumbo-loan/), with each lender’s own rules and pricing. The cap is on the loan amount, not the price, so a larger down payment can keep a pricier home within it. Other programs borrow the figure: the 2026 [FHA loan](https://mortgage-math-us.com/glossary/fha-loan/) floor of $541,287 is 65% of the baseline, and [VA entitlement](https://mortgage-math-us.com/glossary/va-entitlement/) for buyers with a VA loan still outstanding is based on the county limit. The [jumbo loans guide](https://mortgage-math-us.com/loan-types/jumbo-loans/) covers what changes above the line. ## Related terms - [Conforming loan](https://mortgage-math-us.com/glossary/conforming-loan/) and [conventional loan](https://mortgage-math-us.com/glossary/conventional-loan/) ## Sources - [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) — 2026 baseline conforming loan limit (one-unit); 2025 baseline conforming loan limit (one-unit); 2026 high-cost area conforming ceiling (one-unit) (2026 limit) - [HUD](https://www.hud.gov/news/hud-no-25-145) — 2026 FHA loan limit floor (one-unit, low-cost areas) (2026 limit) - [FHFA: Conforming loan limit values for 2026](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) _General information, not financial advice._ --- # Conforming loan > A conforming loan meets Fannie Mae or Freddie Mac rules and stays within the FHFA loan limit, so either can buy it. The two tests and a price example. URL: https://mortgage-math-us.com/glossary/conforming-loan/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A conforming loan** is a conventional mortgage that meets Fannie Mae’s or Freddie Mac’s underwriting rules and is no larger than the conforming loan limit for its county — $832,750 for a one-unit home in most of the US in 2026. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | 2026 baseline limit, one-unit home | $832,750 | [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) | 2026 limit | | 2026 high-cost area ceiling, one-unit home | $1,249,125 | [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) | 2026 limit | ## The two tests **Size:** the loan amount must not exceed the [conforming loan limit](https://mortgage-math-us.com/glossary/conforming-loan-limit/), which rises to as much as $1,249,125 in high-cost counties. A bigger loan is a [jumbo loan](https://mortgage-math-us.com/glossary/jumbo-loan/). **Rules:** credit, debt-to-income, loan-to-value, property and documentation standards from the Fannie Mae and Freddie Mac guides. A loan that fits the size limit but not the rules may be a lender’s portfolio loan or a [non-QM loan](https://mortgage-math-us.com/glossary/non-qm-loan/). Every conforming loan is conventional, but not every conventional loan conforms. FHA, VA and USDA loans have their own limits and aren’t called conforming, however small they are. ## Example: the price ceiling The limit applies to the loan, not the price. In a county at the baseline limit, a buyer putting 20% down stays conforming up to a price of $1,040,938; with 10% down the ceiling is $925,278. Above that, a larger down payment can keep the loan conforming. See the [conventional loans guide](https://mortgage-math-us.com/loan-types/conventional-loans/) for the other requirements. ## Related terms - [Conventional loan](https://mortgage-math-us.com/glossary/conventional-loan/), the wider category - [Loan-to-value ratio](https://mortgage-math-us.com/glossary/loan-to-value-ratio/), which sets your down payment and PMI ## Sources - [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) — 2026 baseline conforming loan limit (one-unit); 2026 high-cost area conforming ceiling (one-unit) (2026 limit) - [CFPB: Conventional loans](https://www.consumerfinance.gov/owning-a-home/conventional-loans/) - [FHFA: Conforming loan limit values for 2026](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) _General information, not financial advice._ --- # Contingency > A contingency is a condition in a home purchase contract that must be met for the sale to close, such as financing, appraisal or inspection approval. URL: https://mortgage-math-us.com/glossary/contingency/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A contingency** is a condition written into a home purchase agreement that must be met for the sale to go through — for example, getting a mortgage, an appraisal at or above the price, or an acceptable home inspection. If a contingency isn’t met by its deadline, the buyer can generally cancel and get the [earnest money](https://mortgage-math-us.com/glossary/earnest-money/) back. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | You get the appraisal at least this long before closing | 3 business days | [CFPB, Regulation B 1002.14](https://www.consumerfinance.gov/rules-policy/regulations/1002/14) | Oct 28, 2026 | ## Common contingencies | Contingency | Protects you if… | |---|---| | Financing (mortgage) | you can’t get the loan by the deadline | | [Appraisal](https://mortgage-math-us.com/glossary/appraisal/) | the home appraises below the price, so you can renegotiate or walk away | | [Home inspection](https://mortgage-math-us.com/glossary/home-inspection/) | the inspector finds problems you want repaired, credited or don’t accept | | Home sale | you must sell your current home first and can’t by the deadline | Each has a deadline in the contract. Miss it without acting, and the protection usually lapses. Your lender must give you a copy of the appraisal at least 3 business days before closing, but don’t wait for that if your appraisal deadline comes sooner — ask for the report as soon as it’s done. ## Waiving a contingency In a competitive market, buyers sometimes drop contingencies to make an offer stronger. The risk is real: without a financing or appraisal contingency, a denied loan or a low appraisal can cost you your deposit or force you to bring more cash. An FHA appraisal is not an inspection, and FHA doesn’t guarantee the home’s condition. A [pre-approval](https://mortgage-math-us.com/glossary/pre-approval/) makes the financing contingency less likely to be needed. See the [appraisal and inspection guide](https://mortgage-math-us.com/buying/appraisal-and-inspection/). ## Sources - [CFPB, Regulation B 1002.14](https://www.consumerfinance.gov/rules-policy/regulations/1002/14) — Lender must give you the appraisal at least this long before closing (or promptly) (Oct 28, 2026) - [Freddie Mac My Home: Understanding contingency clauses in homebuying](https://myhome.freddiemac.com/blog/homebuying/understanding-contingencies) - [HUD: For your protection — get a home inspection (HUD-92564-CN)](https://www.hud.gov/sites/dfiles/OCHCO/documents/92564-CN.pdf) _General information, not financial advice._ --- # Conventional loan > A conventional loan is a mortgage with no FHA, VA or USDA insurance or guarantee. What that means for your down payment, PMI and loan limits. URL: https://mortgage-math-us.com/glossary/conventional-loan/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A conventional loan** is a mortgage that isn’t insured or guaranteed by a federal agency such as FHA, VA or USDA. Most conventional loans follow Fannie Mae or Freddie Mac rules so they can be sold to them; larger ones are jumbo loans kept by lenders or sold to private investors. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Minimum down payment (some programs) | 3% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | | Fannie Mae maximum LTV, one-unit home purchase | 97% | [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) | Apr 1, 2026 | | Ask to cancel PMI at (share of original value) | 80% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) | Oct 28, 2026 | | PMI ends automatically at | 78% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) | Oct 28, 2026 | ## Conventional vs government-backed With no federal backstop, the lender or the investor that buys the loan carries the default risk, so price and approval lean heavily on your credit score, debt-to-income ratio and down payment. Some programs accept as little as 3% down, but with less than 20% down you’ll typically pay [private mortgage insurance](https://mortgage-math-us.com/glossary/private-mortgage-insurance/). Unlike FHA mortgage insurance, PMI can be dropped: you can ask your servicer to cancel it at 80% of the original value, and it ends automatically at 78%. ## Example: when PMI stops Buy a $350,000 home with 5% down and you borrow $332,500. At 7.24% over 30 years, principal and interest is $2,266 a month. PMI ends automatically once the scheduled balance reaches $273,000 — during year 13 if you make only the regular payments. The [conventional loans guide](https://mortgage-math-us.com/loan-types/conventional-loans/) covers credit and DTI rules. ## Related terms - [Conforming loan](https://mortgage-math-us.com/glossary/conforming-loan/) and [jumbo loan](https://mortgage-math-us.com/glossary/jumbo-loan/) - [FHA loan](https://mortgage-math-us.com/glossary/fha-loan/), the main government-backed alternative - [HomeReady](https://mortgage-math-us.com/glossary/homeready/), a low-down-payment conventional program ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) — PMI ends automatically at this share of original value; Ask your servicer to cancel PMI at this share of original value (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum down payment on some conventional loans (Oct 28, 2026) - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae maximum LTV, one-unit principal residence purchase (Apr 1, 2026) - [CFPB: Conventional loans](https://www.consumerfinance.gov/owning-a-home/conventional-loans/) _General information, not financial advice._ --- # Credit score > A credit score predicts how likely you are to repay a loan on time. The minimum scores for FHA and conventional mortgages and how rate shopping affects it. URL: https://mortgage-math-us.com/glossary/credit-score/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer A **credit score** is a three-digit number that predicts how likely you are to repay a loan on time, calculated from the information in your credit reports by a scoring model. You have more than one, since scores vary by model and date, and mortgage lenders use them to decide whether you qualify and what rate and mortgage insurance price you get. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | FHA, minimum down payment | 580 | [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) | Oct 8, 2026 | | FHA, lowest eligible score | 500 | [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) | Oct 8, 2026 | | Fannie Mae, manually underwritten fixed-rate loans | 620 | [Fannie Mae Selling Guide B3-5.1-01](https://selling-guide.fanniemae.com/sel/b3-5.1-01/general-requirements-credit-scores) | Apr 22, 2026 | | Mortgage credit checks in this window count as one | 45 days | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-exactly-happens-when-a-mortgage-lender-checks-my-credit-en-2005/) | Aug 28, 2026 | ## Minimum scores by loan type *Credit score minimums* | Loan | Minimum | |---|---| | FHA, 3.5% down | 580 | | FHA, 10% down | 500 | | Conventional, manual underwriting | 620 (fixed rate) | | Conventional, Fannie Mae DU | No fixed minimum; the system weighs the score with the rest of the file | Lenders can set higher minimums of their own. Above the minimum, a higher score generally brings a lower rate and, with less than 20% down, cheaper [private mortgage insurance](https://mortgage-math-us.com/glossary/private-mortgage-insurance/). ## Rate shopping and your score Score factors include your payment history, how much of your available credit you use, the age and mix of your accounts, new applications, and any collections, foreclosure or bankruptcy. Shopping for a mortgage is treated kindly: multiple mortgage credit checks within 45 days generally count as a single inquiry, so get your [pre-approval](https://mortgage-math-us.com/glossary/pre-approval/) quotes close together. Check your reports for errors before you apply; the [credit score guide](https://mortgage-math-us.com/buying/credit-score/) covers how. ## Related terms - [Underwriting](https://mortgage-math-us.com/glossary/underwriting/) and [debt-to-income ratio](https://mortgage-math-us.com/glossary/debt-to-income-ratio/) ## Sources - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment (Oct 28, 2026) - [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) — FHA minimum score for maximum financing; FHA minimum decision credit score (90% LTV cap from 500 to 579) (Oct 8, 2026) - [Fannie Mae Selling Guide B3-5.1-01](https://selling-guide.fanniemae.com/sel/b3-5.1-01/general-requirements-credit-scores) — Fannie Mae minimum score, manually underwritten fixed-rate loans (Apr 22, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-exactly-happens-when-a-mortgage-lender-checks-my-credit-en-2005/) — Mortgage credit checks within this window count as one inquiry (Aug 28, 2026) - [CFPB: What is a credit score?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-credit-score-en-315/) _General information, not financial advice._ --- # Debt-to-income ratio (DTI) > Debt-to-income ratio is your monthly debt payments divided by gross monthly income. How lenders calculate it and the limits for each loan type. URL: https://mortgage-math-us.com/glossary/debt-to-income-ratio/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer Your **debt-to-income ratio (DTI)** is all your monthly debt payments, including the new mortgage payment, divided by your gross monthly income before taxes. Lenders use it to judge whether you can manage the loan; Fannie Mae accepts up to 50% through its automated system, and each loan program sets its own limit. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Fannie Mae, automated underwriting (DU) | 50% | [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) | Apr 2, 2025 | | Fannie Mae, manual underwriting | 36% | [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) | Apr 2, 2025 | | FHA, manual underwriting | 43% | [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) | Oct 8, 2026 | | VA guideline | 41% | [38 CFR 36.4340](https://www.ecfr.gov/current/title-38/chapter-I/part-36/subpart-B/section-36.4340) | Oct 23, 2026 | ## Worked example With gross income of $8,000 a month and these payments: - New housing payment (PITI): $2,400 - Car loan: $450 - Student loan: $250 - Credit card minimums: $100 That totals $3,200, a DTI of 40%. That’s within Fannie Mae’s 50% automated limit but above its 36% baseline for manually underwritten loans. Debts are the payments on your credit report plus obligations such as alimony or child support; utilities, phone bills and groceries don’t count. ## Limits by loan type *Maximum or guideline DTI* | Loan | DTI | |---|---| | Conventional, Fannie Mae DU | 50% | | Conventional, manual | 36%, up to 45% with strong credit and reserves | | FHA, manual | 43% without compensating factors | | VA | 41% guideline, plus [residual income](https://mortgage-math-us.com/glossary/residual-income/) | | USDA | 41% | The [housing ratio](https://mortgage-math-us.com/glossary/housing-ratio/) is the same calculation with only the housing payment. See how lenders count each debt in the [DTI guide](https://mortgage-math-us.com/buying/debt-to-income/), and test your numbers in the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/). ## Sources - [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) — Fannie Mae maximum DTI, Desktop Underwriter loans; Fannie Mae maximum DTI, manually underwritten loans; Fannie Mae maximum DTI, manual underwriting with strong credit and reserves (Apr 2, 2025) - [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) — FHA manual underwriting debt-to-income ratio (no compensating factors) (Oct 8, 2026) - [38 CFR 36.4340](https://www.ecfr.gov/current/title-38/chapter-I/part-36/subpart-B/section-36.4340) — VA debt-to-income guideline (higher ratios need documented compensating factors) (Oct 23, 2026) - [USDA Rural Development, HB-1-3555 Chapter 11](https://www.rd.usda.gov/files/3555-1chapter11.pdf) — USDA guaranteed loan: total debt ratio (share of repayment income) (Nov 25, 2025) - [CFPB: What is a debt-to-income ratio?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-debt-to-income-ratio-en-1791/) _General information, not financial advice._ --- # Deed of trust > A deed of trust secures a home loan by giving a neutral trustee the power to sell the property if you default. How it differs from a mortgage document. URL: https://mortgage-math-us.com/glossary/deed-of-trust/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A deed of trust** is the document that makes your home security for a loan in many states, used in place of a mortgage document. It involves three parties — you, the lender and a neutral trustee — and usually gives the trustee a power of sale, so the home can be sold if you don’t repay. ## Three parties instead of two *Who’s who in each security document* | Role | Mortgage | Deed of trust | |---|---|---| | You, the borrower | Mortgagor | Trustor | | The lender | Mortgagee | Beneficiary | | Neutral third party | None | Trustee, often a title company or attorney | Either way, the debt itself is in the [promissory note](https://mortgage-math-us.com/glossary/promissory-note/); the deed of trust or mortgage is what creates the [lien](https://mortgage-math-us.com/glossary/lien/) on the home. Both are signed at [closing](https://mortgage-math-us.com/glossary/closing/) and recorded in the county land records. ## Why the difference matters **Foreclosure.** A power-of-sale clause lets the lender foreclose without going to court in states that allow non-judicial [foreclosure](https://mortgage-math-us.com/glossary/foreclosure/), following notice and sale steps set by state law. A mortgage can carry a power of sale too, but in many states that use mortgages, foreclosure goes through the courts. Which document your state uses, and the procedures, are matters of state law. **Payoff.** When the loan is repaid, the trustee issues a deed of reconveyance releasing the home, and it is recorded. Check your county records a few weeks after payoff to confirm it was filed. The [step-by-step buying guide](https://mortgage-math-us.com/first-time-buyers/step-by-step/) shows where this document fits in a purchase. ## Sources - [CFPB: What is a security interest?](https://www.consumerfinance.gov/ask-cfpb/my-mortgage-closing-forms-mention-a-security-interest-what-is-a-security-interest-en-1999/) - [CFPB: How does foreclosure work?](https://www.consumerfinance.gov/ask-cfpb/how-does-foreclosure-work-en-287/) _General information, not financial advice._ --- # Discount points > Discount points are fees paid to the lender at closing to lower your mortgage rate. What one point costs, where it appears and how to find the break-even. URL: https://mortgage-math-us.com/glossary/discount-points/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **Discount points** are an upfront fee you pay the lender at closing in exchange for a lower interest rate than you’d get with a zero-point loan. One point costs 1% of the loan amount, and points are listed in section A on page 2 of the Loan Estimate and Closing Disclosure. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Cost of one point, share of the loan amount | 1% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/how-should-i-use-lender-credits-and-points-also-called-discount-points-en-136/) | Oct 19, 2023 | | 30-year fixed average (used in the example) | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | ## Finding the break-even How much a point lowers the rate varies by lender, loan type and market, so this is only an illustration. On a $300,000 30-year loan at 7.24%, principal and interest is $2,044 a month. If one point ($3,000) cut the rate by 0.25 percentage point to 6.99%, the payment would drop to $1,994, saving $51 a month. You’d need about 60 months, roughly 5.0 years, to earn the cost back. Sell or refinance sooner and the point loses money. The CFPB suggests asking for quotes with and without points and comparing them over the shortest, longest and likeliest time you’ll keep the loan. ## Points and your taxes Points are prepaid interest. IRS Publication 936 lets you deduct points on a loan to buy your main home in the year paid if a list of tests is met; otherwise they’re deducted over the life of the loan. Only borrowers who itemize benefit. ## Related terms - [Lender credit](https://mortgage-math-us.com/glossary/lender-credit/), the same trade in reverse - [Origination fee](https://mortgage-math-us.com/glossary/origination-fee/) and [APR](https://mortgage-math-us.com/glossary/apr/) - [Break-even point](https://mortgage-math-us.com/glossary/break-even-point/), and the [mortgage points guide](https://mortgage-math-us.com/buying/mortgage-points/) ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/how-should-i-use-lender-credits-and-points-also-called-discount-points-en-136/) — Cost of one discount point (share of loan amount) (Oct 19, 2023) - [IRS Publication 936: Home Mortgage Interest Deduction](https://www.irs.gov/publications/p936) _General information, not financial advice._ --- # Down-payment assistance > Down-payment assistance is help from state, local or nonprofit programs with a down payment or closing costs, as a grant or a deferred or forgivable loan. URL: https://mortgage-math-us.com/glossary/down-payment-assistance/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **Down-payment assistance (DPA)** is money from a state housing finance agency, local government, nonprofit or employer that covers part of a buyer’s down payment or closing costs. It usually comes with an income limit, often a [first-time homebuyer](https://mortgage-math-us.com/glossary/first-time-homebuyer/) requirement, and sometimes a homebuyer education course. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Fannie Mae maximum CLTV with a Community Seconds loan | 105% | [Fannie Mae Selling Guide B5-5.1-02](https://selling-guide.fanniemae.com/sel/b5-5.1-02/community-seconds-loan-eligibility) | May 3, 2023 | | Payments deferred this long stay out of DTI | 5 years | [Fannie Mae Selling Guide B5-5.1-02](https://selling-guide.fanniemae.com/sel/b5-5.1-02/community-seconds-loan-eligibility) | May 3, 2023 | | Freddie Mac maximum TLTV with an Affordable Second | 105% | [Freddie Mac Home Possible fact sheet](https://sf.freddiemac.com/docs/pdf/fact-sheet/home_possible_factsheet.pdf) | Feb 1, 2026 | ## Grant or loan? *Common forms of assistance* | Form | Do you repay it? | |---|---| | Grant | Usually not, though some require you to stay a set time | | Forgivable second loan | Forgiven over a set period if you stay; repaid if you sell or refinance early | | Deferred second loan | No payments; due when you sell, refinance or pay off the first mortgage | | Low-rate second loan | Monthly payments alongside your mortgage | Read the terms for what happens when you sell or refinance — that is where the programs differ most. The [grants guide](https://mortgage-math-us.com/first-time-buyers/grants/) compares them. ## How lenders count it A DPA second loan sits behind your first mortgage as a junior [lien](https://mortgage-math-us.com/glossary/lien/). Fannie Mae calls these Community Seconds and allows a [combined loan-to-value](https://mortgage-math-us.com/glossary/combined-loan-to-value/) up to 105%; a payment deferred at least 5 years is left out of your debt-to-income ratio. Freddie Mac’s Affordable Seconds work the same way, up to 105%. On a $300,000 home with a 97% first mortgage, the $9,000 down payment could come entirely from a Community Second, with up to $15,000 more toward closing costs. ## Related terms - [Mortgage credit certificate](https://mortgage-math-us.com/glossary/mortgage-credit-certificate/) ## Sources - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae maximum LTV, one-unit principal residence purchase (Apr 1, 2026) - [Fannie Mae Selling Guide B5-5.1-02](https://selling-guide.fanniemae.com/sel/b5-5.1-02/community-seconds-loan-eligibility) — Fannie Mae Community Seconds maximum combined LTV; Community Seconds payments deferred at least this long are left out of the debt-to-income ratio (May 3, 2023) - [Freddie Mac Home Possible fact sheet](https://sf.freddiemac.com/docs/pdf/fact-sheet/home_possible_factsheet.pdf) — Freddie Mac Home Possible maximum TLTV with Affordable Seconds (Feb 1, 2026) - [CFPB: Where can I find information on programs for first-time home buyers?](https://www.consumerfinance.gov/ask-cfpb/where-can-i-find-information-on-programs-for-first-time-home-buyers-en-2156/) - [CFPB: Where can I get money for a down payment on a home?](https://www.consumerfinance.gov/ask-cfpb/where-can-i-get-money-for-a-down-payment-on-a-home-en-123/) _General information, not financial advice._ --- # Down payment > A down payment is the part of the price you pay upfront in cash; the mortgage covers the rest. Minimums for VA, USDA, conventional and FHA loans. URL: https://mortgage-math-us.com/glossary/down-payment/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer A **down payment** is the part of the purchase price you pay upfront; the mortgage covers the rest. Minimums run from 0% on VA and USDA loans to 3% on some conventional loans and 3.5% on FHA loans, and with less than 20% down you’ll usually pay for mortgage insurance. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Conventional, some programs | 3% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | | FHA (credit score of 580 or higher) | 3.5% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | | VA | 0% | [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/loan-types/purchase-loan/) | Jan 7, 2026 | | USDA guaranteed | 0% | [USDA Rural Development](https://www.rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-guaranteed-loan-program) | Oct 28, 2026 | ## Minimums on a median-priced home *Minimum down payment on a $360,000 home* | Loan | Minimum | In dollars | |---|---|---| | VA | 0% | $0 | | USDA | 0% | $0 | | Conventional (some programs) | 3% | $10,800 | | FHA | 3.5% | $12,600 | Putting 20% down, $72,000 here, avoids private mortgage insurance on a conventional loan. VA and USDA loans need no down payment for eligible buyers but generally charge an upfront funding fee (VA) or guarantee fee (USDA). Every dollar you put down lowers your [loan-to-value ratio](https://mortgage-math-us.com/glossary/loan-to-value-ratio/) and your monthly payment. ## Where the money can come from Savings and the proceeds from selling a home are the usual sources. Family money documented with a [gift letter](https://mortgage-math-us.com/glossary/gift-letter/) and [down-payment assistance](https://mortgage-math-us.com/glossary/down-payment-assistance/) can cover part or all of it, depending on the loan. Lenders check where the funds came from, so large recent deposits need a paper trail. Set aside enough for [closing costs](https://mortgage-math-us.com/glossary/closing-costs/) too; the [down payment guide](https://mortgage-math-us.com/buying/down-payment/) shows how to balance the two. ## Sources - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/loan-types/purchase-loan/) — VA purchase loan down payment (price at or below appraised value) (Jan 7, 2026) - [USDA Rural Development](https://www.rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-guaranteed-loan-program) — USDA guaranteed loan down payment (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum down payment on some conventional loans; Minimum FHA down payment (Oct 28, 2026) - [CFPB: Where can I get money for a down payment on a home?](https://www.consumerfinance.gov/ask-cfpb/where-can-i-get-money-for-a-down-payment-on-a-home-en-123/) _General information, not financial advice._ --- # Draw period > The draw period is when you can borrow from a HELOC, often paying only interest. What happens to your payment when it ends, with a worked example. URL: https://mortgage-math-us.com/glossary/draw-period/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **The draw period** is the first phase of a HELOC, when you can borrow against your credit line — for example 10 years — and many plans ask only for interest. When it ends you can no longer draw, and the balance is repaid over a repayment period, often up to 20 years, or in some plans all at once as a balloon payment. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Draw period (CFPB example) | 10 years | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) | Aug 28, 2026 | | Repayment period, often up to | 20 years | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) | Aug 28, 2026 | | Prime rate (basis of the example rate) | 7% | [Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/) | Oct 28, 2026 | ## Example: the payment jump > **Worked example: $60,000 owed when the draw period ends** > > At an example rate of 7.5% (prime plus half a point), interest-only payments are $375 a month. Repaying the same balance over 20 years takes $483 — 29% more. If the rate has risen 2 points by then, the repayment comes to $559. ## Before the draw period ends Check your agreement for three things: whether draw-period payments are interest-only, whether the balance converts to a repayment schedule or comes due as a [balloon payment](https://mortgage-math-us.com/glossary/balloon-payment/), and whether you can lock part of the balance at a fixed rate. Paying some principal during the draw period softens the jump; refinancing into a [home equity loan](https://mortgage-math-us.com/glossary/home-equity-loan/) is another route. The [HELOC draw and repayment guide](https://mortgage-math-us.com/home-equity/heloc-draw-and-repayment/) and the [HELOC payment calculator](https://mortgage-math-us.com/tools/heloc-payment-calculator/) show the numbers for your line. ## Related terms - [HELOC](https://mortgage-math-us.com/glossary/heloc/) and [interest-only loan](https://mortgage-math-us.com/glossary/interest-only-loan/) ## Sources - [Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/) — Bank prime loan rate (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) — Example HELOC draw period (CFPB); HELOC repayment period, often up to (CFPB) (Aug 28, 2026) - [CFPB: What is a home equity line of credit (HELOC)?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) - [CFPB: What you should know about home equity lines of credit (brochure)](https://files.consumerfinance.gov/f/documents/cfpb_heloc-brochure_print.pdf) _General information, not financial advice._ --- # DSCR loan > A DSCR loan qualifies a rental property on its rent divided by the full monthly payment, not your income. The ratio, an example and the caveats. URL: https://mortgage-math-us.com/glossary/dscr-loan/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A DSCR loan** is an investor mortgage that qualifies a rental property on its debt service coverage ratio — the monthly rent divided by the full monthly payment of principal, interest, taxes, insurance and any association dues (PITIA) — instead of on the borrower’s personal income. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Share of rent a conventional loan counts, for comparison | 75% | [Fannie Mae Selling Guide B3-3.8-02](https://selling-guide.fanniemae.com/sel/b3-3.8-02/rental-income-subject-property) | Sep 2, 2026 | | Conventional maximum LTV, investment purchase | 85% | [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) | Apr 1, 2026 | ## Working out the ratio > **Worked example: A $400,000 rental with 25% down** > > Loan $300,000 at 7.24%: principal and interest $2,044, plus taxes about $297 at 0.89% and insurance about $163 — a PITIA of $2,504. With rent of $3,000, the DSCR is $3,000 ÷ $2,504 = 1.20. A ratio of 1.00 means the rent exactly covers the payment; below 1.00 you make up the gap yourself. Each lender sets its own minimum ratio, down payment and rate — there is no federal or Fannie Mae standard for these loans. By comparison, a conventional investment loan counts 75% of the rent ($2,250 here) and also looks at your income. ## Why the rules vary Credit to buy or improve rental property you won’t live in counts as business-purpose credit under Regulation Z, so consumer protections such as the ability-to-repay rule and the Loan Estimate don’t apply. That is why DSCR loans are often grouped with [non-QM loans](https://mortgage-math-us.com/glossary/non-qm-loan/), and why reading the note for [prepayment penalties](https://mortgage-math-us.com/glossary/prepayment-penalty/) matters. See the [DSCR loans guide](https://mortgage-math-us.com/loan-types/dscr-loans/) and [second home vs investment property](https://mortgage-math-us.com/blog/buying-a-second-home-or-rental/). ## Related terms - [PITI](https://mortgage-math-us.com/glossary/piti/) ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Fannie Mae Selling Guide B3-3.8-02](https://selling-guide.fanniemae.com/sel/b3-3.8-02/rental-income-subject-property) — Fannie Mae: share of gross monthly rent counted as net rental income (subject property) (Sep 2, 2026) - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae maximum LTV, one-unit investment property purchase (Apr 1, 2026) - [CFPB: Official interpretation of 1026.3 (business-purpose rental property)](https://www.consumerfinance.gov/rules-policy/regulations/1026/interp-3/) _General information, not financial advice._ --- # Due-on-sale clause > A due-on-sale clause lets a lender demand full repayment if the home is sold or transferred without consent. What it covers and the transfers it can’t. URL: https://mortgage-math-us.com/glossary/due-on-sale-clause/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A due-on-sale clause** is a provision in a mortgage that lets the lender, at its option, declare the whole loan due and payable if all or part of the property, or an interest in it, is sold or transferred without the lender’s prior written consent. ## What it means when you sell In an ordinary sale the clause never comes up, because your loan is paid off from the sale proceeds at [closing](https://mortgage-math-us.com/glossary/closing/). It matters when someone wants to take over the loan or take title while the loan stays in place. Most conventional loans include the clause in the security instrument — the mortgage or [deed of trust](https://mortgage-math-us.com/glossary/deed-of-trust/) — so they can’t simply be passed on. FHA and VA loans are [assumable](https://mortgage-math-us.com/glossary/assumable-mortgage/) with approval instead. ## Transfers the lender can’t use it against The Garn–St Germain Act (12 U.S.C. 1701j-3) bars lenders from enforcing the clause on homes with fewer than five units when the transfer is: - to a spouse or children who become owners of the property - to a relative because the borrower died, or on the death of a joint tenant - the result of a divorce decree or legal separation agreement - into a living trust in which the borrower stays a beneficiary - a second [lien](https://mortgage-math-us.com/glossary/lien/) or other junior encumbrance that doesn’t transfer occupancy - a lease of three years or less with no option to buy Some of these protections depend on who lives in the home, so confirm with the servicer — or a real estate attorney — before transferring title. The [home equity loan guide](https://mortgage-math-us.com/home-equity/home-equity-loan/) covers adding a second lien. ## Sources - [12 U.S.C. 1701j-3: Preemption of due-on-sale prohibitions (GovInfo)](https://www.govinfo.gov/content/pkg/USCODE-2023-title12/html/USCODE-2023-title12-chap13-sec1701j-3.htm) _General information, not financial advice._ --- # Earnest money > Earnest money is the deposit you pay when you sign a purchase contract. Who holds it, when it’s refunded, when you can lose it and how it’s credited. URL: https://mortgage-math-us.com/glossary/earnest-money/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **Earnest money** is a deposit a buyer pays after signing a contract to buy a home, to show good faith. The seller or a third party such as a title company, escrow agent or broker holds it, and if the sale closes it goes toward your down payment or closing costs. ## When you get it back, and when you don’t The purchase contract decides. If the contract ends for a reason it allows, such as a failed financing, appraisal or inspection [contingency](https://mortgage-math-us.com/glossary/contingency/), the deposit is generally refunded. If you back out without such a reason, or miss a contract deadline, the seller may be entitled to keep it. Each contingency has its own deadline: once it passes, walking away on those grounds can cost you the deposit, so put the dates in your calendar the day you sign. ## How much, and where it shows up No federal rule sets the amount; local custom and negotiation do, and a larger deposit can make an offer stronger in a competitive market. Pay it to the holder named in the contract, never to a person who emails new payment instructions, and keep the receipt. Your lender may ask you to document where the money came from, since it counts toward the funds you need to buy (see the [step-by-step buying guide](https://mortgage-math-us.com/first-time-buyers/step-by-step/)). At closing, the deposit appears on page 3 of the Closing Disclosure under amounts “Paid Already by or on Behalf of Borrower at Closing,” which lowers your [cash to close](https://mortgage-math-us.com/glossary/cash-to-close/). ## Related terms - [Closing costs](https://mortgage-math-us.com/glossary/closing-costs/), which the deposit can help cover - [Home inspection](https://mortgage-math-us.com/glossary/home-inspection/), the most common reason buyers use a contingency ## Sources - [CFPB: Mortgage key terms (earnest money)](https://www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/) _General information, not financial advice._ --- # Escrow account > A mortgage escrow account collects part of each payment to pay property taxes and insurance. What it holds, the cushion limit and the yearly analysis. URL: https://mortgage-math-us.com/glossary/escrow-account/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **An escrow account** (also called an impound account) is an account your mortgage servicer sets up to pay certain property-related bills — mainly [property tax](https://mortgage-math-us.com/glossary/property-tax/) and [homeowners insurance](https://mortgage-math-us.com/glossary/homeowners-insurance/), and sometimes mortgage insurance — from a portion of each monthly payment. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Maximum cushion (one-sixth of a year’s escrow bills) | 2 months | [CFPB, Regulation X 1024.17](https://www.consumerfinance.gov/rules-policy/regulations/1024/17/) | Oct 28, 2026 | | Surplus that must be refunded | $50 | [12 CFR 1024.17(f)(2) (Regulation X)](https://www.consumerfinance.gov/rules-policy/regulations/1024/17/) | Oct 29, 2026 | | Large shortage spread over at least | 12 months | [12 CFR 1024.17(f)(3) (Regulation X)](https://www.consumerfinance.gov/rules-policy/regulations/1024/17/) | Oct 29, 2026 | ## Example: the monthly deposit On a $361,000 home taxed at the US effective rate of 0.89%, the yearly tax bill is about $3,213; add an average insurance premium of $1,522/yr and the account must pay $4,735 a year. That adds $395 to each monthly payment. Federal rules let the servicer keep a cushion of no more than one-sixth of the yearly total — 2 months of deposits, or $789 here. ## The yearly escrow analysis Once a year the servicer compares what it collected with what it paid and resets your deposit. If there’s a surplus of $50 or more and you’re current, it must refund it within 30 days. If there’s a shortage of a month’s deposit or more, the servicer can’t demand it all at once; it may spread repayment over at least 12 months. That’s why your payment can change even on a [fixed-rate mortgage](https://mortgage-math-us.com/glossary/fixed-rate-mortgage/). Lenders often require escrow, and some loans require it by law. At closing you fund it with an initial deposit, part of your [prepaid items](https://mortgage-math-us.com/glossary/prepaid-items/). Don’t confuse it with the escrow that holds a buyer’s [earnest money](https://mortgage-math-us.com/glossary/earnest-money/) before closing. See [escrow accounts explained](https://mortgage-math-us.com/blog/escrow-accounts/), and use the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/) to see escrow inside your full payment. ## Sources - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average annual homeowners insurance premium (Freddie Mac borrowers) (2023 data) - [CFPB, Regulation X 1024.17](https://www.consumerfinance.gov/rules-policy/regulations/1024/17/) — Most an escrow account may hold as a cushion (one-sixth of annual escrow payments); Escrow surplus at or above this amount must be refunded to a current borrower; Escrow surplus refund due within this long after the annual escrow analysis (Oct 28, 2026) - [CFPB: What is an escrow or impound account?](https://www.consumerfinance.gov/ask-cfpb/what-is-an-escrow-or-impound-account-en-140/) _General information, not financial advice._ --- # Fannie Mae and Freddie Mac > Fannie Mae and Freddie Mac are congressionally chartered companies that buy mortgages from lenders. What they do, why conforming loans follow their rules. URL: https://mortgage-math-us.com/glossary/fannie-mae-and-freddie-mac/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **Fannie Mae and Freddie Mac** are government-sponsored enterprises chartered by Congress that buy mortgages from lenders and guarantee securities backed by them, which gives lenders money to make new loans. They don’t lend to consumers directly, and both operate under the conservatorship of the Federal Housing Finance Agency (FHFA), their regulator. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | 2026 baseline conforming loan limit, one unit | $832,750 | [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) | 2026 limit | | 2026 high-cost area ceiling, one unit | $1,249,125 | [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) | 2026 limit | ## Why they shape your loan A loan Fannie Mae or Freddie Mac can buy is a [conforming loan](https://mortgage-math-us.com/glossary/conforming-loan/). It must follow their Selling Guides on credit, [debt-to-income ratio](https://mortgage-math-us.com/glossary/debt-to-income-ratio/), down payment and documents, and stay within the [conforming loan limit](https://mortgage-math-us.com/glossary/conforming-loan-limit/): $832,750 for a one-unit home in most of the country in 2026, up to $1,249,125 in high-cost areas. That’s why conventional loans look so similar from lender to lender, including the 3% minimum down payment on some programs. Loans above the limit are [jumbo loans](https://mortgage-math-us.com/glossary/jumbo-loan/). ## Who you deal with Even when one of them owns your mortgage, your lender or servicer remains your contact for payments and questions. Both companies offer online lookup tools that tell you whether they own your loan, which matters if you ever need help with payments, since their relief options apply to their loans. Freddie Mac also publishes the weekly [Primary Mortgage Market Survey](https://mortgage-math-us.com/glossary/pmms/), which put the average 30-year fixed rate at 7.24% this week. Compare conventional loans with the other types in the [conventional loans guide](https://mortgage-math-us.com/loan-types/conventional-loans/). ## Sources - [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) — 2026 baseline conforming loan limit (one-unit); 2026 high-cost area conforming ceiling (one-unit) (2026 limit) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum down payment on some conventional loans (Oct 28, 2026) - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [CFPB: Mortgage key terms (Fannie Mae, Freddie Mac)](https://www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/) _General information, not financial advice._ --- # FHA loan > An FHA loan is a mortgage from a private lender insured by the Federal Housing Administration. Minimum down payment, credit score, MIP and loan limits. URL: https://mortgage-math-us.com/glossary/fha-loan/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **An FHA loan** is a mortgage made by a private lender and insured by the Federal Housing Administration, part of HUD. The insurance lets lenders accept a down payment as low as 3.5% with a credit score of 580 or higher, and the borrower pays for it through mortgage insurance premiums. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Minimum down payment | 3.5% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | | Minimum score for maximum financing | 580 | [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) | Oct 8, 2026 | | Upfront mortgage insurance premium | 1.75% | [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) | Feb 22, 2023 | | Annual MIP, 30-year loan, under 5% down | 0.55% | [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) | Feb 22, 2023 | ## What the insurance costs Every FHA loan carries an [upfront premium](https://mortgage-math-us.com/glossary/upfront-mortgage-insurance-premium/) of 1.75% of the base loan, usually added to the balance, plus an annual [mortgage insurance premium](https://mortgage-math-us.com/glossary/mortgage-insurance-premium/) collected monthly. With less than 10% down, annual MIP lasts for the life of the loan; at a starting loan-to-value of 90% or less it ends after 11 years. > **Worked example: Minimum down on a $300,000 home** > > Down payment: $10,500, base loan $289,500. Upfront premium: $5,066, financed into the loan. Annual MIP at 0.55%: about $133 a month in the first year. ## Limits and uses FHA loans are for homes you’ll live in, and the loan amount is capped by county: for a one-unit home in 2026, between $541,287 and $1,249,125. Scores from 500 to just under 580 need a larger down payment. The [FHA loans guide](https://mortgage-math-us.com/loan-types/fha-loans/) covers the full rules. ## Related terms - [Conventional loan](https://mortgage-math-us.com/glossary/conventional-loan/), the usual alternative - [Streamline refinance](https://mortgage-math-us.com/glossary/streamline-refinance/) for existing FHA borrowers ## Sources - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment (Oct 28, 2026) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA upfront mortgage insurance premium; FHA annual MIP, 30-year loan, more than 95% LTV; FHA annual MIP ends after 11 years when the starting LTV is at or below (Feb 22, 2023) - [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) — FHA minimum score for maximum financing; FHA minimum decision credit score (90% LTV cap from 500 to 579) (Oct 8, 2026) - [HUD](https://www.hud.gov/news/hud-no-25-145) — 2026 FHA loan limit floor (one-unit, low-cost areas); 2026 FHA loan limit ceiling (one-unit, high-cost areas) (2026 limit) - [CFPB: FHA loans](https://www.consumerfinance.gov/owning-a-home/fha-loans/) _General information, not financial advice._ --- # First-time homebuyer > For most programs a first-time homebuyer is someone with no recent home ownership, not just someone who has never owned. Definitions compared by program. URL: https://mortgage-math-us.com/glossary/first-time-homebuyer/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A first-time homebuyer**, under the definition most US programs use, is someone who hasn’t owned a home during the 3 years before the purchase — so a former owner can qualify again. HUD’s definition also covers single parents and displaced homemakers whose only recent ownership was with a spouse. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | HUD definition: no home owned in the past | 3 years | [42 U.S.C. 12704(14)](https://www.law.cornell.edu/uscode/text/42/12704) | Oct 28, 2026 | | Fannie Mae: no ownership interest in the past | 3 years | [Fannie Mae Selling Guide E-3-06](https://selling-guide.fanniemae.com/sel/e-3-06/acronyms-and-glossary-defined-terms-f) | Sep 3, 2025 | | MCC and mortgage revenue bonds: no principal residence in the past | 3 years | [26 U.S.C. 143(d)](https://www.govinfo.gov/link/uscode/26/143) | Oct 28, 2026 | | IRA early-withdrawal exception: no principal residence in the past | 2 years | [26 U.S.C. 72(t)(8)](https://www.govinfo.gov/link/uscode/26/72) | Oct 28, 2026 | ## The definitions side by side *Look-back periods by program* | Program | No ownership in the past | Notes | |---|---|---| | HUD (HOME program and many state programs) | 3 years | Counts you and your spouse | | Fannie Mae, including HomeReady | 3 years | Any residential property, sole or joint | | [Mortgage credit certificates](https://mortgage-math-us.com/glossary/mortgage-credit-certificate/) and bond loans | 3 years | Principal residence; waived in targeted areas | | IRA penalty-free withdrawal | 2 years | Up to $10,000 over your lifetime | Each program applies its own wording, so check the exact rule with the agency or lender. ## What the label unlocks First-time status can open [down-payment assistance](https://mortgage-math-us.com/glossary/down-payment-assistance/), mortgage credit certificates and some state agency loans. It can also bring obligations: under [HomeReady](https://mortgage-math-us.com/glossary/homeready/) and Home Possible, when every occupying borrower is a first-time buyer, at least one must take a homebuyer education course. The guide [Who counts as a first-time buyer?](https://mortgage-math-us.com/first-time-buyers/who-counts-as-first-time/) works through the edge cases, including the single-parent and displaced-homemaker exceptions. ## Sources - [42 U.S.C. 12704(14)](https://www.law.cornell.edu/uscode/text/42/12704) — First-time homebuyer: has not owned a home in the past (HUD/HOME statute) (Oct 28, 2026) - [Fannie Mae Selling Guide E-3-06](https://selling-guide.fanniemae.com/sel/e-3-06/acronyms-and-glossary-defined-terms-f) — Fannie Mae: first-time buyer had no ownership interest in the past (Sep 3, 2025) - [26 U.S.C. 143(d)](https://www.govinfo.gov/link/uscode/26/143) — MCC and mortgage revenue bond loans: no ownership interest in a principal residence in the past (Oct 28, 2026) - [26 U.S.C. 72(t)(8)](https://www.govinfo.gov/link/uscode/26/72) — IRA first-home exception: no ownership interest in a principal residence in the past (Oct 28, 2026) - [IRS Tax Topic 557](https://www.irs.gov/taxtopics/tc557) — Penalty-free IRA withdrawal for a first home (lifetime limit) (Oct 26, 2026) - [Fannie Mae Selling Guide: Glossary, first-time homebuyer](https://selling-guide.fanniemae.com/sel/e-3-06/acronyms-and-glossary-defined-terms-f) - [42 U.S.C. 12704: Definitions (Cornell LII)](https://www.law.cornell.edu/uscode/text/42/12704) _General information, not financial advice._ --- # Fixed-rate mortgage > A fixed-rate mortgage keeps the same interest rate for the whole loan, so principal and interest never change. What still can, with an example. URL: https://mortgage-math-us.com/glossary/fixed-rate-mortgage/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A fixed-rate mortgage** is a home loan whose interest rate is set when you take out the loan and doesn’t change for its whole term, so the principal-and-interest part of the payment stays the same from the first month to the last. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | 30-year fixed average | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | 15-year fixed average | 6.6% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | US effective property tax rate (used in the example) | 0.89% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) | 2024 ACS 1-year | ## What stays fixed — and what doesn’t Only principal and interest are locked in. [Property tax](https://mortgage-math-us.com/glossary/property-tax/) and [homeowners insurance](https://mortgage-math-us.com/glossary/homeowners-insurance/) collected through an [escrow account](https://mortgage-math-us.com/glossary/escrow-account/) can rise or fall each year, and mortgage insurance can drop off. On a $375,000 home with 20% down, a 30-year fixed loan at 7.24% has principal and interest of $2,044. With taxes at the US effective rate of 0.89% and typical insurance, the full payment starts near $2,476. If the tax bill and premium each rise 10%, it becomes about $2,519 — even though the rate never moved. ## Fixed vs adjustable Certainty has a price: an [adjustable-rate mortgage](https://mortgage-math-us.com/glossary/adjustable-rate-mortgage/) often starts lower but can reset later. With a fixed loan, the only way to get a lower rate is to [refinance](https://mortgage-math-us.com/glossary/refinance/). Freddie Mac’s weekly averages are 7.24% for 30-year and 6.6% for 15-year fixed loans; the [loan term](https://mortgage-math-us.com/glossary/loan-term/) you pick changes both the rate and the payment. The [fixed vs adjustable guide](https://mortgage-math-us.com/loan-types/fixed-vs-adjustable-rate/) compares the two in depth. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average; 15-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [CFPB: What is the difference between a fixed-rate and adjustable-rate mortgage (ARM) loan?](https://www.consumerfinance.gov/ask-cfpb/what-is-the-difference-between-a-fixed-rate-and-adjustable-rate-mortgage-arm-loan-en-100/) _General information, not financial advice._ --- # Flood insurance > Flood insurance covers flood damage that homeowners policies exclude. When a mortgage requires it, NFIP coverage limits and the usual waiting period. URL: https://mortgage-math-us.com/glossary/flood-insurance/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **Flood insurance** covers flood damage to a home and its contents, which standard [homeowners insurance](https://mortgage-math-us.com/glossary/homeowners-insurance/) excludes. If the property is in a high-risk flood zone and you have a government-backed mortgage, you must buy it. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | NFIP building coverage, up to | $250,000 | [FloodSmart (FEMA NFIP): Buy a flood insurance policy](https://www.floodsmart.gov/get-insured/buy-a-policy) | Oct 29, 2026 | | NFIP contents coverage, up to | $100,000 | [FloodSmart (FEMA NFIP): Buy a flood insurance policy](https://www.floodsmart.gov/get-insured/buy-a-policy) | Oct 29, 2026 | | Usual wait before coverage starts | 30 days | [FloodSmart (FEMA NFIP): Buy a flood insurance policy](https://www.floodsmart.gov/get-insured/buy-a-policy) | Oct 29, 2026 | ## When a mortgage requires it High-risk areas, called special flood hazard areas, are the zones on FEMA flood maps that begin with A or V. The lender checks the zone during underwriting, and if flood insurance is required, the premium usually goes into your [escrow account](https://mortgage-math-us.com/glossary/escrow-account/) with taxes and other insurance. Homes outside those zones can still flood, and coverage there is optional and generally costs less. ## NFIP coverage basics Many policies come from FEMA’s National Flood Insurance Program (NFIP). A homeowner’s policy covers the building up to $250,000 and belongings up to $100,000. Coverage usually starts 30 days after purchase, but there’s no wait when you buy it while making, increasing, extending or renewing a mortgage — so it can be in place by [closing](https://mortgage-math-us.com/glossary/closing/). If rebuilding your home would cost $350,000, the NFIP limit leaves $100,000 uncovered; private or excess flood policies can fill that gap. Flood premiums count toward your [PITI](https://mortgage-math-us.com/glossary/piti/) when a lender sizes your payment, so get a quote before you make an offer. The [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/) shows the effect. ## Sources - [FloodSmart (FEMA NFIP): Buy a flood insurance policy](https://www.floodsmart.gov/get-insured/buy-a-policy) — NFIP building coverage limit, homeowners; NFIP contents coverage limit, homeowners; NFIP flood insurance usually takes effect this long after purchase (Oct 29, 2026) - [FloodSmart (FEMA NFIP): What is my flood risk?](https://www.floodsmart.gov/flood-zones-and-maps/what-is-my-flood-risk) _General information, not financial advice._ --- # Forbearance > Mortgage forbearance lets you pause or reduce payments for a limited time. You still owe the full amount. How the skipped payments are repaid afterward. URL: https://mortgage-math-us.com/glossary/forbearance/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **Forbearance** is an arrangement in which your mortgage servicer lets you temporarily pause your payments or make smaller ones, usually during a short-term hardship. It doesn’t erase or reduce what you owe: you still owe the full amount and pay back the difference later. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | HUD housing counseling referral line | 800-569-4287 | [HUD](https://www.hud.gov/stat/sfh/housing-counseling) | Oct 28, 2026 | ## How the skipped payments are repaid Say your payment is $2,000 and you pause it for 6 months. You now owe $12,000 that you didn’t pay, and interest on the paused amounts may keep adding up. When forbearance ends, servicers usually offer one of these: - **Lump sum.** Pay all $12,000 at once to catch up. - **Repayment plan.** Spread it over, say, 12 months, adding $1,000 to each regular payment. - **Deferral.** Move the missed amount to the end of the loan, due when you sell, refinance or pay off. - **[Loan modification](https://mortgage-math-us.com/glossary/loan-modification/).** Change the loan’s terms if the old payment is no longer affordable. Don’t assume a lump sum is required — ask what your loan type allows before you agree. ## Before you ask for it Call your [servicer](https://mortgage-math-us.com/glossary/mortgage-servicer/) as soon as you know you’ll miss a payment. Ask how long the forbearance lasts, how the paused amount will be repaid, whether interest or fees accrue and how it will be reported to the credit bureaus. Get the terms in writing. For free, independent advice, call HUD’s housing counseling line at 800-569-4287. Missed payments without an agreement can lead toward [foreclosure](https://mortgage-math-us.com/glossary/foreclosure/). See [home equity risks](https://mortgage-math-us.com/home-equity/home-equity-risks/) for what’s at stake when a home secures a loan. ## Sources - [HUD](https://www.hud.gov/stat/sfh/housing-counseling) — HUD housing counseling referral line (Oct 28, 2026) - [CFPB: What is mortgage forbearance?](https://www.consumerfinance.gov/ask-cfpb/what-is-mortgage-forbearance-en-289/) _General information, not financial advice._ --- # Foreclosure > Foreclosure is the legal process a lender uses to take and sell a home after missed payments. The federal timeline, state processes and what comes after. URL: https://mortgage-math-us.com/glossary/foreclosure/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **Foreclosure** is the legal process a lender or servicer uses to take back a home after the homeowner fails to make the mortgage payments, usually ending in a public sale of the property to repay the debt. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | No first foreclosure filing until the loan is more than | 120 days | [12 CFR 1024.41(f)(1) (Regulation X)](https://www.consumerfinance.gov/rules-policy/regulations/1024/41/) | Oct 28, 2026 | | A complete application more than this long before a sale blocks the sale during review | 37 days | [12 CFR 1024.41(c) and (g) (Regulation X)](https://www.consumerfinance.gov/rules-policy/regulations/1024/41/) | Oct 29, 2026 | | Fannie Mae waiting period after a foreclosure | 7 years | [Fannie Mae Selling Guide B3-5.3-07](https://selling-guide.fanniemae.com/sel/b3-5.3-07/significant-derogatory-credit-events-waiting-periods-and-re-establishing-credit) | Aug 7, 2019 | ## Timeline and federal protections Under federal servicing rules, a servicer generally can’t make the first notice or filing for foreclosure until your loan is more than 120 days delinquent. That window is for working out an alternative such as [forbearance](https://mortgage-math-us.com/glossary/forbearance/), a repayment plan or a [loan modification](https://mortgage-math-us.com/glossary/loan-modification/). If you send a complete application for help more than 37 days before a scheduled sale, the servicer can’t hold the sale while it reviews it. After that, state law takes over. In some states the lender must go to court (judicial foreclosure); in others it can foreclose without a lawsuit under a power of sale in the [deed of trust](https://mortgage-math-us.com/glossary/deed-of-trust/). You must be notified either way. ## What happens after the sale The home is usually sold at public auction to the highest bidder, which may be the lender. If the sale brings less than you owe, some states let the lender pursue the difference. Getting a new conventional loan generally means waiting 7 years under Fannie Mae rules (3 years with documented extenuating circumstances); a [short sale](https://mortgage-math-us.com/glossary/short-sale/) carries a shorter wait. A HUD-approved housing counselor can help at no cost: 800-569-4287. The [home equity risks guide](https://mortgage-math-us.com/home-equity/home-equity-risks/) explains how borrowing against a home adds to this risk, and [getting a mortgage after foreclosure](https://mortgage-math-us.com/blog/mortgage-after-bankruptcy-or-foreclosure/) covers what comes next. ## Sources - [12 CFR 1024.41(f)(1) (Regulation X)](https://www.consumerfinance.gov/rules-policy/regulations/1024/41/) — Servicer cannot make the first foreclosure notice or filing until a closed-end mortgage is more than this delinquent; Loss mitigation protections apply to complete applications received more than this many days before a foreclosure sale (Oct 28, 2026) - [Fannie Mae Selling Guide B3-5.3-07](https://selling-guide.fanniemae.com/sel/b3-5.3-07/significant-derogatory-credit-events-waiting-periods-and-re-establishing-credit) — Fannie Mae waiting period after a foreclosure; Fannie Mae waiting period after a foreclosure, with documented extenuating circumstances (Aug 7, 2019) - [HUD](https://www.hud.gov/stat/sfh/housing-counseling) — HUD housing counseling referral line (Oct 28, 2026) - [CFPB: How does foreclosure work?](https://www.consumerfinance.gov/ask-cfpb/how-does-foreclosure-work-en-287/) - [CFPB: If I can’t pay my mortgage loan, what are my options?](https://www.consumerfinance.gov/ask-cfpb/if-i-cant-pay-my-mortgage-loan-what-are-my-options-en-268/) _General information, not financial advice._ --- # Gift letter > A gift letter is a signed statement from a donor confirming money for your home purchase is a gift, not a loan. What it must include and who can give. URL: https://mortgage-math-us.com/glossary/gift-letter/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer A **gift letter** is a signed statement from someone giving you money toward a home purchase, confirming the amount and that you don’t have to repay it. Lenders require it so the money is treated as your own funds, not as a hidden loan that would count against your [debt-to-income ratio](https://mortgage-math-us.com/glossary/debt-to-income-ratio/). ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Own funds required first, 2–4 units or second home above 80% LTV | 5% | [Fannie Mae Selling Guide B3-4.3-04](https://selling-guide.fanniemae.com/sel/b3-4.3-04/personal-gifts) | Feb 4, 2026 | | Annual gift tax exclusion per recipient | $19,000 | [IRS: What's new — Estate and gift tax](https://www.irs.gov/businesses/small-businesses-self-employed/whats-new-estate-and-gift-tax) | Tax year 2026 | ## What the letter must include For a Fannie Mae loan, the donor signs a letter that: - states the actual or maximum dollar amount of the gift; - says no repayment is expected; - gives the donor’s name, address, phone number and relationship to you. The lender also documents the transfer, for example with a copy of the donor’s check and your deposit slip, a wire record, or the donor’s check to the closing agent. Acceptable donors include relatives, a domestic partner, a fiancé or fiancée, and people with a long-standing family-like relationship to you. No one with a stake in the sale, such as the builder or a real estate agent, can be a donor. ## How much a gift can cover On a one-unit home you’ll live in, a gift can cover the whole [down payment](https://mortgage-math-us.com/glossary/down-payment/), closing costs and [reserves](https://mortgage-math-us.com/glossary/reserves/). On a two- to four-unit home or a second home with more than 80% LTV, you must first put in 5% from your own funds, and gifts aren’t allowed on investment property. On taxes, the donor, not you, files a gift tax return only when gifts to one person top $19,000 in a year, and tax is generally owed only after their lifetime exemption is used up. More in the [down payment guide](https://mortgage-math-us.com/buying/down-payment/). ## Sources - [Fannie Mae Selling Guide B3-4.3-04](https://selling-guide.fanniemae.com/sel/b3-4.3-04/personal-gifts) — Fannie Mae: own funds required above 80% LTV on a two- to four-unit principal residence or second home (Feb 4, 2026) - [IRS: What's new — Estate and gift tax](https://www.irs.gov/businesses/small-businesses-self-employed/whats-new-estate-and-gift-tax) — Annual gift tax exclusion per recipient (2026) (Tax year 2026) - [CFPB: Where can I get money for a down payment on a home?](https://www.consumerfinance.gov/ask-cfpb/where-can-i-get-money-for-a-down-payment-on-a-home-en-123/) _General information, not financial advice._ --- # HELOC > A HELOC is a revolving credit line secured by your home, usually at a variable rate tied to the prime rate, with a draw period and then a repayment period. URL: https://mortgage-math-us.com/glossary/heloc/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A HELOC (home equity line of credit)** is a revolving credit line secured by your home: during the draw period you can borrow, repay and borrow again up to a credit limit, then you repay what you owe over a repayment period. The rate is usually variable — an index, most often the prime rate, plus the lender’s margin. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Prime rate | 7% | [Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/) | Oct 28, 2026 | | Draw period (CFPB example) | 10 years | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) | Aug 28, 2026 | | Repayment period, often up to | 20 years | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) | Aug 28, 2026 | | Notice of a freeze or limit cut, within | 3 business days | [12 CFR 1026.9(c)(1)(iii)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-B/section-1026.9) | Oct 28, 2026 | ## How the limit and the rate are set Lenders cap the [combined loan-to-value](https://mortgage-math-us.com/glossary/combined-loan-to-value/) of your mortgage plus the line. On a $400,000 home with $250,000 owed, a lender capping it at 85% (an example) could offer a line of up to $90,000. With prime at 7% and a 1-point margin, the rate would be 8%; drawing $40,000 would cost about $267 a month in interest alone. When prime moves, your rate and payment move with it. ## What to watch The payment can jump when the [draw period](https://mortgage-math-us.com/glossary/draw-period/) ends and principal comes due. A lender may freeze the line or cut the limit if your home’s value falls significantly or your finances change materially; it must tell you in writing within 3 business days after acting. You can also cancel within 3 business days of opening a line on your main home. Model payments with the [HELOC payment calculator](https://mortgage-math-us.com/tools/heloc-payment-calculator/) and read the [HELOC guide](https://mortgage-math-us.com/home-equity/heloc/). ## Related terms - [Home equity loan](https://mortgage-math-us.com/glossary/home-equity-loan/) and [prime rate](https://mortgage-math-us.com/glossary/prime-rate/) ## Sources - [Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/) — Bank prime loan rate (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) — Example HELOC draw period (CFPB); HELOC repayment period, often up to (CFPB) (Aug 28, 2026) - [12 CFR 1026.9(c)(1)(iii)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-B/section-1026.9) — Lender must send written notice of a HELOC freeze or credit-limit cut within (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) — Right to cancel a refinance or home equity loan on your principal home (Aug 8, 2024) - [CFPB: What is a home equity line of credit (HELOC)?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-line-of-credit-heloc-en-107/) - [CFPB: What you should know about home equity lines of credit (brochure)](https://files.consumerfinance.gov/f/documents/cfpb_heloc-brochure_print.pdf) _General information, not financial advice._ --- # HOA dues > HOA dues are fees a homeowners association charges to maintain shared property. They’re paid separately but count when you qualify. Example and checks. URL: https://mortgage-math-us.com/glossary/hoa-dues/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **HOA dues** are regular fees that a homeowners association — or a condo or co-op association — charges owners to maintain shared property and services. They are usually paid directly to the association, not included in the payment you make to your mortgage servicer. ## How dues affect what you can borrow Lenders add HOA dues to your housing payment when they figure your [housing ratio](https://mortgage-math-us.com/glossary/housing-ratio/) and [debt-to-income ratio](https://mortgage-math-us.com/glossary/debt-to-income-ratio/), even though the dues don’t pass through the servicer. Say your budget for total housing costs is $2,500 a month, with 10% down and a 30-year loan at 7.24%. With no HOA, that supports a home of about $323,000. With $300 a month in dues, the same budget supports about $284,000 — $39,000 less. The [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/) has an HOA field to test your own numbers. ## What to check before you buy - **The amount and history.** Dues range from a few hundred dollars a month to more than a thousand, and they can rise. - **Reserves and special assessments.** A thin reserve fund can mean one-time charges for big repairs. - **The rules.** Covenants can limit rentals, pets, parking and exterior changes. - **Collection rights.** Unpaid dues can become a [lien](https://mortgage-math-us.com/glossary/lien/) on the home, and in some states the association can foreclose. Unlike [PITI](https://mortgage-math-us.com/glossary/piti/), dues aren’t usually in escrow, so budget for them as a separate bill. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [CFPB: Are condo/co-op fees or homeowners’ association dues included in my monthly mortgage payment?](https://www.consumerfinance.gov/ask-cfpb/are-condoco-op-fees-or-homeowners-association-dues-included-in-my-monthly-mortgage-payment-en-1945/) _General information, not financial advice._ --- # Home equity loan > A home equity loan is a lump-sum second mortgage, usually at a fixed rate with equal monthly payments. How it differs from a HELOC, with a worked example. URL: https://mortgage-math-us.com/glossary/home-equity-loan/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A home equity loan** is a second mortgage that pays you a lump sum against your home equity, usually at a fixed rate, repaid in equal monthly installments over a set term. Because your home secures it, falling behind can lead to foreclosure. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Right to cancel after closing (principal home) | 3 business days | [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) | Aug 8, 2024 | | 30-year fixed average (basis of the example rate) | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | ## Example Borrow $40,000 for 10 years at an example fixed rate of 8.25% and the payment is $491 a month from the first month, with $18,873 of interest over the term. Your first mortgage keeps its rate and balance, which is the main reason to choose this over a [cash-out refinance](https://mortgage-math-us.com/glossary/cash-out-refinance/) when your current rate is low. The loan sits behind your first mortgage as a junior [lien](https://mortgage-math-us.com/glossary/lien/). ## Home equity loan vs HELOC *Two ways to borrow against equity* | | Home equity loan | [HELOC](https://mortgage-math-us.com/glossary/heloc/) | |---|---|---| | Money | All at once | Draw as needed | | Rate | Usually fixed | Usually variable | | Payments | Principal and interest from the start | Often interest-only during the draw period | On your principal home you can cancel within 3 business days after closing. Interest is tax-deductible only when the money buys, builds or substantially improves the home that secures it — see [home equity interest and taxes](https://mortgage-math-us.com/home-equity/home-equity-interest-deduction/). The [home equity loan guide](https://mortgage-math-us.com/home-equity/home-equity-loan/) covers requirements and costs. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) — Right to cancel a refinance or home equity loan on your principal home (Aug 8, 2024) - [CFPB: What is a home equity loan?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-loan-en-106/) - [FTC: Home equity loans and home equity lines of credit](https://consumer.ftc.gov/articles/home-equity-loans-and-home-equity-lines-credit) _General information, not financial advice._ --- # Home equity > Home equity is your home’s current market value minus everything you owe against it. How to calculate it, how it grows and how much you can borrow. URL: https://mortgage-math-us.com/glossary/home-equity/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **Home equity** is the part of your home you own outright: its current market value minus the balances of every loan secured by it, such as your mortgage, a home equity loan or a HELOC. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | US house prices, 12-month change | 2.4% | [FHFA House Price Index](https://www.fhfa.gov/news/news-release/fhfa-house-price-index-up-0.3-percent-in-august-up-2.4-percent-from-last-year) | August 2026 | | Fannie Mae cash-out limit, one-unit primary home | 80% | [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) | Apr 1, 2026 | ## Calculating it > **Worked example: A $400,000 home** > > You owe $240,000 on the mortgage and $20,000 on a HELOC. Equity: $400,000 − $240,000 − $20,000 = $140,000, or 35% of the value. Your [combined loan-to-value](https://mortgage-math-us.com/glossary/combined-loan-to-value/) is 65%. Lenders won’t let you borrow all of it. A Fannie Mae cash-out refinance, for example, stops at 80% loan-to-value, which here would leave about $60,000 available before closing costs. The guide [How much equity can you borrow?](https://mortgage-math-us.com/home-equity/how-much-equity/) runs the limits for each option. ## How equity changes It grows as you pay down principal — slowly at first, because early payments are mostly interest (see [amortization](https://mortgage-math-us.com/glossary/amortization/)) — and as prices rise: US house prices changed by 2.4% over the latest 12 months in FHFA’s index, though your local market can differ widely. It shrinks when you borrow against the home or prices fall; if you owe more than the home is worth, you have negative equity. ## Related terms - [Home equity loan](https://mortgage-math-us.com/glossary/home-equity-loan/) and [HELOC](https://mortgage-math-us.com/glossary/heloc/) ## Sources - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae cash-out refinance maximum LTV, one-unit principal residence (Apr 1, 2026) - [FHFA House Price Index](https://www.fhfa.gov/news/news-release/fhfa-house-price-index-up-0.3-percent-in-august-up-2.4-percent-from-last-year) — US house prices, 12-month change (FHFA HPI) (August 2026) - [CFPB: What is a home equity loan? (defines equity)](https://www.consumerfinance.gov/ask-cfpb/what-is-a-home-equity-loan-en-106/) - [FTC: Home equity loans and home equity lines of credit](https://consumer.ftc.gov/articles/home-equity-loans-and-home-equity-lines-credit) _General information, not financial advice._ --- # Home inspection > A home inspection is a review of a home’s physical condition by an inspector you hire before closing. How it differs from an appraisal and how to use it. URL: https://mortgage-math-us.com/glossary/home-inspection/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer A **home inspection** is an evaluation of a home’s physical condition, especially its structure and mechanical systems, by an inspector you hire before closing. Unlike the appraisal, which the lender orders to confirm value, the inspection is for your protection, and the CFPB recommends getting one. ## Using the report If your contract has an inspection [contingency](https://mortgage-math-us.com/glossary/contingency/), you can cancel without penalty when the results aren’t satisfactory, as long as you act before its deadline. More often, buyers negotiate: the seller makes repairs, lowers the price, or gives a credit toward closing costs, which counts as one of the [seller concessions](https://mortgage-math-us.com/glossary/seller-concessions/) your loan limits. If major repairs are needed, the lender may require them before closing or ask you to fund a repair account. Without a contingency, the report still tells you what to budget for. ## Choosing the inspector Hire someone who works for you, not someone paid by another party to the sale or paid only if it closes, since that can soften the findings. Check references and your state or county licensing rules, which vary. Schedule the inspection as soon as your offer is accepted so any specialist checks the inspector recommends, such as for pests, radon or a sewer line, fit inside the contingency period, and attend so you can ask questions on the spot. ## Related terms - [Appraisal](https://mortgage-math-us.com/glossary/appraisal/), the lender’s valuation - [Earnest money](https://mortgage-math-us.com/glossary/earnest-money/), which a missed deadline can put at risk - The [appraisal and inspection guide](https://mortgage-math-us.com/buying/appraisal-and-inspection/) ## Sources - [CFPB: Schedule a home inspection](https://www.consumerfinance.gov/owning-a-home/close/schedule-a-home-inspection/) _General information, not financial advice._ --- # Home Possible > Home Possible is Freddie Mac’s conventional mortgage for buyers earning up to a set share of area median income, with a very small down payment. URL: https://mortgage-math-us.com/glossary/home-possible/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **Home Possible** is Freddie Mac’s conventional mortgage for low- and moderate-income borrowers: total qualifying income can’t exceed 80% of the area median income, and a fixed-rate loan on a one-unit home can reach 97% loan-to-value — a 3% down payment. It is for primary residences only. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Income limit (share of AMI) | 80% | [Freddie Mac Home Possible fact sheet](https://sf.freddiemac.com/docs/pdf/fact-sheet/home_possible_factsheet.pdf) | Feb 1, 2026 | | Maximum LTV, one-unit fixed-rate loan | 97% | [Freddie Mac Home Possible fact sheet](https://sf.freddiemac.com/docs/pdf/fact-sheet/home_possible_factsheet.pdf) | Feb 1, 2026 | | Maximum total LTV with an Affordable Second | 105% | [Freddie Mac Home Possible fact sheet](https://sf.freddiemac.com/docs/pdf/fact-sheet/home_possible_factsheet.pdf) | Feb 1, 2026 | ## Where the down payment can come from Freddie Mac accepts gifts, grants, cash on hand, employer housing assistance and, in some cases, sweat equity. An Affordable Second — a second loan from an eligible source such as a housing agency — can push the total loan-to-value up to 105%, which can cover closing costs as well as the down payment. If all occupying borrowers are [first-time homebuyers](https://mortgage-math-us.com/glossary/first-time-homebuyer/), at least one must complete homeownership education before closing. > **Worked example: A $280,000 home** > > At 97% LTV the first mortgage is $271,600 and the down payment $8,400. Within the 105% total cap, an Affordable Second could add up to $22,400. ## Home Possible vs HomeReady [HomeReady](https://mortgage-math-us.com/glossary/homeready/) is Fannie Mae’s counterpart, with the same 80% income cap; a lender that sells loans to both companies can quote you either. Both carry [private mortgage insurance](https://mortgage-math-us.com/glossary/private-mortgage-insurance/) below 20% down. See the [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/). ## Related terms - [Down-payment assistance](https://mortgage-math-us.com/glossary/down-payment-assistance/) ## Sources - [Freddie Mac Home Possible fact sheet](https://sf.freddiemac.com/docs/pdf/fact-sheet/home_possible_factsheet.pdf) — Freddie Mac Home Possible maximum LTV, one-unit fixed-rate loan; Freddie Mac Home Possible maximum TLTV with Affordable Seconds; Freddie Mac Home Possible income limit (share of area median income) (Feb 1, 2026) - [Fannie Mae Selling Guide B5-6-01](https://selling-guide.fanniemae.com/sel/b5-6-01/homeready-mortgage-loan-and-borrower-eligibility) — Fannie Mae HomeReady income limit (share of area median income) (Jun 4, 2025) - [Freddie Mac: Home Possible fact sheet](https://sf.freddiemac.com/docs/pdf/fact-sheet/home_possible_factsheet.pdf) _General information, not financial advice._ --- # Homeowners insurance > Homeowners insurance pays for damage to your home and belongings and covers liability. Why lenders require it, what it costs and what it leaves out. URL: https://mortgage-math-us.com/glossary/homeowners-insurance/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **Homeowners insurance** pays for losses and damage to your home and belongings when something unexpected happens, such as a fire or burglary, and usually covers your liability if someone is hurt on the property. Mortgage lenders require it because the home secures the loan. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Average annual premium | $1,522/yr | [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) | 2023 data | | Average premium per $1,000 of home value | $4.90 per $1,000 | [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) | 2023 data | | Average Texas premium | $3,489/yr | [Texas Department of Insurance](https://www.tdi.texas.gov/general/texas-homeowners-insurance-market-overview.html) | 2025 (preliminary) | ## What it costs Freddie Mac data put the average premium at $1,522/yr, or about $4.90 per $1,000 of home value a year. At that rate, a $361,000 home costs about $1,769 a year to insure — $147 a month, usually collected through your [escrow account](https://mortgage-math-us.com/glossary/escrow-account/) as the “I” in [PITI](https://mortgage-math-us.com/glossary/piti/). Costs vary a lot by location: the Texas average is $3,489/yr, or $291 a month. ## What it usually leaves out Standard policies don’t cover flood or earthquake damage. If you’re in a high-risk flood zone with a government-backed loan, you must also carry [flood insurance](https://mortgage-math-us.com/glossary/flood-insurance/). Homeowners insurance also isn’t the same as [private mortgage insurance](https://mortgage-math-us.com/glossary/private-mortgage-insurance/), which protects the lender if you stop paying. If your coverage lapses, the servicer can buy a policy for you after giving notice and add the cost to your bill. This force-placed coverage is often more expensive and may protect only the lender, so keep proof of your own policy current. See [homeowners insurance and your mortgage](https://mortgage-math-us.com/blog/homeowners-insurance-and-your-mortgage/), and add a real quote to the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/) before you shop. ## Sources - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value; Average annual homeowners insurance premium (Freddie Mac borrowers) (2023 data) - [Texas Department of Insurance](https://www.tdi.texas.gov/general/texas-homeowners-insurance-market-overview.html) — Average Texas homeowners insurance premium (2025 (preliminary)) - [CFPB: What is homeowner’s insurance? Why is homeowner’s insurance required?](https://www.consumerfinance.gov/ask-cfpb/what-is-homeowners-insurance-why-is-homeowners-insurance-required-en-162/) _General information, not financial advice._ --- # HomeReady > HomeReady is a Fannie Mae conventional loan for low- to moderate-income buyers, with a small down payment and an income cap tied to area median income. URL: https://mortgage-math-us.com/glossary/homeready/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **HomeReady** is Fannie Mae’s conventional mortgage for borrowers whose total qualifying income is no more than 80% of the area median income (AMI). It allows a loan-to-value ratio up to 97% on a one-unit principal residence — a 3% down payment — and you don’t have to be a first-time buyer. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Income limit (share of AMI) | 80% | [Fannie Mae Selling Guide B5-6-01](https://selling-guide.fanniemae.com/sel/b5-6-01/homeready-mortgage-loan-and-borrower-eligibility) | Jun 4, 2025 | | Fannie Mae maximum LTV, one-unit purchase | 97% | [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) | Apr 1, 2026 | | Combined LTV with a Community Seconds loan | 105% | [Fannie Mae Selling Guide B5-5.1-02](https://selling-guide.fanniemae.com/sel/b5-5.1-02/community-seconds-loan-eligibility) | May 3, 2023 | ## What sets it apart - **Income cap, not a buyer test.** Only the qualifying income of the borrowers counts, checked against Fannie Mae’s AMI figures for the property’s location. Where AMI is $100,000, qualifying income can be at most $80,000. - **Flexible down payment money.** Gifts, grants and [down-payment assistance](https://mortgage-math-us.com/glossary/down-payment-assistance/) seconds are allowed; with a Community Seconds loan the combined LTV can reach 105%. - **Education.** If every occupying borrower is a [first-time homebuyer](https://mortgage-math-us.com/glossary/first-time-homebuyer/), at least one must complete a homeownership education course before a purchase. - **Uses.** Purchases and limited cash-out refinances of one- to four-unit principal residences. You still pay [private mortgage insurance](https://mortgage-math-us.com/glossary/private-mortgage-insurance/) with less than 20% down, and it can be cancelled like on other conventional loans. The [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/) compares HomeReady with other options. ## Related terms - [Home Possible](https://mortgage-math-us.com/glossary/home-possible/), Freddie Mac’s counterpart ## Sources - [Fannie Mae Selling Guide B5-6-01](https://selling-guide.fanniemae.com/sel/b5-6-01/homeready-mortgage-loan-and-borrower-eligibility) — Fannie Mae HomeReady income limit (share of area median income) (Jun 4, 2025) - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae maximum LTV, one-unit principal residence purchase (Apr 1, 2026) - [Fannie Mae Selling Guide B5-5.1-02](https://selling-guide.fanniemae.com/sel/b5-5.1-02/community-seconds-loan-eligibility) — Fannie Mae Community Seconds maximum combined LTV (May 3, 2023) - [Fannie Mae Selling Guide B5-6-01: HomeReady loan and borrower eligibility](https://selling-guide.fanniemae.com/sel/b5-6-01/homeready-mortgage-loan-and-borrower-eligibility) _General information, not financial advice._ --- # Homestead exemption > A homestead exemption cuts the taxable value or tax bill on the home you own and live in. How it works, examples from Texas and Florida, and how to apply. URL: https://mortgage-math-us.com/glossary/homestead-exemption/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A homestead exemption** is a state or local [property tax](https://mortgage-math-us.com/glossary/property-tax/) break that lowers the taxable value — or the tax bill — of the home you own and live in as your primary residence. The amount, who qualifies and the deadline to apply are set by each state, and you usually have to apply. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Texas school district homestead exemption | $140,000 | [Texas Comptroller](https://comptroller.texas.gov/taxes/property-tax/exemptions/) | Dec 11, 2025 | | Florida homestead exemption, up to | $50,000 | [Florida Department of Revenue: Homestead Exemption (PT-113)](https://www.floridarevenue.com/property/Documents/pt113.pdf) | Aug 1, 2025 | | California homeowners’ exemption | $7,000 | [California State Board of Equalization: Homeowners’ Exemption (Publication 800-6)](https://boe.ca.gov/pdf/pub800-6.pdf) | Jun 1, 2023 | ## How big it is in different states - **Texas:** school districts must exempt $140,000 of a homestead’s value, plus $60,000 more for owners 65 or older or disabled. On the median Texas home of $313,000, school taxes apply to only $173,000 — the exemption removes about 45% of the value. See [Texas](https://mortgage-math-us.com/location/texas/). - **Florida:** up to $50,000 off the assessed value. See [Florida](https://mortgage-math-us.com/location/florida/). - **California:** the homeowners’ exemption takes $7,000 off the assessed value. - **Utah:** 45% of a primary residence’s market value is exempt. Some states add caps on yearly assessment increases or extra relief for seniors and people with disabilities. ## Applying and keeping it You generally apply once with the county appraisal district or assessor after you buy and move in, and the exemption is lost if the home stops being your main residence. Once it’s on the tax bill, the lower amount should flow through to your [escrow account](https://mortgage-math-us.com/glossary/escrow-account/) deposit at the next yearly analysis. In some states “homestead” also means a separate protection of home equity from creditors. See [how property taxes change your payment](https://mortgage-math-us.com/blog/how-property-taxes-change-your-payment/), or enter your net tax bill in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/). ## Sources - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US48) — Median value of owner-occupied homes (2024 ACS 1-year) - [Texas Comptroller](https://comptroller.texas.gov/taxes/property-tax/exemptions/) — School district residence homestead exemption; Additional school homestead exemption, age 65+ or disabled (Dec 11, 2025) - [Florida Department of Revenue: Homestead Exemption (PT-113)](https://www.floridarevenue.com/property/Documents/pt113.pdf) — Florida homestead exemption, up to (Aug 1, 2025) - [California State Board of Equalization: Homeowners’ Exemption (Publication 800-6)](https://boe.ca.gov/pdf/pub800-6.pdf) — California homeowners’ exemption (assessed value) (Jun 1, 2023) - [Utah State Tax Commission: Primary Residential Exemption](https://tax.utah.gov/propertytax/tax-relief/primary-residential-exemption/) — Utah primary residential exemption (share of market value exempt from property tax) (Oct 29, 2026) - [Texas Comptroller: Property tax exemptions](https://comptroller.texas.gov/taxes/property-tax/exemptions/) _General information, not financial advice._ --- # Housing ratio (front-end ratio) > The housing ratio, or front-end ratio, is your full monthly housing payment divided by gross monthly income. Which loans use it and how to work it out. URL: https://mortgage-math-us.com/glossary/housing-ratio/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The **housing ratio**, or front-end ratio, is your monthly housing payment (principal, interest, property taxes, homeowners insurance, mortgage insurance and any HOA dues) divided by your gross monthly income. FHA uses 31% as its guideline on manually underwritten loans, and Freddie Mac suggests keeping housing costs below 30%. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | FHA, manual underwriting | 31% | [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) | Oct 8, 2026 | | USDA guaranteed loans | 29% | [USDA Rural Development, HB-1-3555 Chapter 11](https://www.rd.usda.gov/files/3555-1chapter11.pdf) | Nov 25, 2025 | | Freddie Mac suggested ceiling | 30% | [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) | Jan 22, 2026 | ## Example: income for a median-priced home On a $360,000 home with 10% down at 7.24%, with property tax at the national effective rate of 0.89% and average insurance, the full payment comes to about $2,784 a month: $2,208 principal and interest, $267 tax, $147 insurance and $162 mortgage insurance. Keeping that under 30% of income takes about $9,280 a month, or $111,000 a year. ## Which loans test it FHA manual underwriting (31%) and USDA (29%) set housing ratio limits. Fannie Mae and Freddie Mac’s rules cap only the total [debt-to-income ratio](https://mortgage-math-us.com/glossary/debt-to-income-ratio/), so on a conventional loan the housing payment matters through that total. Even where no lender limit applies, the front-end ratio is a quick budget check: the more of your income the payment takes, the less room for [reserves](https://mortgage-math-us.com/glossary/reserves/) and everything else. Run your own numbers in the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/). ## Related terms - [PITI](https://mortgage-math-us.com/glossary/piti/) and [escrow account](https://mortgage-math-us.com/glossary/escrow-account/) ## Sources - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) — FHA manual underwriting housing ratio (no compensating factors) (Oct 8, 2026) - [USDA Rural Development, HB-1-3555 Chapter 11](https://www.rd.usda.gov/files/3555-1chapter11.pdf) — USDA guaranteed loan: housing payment ratio (share of repayment income) (Nov 25, 2025) - [Fannie Mae Selling Guide B3-6-02: Debt-to-Income Ratios](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) _General information, not financial advice._ --- # Interest-only loan > An interest-only loan lets you pay only interest for a set period, so the balance doesn’t fall. What happens to the payment afterward, with an example. URL: https://mortgage-math-us.com/glossary/interest-only-loan/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **An interest-only loan** is a mortgage whose scheduled payments cover only the interest for a set period, so the amount you owe doesn’t go down. When that period ends, you must start repaying principal — usually through higher monthly payments — pay off the balance, or refinance. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | 30-year fixed average (used in the example) | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | ## The payment jump Take a $300,000 30-year loan at 7.24% with a 10-year interest-only period. For ten years the payment is $1,810, and the balance is still $300,000 at the end. The full balance must then be repaid over the remaining 20 years, so the payment rises to $2,369 — $559 more, a 31% increase. An ordinary fully amortizing 30-year loan at the same rate costs $2,044 from the start and has been paying down principal all along. Don’t count on selling or refinancing before the jump: home values can fall and your finances can change. ## Who offers them Interest-only features aren’t allowed in a [Qualified Mortgage](https://mortgage-math-us.com/glossary/qualified-mortgage/), so these loans are usually [non-QM](https://mortgage-math-us.com/glossary/non-qm-loan/) or jumbo products with stricter requirements. The same pattern shows up in a HELOC’s [draw period](https://mortgage-math-us.com/glossary/draw-period/), and some loans end in a [balloon payment](https://mortgage-math-us.com/glossary/balloon-payment/) instead of a higher monthly one. The [interest-only mortgages guide](https://mortgage-math-us.com/loan-types/interest-only-mortgages/) covers who they suit and the risks. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [CFPB: What is an interest-only loan?](https://www.consumerfinance.gov/ask-cfpb/what-is-an-interest-only-loan-en-101/) _General information, not financial advice._ --- # Interest rate > A mortgage interest rate is the yearly cost of borrowing as a percentage of what you owe. How the monthly charge is figured and what moves your rate. URL: https://mortgage-math-us.com/glossary/interest-rate/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **The interest rate** is the cost you pay each year to borrow the money, expressed as a percentage of the loan balance. It sets your principal-and-interest payment; unlike the [APR](https://mortgage-math-us.com/glossary/apr/), it doesn’t include points or lender fees. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | 30-year fixed average | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | 15-year fixed average | 6.6% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | ## How the monthly charge is figured Mortgage interest is charged on the balance you owe: the annual rate divided by 12, times the balance. On a $300,000 loan at 7.24%, the first month’s interest is $1,810 of a $2,044 payment. As the balance falls, so does the interest, which is why later payments go mostly to [principal](https://mortgage-math-us.com/glossary/principal/). Small rate differences add up. Half a percentage point higher on the same loan raises the payment to $2,147, or $103 a month — about $36,961 over 30 years. ## What moves your rate - **The market.** Freddie Mac’s weekly averages are 7.24% for a 30-year fixed loan and 6.6% for a 15-year — see the [PMMS](https://mortgage-math-us.com/glossary/pmms/). - **Your file.** Credit score, down payment and loan type all change the price a lender quotes. - **Your choices.** Paying [discount points](https://mortgage-math-us.com/glossary/discount-points/) lowers the rate; a [rate lock](https://mortgage-math-us.com/glossary/rate-lock/) holds it until closing. - **Fixed or adjustable.** A [fixed-rate mortgage](https://mortgage-math-us.com/glossary/fixed-rate-mortgage/) keeps one rate; an ARM’s rate can change later. The [mortgage rates guide](https://mortgage-math-us.com/buying/mortgage-rates/) explains how to compare quotes. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average; 15-year fixed rate, national weekly average (Week of Oct 29, 2026) - [CFPB: What is the difference between a mortgage interest rate and an APR?](https://www.consumerfinance.gov/ask-cfpb/what-is-the-difference-between-a-mortgage-interest-rate-and-an-apr-en-135/) _General information, not financial advice._ --- # IRRRL (VA streamline) > An IRRRL is the VA’s streamline refinance: a new VA loan replacing your current one at a lower rate, with rate, seasoning and recoupment rules set by law. URL: https://mortgage-math-us.com/glossary/irrrl/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **An IRRRL (Interest Rate Reduction Refinance Loan)** is the VA’s streamline refinance: it replaces an existing VA-backed loan with a new VA loan, usually at a lower rate and with less paperwork than a regular refinance. You must certify that you live in the home now or did in the past. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Fixed-to-fixed: new rate at least this much lower | 0.5% | [38 U.S.C. 3709](https://www.govinfo.gov/link/uscode/38/3709) | Oct 28, 2026 | | Fees and costs must be recouped within | 36 months | [38 U.S.C. 3709](https://www.govinfo.gov/link/uscode/38/3709) | Oct 28, 2026 | | Consecutive monthly payments made first | 6 | [38 U.S.C. 3709](https://www.govinfo.gov/link/uscode/38/3709) | Oct 28, 2026 | | Funding fee | 0.5% | [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) | Apr 7, 2023 | ## Rules set by law Under 38 U.S.C. 3709, a fixed-to-fixed IRRRL needs a rate at least 0.5% lower, in percentage points, than the old one (2% when moving to an adjustable rate). The loan being refinanced must have 6 consecutive monthly payments and be at least 210 days past its first payment due date. Fees and closing costs — not counting taxes, escrow amounts or the VA funding fee — must be recouped through lower payments within 36 months. The [streamline refinance guide](https://mortgage-math-us.com/refinancing/streamline-refinance/) compares the IRRRL with FHA’s version. ## Example: the recoupment test A $300,000 balance at an example rate of 7.99% with 28 years left, refinanced to a 30-year loan at 7.24%, cuts principal and interest by $194 a month. With $4,000 of closing costs, recoupment takes 21 months, within the limit of 36 months. The funding fee of 0.5%, $1,500 here, can be added to the loan. ## Related terms - [VA loan](https://mortgage-math-us.com/glossary/va-loan/) and [VA funding fee](https://mortgage-math-us.com/glossary/va-funding-fee/) - [Streamline refinance](https://mortgage-math-us.com/glossary/streamline-refinance/) and [break-even point](https://mortgage-math-us.com/glossary/break-even-point/) ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) — VA funding fee, Interest Rate Reduction Refinance Loan (IRRRL) (Apr 7, 2023) - [38 U.S.C. 3709](https://www.govinfo.gov/link/uscode/38/3709) — VA IRRRL: fees and closing costs must be recouped within; VA IRRRL fixed-to-fixed: new rate at least this much lower; VA IRRRL fixed-to-adjustable: new rate at least this much lower (Oct 28, 2026) - [VA: Interest Rate Reduction Refinance Loan](https://www.va.gov/housing-assistance/home-loans/loan-types/interest-rate-reduction-loan/) - [38 U.S.C. 3709: Refinancing of housing loans](https://www.govinfo.gov/link/uscode/38/3709) _General information, not financial advice._ --- # Jumbo loan > A jumbo loan is a mortgage larger than the FHFA conforming loan limit, so Fannie Mae and Freddie Mac can’t buy it. The 2026 threshold and what changes. URL: https://mortgage-math-us.com/glossary/jumbo-loan/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A jumbo loan** is a conventional mortgage larger than the conforming loan limit for its county — above $832,750 for a one-unit home in most of the US in 2026, and above as much as $1,249,125 in high-cost areas. Because Fannie Mae and Freddie Mac can’t buy it, the lender keeps the loan or sells it to private investors. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | 2026 baseline conforming limit | $832,750 | [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) | 2026 limit | | 2026 high-cost conforming ceiling | $1,249,125 | [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) | 2026 limit | ## What changes above the limit There is no national rulebook for jumbo loans, so each lender or investor sets its own standards. Lenders commonly ask for higher credit scores, larger down payments and more cash [reserves](https://mortgage-math-us.com/glossary/reserves/) than on a [conforming loan](https://mortgage-math-us.com/glossary/conforming-loan/), and the CFPB notes that a jumbo mortgage may cost more. Most are still covered by the ability-to-repay rule, and many are written as [Qualified Mortgages](https://mortgage-math-us.com/glossary/qualified-mortgage/). ## Example: crossing the line In a county at the baseline limit, a $1,000,000 home bought with 10% down needs a $900,000 loan — $67,250 over the limit, so it’s a jumbo loan. A down payment of $167,250 (16.7%) would bring the loan down to the limit and keep it conforming. Check your county’s figure under [conforming loan limit](https://mortgage-math-us.com/glossary/conforming-loan-limit/), and see the [jumbo loans guide](https://mortgage-math-us.com/loan-types/jumbo-loans/) for typical requirements. ## Related terms - [Non-QM loan](https://mortgage-math-us.com/glossary/non-qm-loan/), another kind of loan outside the Fannie Mae and Freddie Mac rules ## Sources - [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) — 2026 baseline conforming loan limit (one-unit); 2026 high-cost area conforming ceiling (one-unit) (2026 limit) - [CFPB: What is a jumbo loan?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-jumbo-loan-en-116/) - [FHFA: Conforming loan limit values for 2026](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) _General information, not financial advice._ --- # Lender credit > A lender credit pays part of your closing costs in exchange for a higher interest rate. Where it shows on the Loan Estimate and when it pays off. URL: https://mortgage-math-us.com/glossary/lender-credit/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer A **lender credit** is money the lender applies to your closing costs in exchange for a higher interest rate than you’d otherwise get. It is the reverse of discount points and appears as a negative number on the “Lender Credits” line in section J, page 2 of the Loan Estimate and Closing Disclosure. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | 30-year fixed average (used in the example) | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | ## What the trade costs over time Lenders price credits differently, so treat this as an illustration. On a $300,000 30-year loan at 7.24%, principal and interest is $2,044 a month. Taking a $3,000 credit for a rate 0.25 percentage point higher, 7.49%, raises the payment to $2,096, or $51 more each month. After about 59 months (roughly 4.9 years) the extra payments exceed the credit. If you expect to sell or [refinance](https://mortgage-math-us.com/glossary/refinance/) before then, the credit comes out ahead; if you’ll keep the loan longer, it costs you. ## What to check A credit can only reduce closing costs; it isn’t cash in your pocket. Once your rate is locked, a lender generally can’t shrink a disclosed credit unless a valid changed circumstance occurs, so compare the credit on the Closing Disclosure with your Loan Estimate: a smaller credit means more [cash to close](https://mortgage-math-us.com/glossary/cash-to-close/). Large credits that cover all costs are how “no-closing-cost” loans work — see the [no-closing-cost refinance guide](https://mortgage-math-us.com/refinancing/no-closing-cost-refinance/). ## Related terms - [Discount points](https://mortgage-math-us.com/glossary/discount-points/) and [rate lock](https://mortgage-math-us.com/glossary/rate-lock/) ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [CFPB: How should I use lender credits and points?](https://www.consumerfinance.gov/ask-cfpb/how-should-i-use-lender-credits-and-points-also-called-discount-points-en-136/) - [CFPB: Is there such a thing as a no-cost loan or refinancing?](https://www.consumerfinance.gov/ask-cfpb/is-there-such-a-thing-as-a-no-cost-or-no-closing-loan-or-refinancing-en-141/) _General information, not financial advice._ --- # Lien > A lien is a legal claim against property that secures a debt. How mortgage, tax and judgment liens work, why priority matters and how a lien is released. URL: https://mortgage-math-us.com/glossary/lien/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A lien** is a legal claim against a property that secures a debt, giving the creditor the right to be paid from the property — through foreclosure or when it’s sold — if the debt isn’t repaid. Your mortgage or [deed of trust](https://mortgage-math-us.com/glossary/deed-of-trust/) creates a voluntary lien; others, such as tax or court-judgment liens, can attach without your agreement. ## Lien priority Liens are generally paid in order of priority, which usually follows the order they were recorded — that is why a home equity loan or HELOC taken after your mortgage is called a second or junior lien. Property tax liens are a common exception and typically jump ahead of mortgages. > **Worked example: Who gets paid in a foreclosure sale** > > A home sells for $300,000 (before costs) with a $280,000 first mortgage and a $40,000 second. The first lender is paid $280,000 in full; the second receives only $20,000 of the $40,000 it’s owed. Priority is also why refinancing a first mortgage while keeping a HELOC needs the HELOC lender to sign a subordination agreement. ## Clearing a lien Before closing, a title search looks for liens on the property, and existing ones must be paid off or released for the buyer to get clear title — which [title insurance](https://mortgage-math-us.com/glossary/title-insurance/) backs up. When you pay off a loan, the lender should record a release (a satisfaction of mortgage or a reconveyance); check the county records. The [home equity risks guide](https://mortgage-math-us.com/home-equity/home-equity-risks/) explains what a second lien adds. ## Related terms - [Foreclosure](https://mortgage-math-us.com/glossary/foreclosure/) and [home equity loan](https://mortgage-math-us.com/glossary/home-equity-loan/) ## Sources - [CFPB: What is a second mortgage loan or “junior-lien”?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-second-mortgage-loan-or-junior-lien-en-105/) - [CFPB: What is a security interest?](https://www.consumerfinance.gov/ask-cfpb/my-mortgage-closing-forms-mention-a-security-interest-what-is-a-security-interest-en-1999/) _General information, not financial advice._ --- # Loan Estimate > A Loan Estimate is the standard form a lender must send after you apply for a mortgage, showing the rate, payment and closing costs. Timing and tolerances. URL: https://mortgage-math-us.com/glossary/loan-estimate/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A Loan Estimate** is the standardized three-page form a lender must give you within 3 business days of receiving your mortgage application, showing the estimated interest rate, monthly payment, closing costs and key loan features. It isn’t an approval, but because every lender uses the same form, you can compare offers line by line. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Lender must send it within | 3 business days | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-loan-estimate-en-1995/) | Oct 28, 2026 | | Must be delivered or mailed before closing by at least | 7 business days | [12 CFR 1026.19(e)(1)(iii)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-C/section-1026.19) | Oct 28, 2026 | | Cumulative limit on increases for the 10% category | 10% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-my-final-mortgage-costs-increase-from-what-was-on-my-loan-estimate-en-172/) | Sep 11, 2024 | | Revisable if you take longer than this to say you’ll proceed | 10 business days | [12 CFR 1026.19(e)(3)(iv)(E)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-C/section-1026.19) | Oct 28, 2026 | ## Which costs can change *How much Loan Estimate costs can rise without a changed circumstance* | Category | Examples | Limit | |---|---|---| | Can’t increase | Lender and broker fees, services you couldn’t shop for, transfer taxes | No increase | | Can rise a little | Recording fees, services from the lender’s list | 10% in total | | Can change freely | Prepaid interest, insurance premiums, escrow deposits, services you chose yourself | Any amount | If the final figures exceed these limits without a valid changed circumstance, the lender must refund the difference. You’ll check that on the [Closing Disclosure](https://mortgage-math-us.com/glossary/closing-disclosure/). ## Timing rules Apart from a credit report fee, a lender can’t charge you before you receive the estimate and say you want to go ahead. If you wait more than 10 business days to do that, the lender may issue a revised estimate. The Loan Estimate must be delivered or mailed at least 7 business days before closing. Ask for estimates from several lenders on the same day so rates are comparable, and note whether the rate is locked — see [rate lock](https://mortgage-math-us.com/glossary/rate-lock/). The [Loan Estimate and Closing Disclosure guide](https://mortgage-math-us.com/buying/loan-estimate/) walks through each page, and the [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/) helps check the totals. ## Related terms - [Closing costs](https://mortgage-math-us.com/glossary/closing-costs/) and [APR](https://mortgage-math-us.com/glossary/apr/) ## Sources - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-loan-estimate-en-1995/) — Lender must send the Loan Estimate within this many business days of your application (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-my-final-mortgage-costs-increase-from-what-was-on-my-loan-estimate-en-172/) — Cumulative limit on increases for recording fees and lender-listed services (Sep 11, 2024) - [12 CFR 1026.19(e)(3)(iv)(E)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-C/section-1026.19) — Lender may revise the Loan Estimate if you indicate intent to proceed after more than this many business days; Loan Estimate must be delivered or mailed at least this many business days before closing (Oct 28, 2026) - [CFPB: What is a Loan Estimate?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-loan-estimate-en-1995/) - [CFPB: Can my final mortgage costs increase from what was on my Loan Estimate?](https://www.consumerfinance.gov/ask-cfpb/can-my-final-mortgage-costs-increase-from-what-was-on-my-loan-estimate-en-172/) _General information, not financial advice._ --- # Loan modification > A loan modification permanently changes your mortgage terms, such as the rate or term, to make the payment affordable. How it works and federal timelines. URL: https://mortgage-math-us.com/glossary/loan-modification/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A loan modification** is a change to your mortgage’s terms — such as extending the years you have to repay, lowering the interest rate, or forbearing or reducing part of the principal — that the servicer agrees to so the payment becomes affordable and you can keep the home. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Servicer must decide on a complete application within | 30 days | [12 CFR 1024.41(c)(1) (Regulation X)](https://www.consumerfinance.gov/rules-policy/regulations/1024/41/) | Oct 29, 2026 | | Applies to applications received more than this long before a sale | 37 days | [12 CFR 1024.41(c) and (g) (Regulation X)](https://www.consumerfinance.gov/rules-policy/regulations/1024/41/) | Oct 29, 2026 | | No first foreclosure filing until the loan is more than | 120 days | [12 CFR 1024.41(f)(1) (Regulation X)](https://www.consumerfinance.gov/rules-policy/regulations/1024/41/) | Oct 28, 2026 | ## Example: two ways to lower the payment You owe $250,000 at 7.24% with 25 years left, so the payment is $1,805. - **Longer term.** Stretching the balance over 40 years at the same rate cuts the payment to $1,597, saving $208 a month — but adds about $225,105 of interest over the life of the loan. - **Lower rate.** Cutting the rate by one percentage point, with the term unchanged, brings it to $1,648, a saving of $158. Run your own figures through the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/). Many modifications also add missed payments to the balance. Make sure you understand the new payment and the total you’ll owe; if you still can’t pay after a modification, you may lose the home. ## How the review works Apply through your [servicer](https://mortgage-math-us.com/glossary/mortgage-servicer/). If your complete application arrives more than 37 days before a foreclosure sale, federal rules require a written decision within 30 days, and the first [foreclosure](https://mortgage-math-us.com/glossary/foreclosure/) filing generally can’t come until you’re more than 120 days behind. Servicers often start with a trial payment plan. Never pay a company upfront to get a modification — housing counselors help for free. If keeping the home isn’t realistic, compare [forbearance](https://mortgage-math-us.com/glossary/forbearance/) and a [short sale](https://mortgage-math-us.com/glossary/short-sale/). ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [12 CFR 1024.41(c) and (g) (Regulation X)](https://www.consumerfinance.gov/rules-policy/regulations/1024/41/) — Loss mitigation protections apply to complete applications received more than this many days before a foreclosure sale; Servicer must evaluate a complete loss mitigation application and send a written decision within; Servicer cannot make the first foreclosure notice or filing until a closed-end mortgage is more than this delinquent (Oct 29, 2026) - [CFPB: What is a mortgage loan modification?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-mortgage-loan-modification-en-269/) _General information, not financial advice._ --- # Loan term > The loan term is how long you have to repay a mortgage, usually 15 or 30 years. How the term changes your payment, your rate and total interest. URL: https://mortgage-math-us.com/glossary/loan-term/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **The loan term** is how long you have to repay the mortgage, most often 30 or 15 years. A shorter term means a higher monthly payment but usually a lower rate and much less interest over the life of the loan. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | 30-year fixed average | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | 15-year fixed average | 6.6% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | Longest term on a Qualified Mortgage | 30 years | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-qualified-mortgage-en-1789/) | Jan 7, 2025 | ## 30 years vs 15 years at today’s averages *A $300,000 loan at Freddie Mac’s weekly averages* | Term | Rate | Monthly principal and interest | Total interest | |---|---|---|---| | 30 years | 7.24% | $2,044 | $436,018 | | 15 years | 6.6% | $2,630 | $173,372 | The 15-year loan costs $585 more a month but saves $262,646 in interest, because you borrow for half as long and at a lower rate. The [15-year vs 30-year comparison](https://mortgage-math-us.com/blog/15-year-vs-30-year-mortgage/) covers when each makes sense. ## Other terms and limits Lenders also offer 10-, 20- and 25-year fixed loans, and an [adjustable-rate mortgage](https://mortgage-math-us.com/glossary/adjustable-rate-mortgage/) usually runs 30 years in total. A [Qualified Mortgage](https://mortgage-math-us.com/glossary/qualified-mortgage/) can’t exceed 30 years. You can shorten an existing term with extra [principal](https://mortgage-math-us.com/glossary/principal/) payments or a [refinance](https://mortgage-math-us.com/glossary/refinance/); the [amortization](https://mortgage-math-us.com/glossary/amortization/) schedule shows the effect month by month. Compare terms with your own numbers in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/). ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average; 15-year fixed rate, national weekly average (Week of Oct 29, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-qualified-mortgage-en-1789/) — Longest term allowed on a Qualified Mortgage (Jan 7, 2025) - [CFPB: Understand the different kinds of loans available (loan term)](https://www.consumerfinance.gov/owning-a-home/loan-options/) _General information, not financial advice._ --- # Loan-to-value ratio (LTV) > Loan-to-value ratio compares your loan amount with the home’s value. How to calculate LTV and why it decides mortgage insurance, pricing and limits. URL: https://mortgage-math-us.com/glossary/loan-to-value-ratio/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The **loan-to-value ratio (LTV)** is your mortgage amount divided by the home’s value, shown as a percentage; on a purchase, lenders use the lower of the price and the appraised value. A bigger down payment means a lower LTV, which affects whether you qualify, your rate and whether you pay mortgage insurance. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Fannie Mae maximum, one-unit purchase | 97% | [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) | Apr 1, 2026 | | You can ask to cancel PMI at this LTV (original value) | 80% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) | Oct 28, 2026 | | Lowest conventional down payment | 3% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | ## LTV at different down payments *A $360,000 purchase* | Down payment | Loan | LTV | Conventional mortgage insurance? | |---|---|---|---| | 3% | $349,200 | 97% | Yes | | 10% | $324,000 | 90% | Yes | | 20% | $288,000 | 80% | No | The formula is simply loan ÷ value × 100. Fannie Mae’s maximum on a one-unit home you’ll live in is 97%, the flip side of the 3% minimum down payment on some conventional loans. ## Why the line at 80% matters Above 80% LTV, a conventional loan generally needs [private mortgage insurance](https://mortgage-math-us.com/glossary/private-mortgage-insurance/), and you can ask your servicer to cancel it once the balance reaches 80% of the original value. After closing, LTV falls as you pay down principal or as the home gains value, which is your [home equity](https://mortgage-math-us.com/glossary/home-equity/) growing. A second loan on the same home is counted in the [combined loan-to-value](https://mortgage-math-us.com/glossary/combined-loan-to-value/) instead. Compare payments at each down payment in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/) or read the [down payment guide](https://mortgage-math-us.com/buying/down-payment/). ## Sources - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) — Ask your servicer to cancel PMI at this share of original value (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum down payment on some conventional loans (Oct 28, 2026) - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae maximum LTV, one-unit principal residence purchase (Apr 1, 2026) - [CFPB: What is a loan-to-value ratio and how does it relate to my costs?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-loan-to-value-ratio-and-how-does-it-relate-to-my-costs-en-121/) _General information, not financial advice._ --- # Manual underwriting > Manual underwriting is a loan review by a human underwriter using the program’s written rules, not an automated approval. When it’s used and its limits. URL: https://mortgage-math-us.com/glossary/manual-underwriting/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **Manual underwriting** is a review of a mortgage application by a human underwriter applying the loan program’s written guidelines, rather than relying on an automated system’s approval. It’s used when the automated system refers the file or can’t evaluate it, for example a borrower with no credit score, and its limits are usually stricter. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Fannie Mae maximum DTI, manual | 36% | [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) | Apr 2, 2025 | | Fannie Mae, manual with strong credit and reserves | 45% | [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) | Apr 2, 2025 | | FHA housing ratio, manual | 31% | [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) | Oct 8, 2026 | | FHA total DTI, manual | 43% | [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) | Oct 8, 2026 | ## Stricter limits *Manual underwriting limits compared* | | Fannie Mae | FHA | |---|---|---| | Total DTI | 36%, up to 45% with the required score and reserves | 43% without compensating factors | | Housing ratio | No separate limit | 31% without compensating factors | | Minimum credit score | 620 on fixed-rate loans | 500 | By comparison, Fannie Mae’s [automated underwriting](https://mortgage-math-us.com/glossary/automated-underwriting/) can approve a [DTI](https://mortgage-math-us.com/glossary/debt-to-income-ratio/) up to 50%. ## Preparing a manual file Compensating factors such as extra [reserves](https://mortgage-math-us.com/glossary/reserves/), a new payment close to your current rent, or steady income the lender didn’t count can justify ratios above the baseline where the program allows. Expect the underwriter to read bank statements line by line and ask for written explanations of late payments, gaps in work or large deposits. With little traditional credit, the lender may build a history from rent, utility and insurance payments. The [DTI guide](https://mortgage-math-us.com/buying/debt-to-income/) covers how each debt is counted. ## Sources - [Fannie Mae Selling Guide B3-6-02](https://selling-guide.fanniemae.com/sel/b3-6-02/debt-income-ratios) — Fannie Mae maximum DTI, manually underwritten loans; Fannie Mae maximum DTI, manual underwriting with strong credit and reserves; Fannie Mae maximum DTI, Desktop Underwriter loans (Apr 2, 2025) - [HUD Mortgagee Letter 2026-11](https://www.hud.gov/sites/default/files/hudclips/documents/2026-11hsgml.pdf) — FHA manual underwriting debt-to-income ratio (no compensating factors); FHA manual underwriting housing ratio (no compensating factors); FHA minimum decision credit score (90% LTV cap from 500 to 579) (Oct 8, 2026) - [Fannie Mae Selling Guide B3-5.1-01](https://selling-guide.fanniemae.com/sel/b3-5.1-01/general-requirements-credit-scores) — Fannie Mae minimum score, manually underwritten fixed-rate loans (Apr 22, 2026) - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) _General information, not financial advice._ --- # Mortgage credit certificate (MCC) > A mortgage credit certificate, issued by a state or local housing agency, turns part of the mortgage interest you pay each year into a federal tax credit. URL: https://mortgage-math-us.com/glossary/mortgage-credit-certificate/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A mortgage credit certificate (MCC)** is a certificate from a state or local housing agency that lets a qualifying homebuyer claim a federal tax credit each year for a set percentage of the mortgage interest paid — between 10% and 50%, depending on the program. You claim it on IRS Form 8396. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Lowest certificate rate | 10% | [IRS Form 8396](https://www.irs.gov/pub/irs-pdf/f8396.pdf) | Tax year 2025 | | Highest certificate rate | 50% | [IRS Form 8396](https://www.irs.gov/pub/irs-pdf/f8396.pdf) | Tax year 2025 | | Yearly cap when the rate is above the threshold | $2,000/yr | [IRS Form 8396](https://www.irs.gov/pub/irs-pdf/f8396.pdf) | Tax year 2025 | | Unused credit carries forward | 3 years | [IRS Form 8396](https://www.irs.gov/pub/irs-pdf/f8396.pdf) | Tax year 2025 | ## How the credit is figured > **Worked example: A $300,000 loan at 7.24%** > > First-year interest: $21,625. With a 20% certificate, the credit is $4,325. If you itemize, you can still deduct the other $17,300 of interest — the deduction is reduced by the credit. At certificate rates above 20%, the credit is capped at $2,000/yr. The credit can’t exceed your federal tax for the year, but unused credit carries forward for up to 3 years. ## Who can get one You generally apply through a participating lender before closing, as part of the purchase. Programs generally require that you haven’t owned a main home in the past 3 years, and cap income and purchase price. If you sell within 9 years at a gain and your income has risen past set limits, you may owe a recapture tax. The [MCC guide](https://mortgage-math-us.com/first-time-buyers/mortgage-credit-certificates/) covers limits and recapture in detail. ## Related terms - [First-time homebuyer](https://mortgage-math-us.com/glossary/first-time-homebuyer/) and [down-payment assistance](https://mortgage-math-us.com/glossary/down-payment-assistance/) ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [IRS Form 8396](https://www.irs.gov/pub/irs-pdf/f8396.pdf) — Mortgage credit certificate rate, lowest; Mortgage credit certificate rate, highest; Mortgage credit certificate: the yearly dollar cap applies when the rate is above (Tax year 2025) - [26 U.S.C. 143(d)](https://www.govinfo.gov/link/uscode/26/143) — MCC and mortgage revenue bond loans: no ownership interest in a principal residence in the past (Oct 28, 2026) - [IRS Form 8396: Mortgage Interest Credit](https://www.irs.gov/pub/irs-pdf/f8396.pdf) _General information, not financial advice._ --- # Mortgage insurance premium (MIP) > MIP is FHA mortgage insurance: an upfront premium plus an annual premium paid monthly. Current rates, how long it lasts and how it differs from PMI. URL: https://mortgage-math-us.com/glossary/mortgage-insurance-premium/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **Mortgage insurance premium (MIP)** is the mortgage insurance FHA borrowers pay: an [upfront premium](https://mortgage-math-us.com/glossary/upfront-mortgage-insurance-premium/) at closing plus an annual premium divided into the monthly payments. It funds FHA’s insurance, which protects the lender if the borrower defaults. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Annual MIP, 30-year loan, more than 95% LTV | 0.55% | [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) | Feb 22, 2023 | | Annual MIP, 30-year loan, 95% LTV or less | 0.5% | [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) | Feb 22, 2023 | | MIP lasts this long if you start at 90% LTV or less | 11 years | [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) | Feb 22, 2023 | | Upfront premium | 1.75% | [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) | Feb 22, 2023 | ## Example With the minimum 3.5% down on a $361,000 home, the base loan is $348,365. The annual MIP on a 30-year loan at that loan-to-value is 0.55%, about $160 a month in the first year (it shrinks a little as the balance falls). Separately, the 1.75% upfront premium adds $6,096, usually financed into the loan. ## How long it lasts If your starting [loan-to-value ratio](https://mortgage-math-us.com/glossary/loan-to-value-ratio/) is 90% or less, annual MIP ends after 11 years; with less than 10% down, it stays for the life of the loan. Putting down 5% or more drops the 30-year rate to 0.5%. That’s the big difference from [private mortgage insurance](https://mortgage-math-us.com/glossary/private-mortgage-insurance/), which ends on its own when the balance reaches 78% of the original value. Many FHA borrowers drop MIP by refinancing into a conventional loan once they have enough equity. The [FHA loans guide](https://mortgage-math-us.com/loan-types/fha-loans/) and [FHA vs conventional](https://mortgage-math-us.com/blog/fha-vs-conventional/) compare the total cost. ## Sources - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment (Oct 28, 2026) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA annual MIP, 30-year loan, more than 95% LTV; FHA upfront mortgage insurance premium; FHA annual MIP ends after 11 years when the starting LTV is at or below (Feb 22, 2023) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) — PMI ends automatically at this share of original value (Oct 28, 2026) - [CFPB: What is mortgage insurance and how does it work?](https://www.consumerfinance.gov/ask-cfpb/what-is-mortgage-insurance-and-how-does-it-work-en-1953/) _General information, not financial advice._ --- # Mortgage recording tax > A mortgage recording tax is a state tax on the amount you borrow, collected when the mortgage is recorded. Which states charge it and what it costs. URL: https://mortgage-math-us.com/glossary/mortgage-recording-tax/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer A **mortgage recording tax** is a state or local tax on the amount you borrow, collected when the mortgage or deed of trust is recorded. Only 8 states charge one statewide, under names such as intangible tax, documentary stamp tax or mortgage registry tax, and it is generally paid at closing along with your other closing costs. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | New York, outside New York City (approximate) | 1% | [New York Department of Taxation and Finance](https://www.tax.ny.gov/pit/mortgage/mtgidx.htm) | Dec 30, 2025 | | Florida, stamp tax plus intangible tax | 0.55% | [Florida Statutes 199.133; Florida DOR GT-800014](https://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0100-0199/0199/Sections/0199.133.html) | Oct 28, 2026 | | Virginia, deeds of trust | 0.25% | [Code of Virginia, Title 58.1, Chapter 8](https://law.lis.virginia.gov/vacodefull/title58.1/chapter8/) | Oct 28, 2026 | ## The tax by state *Statewide mortgage taxes on a $300,000 loan* | State | Rate on file | Tax | |---|---|---| | Alabama | 0.15% | $450 | | Florida | 0.55% | $1,650 | | Georgia | 0.3% | $900 | | Minnesota | 0.23% | $690 | | New York | 1% | $3,000 | | Oklahoma | 0.1% | $300 | | Tennessee | 0.115% | $343 | | Virginia | 0.25% | $750 | Local rules change these figures. New York’s rate varies by county and is higher in New York City; Georgia caps its tax; Tennessee exempts a small first slice of the debt; and Virginia charges less on refinances. Your [state page](https://mortgage-math-us.com/location/), for example [New York](https://mortgage-math-us.com/location/new-york/), has the details. ## How it differs from a transfer tax A [transfer tax](https://mortgage-math-us.com/glossary/transfer-tax/) is based on the sale price and applies whether or not you finance, while a mortgage tax is based on the loan amount, so a bigger down payment lowers it. Because it applies to each new mortgage, it can also come up when you refinance, which is why it matters for [refinance closing costs](https://mortgage-math-us.com/refinancing/refinance-closing-costs/). The [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/) includes it for these states. ## Related terms - [Recording fee](https://mortgage-math-us.com/glossary/recording-fee/), the flat government charge for recording ## Sources - [Alabama Department of Revenue](https://www.revenue.alabama.gov/tax-types/recordation-tax/) — State tax on recording a mortgage (Aug 14, 2023) - [Florida Statutes 199.133; Florida DOR GT-800014](https://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0100-0199/0199/Sections/0199.133.html) — State tax on recording a mortgage (Oct 28, 2026) - [Georgia Department of Revenue](https://dor.georgia.gov/intangible-recording-tax) — State tax on recording a mortgage (Oct 28, 2026) - [Minnesota Department of Revenue](https://www.revenue.state.mn.us/mortgage-tax-rate) — State tax on recording a mortgage (Oct 28, 2026) - [New York Department of Taxation and Finance](https://www.tax.ny.gov/pit/mortgage/mtgidx.htm) — State tax on recording a mortgage (Dec 30, 2025) - [68 O.S. §1904](https://law.justia.com/codes/oklahoma/title-68/section-68-1904/) — State tax on recording a mortgage (Nov 1, 2025) - [Tennessee Department of Revenue](https://www.tn.gov/revenue/taxes/local-taxes/recordation-taxes/due-date-tax-rate.html) — State tax on recording a mortgage (May 6, 2024) - [Code of Virginia, Title 58.1, Chapter 8](https://law.lis.virginia.gov/vacodefull/title58.1/chapter8/) — State tax on recording a mortgage (Oct 28, 2026) - [CFPB: Loan Estimate explainer (taxes and other government fees)](https://www.consumerfinance.gov/owning-a-home/loan-estimate/) _General information, not financial advice._ --- # Mortgage servicer > A mortgage servicer collects your payments, runs your escrow account and handles loan problems. How it differs from the lender, and what a transfer means. URL: https://mortgage-math-us.com/glossary/mortgage-servicer/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A mortgage servicer** is the company that sends your statements, collects your payments, manages any [escrow account](https://mortgage-math-us.com/glossary/escrow-account/) for taxes and insurance, and handles requests for help if you fall behind. It is often not the lender that made the loan, or the investor that owns it. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Transfer notices: before (old servicer) and after (new servicer), within | 15 days | [CFPB, Regulation X 1024.33](https://www.consumerfinance.gov/rules-policy/regulations/1024/33/) | Oct 29, 2026 | | Payments sent to the old servicer protected from late fees for | 60 days | [CFPB, Regulation X 1024.33](https://www.consumerfinance.gov/rules-policy/regulations/1024/33/) | Oct 29, 2026 | | No foreclosure filing until more than this delinquent | 120 days | [12 CFR 1024.41(f)(1) (Regulation X)](https://www.consumerfinance.gov/rules-policy/regulations/1024/41/) | Oct 28, 2026 | | Most an escrow cushion may hold | 2 months | [CFPB, Regulation X 1024.17](https://www.consumerfinance.gov/rules-policy/regulations/1024/17/) | Oct 28, 2026 | ## When servicing changes hands Servicing rights are bought and sold, but a transfer can’t change the terms of your loan. The old servicer generally must notify you at least 15 days before the transfer and the new one within 15 days after (the two notices can be combined). For 60 days after the transfer, a payment sent on time to the old servicer can’t be treated as late or charged a late fee. Keep the notices and check that your escrow balance moved over. ## Rules servicers follow Regulation X sets the main ones. An escrow account’s cushion can’t exceed 2 months of payments. A servicer generally can’t make the first foreclosure notice or filing until your loan is more than 120 days delinquent, and it must evaluate a complete, timely application for help such as [forbearance](https://mortgage-math-us.com/glossary/forbearance/) or a [loan modification](https://mortgage-math-us.com/glossary/loan-modification/). You can send a written notice of error or request for information, and the servicer must respond within set deadlines. It’s also the servicer you ask to cancel PMI — see the [PMI guide](https://mortgage-math-us.com/buying/pmi/) — and to whom you send extra principal, as in [biweekly payments](https://mortgage-math-us.com/blog/biweekly-mortgage-payments/). ## Sources - [CFPB, Regulation X 1024.33](https://www.consumerfinance.gov/rules-policy/regulations/1024/33/) — Servicing transfer notice: old servicer at least this long before the transfer, new servicer within this long after; After a servicing transfer, an on-time payment sent to the old servicer cannot be treated as late for (Oct 29, 2026) - [CFPB, Regulation X 1024.17](https://www.consumerfinance.gov/rules-policy/regulations/1024/17/) — Most an escrow account may hold as a cushion (one-sixth of annual escrow payments) (Oct 28, 2026) - [12 CFR 1024.41(f)(1) (Regulation X)](https://www.consumerfinance.gov/rules-policy/regulations/1024/41/) — Servicer cannot make the first foreclosure notice or filing until a closed-end mortgage is more than this delinquent (Oct 28, 2026) - [CFPB: What’s the difference between a mortgage lender and a mortgage servicer?](https://www.consumerfinance.gov/ask-cfpb/whats-the-difference-between-a-mortgage-lender-and-a-mortgage-servicer-en-198/) - [CFPB: What happens if the company that I send my mortgage payments to changes?](https://www.consumerfinance.gov/ask-cfpb/what-happens-if-the-company-that-i-send-my-mortgage-payments-to-changes-en-215/) _General information, not financial advice._ --- # Non-QM loan > A non-QM loan is a mortgage that doesn’t meet the Qualified Mortgage rules, such as a bank-statement or interest-only loan. Who uses them and why. URL: https://mortgage-math-us.com/glossary/non-qm-loan/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A non-QM loan** is a mortgage that doesn’t meet the [Qualified Mortgage](https://mortgage-math-us.com/glossary/qualified-mortgage/) standards — because of a feature, its price or how income is documented — so the lender doesn’t get QM legal protection. A non-QM consumer loan secured by a home must still satisfy the [ability-to-repay rule](https://mortgage-math-us.com/glossary/ability-to-repay/). ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Longest term a QM can have | 30 years | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-qualified-mortgage-en-1789/) | Jan 7, 2025 | | QM points-and-fees cap (larger loans) | 3% | [CFPB, Federal Register 90 FR 57890](https://www.federalregister.gov/documents/2025/12/15/2025-22773/truth-in-lending-regulation-z-annual-threshold-adjustments-credit-cards-hoepa-and-qualified) | 2026 threshold | ## Common kinds - **Bank-statement loans** for self-employed borrowers, where income is worked out from deposits rather than tax returns. The lender still has to verify it with reliable third-party records. - **[Interest-only loans](https://mortgage-math-us.com/glossary/interest-only-loan/)** and loans with terms longer than 30 years. - **Loans with high points and fees**, above 3% of the loan on larger loans, or priced too far above average rates. - **Asset-based loans** that qualify you on savings and investments. Investor loans such as [DSCR loans](https://mortgage-math-us.com/glossary/dscr-loan/) are often sold under the non-QM label, but a loan for a rental you won’t live in is business-purpose credit outside these consumer rules altogether. ## What it means for you Non-QM isn’t a warning label: plenty of non-QM loans are sound. But no Fannie Mae, Freddie Mac or government standard sets the terms, so rates, down payments and fees vary widely between lenders and are often higher than on a conventional loan. Compare several Loan Estimates line by line. The [interest-only mortgages guide](https://mortgage-math-us.com/loan-types/interest-only-mortgages/) and [mortgages for the self-employed](https://mortgage-math-us.com/blog/mortgages-for-the-self-employed/) cover two common cases. ## Sources - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-qualified-mortgage-en-1789/) — Longest term allowed on a Qualified Mortgage (Jan 7, 2025) - [CFPB, Federal Register 90 FR 57890](https://www.federalregister.gov/documents/2025/12/15/2025-22773/truth-in-lending-regulation-z-annual-threshold-adjustments-credit-cards-hoepa-and-qualified) — Qualified Mortgage points-and-fees cap (loans of $137,958 or more) (2026 threshold) - [CFPB: What is a Qualified Mortgage?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-qualified-mortgage-en-1789/) - [CFPB: What is the ability-to-repay rule?](https://www.consumerfinance.gov/ask-cfpb/what-is-the-ability-to-repay-rule-en-1787/) _General information, not financial advice._ --- # Origination fee > An origination fee is the lender’s charge for processing, underwriting and funding your mortgage. Where it appears on the Loan Estimate and its limits. URL: https://mortgage-math-us.com/glossary/origination-fee/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer An **origination fee** is what the lender charges for making your mortgage loan, covering work such as processing the application, underwriting and funding. It appears in section A, “Origination Charges,” on page 2 of the Loan Estimate and Closing Disclosure, and it generally can’t increase at closing except in specific circumstances. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Qualified Mortgage cap on points and fees (larger loans) | 3% | [CFPB, Federal Register 90 FR 57890](https://www.federalregister.gov/documents/2025/12/15/2025-22773/truth-in-lending-regulation-z-annual-threshold-adjustments-credit-cards-hoepa-and-qualified) | 2026 threshold | | One discount point, share of the loan amount | 1% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/how-should-i-use-lender-credits-and-points-also-called-discount-points-en-136/) | Oct 19, 2023 | ## One fee or several Some lenders charge a single percentage of the loan; others list separate application, processing and underwriting fees. All of them belong in section A, alongside any [discount points](https://mortgage-math-us.com/glossary/discount-points/), so compare the section A total between offers rather than the fee names. A lender that advertises no origination fee may be pricing its costs into a higher rate, which the [APR](https://mortgage-math-us.com/glossary/apr/) helps reveal. ## An example against the cap Say a lender charges a 1% origination fee on a $300,000 loan, which is $3,000, and you buy one point at 1% of the loan, another $3,000. Section A totals $6,000. To be a [Qualified Mortgage](https://mortgage-math-us.com/glossary/qualified-mortgage/), a loan of this size generally can’t carry points and fees above 3% of the loan amount, or $9,000 here, and origination charges count toward that limit. See how section A fits with the rest of the bill in the [Loan Estimate guide](https://mortgage-math-us.com/buying/loan-estimate/). ## Related terms - [Lender credit](https://mortgage-math-us.com/glossary/lender-credit/), which can offset section A - [Closing costs](https://mortgage-math-us.com/glossary/closing-costs/) ## Sources - [CFPB](https://www.consumerfinance.gov/ask-cfpb/how-should-i-use-lender-credits-and-points-also-called-discount-points-en-136/) — Cost of one discount point (share of loan amount) (Oct 19, 2023) - [CFPB, Federal Register 90 FR 57890](https://www.federalregister.gov/documents/2025/12/15/2025-22773/truth-in-lending-regulation-z-annual-threshold-adjustments-credit-cards-hoepa-and-qualified) — Qualified Mortgage points-and-fees cap (loans of $137,958 or more) (2026 threshold) - [CFPB: What are mortgage origination services? What is an origination fee?](https://www.consumerfinance.gov/ask-cfpb/what-are-mortgage-origination-services-what-is-an-origination-fee-en-155/) _General information, not financial advice._ --- # PITI > PITI stands for principal, interest, taxes and insurance — the four basic parts of a monthly mortgage payment. A worked example and how lenders use it. URL: https://mortgage-math-us.com/glossary/piti/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **PITI** stands for principal, interest, taxes and insurance — the four basic elements of a monthly mortgage payment. Principal and interest repay the loan; property taxes and homeowners insurance are often collected with the payment and held in an [escrow account](https://mortgage-math-us.com/glossary/escrow-account/) until the bills are due. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | US median home value (used in the example) | $360,600 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) | 2024 ACS 1-year | | US effective property tax rate | 0.89% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) | 2024 ACS 1-year | | Average homeowners insurance premium | $1,522/yr | [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) | 2023 data | | Freddie Mac housing-cost guideline | 30% | [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) | Jan 22, 2026 | ## Example *$361,000 home, 10% down, 30 years at 7.24%* | Part | Monthly | |---|---| | Principal and interest | $2,214 | | Property tax at 0.89% | $268 | | Homeowners insurance ($1,522 a year) | $127 | | **PITI** | **$2,609** | | Private mortgage insurance | $162 | | **Total payment** | **$2,771** | With less than 20% down, [private mortgage insurance](https://mortgage-math-us.com/glossary/private-mortgage-insurance/) is added on top, and [HOA dues](https://mortgage-math-us.com/glossary/hoa-dues/), if any, usually are paid separately but still count when you qualify. ## How lenders use it Lenders compare your full housing payment with your gross monthly income to get your [housing ratio](https://mortgage-math-us.com/glossary/housing-ratio/), then add other debts for the [debt-to-income ratio](https://mortgage-math-us.com/glossary/debt-to-income-ratio/). Freddie Mac suggests keeping housing costs below 30% of gross income; for this payment that means about $9,237 a month. Try your own numbers in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/). ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average annual homeowners insurance premium (Freddie Mac borrowers) (2023 data) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026) - [CFPB: What is PITI?](https://www.consumerfinance.gov/ask-cfpb/what-is-piti-en-152/) _General information, not financial advice._ --- # Primary Mortgage Market Survey (PMMS) > The PMMS is Freddie Mac’s weekly average of 30-year and 15-year fixed mortgage rates. What loans it measures, when it’s published and how to read it. URL: https://mortgage-math-us.com/glossary/pmms/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The **Primary Mortgage Market Survey (PMMS)** is Freddie Mac’s weekly national average of 30-year and 15-year fixed mortgage rates, released on Thursdays. The latest averages are 7.24% for a 30-year loan and 6.6% for a 15-year loan. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | 30-year fixed average | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | 15-year fixed average | 6.6% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | 30-year fixed average, previous week | 7.32% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 22, 2026 | ## What the average measures Since late 2022 the survey has been built from applications lenders submit to Freddie Mac’s automated underwriting system, Loan Product Advisor, rather than from a survey of lenders, and each week averages applications from Thursday through Wednesday. It covers conventional, conforming, fixed-rate purchase loans on owner-occupied one-unit homes for borrowers with strong credit who put 20% down. It no longer reports points or fees. So it’s a benchmark, not a quote: your rate depends on your [credit score](https://mortgage-math-us.com/glossary/credit-score/), down payment, points and loan type, and the [APR](https://mortgage-math-us.com/glossary/apr/) on your Loan Estimate shows the full cost. ## Reading it in dollars On a $300,000 loan, the latest averages mean principal and interest of $2,044 a month over 30 years or $2,630 over 15 years. Last week’s 30-year average of 7.32% would have meant $2,061, so this week’s average works out to $16 a month less than last week’s. Weekly moves matter most while you’re deciding when to [lock your rate](https://mortgage-math-us.com/glossary/rate-lock/). Try other rates in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/). ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average; 15-year fixed rate, national weekly average; 30-year fixed rate, previous week (Week of Oct 29, 2026) - [Freddie Mac: Newly enhanced mortgage rate survey explained](https://www.freddiemac.com/research/insight/20221103-freddie-macs-newly-enhanced-mortgage-rate-survey) _General information, not financial advice._ --- # Pre-approval > A pre-approval is a lender’s letter saying you’re likely to qualify up to a set amount, usually after checking credit and documents. What it is and isn’t. URL: https://mortgage-math-us.com/glossary/pre-approval/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer A **pre-approval** is a lender’s letter stating how much it is willing to lend you, usually issued after it checks your credit and reviews documents that verify your income and assets. Sellers often expect one with an offer, but it isn’t a guaranteed loan offer: final approval still depends on underwriting, the appraisal and your finances staying the same. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Mortgage credit checks in this window count as one inquiry | 45 days | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-exactly-happens-when-a-mortgage-lender-checks-my-credit-en-2005/) | Aug 28, 2026 | | Fannie Mae: oldest a credit, income or asset document can be at closing | 4 months | [Fannie Mae Selling Guide B1-1-03](https://selling-guide.fanniemae.com/sel/b1-1-03/allowable-age-credit-documents-and-federal-income-tax-returns) | Apr 2, 2025 | ## What the lender reviews Expect a credit check and requests for recent pay stubs, W-2s or tax returns, and bank statements. Many lenders also run the file through [automated underwriting](https://mortgage-math-us.com/glossary/automated-underwriting/), which makes the letter more meaningful. Because mortgage credit checks within 45 days generally count as one inquiry, you can get pre-approved by more than one lender and compare their [Loan Estimates](https://mortgage-math-us.com/glossary/loan-estimate/) once you have a property address to apply with. Some lenders call this same letter a [pre-qualification](https://mortgage-math-us.com/glossary/pre-qualification/), so ask what was verified. ## How long it lasts Letters carry an expiration date, partly because documents go stale: Fannie Mae requires credit, income and asset documents to be no more than 4 months old on the note date, so a long search may mean updating them. Talk to your lender before financing a car or changing jobs, since either can change the amount. The [pre-approval guide](https://mortgage-math-us.com/buying/pre-approval/) walks through the steps. ## Sources - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-exactly-happens-when-a-mortgage-lender-checks-my-credit-en-2005/) — Mortgage credit checks within this window count as one inquiry (Aug 28, 2026) - [Fannie Mae Selling Guide B1-1-03](https://selling-guide.fanniemae.com/sel/b1-1-03/allowable-age-credit-documents-and-federal-income-tax-returns) — Fannie Mae: credit, income, employment and asset documents may be no older than this on the note date (Apr 2, 2025) - [CFPB: What’s the difference between a prequalification letter and a preapproval letter?](https://www.consumerfinance.gov/ask-cfpb/whats-the-difference-between-a-prequalification-letter-and-a-preapproval-letter-en-127/) _General information, not financial advice._ --- # Pre-qualification > Pre-qualification is a lender’s early estimate of how much you could borrow, often from figures you report. How it differs from a pre-approval. URL: https://mortgage-math-us.com/glossary/pre-qualification/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **Pre-qualification** is a lender’s early estimate of how much you may be able to borrow, often based on the income, debts and assets you report, sometimes with a credit check. A pre-qualification letter helps you set a budget and shows sellers you’ve started, but it isn’t a loan offer or a guarantee of approval. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Mortgage credit checks in this window count as one inquiry | 45 days | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-exactly-happens-when-a-mortgage-lender-checks-my-credit-en-2005/) | Aug 28, 2026 | ## Same idea as pre-approval, different depth The CFPB points out that lenders use the words loosely: one lender’s pre-qualification letter is another’s [pre-approval](https://mortgage-math-us.com/glossary/pre-approval/). What matters is what the lender actually checked. A letter based on numbers you typed into a form carries less weight with a seller than one backed by a credit report, pay stubs and bank statements, so ask the lender which it is. Either way, final approval still depends on full [underwriting](https://mortgage-math-us.com/glossary/underwriting/) and the appraisal. ## Making it useful Pre-qualify with more than one lender to compare likely rates and costs. If a lender pulls your credit, multiple mortgage credit checks within 45 days generally count as a single inquiry. If a lender looks at your credit and decides you don’t qualify, it must send you an adverse action notice explaining why. Treat the amount as a ceiling, not a target: run your own numbers through the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/), which accounts for taxes, insurance and the [debt-to-income ratio](https://mortgage-math-us.com/glossary/debt-to-income-ratio/) lenders use. ## Sources - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-exactly-happens-when-a-mortgage-lender-checks-my-credit-en-2005/) — Mortgage credit checks within this window count as one inquiry (Aug 28, 2026) - [CFPB: What’s the difference between a prequalification letter and a preapproval letter?](https://www.consumerfinance.gov/ask-cfpb/whats-the-difference-between-a-prequalification-letter-and-a-preapproval-letter-en-127/) _General information, not financial advice._ --- # Prepaid items > Prepaid items are costs paid at closing before they’re due: daily interest to month-end, homeowners insurance and sometimes property taxes. URL: https://mortgage-math-us.com/glossary/prepaid-items/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **Prepaid items**, or prepaids, are costs you pay at closing before they come due: daily interest from the closing date to the period your first payment covers, usually the first year of homeowners insurance, and sometimes property taxes or mortgage insurance. They’re listed in section F, “Prepaids,” on page 2 of the Loan Estimate and Closing Disclosure. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | 30-year fixed average (used in the example) | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | | Largest escrow cushion a servicer may hold | 2 months | [CFPB, Regulation X 1024.17](https://www.consumerfinance.gov/rules-policy/regulations/1024/17/) | Oct 28, 2026 | ## Prepaid interest, worked out Mortgage interest is paid in arrears, so your first regular payment doesn’t cover the days between closing and the end of that month; you pay them upfront. On a $300,000 loan at 7.24%, daily interest is $59.51. Close with 15 days left in the month and prepaid interest is $893. Closing later in the month shrinks this line because you borrow for fewer days; your regular payments stay the same. ## Prepaids vs. the escrow deposit Section F pays bills themselves, such as the insurance premium. Section G, the initial escrow payment, is a separate deposit that starts your [escrow account](https://mortgage-math-us.com/glossary/escrow-account/) so the servicer can pay future [property tax](https://mortgage-math-us.com/glossary/property-tax/) and insurance bills; it can include a cushion of up to 2 months of escrow payments. Neither has a tolerance limit. The CFPB lists prepaid interest, property insurance premiums and initial escrow deposits among the costs that can change by any amount before closing, since they depend on your closing date, insurance quote and tax bill. Estimate them with the [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/). ## Related terms - [Closing costs](https://mortgage-math-us.com/glossary/closing-costs/) and [homeowners insurance](https://mortgage-math-us.com/glossary/homeowners-insurance/) ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [CFPB, Regulation X 1024.17](https://www.consumerfinance.gov/rules-policy/regulations/1024/17/) — Most an escrow account may hold as a cushion (one-sixth of annual escrow payments) (Oct 28, 2026) - [CFPB: What are prepaid interest charges?](https://www.consumerfinance.gov/ask-cfpb/what-are-prepaid-interest-charges-en-161/) - [CFPB: Can my final mortgage costs increase from what was on my Loan Estimate?](https://www.consumerfinance.gov/ask-cfpb/can-my-final-mortgage-costs-increase-from-what-was-on-my-loan-estimate-en-172/) _General information, not financial advice._ --- # Prepayment penalty > A prepayment penalty is a fee for paying off a mortgage early, usually by selling or refinancing in the first years. Federal limits and where to check. URL: https://mortgage-math-us.com/glossary/prepayment-penalty/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A prepayment penalty** is a fee some lenders charge if you pay off all or part of your mortgage early — typically when you sell the home or refinance within the first few years. Small extra principal payments normally don’t trigger it. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Maximum penalty in years 1–2 (share of balance prepaid) | 2% | [12 CFR 1026.43(g)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43) | Oct 28, 2026 | | Maximum penalty in year 3 | 1% | [12 CFR 1026.43(g)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43) | Oct 28, 2026 | | No penalty after | 3 years | [12 CFR 1026.43(g)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43) | Oct 28, 2026 | ## Federal limits Under the ability-to-repay rule, a prepayment penalty is generally allowed only on a fixed- or step-rate [Qualified Mortgage](https://mortgage-math-us.com/glossary/qualified-mortgage/) that isn’t higher-priced, and it is capped at 2% of the balance prepaid in the first two years and 1% in the third. No penalty can apply after 3 years. A lender that offers a loan with a penalty must also offer you one without. If you refinance a $280,000 balance in year two, the most a penalty could be is $5,600; in year three, $2,800. Include that in any [break-even](https://mortgage-math-us.com/glossary/break-even-point/) math. ## How to spot one Page 1 of the [Loan Estimate](https://mortgage-math-us.com/glossary/loan-estimate/) has a Prepayment Penalty line in the Loan Terms table that says yes or no, and if yes, the maximum and when it ends. The same line appears on the [Closing Disclosure](https://mortgage-math-us.com/glossary/closing-disclosure/). If you expect to sell or [refinance](https://mortgage-math-us.com/glossary/refinance/) soon, or plan a [recast](https://mortgage-math-us.com/glossary/recast/), ask for a loan without one. The [refinance break-even calculator](https://mortgage-math-us.com/tools/refinance-break-even-calculator/) shows whether a refinance still pays. ## Sources - [12 CFR 1026.43(g)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43) — Maximum prepayment penalty in the first two years (share of balance prepaid); Maximum prepayment penalty in the third year (share of balance prepaid); Prepayment penalty may not apply after this many years (qualified mortgages) (Oct 28, 2026) - [CFPB: What is a prepayment penalty?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-prepayment-penalty-en-1957/) _General information, not financial advice._ --- # Prime rate > The prime rate is the base lending rate posted by most large US banks. Where it comes from, how it moves and how it sets the rate on many HELOCs. URL: https://mortgage-math-us.com/glossary/prime-rate/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer The **prime rate** is the base lending rate posted by most large US banks; the Federal Reserve publishes it as the rate posted by a majority of the top 25 insured US-chartered commercial banks. It is 7% now, and many home equity lines of credit use it as the index for their variable rate. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Bank prime loan rate | 7% | [Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/) | Oct 28, 2026 | | 30-year fixed mortgage average, for comparison | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | ## How prime moves Banks generally change prime when the Federal Reserve changes its target for the federal funds rate, so it moves in steps rather than daily. Fixed mortgage rates don’t follow it directly: they track longer-term bond markets, which is why this week’s 30-year mortgage average of 7.24% can move while prime stands still, or the reverse. ## Prime and your HELOC A [HELOC](https://mortgage-math-us.com/glossary/heloc/) rate is usually an index plus a margin, and the CFPB names the US prime rate as a common index. With an illustrative margin of 1 percentage point, the rate today would be 8.00%, and interest-only payments during the [draw period](https://mortgage-math-us.com/glossary/draw-period/) on a $50,000 balance would be $333 a month. If prime rose by half a point, that payment would become $354. Your margin stays fixed; the index is what moves, within any [rate caps](https://mortgage-math-us.com/glossary/rate-caps/) in your agreement. Model your own line with the [HELOC payment calculator](https://mortgage-math-us.com/tools/heloc-payment-calculator/). ## Sources - [Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/) — Bank prime loan rate (Oct 28, 2026) - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [CFPB: What you should know about home equity lines of credit (brochure)](https://files.consumerfinance.gov/f/documents/cfpb_heloc-brochure_print.pdf) _General information, not financial advice._ --- # Principal > Principal is the amount you borrowed and still owe on a mortgage, separate from interest. How it is set, how it falls, and how extra payments cut it. URL: https://mortgage-math-us.com/glossary/principal/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **Principal** is the amount you borrow on a mortgage and have to pay back, not counting interest. The part of each payment that reduces the loan balance is the principal portion; the rest pays interest on the balance you still owe. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | US median home value (used in the example) | $360,600 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) | 2024 ACS 1-year | | 30-year fixed average (used in the example) | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | ## Starting principal vs the price Your starting principal is the purchase price minus your [down payment](https://mortgage-math-us.com/glossary/down-payment/), plus any fee you choose to finance, such as FHA’s [upfront mortgage insurance premium](https://mortgage-math-us.com/glossary/upfront-mortgage-insurance-premium/) or the [VA funding fee](https://mortgage-math-us.com/glossary/va-funding-fee/). Lenders compare it with the home’s value to get your [loan-to-value ratio](https://mortgage-math-us.com/glossary/loan-to-value-ratio/). ## Example On a $361,000 home with 10% down, the principal is $324,900. At 7.24% over 30 years, the first five years of payments include only $18,295 of principal against $114,556 of interest, leaving a balance of $306,605. That slow start is how [amortization](https://mortgage-math-us.com/glossary/amortization/) works on a long loan. ## Paying extra principal Any amount you send beyond the scheduled payment, marked for principal, lowers the balance at once, so every later payment carries less interest and the loan ends sooner. Check first that the loan has no [prepayment penalty](https://mortgage-math-us.com/glossary/prepayment-penalty/). To lower the monthly payment instead of the payoff date, ask the servicer about a [recast](https://mortgage-math-us.com/glossary/recast/). The [extra payment calculator](https://mortgage-math-us.com/tools/extra-payment-calculator/) shows the interest saved. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [CFPB: What’s the difference between my principal and interest payment and my total monthly payment?](https://www.consumerfinance.gov/ask-cfpb/on-a-mortgage-whats-the-difference-between-my-principal-and-interest-payment-and-my-total-monthly-payment-en-1941/) _General information, not financial advice._ --- # Private mortgage insurance (PMI) > PMI is insurance a conventional lender requires when you put down less than 20%. It protects the lender. What it costs and when you can drop it. URL: https://mortgage-math-us.com/glossary/private-mortgage-insurance/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **Private mortgage insurance (PMI)** is insurance a lender usually requires on a [conventional loan](https://mortgage-math-us.com/glossary/conventional-loan/) when your down payment is less than 20% of the price. You pay for it, but it protects the lender — not you — if you stop making payments. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Typical cost, low end | $30 per $100k a month | [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) | Oct 28, 2026 | | Typical cost, high end | $70 per $100k a month | [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) | Oct 28, 2026 | | You can ask to cancel at | 80% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) | Oct 28, 2026 | | Ends automatically at | 78% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) | Oct 28, 2026 | ## What it costs Freddie Mac puts typical PMI at $30 to $70 a month for each $100,000 borrowed, depending mainly on your credit score and down payment. On a $337,500 loan — 10% down on a $375,000 home — that’s about $101 to $236 a month. Most borrowers pay it monthly with the mortgage; some pay a one-time premium at closing, or both. ## When it ends On a loan for your main home, you can ask the servicer in writing to cancel PMI once the balance reaches 80% of the home’s original value, if you’re current and meet the other conditions. It must end automatically at 78%, and in any case at the midpoint of the loan’s schedule. In the example above, at 7.24% with regular payments, you could ask after about 8.6 years, and it would drop off on its own after about 9.8 years. Extra principal payments move both dates up. FHA loans use a different system — see [mortgage insurance premium](https://mortgage-math-us.com/glossary/mortgage-insurance-premium/). The [PMI guide](https://mortgage-math-us.com/buying/pmi/) covers removal by new appraisal, and your [loan-to-value ratio](https://mortgage-math-us.com/glossary/loan-to-value-ratio/) is the number to watch. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) — Ask your servicer to cancel PMI at this share of original value; PMI ends automatically at this share of original value (Oct 28, 2026) - [CFPB: What is private mortgage insurance?](https://www.consumerfinance.gov/ask-cfpb/what-is-private-mortgage-insurance-en-122/) - [CFPB: When can I remove private mortgage insurance (PMI) from my loan?](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) _General information, not financial advice._ --- # Promissory note > A promissory note is the document you sign at closing promising to repay the mortgage on stated terms. How it differs from the mortgage or deed of trust. URL: https://mortgage-math-us.com/glossary/promissory-note/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A promissory note** is the written promise you sign at [closing](https://mortgage-math-us.com/glossary/closing/) to repay your mortgage loan. It states the amount you owe, the interest rate, the payment amount and schedule, and what happens if you pay late or don’t pay. ## Note vs mortgage or deed of trust A home loan comes with two core documents that do different jobs: | Document | What it does | |---|---| | Promissory note | Creates the debt: your personal promise to repay on the stated terms | | Mortgage or [deed of trust](https://mortgage-math-us.com/glossary/deed-of-trust/) | Makes the home collateral and gives the lender a [lien](https://mortgage-math-us.com/glossary/lien/) it can foreclose if you don’t pay | When you pay the loan off, the note is marked paid and the lender releases the lien in the public records. Notes are often sold to investors such as [Fannie Mae and Freddie Mac](https://mortgage-math-us.com/glossary/fannie-mae-and-freddie-mac/), and the company you pay — your [mortgage servicer](https://mortgage-math-us.com/glossary/mortgage-servicer/) — may be different from the note’s owner. Your terms stay the same either way. ## What to check before you sign Compare the note with your [Closing Disclosure](https://mortgage-math-us.com/glossary/closing-disclosure/): the loan amount, interest rate, monthly principal and interest, first payment date and maturity date should match. Look for the late charge and grace period, and whether there’s a [prepayment penalty](https://mortgage-math-us.com/glossary/prepayment-penalty/) or [balloon payment](https://mortgage-math-us.com/glossary/balloon-payment/). On an adjustable-rate loan, the note also sets the index, margin and caps. Keep your copy with your other closing papers; the [Loan Estimate guide](https://mortgage-math-us.com/buying/loan-estimate/) shows how the two disclosure forms line up. ## Sources - [CFPB: What documents should I receive before closing on a mortgage loan?](https://www.consumerfinance.gov/ask-cfpb/what-documents-should-i-receive-before-closing-on-a-mortgage-loan-en-181/) - [CFPB: What can I expect in the mortgage closing process?](https://www.consumerfinance.gov/ask-cfpb/im-about-to-close-on-a-real-estate-purchase-transaction-with-a-mortgage-what-can-expect-in-the-mortgage-closing-process-en-1905/) _General information, not financial advice._ --- # Property tax > Property tax is a local tax on real estate based on its assessed value, usually paid through mortgage escrow. How the bill is figured and how rates vary. URL: https://mortgage-math-us.com/glossary/property-tax/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **Property tax** is a tax that local governments — typically counties, cities and school districts — charge on real estate based on its assessed value. With a mortgage it is usually paid through an [escrow account](https://mortgage-math-us.com/glossary/escrow-account/) as part of your monthly payment. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | US effective property tax rate | 0.89% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) | 2024 ACS 1-year | | US median property tax bill | $3,211/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) | 2024 ACS 1-year | ## How the bill is figured The assessor sets a taxable value for the home; each taxing body applies its rate (often quoted in mills, or dollars per $1,000); and exemptions such as a [homestead exemption](https://mortgage-math-us.com/glossary/homestead-exemption/) reduce the taxable value or the bill. Assessments and rates can change every year, so the tax part of your [PITI](https://mortgage-math-us.com/glossary/piti/) can change too. Nationally, homeowners pay a median of $3,211 a year, an effective rate of 0.89% of home value. On a $361,000 home, that rate works out to $3,213 a year. ## How much it varies by state Across the states and DC, the effective rate is highest in [Illinois](https://mortgage-math-us.com/location/illinois/) at 1.92% and lowest in [Hawaii](https://mortgage-math-us.com/location/hawaii/) at 0.27%. On the same $361,000 home, that is $6,931 a year versus $975. Rates also vary widely between counties within a state. See [how property taxes change your payment](https://mortgage-math-us.com/blog/how-property-taxes-change-your-payment/), and use the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/) with your local rate. ## Sources - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US17) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US15) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [CFPB: Mortgage key terms (property taxes)](https://www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/) _General information, not financial advice._ --- # Qualified Mortgage (QM) > A Qualified Mortgage meets CFPB rules that bar risky features and cap points and fees, giving the lender legal protection under the ability-to-repay rule. URL: https://mortgage-math-us.com/glossary/qualified-mortgage/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A Qualified Mortgage (QM)** is a home loan that meets the CFPB’s Regulation Z standards for safer features and limited upfront costs. In return, the lender gets legal protection — a safe harbor or a rebuttable presumption — that it complied with the [ability-to-repay rule](https://mortgage-math-us.com/glossary/ability-to-repay/). ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Longest term allowed | 30 years | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-qualified-mortgage-en-1789/) | Jan 7, 2025 | | Points-and-fees cap (larger loans) | 3% | [CFPB, Federal Register 90 FR 57890](https://www.federalregister.gov/documents/2025/12/15/2025-22773/truth-in-lending-regulation-z-annual-threshold-adjustments-credit-cards-hoepa-and-qualified) | 2026 threshold | | General QM price limit over the average prime offer rate | 2.25% | [CFPB, Federal Register 90 FR 57890](https://www.federalregister.gov/documents/2025/12/15/2025-22773/truth-in-lending-regulation-z-annual-threshold-adjustments-credit-cards-hoepa-and-qualified) | 2026 threshold | | Prepayment penalties end after | 3 years | [12 CFR 1026.43(g)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43) | Oct 28, 2026 | ## What a QM can’t have - Interest-only payments, negative amortization or, except for some small lenders, a [balloon payment](https://mortgage-math-us.com/glossary/balloon-payment/) - A term longer than 30 years - Points and fees above 3% of the loan on larger loans (smaller loans have higher limits) - For a General QM on a larger first-lien loan, an APR 2.25% or more above the average prime offer rate A [prepayment penalty](https://mortgage-math-us.com/glossary/prepayment-penalty/) is allowed only on fixed-rate QMs that aren’t higher-priced, and only in the first 3 years. A General QM no longer has a fixed debt-to-income cap, but the lender must still consider your DTI or residual income — see the [debt-to-income guide](https://mortgage-math-us.com/buying/debt-to-income/). ## Example: the points-and-fees test On a $400,000 loan, points and fees counted under the rule — including origination charges and discount points, with some exclusions — can total no more than $12,000. If they go higher, the loan can’t be a QM. ## Related terms - [Non-QM loan](https://mortgage-math-us.com/glossary/non-qm-loan/) ## Sources - [CFPB, Federal Register 90 FR 57890](https://www.federalregister.gov/documents/2025/12/15/2025-22773/truth-in-lending-regulation-z-annual-threshold-adjustments-credit-cards-hoepa-and-qualified) — Qualified Mortgage points-and-fees cap (loans of $137,958 or more); General QM: APR must stay below the average prime offer rate plus this (first-lien loans of $137,958 or more) (2026 threshold) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-qualified-mortgage-en-1789/) — Longest term allowed on a Qualified Mortgage (Jan 7, 2025) - [12 CFR 1026.43(g)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43) — Prepayment penalty may not apply after this many years (qualified mortgages) (Oct 28, 2026) - [CFPB: What is a Qualified Mortgage?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-qualified-mortgage-en-1789/) - [eCFR: 12 CFR 1026.43 (ability to repay and qualified mortgages)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43) _General information, not financial advice._ --- # Rate-and-term refinance > A rate-and-term refinance changes your mortgage rate or term without taking equity out. What the new loan may pay off and how much cash back is allowed. URL: https://mortgage-math-us.com/glossary/rate-and-term-refinance/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A rate-and-term refinance** replaces your mortgage with a new one that changes the interest rate, the loan term or both, without borrowing against extra equity. The new loan pays off the old balance and can include closing costs; Fannie Mae calls this a limited cash-out refinance. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Cash back allowed: the greater of this share of the loan | 1% | [Fannie Mae Selling Guide B2-1.3-02](https://selling-guide.fanniemae.com/sel/b2-1.3-02/limited-cash-out-refinance-transactions) | Oct 8, 2025 | | …or this amount | $2,000 | [Fannie Mae Selling Guide B2-1.3-02](https://selling-guide.fanniemae.com/sel/b2-1.3-02/limited-cash-out-refinance-transactions) | Oct 8, 2025 | | Fannie Mae maximum LTV, one-unit primary home (fixed rate) | 97% | [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) | Apr 1, 2026 | ## What the new loan can pay off Under Fannie Mae’s rules, the new loan can cover the existing first mortgage, closing costs, points and prepaid items. A second mortgage can be rolled in only if it was used to buy the home; paying off a [HELOC](https://mortgage-math-us.com/glossary/heloc/) used for anything else turns the deal into a [cash-out refinance](https://mortgage-math-us.com/glossary/cash-out-refinance/), so you would pay it off separately or ask the HELOC lender to subordinate — stay in second place behind the new loan. Loan-to-value can go as high as 97%, against 80% on a cash-out refinance. ## Example: the cash-back limit Cash back is limited to the greater of 1% of the new loan or $2,000. On a $300,000 refinance that’s $3,000; on $150,000 it’s $2,000. Anything more makes it a cash-out loan, with a lower LTV limit and usually higher pricing. Whether a lower rate or shorter term pays depends on the [break-even point](https://mortgage-math-us.com/glossary/break-even-point/). See the [rate-and-term refinance guide](https://mortgage-math-us.com/refinancing/rate-and-term/) and the [refinance break-even calculator](https://mortgage-math-us.com/tools/refinance-break-even-calculator/). ## Sources - [Fannie Mae Selling Guide B2-1.3-02](https://selling-guide.fanniemae.com/sel/b2-1.3-02/limited-cash-out-refinance-transactions) — Fannie Mae limited cash-out refinance: cash back up to the greater of this share of the loan; Fannie Mae limited cash-out refinance: cash back up to the greater of 1% or (Oct 8, 2025) - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae limited cash-out refinance maximum LTV, one-unit principal residence (fixed rate); Fannie Mae cash-out refinance maximum LTV, one-unit principal residence (Apr 1, 2026) - [Fannie Mae Selling Guide B2-1.3-02: Limited cash-out refinance transactions](https://selling-guide.fanniemae.com/sel/b2-1.3-02/limited-cash-out-refinance-transactions) _General information, not financial advice._ --- # Rate caps > Rate caps limit how far an adjustable mortgage rate can move at the first reset, at each later reset and over the life of the loan. Worst-case example. URL: https://mortgage-math-us.com/glossary/rate-caps/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **Rate caps** limit how much the interest rate on an adjustable-rate mortgage can change: the initial cap at the first adjustment, the subsequent (periodic) cap at each later adjustment, and the lifetime cap over the whole loan, measured from the starting rate. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Caps on a 5/6 ARM (first/periodic/lifetime) | 2/1/5 | [Fannie Mae Standard ARM Plan Matrix](https://singlefamily.fanniemae.com/media/6951/display) | Oct 1, 2021 | | Caps on 7/6 and 10/6 ARMs | 5/1/5 | [Fannie Mae Standard ARM Plan Matrix](https://singlefamily.fanniemae.com/media/6951/display) | Oct 1, 2021 | ## Reading cap numbers Caps are written first/periodic/lifetime. Fannie Mae’s 5/6 ARM uses 2/1/5: up to 2 percentage points at the first reset, 1 at each six-month reset after that, and never more than 5 above the starting rate. On 7/6 and 10/6 ARMs the caps are 5/1/5, so the first reset alone can reach the lifetime ceiling. ## Worst case on a 5/6 ARM *$300,000 5/6 ARM at an example 6.5% start, if every reset rises by the most allowed* | From | Rate | Monthly payment | |---|---|---| | Month 1 | 6.5% | $1,896 | | Month 61 | 8.5% | $2,261 | | Month 67 | 9.5% | $2,451 | | Month 73 | 10.5% | $2,645 | | Month 79 | 11.5% | $2,842 | Caps limit decreases as well as increases. Some ARMs cap the payment rather than the rate, which can let unpaid interest add to the balance; a [Qualified Mortgage](https://mortgage-math-us.com/glossary/qualified-mortgage/) can’t do that. ## Related terms - [Adjustable-rate mortgage](https://mortgage-math-us.com/glossary/adjustable-rate-mortgage/) - [Index](https://mortgage-math-us.com/glossary/arm-index/) and [margin](https://mortgage-math-us.com/glossary/arm-margin/), which set the rate the caps limit - [Fixed vs adjustable-rate mortgages](https://mortgage-math-us.com/loan-types/fixed-vs-adjustable-rate/) ## Sources - [Fannie Mae Standard ARM Plan Matrix](https://singlefamily.fanniemae.com/media/6951/display) — Rate caps on a Fannie Mae 5/6 ARM (first/periodic/lifetime); Rate caps on Fannie Mae 7/6 and 10/6 ARMs (first/periodic/lifetime) (Oct 1, 2021) - [CFPB: What are rate caps with an adjustable-rate mortgage (ARM), and how do they work?](https://www.consumerfinance.gov/ask-cfpb/what-are-rate-caps-with-an-adjustable-rate-mortgage-arm-and-how-do-they-work-en-1951/) _General information, not financial advice._ --- # Rate lock > A rate lock means your mortgage rate won’t change between the offer and closing, if you close in time. Typical lock periods, costs and what can break it. URL: https://mortgage-math-us.com/glossary/rate-lock/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A rate lock** (or lock-in) on a mortgage means your interest rate won’t change between the loan offer and closing, as long as you close within the lock period and nothing in your application changes. Locks are typically available for 30, 45 or 60 days, and sometimes longer. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Typical lock periods | 30, 45 or 60 days | [CFPB](https://www.consumerfinance.gov/ask-cfpb/whats-a-lock-in-or-a-rate-lock-en-143/) | Oct 28, 2026 | | 30-year fixed average (used in the example) | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | ## What a lock protects you from Rates can move daily while a loan is processed. On a $300,000 30-year loan at 7.24%, the payment is $2,044. If rates rose half a percentage point before closing and you hadn’t locked, the payment would be $2,147 — $103 more a month, or $1,232 a year. A lock also fixes the [discount points](https://mortgage-math-us.com/glossary/discount-points/) or [lender credit](https://mortgage-math-us.com/glossary/lender-credit/) tied to that rate. ## What can change a locked rate - **Expiration.** If closing slips past the lock date, extending it may be expensive. Ask what extensions cost before you choose a lock period. - **Changes to your file.** A different loan amount, a lower appraisal, a new credit score or a change in income can change the price. - **Floating down.** If rates fall after you lock, you usually keep the higher rate unless your lock includes a float-down option. Page 1 of the [Loan Estimate](https://mortgage-math-us.com/glossary/loan-estimate/) shows whether your rate is locked and when the lock expires. Plan the lock around your [closing](https://mortgage-math-us.com/glossary/closing/) date. See [how a rate lock works](https://mortgage-math-us.com/blog/how-a-rate-lock-works/) and the [mortgage rates guide](https://mortgage-math-us.com/buying/mortgage-rates/). ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/whats-a-lock-in-or-a-rate-lock-en-143/) — Typical rate lock periods (Oct 28, 2026) - [CFPB: What’s a lock-in or a rate lock on a mortgage?](https://www.consumerfinance.gov/ask-cfpb/whats-a-lock-in-or-a-rate-lock-en-143/) _General information, not financial advice._ --- # Mortgage recast > A mortgage recast re-amortizes your loan after a large principal payment, lowering the monthly payment while the rate and payoff date stay the same. URL: https://mortgage-math-us.com/glossary/recast/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A mortgage recast** (re-amortization) is when you make a large lump-sum payment toward [principal](https://mortgage-math-us.com/glossary/principal/) and the servicer recalculates your monthly payment over the remaining term based on the new, lower balance. The interest rate and payoff date stay the same. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | 30-year fixed average (used in the example) | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | ## Example You took a $300,000 30-year loan at 7.24% with a payment of $2,044. Five years in, you owe $283,107 and pay down $50,000 — say, from the sale of a previous home. After a recast, the payment on the remaining $233,107 drops to $1,683, saving $361 a month for the last 25 years. Without a recast, the same lump sum keeps the payment at $2,044 but pays the loan off in about 16 years instead of 25. Recasting buys monthly breathing room; skipping it saves more interest. ## Recast vs refinance A recast keeps your existing loan, so there’s no new application or closing costs — usually just a servicer fee. It can’t lower your rate, though; only a [refinance](https://mortgage-math-us.com/glossary/refinance/) does that. Not every loan or servicer offers recasting, and servicers set their own minimum lump sums, so ask yours before you send the money. The [extra payment calculator](https://mortgage-math-us.com/tools/extra-payment-calculator/) shows the payoff side of the trade-off, and the [amortization](https://mortgage-math-us.com/glossary/amortization/) schedule shows why early principal saves the most interest. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [Fannie Mae: Re-amortized (recast) mortgages](https://singlefamily.fanniemae.com/job-aid/loan-delivery/topic/recast_mortgage.htm) _General information, not financial advice._ --- # Recording fee > A recording fee is the government charge to record your deed and mortgage in the public land records. Where it appears and how much it can change. URL: https://mortgage-math-us.com/glossary/recording-fee/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer A **recording fee** is the charge a state or local government office, usually the county recorder, collects to record your deed, mortgage or deed of trust and other loan documents in the public land records. It is listed with “Taxes and Other Government Fees” in section E on page 2 of the Loan Estimate and Closing Disclosure. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Cap on total increases for recording fees and lender-listed services | 10% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-my-final-mortgage-costs-increase-from-what-was-on-my-loan-estimate-en-172/) | Sep 11, 2024 | ## Why the documents are recorded Recording gives public notice of who owns the home and that the lender holds a [lien](https://mortgage-math-us.com/glossary/lien/) on it, which sets the lien’s priority against later claims. A title search relies on these records, and when you pay off the loan, a release of the lien is recorded the same way. Either the buyer or the seller may pay the fees, depending on the document and local practice. ## How much it can change Counties set their own fees, often per document or per page, so check your county recorder’s schedule. Between the Loan Estimate and closing, recording fees fall in the group of charges that can rise by no more than 10% in total, together with third-party services you pick from the lender’s list. If the total goes over, the lender must refund the excess. Don’t confuse the fee with a [transfer tax](https://mortgage-math-us.com/glossary/transfer-tax/) or a [mortgage recording tax](https://mortgage-math-us.com/glossary/mortgage-recording-tax/): both are also collected when documents are recorded, but they’re based on the price or the loan amount and can run far higher. See how they add up in the [closing costs guide](https://mortgage-math-us.com/buying/closing-costs/). ## Related terms - [Deed of trust](https://mortgage-math-us.com/glossary/deed-of-trust/) and [title insurance](https://mortgage-math-us.com/glossary/title-insurance/) ## Sources - [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-my-final-mortgage-costs-increase-from-what-was-on-my-loan-estimate-en-172/) — Cumulative limit on increases for recording fees and lender-listed services (Sep 11, 2024) - [CFPB: What are government recording charges for a mortgage?](https://www.consumerfinance.gov/ask-cfpb/what-are-government-recording-charges-for-a-mortgage-en-159/) _General information, not financial advice._ --- # Refinance > To refinance is to pay off your mortgage with a new loan, usually to lower the rate, change the term or take cash out. The main types and what they cost. URL: https://mortgage-math-us.com/glossary/refinance/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A refinance** replaces your current mortgage with a new loan that pays the old one off. People refinance to get a lower rate or payment, change the loan term or type, drop mortgage insurance, or borrow against their equity — and they pay closing costs again to do it. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Typical refinance costs, low end (share of principal) | 3% | [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) | Oct 28, 2026 | | Typical refinance costs, high end | 6% | [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) | Oct 28, 2026 | | 30-year fixed average | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 | ## Types of refinance *The main ways to refinance* | Type | What changes | Cash to you | |---|---|---| | [Rate-and-term](https://mortgage-math-us.com/glossary/rate-and-term-refinance/) | Rate, term or loan type | Little or none | | [Cash-out](https://mortgage-math-us.com/glossary/cash-out-refinance/) | A larger loan replaces the old one | The difference, minus costs | | [Streamline](https://mortgage-math-us.com/glossary/streamline-refinance/) (FHA, VA, USDA) | Rate or payment, with less paperwork | None or very little | ## What it costs Freddie Mac puts typical refinance costs at 3%–6% of the loan principal — $9,000 to $18,000 on a $300,000 loan — paid in cash, rolled into the balance or covered with a higher rate. A refinance pays off only if you keep the new loan past its [break-even point](https://mortgage-math-us.com/glossary/break-even-point/). Restarting a 30-year term can also raise the total interest you pay even when the monthly payment falls. Run your numbers through the [refinance break-even calculator](https://mortgage-math-us.com/tools/refinance-break-even-calculator/). ## Sources - [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) — Typical refinance closing costs, low end (share of loan principal); Typical refinance closing costs, high end (share of loan principal) (Oct 28, 2026) - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [CFPB: Should I refinance? (handout)](https://files.consumerfinance.gov/f/documents/cfpb_should_i_refinance_handout.pdf) - [Freddie Mac My Home: Costs of refinancing](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) _General information, not financial advice._ --- # Reserves > Reserves are the savings you still have after closing, counted in months of your new mortgage payment. What counts and the Fannie Mae minimums. URL: https://mortgage-math-us.com/glossary/reserves/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **Reserves** are the liquid savings you’ll still have after closing, measured in months of your new mortgage payment (principal, interest, taxes, insurance and any HOA dues). Money in checking, savings and other accounts you can draw on counts; the cash you need to close doesn’t, and some loans require a minimum number of months. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Fannie Mae minimum, second home | 2 months | [Fannie Mae Selling Guide B3-4.1-01](https://selling-guide.fanniemae.com/sel/b3-4.1-01/minimum-reserve-requirements) | Aug 7, 2024 | | Fannie Mae minimum, 2–4 units, investment property or high-DTI cash-out | 6 months | [Fannie Mae Selling Guide B3-4.1-01](https://selling-guide.fanniemae.com/sel/b3-4.1-01/minimum-reserve-requirements) | Aug 7, 2024 | ## Fannie Mae minimums *Minimum reserves on loans approved through Desktop Underwriter* | Property or transaction | Minimum | |---|---| | One-unit home you’ll live in | None, unless DU asks for more | | Second home | 2 months | | Two- to four-unit home you’ll live in, investment property, or cash-out refinance with DTI above 45% | 6 months | Owning other financed properties adds to the requirement when you buy a second home or rental, and [manually underwritten](https://mortgage-math-us.com/glossary/manual-underwriting/) loans follow the levels in Fannie Mae’s Eligibility Matrix. ## In dollars On a $360,000 home with 20% down at 7.24%, the full monthly payment is about $2,377 (try your own figures in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/)). Two months of reserves is $4,753; six months is $14,260. Even where none are required, reserves strengthen a borderline file in [automated underwriting](https://mortgage-math-us.com/glossary/automated-underwriting/) and give you a buffer after move-in. On Fannie Mae loans, a documented [gift](https://mortgage-math-us.com/glossary/gift-letter/) can count toward reserves. Planning a rental? See [buying a second home or rental](https://mortgage-math-us.com/blog/buying-a-second-home-or-rental/). ## Sources - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year) - [Fannie Mae Selling Guide B3-4.1-01](https://selling-guide.fanniemae.com/sel/b3-4.1-01/minimum-reserve-requirements) — Fannie Mae minimum reserves, second home (DU loans); Fannie Mae minimum reserves: two- to four-unit principal residence, investment property, or cash-out refinance with DTI above 45% (DU loans) (Aug 7, 2024) - [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) _General information, not financial advice._ --- # Residual income > Residual income is the money left each month after housing costs, debts and taxes. How VA loans use it alongside DTI, with the family-of-four minimums. URL: https://mortgage-math-us.com/glossary/residual-income/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **Residual income** is the money left each month after taxes, the new housing payment with estimated maintenance and utilities, and your other debt payments are taken out of your income. VA loans require it to meet a minimum set by region and family size, alongside the 41% [debt-to-income](https://mortgage-math-us.com/glossary/debt-to-income-ratio/) guideline. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | VA debt-to-income guideline | 41% | [38 CFR 36.4340](https://www.ecfr.gov/current/title-38/chapter-I/part-36/subpart-B/section-36.4340) | Oct 23, 2026 | | VA minimum, family of four, South | $1,003/mo | [38 CFR 36.4340](https://www.ecfr.gov/current/title-38/chapter-I/part-36/subpart-B/section-36.4340) | Oct 29, 2026 | | Margin above the minimum that lets DTI exceed the guideline | 20% | [38 CFR 36.4340](https://www.ecfr.gov/current/title-38/chapter-I/part-36/subpart-B/section-36.4340) | Oct 29, 2026 | ## VA minimums for a family of four *VA residual income guidelines, family of four, loans of $80,000 or more* | Region | Minimum per month | |---|---| | Northeast | $1,025/mo | | Midwest | $1,003/mo | | South | $1,003/mo | | West | $1,117/mo | Smaller households need less and larger ones more. When DTI is above 41%, the loan can still be approved without the extra review and written justification VA otherwise requires if residual income beats the guideline by at least 20%. For a family of four in the South, that means at least $1,204 a month. ## Outside VA loans The federal [ability-to-repay rule](https://mortgage-math-us.com/glossary/ability-to-repay/) lets any lender consider either DTI or residual income, but most conventional and FHA approvals rest on DTI. Residual income is still a useful personal test: a ratio can look fine while the cash left for food, childcare and savings is thin. Check yours with the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/), and see the [VA loans guide](https://mortgage-math-us.com/loan-types/va-loans/) for the rest of the program. ## Sources - [38 CFR 36.4340](https://www.ecfr.gov/current/title-38/chapter-I/part-36/subpart-B/section-36.4340) — VA residual income guideline, family of four, loans of $80,000 or more, South; VA: residual income this far above the guideline lets a loan with DTI above 41% skip the second-level review; VA debt-to-income guideline (higher ratios need documented compensating factors) (Oct 29, 2026) - [eCFR: 12 CFR 1026.43 (ability to repay and qualified mortgages)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43) _General information, not financial advice._ --- # Reverse mortgage (HECM) > A reverse mortgage lets older homeowners borrow against home equity with no monthly loan payment; the balance is repaid when they sell, move out or die. URL: https://mortgage-math-us.com/glossary/reverse-mortgage/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A reverse mortgage** is a loan against your home equity that you don’t repay month by month: interest and fees are added to the balance, and the loan comes due when the last borrower dies, sells the home or no longer lives there. Most are Home Equity Conversion Mortgages (HECMs), insured by FHA and open to borrowers aged 62 years or older. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Youngest borrower must be at least | 62 years | [24 CFR 206.33](https://www.ecfr.gov/current/title-24/subtitle-B/chapter-II/subchapter-B/part-206/subpart-B) | Oct 7, 2026 | | 2026 maximum claim amount | $1,249,125 | [HUD Mortgagee Letter 2025-22](https://www.hud.gov/sites/dfiles/hudclips/documents/2025-22hsgml.pdf) | 2026 limit | | Initial mortgage insurance premium | 2% | [HUD Mortgagee Letter 2017-12](https://www.hud.gov/sites/documents/17-12ml.pdf) | Oct 2, 2017 | | Annual mortgage insurance premium | 0.5% | [HUD Mortgagee Letter 2017-12](https://www.hud.gov/sites/documents/17-12ml.pdf) | Oct 2, 2017 | ## What you still have to pay No loan payment doesn’t mean no costs. You must keep paying [property taxes](https://mortgage-math-us.com/glossary/property-tax/) and [homeowners insurance](https://mortgage-math-us.com/glossary/homeowners-insurance/), maintain the home and live in it as your main residence; falling behind can make the loan due and lead to [foreclosure](https://mortgage-math-us.com/glossary/foreclosure/). Before applying for a HECM you must meet a HUD-approved counselor. ## What a HECM costs The FHA premiums are an initial 2% of the maximum claim amount — the home’s value up to the $1,249,125 limit — plus 0.5% a year on the balance. On a $400,000 home that’s $8,000 at closing; on a $150,000 balance, about $750 a year added to the loan. Origination fees and other closing costs come on top. Because a HECM is non-recourse, you or your heirs never owe more than the home is worth: if the balance is higher, heirs can settle by selling for at least 95% of the appraised value. The [reverse mortgages guide](https://mortgage-math-us.com/loan-types/reverse-mortgages/) covers payout options. ## Related terms - [Home equity](https://mortgage-math-us.com/glossary/home-equity/) ## Sources - [HUD Mortgagee Letter 2017-12](https://www.hud.gov/sites/documents/17-12ml.pdf) — HECM initial mortgage insurance premium (share of maximum claim amount); HECM annual mortgage insurance premium (share of balance) (Oct 2, 2017) - [24 CFR 206.33](https://www.ecfr.gov/current/title-24/subtitle-B/chapter-II/subchapter-B/part-206/subpart-B) — HECM reverse mortgage: youngest borrower must be at least (Oct 7, 2026) - [HUD Mortgagee Letter 2025-22](https://www.hud.gov/sites/dfiles/hudclips/documents/2025-22hsgml.pdf) — 2026 HECM maximum claim amount (2026 limit) - [CFPB](https://www.consumerfinance.gov/ask-cfpb/will-my-children-be-able-to-keep-my-home-after-i-die-if-i-have-a-reverse-mortgage-loan-en-242/) — Heirs can settle a HECM larger than the home’s value by selling for at least this share of the appraised value (Aug 28, 2026) - [CFPB: What is a reverse mortgage?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-reverse-mortgage-en-224/) - [HUD: FHA reverse mortgage for seniors (HECM)](https://www.hud.gov/hud-partners/single-family-hecmhome) _General information, not financial advice._ --- # Right of rescission > The right of rescission lets you cancel a refinance, home equity loan or HELOC on your main home shortly after closing. Who has it and how to use it. URL: https://mortgage-math-us.com/glossary/right-of-rescission/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **The right of rescission** is your federal right under the Truth in Lending Act to cancel certain loans secured by your principal home — most refinances, home equity loans and HELOCs — within 3 business days after closing, without penalty. It doesn’t apply to a loan used to buy the home. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Time to cancel | 3 business days | [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) | Aug 8, 2024 | | Lender must refund and release the lien within | 20 days | [CFPB; 12 CFR 1026.15(d)(2) and 1026.23(d)(2)](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) | Oct 28, 2026 | | Right lasts up to this long if disclosures were missing | 3 years | [12 CFR 1026.15(a)(3) and 1026.23(a)(3)](https://www.consumerfinance.gov/rules-policy/regulations/1026/15/) | Oct 28, 2026 | ## Counting the days The clock starts only after the last of three events: you sign, you receive the Truth in Lending disclosures, and you receive two copies of the rescission notice. Saturdays count as business days; Sundays and federal holidays don’t. Sign on a Friday with no holiday in between and your deadline is midnight on Tuesday. The lender won’t release the money until the period has passed. If the required notice or disclosures were never given, the right can last up to 3 years. ## How to cancel, and when you can’t Notify the lender in writing — a phone call doesn’t count — and keep a copy. The lender then has 20 days to return any fees and cancel its [lien](https://mortgage-math-us.com/glossary/lien/). There is no right of rescission on a purchase loan, on a second home or rental, or on a refinance with your current lender except for any new money borrowed. It does cover a [cash-out refinance](https://mortgage-math-us.com/glossary/cash-out-refinance/), a [home equity loan](https://mortgage-math-us.com/glossary/home-equity-loan/) and a [HELOC](https://mortgage-math-us.com/glossary/heloc/) on your main home. The [refinance closing costs guide](https://mortgage-math-us.com/refinancing/refinance-closing-costs/) shows where it fits in the timeline. ## Sources - [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) — Right to cancel a refinance or home equity loan on your principal home; After you cancel, the lender must return your money and release the lien within (Aug 8, 2024) - [12 CFR 1026.15(a)(3) and 1026.23(a)(3)](https://www.consumerfinance.gov/rules-policy/regulations/1026/15/) — Right to cancel lasts up to this long if the required notice or disclosures were not given (Oct 28, 2026) - [CFPB: How long do I have to rescind?](https://www.consumerfinance.gov/ask-cfpb/how-long-do-i-have-to-rescind-when-does-the-right-of-rescission-start-en-187/) - [12 CFR 1026.23: Right of rescission](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-C/section-1026.23) _General information, not financial advice._ --- # Seller concessions > Seller concessions are costs the seller pays for the buyer, usually closing costs. How much Fannie Mae and VA loans allow and what they can’t cover. URL: https://mortgage-math-us.com/glossary/seller-concessions/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **Seller concessions** are costs the seller agrees to pay on the buyer’s behalf, most often closing costs and prepaid items, usually written into the contract as a seller credit. Each loan program caps them: on a Fannie Mae loan, from 3% to 9% of the price (or appraised value, if lower) for a home you’ll live in, depending on your down payment. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Fannie Mae, less than 10% down (LTV/CLTV above 90%) | 3% | [Fannie Mae Selling Guide B3-4.1-02](https://selling-guide.fanniemae.com/sel/b3-4.1-02/interested-party-contributions-ipcs) | May 7, 2025 | | Fannie Mae, LTV/CLTV 75.01–90% | 6% | [Fannie Mae Selling Guide B3-4.1-02](https://selling-guide.fanniemae.com/sel/b3-4.1-02/interested-party-contributions-ipcs) | May 7, 2025 | | Fannie Mae, 25% or more down | 9% | [Fannie Mae Selling Guide B3-4.1-02](https://selling-guide.fanniemae.com/sel/b3-4.1-02/interested-party-contributions-ipcs) | May 7, 2025 | | VA limit (normal closing costs not counted) | 4% | [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) | Oct 28, 2026 | ## Limits and an example Fannie Mae calls these interested party contributions. Its caps are 3% above 90% LTV, 6% from 75.01% to 90%, 9% at 75% or less, and 2% on an investment property. VA loans cap concessions at 4% of the home’s reasonable value, but the seller paying your normal closing costs doesn’t count toward that limit. FHA and USDA set their own caps. On a $360,000 home with 10% down, a Fannie Mae loan allows up to $21,600; with 5% down the cap falls to $10,800. ## What concessions can’t cover Under Fannie Mae’s rules, a seller credit can’t pay your down payment or count toward [reserves](https://mortgage-math-us.com/glossary/reserves/), and it can’t exceed your actual closing costs. Anything above the cap or your costs is treated as a price reduction, which lowers the value used for [loan-to-value](https://mortgage-math-us.com/glossary/loan-to-value-ratio/). Check that the seller credit on page 3 of the Closing Disclosure matches what you negotiated. For other ways to cut the bill, see [how to lower closing costs](https://mortgage-math-us.com/blog/how-to-lower-closing-costs/). ## Related terms - [Closing costs](https://mortgage-math-us.com/glossary/closing-costs/) and [lender credit](https://mortgage-math-us.com/glossary/lender-credit/); estimate yours with the [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/) ## Sources - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [Fannie Mae Selling Guide B3-4.1-02](https://selling-guide.fanniemae.com/sel/b3-4.1-02/interested-party-contributions-ipcs) — Fannie Mae: most an interested party may pay toward closing costs, principal residence or second home, LTV/CLTV 75.01–90%; Fannie Mae: most an interested party may pay toward closing costs, principal residence or second home, LTV/CLTV above 90%; Fannie Mae: most an interested party may pay toward closing costs, principal residence or second home, LTV/CLTV 75% or less (May 7, 2025) - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) — VA limit on seller concessions (share of the home’s reasonable value) (Oct 28, 2026) - [CFPB: Closing Disclosure explainer (seller credits)](https://www.consumerfinance.gov/owning-a-home/closing-disclosure/) _General information, not financial advice._ --- # Short sale > A short sale is selling your home for less than the mortgage balance, with the lender’s approval. How the shortfall is handled and the wait afterward. URL: https://mortgage-math-us.com/glossary/short-sale/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A short sale** is the sale of your home for less than what you owe on the mortgage, with your lender’s approval to accept the sale proceeds — after selling costs — as payment. It is one of the ways to leave a home you can no longer afford without going through [foreclosure](https://mortgage-math-us.com/glossary/foreclosure/). ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Fannie Mae waiting period after a short sale | 4 years | [Fannie Mae Selling Guide B3-5.3-07](https://selling-guide.fanniemae.com/sel/b3-5.3-07/significant-derogatory-credit-events-waiting-periods-and-re-establishing-credit) | Aug 7, 2019 | | With documented extenuating circumstances | 2 years | [Fannie Mae Selling Guide B3-5.3-07](https://selling-guide.fanniemae.com/sel/b3-5.3-07/significant-derogatory-credit-events-waiting-periods-and-re-establishing-credit) | Aug 7, 2019 | | Compare: waiting period after a foreclosure | 7 years | [Fannie Mae Selling Guide B3-5.3-07](https://selling-guide.fanniemae.com/sel/b3-5.3-07/significant-derogatory-credit-events-waiting-periods-and-re-establishing-credit) | Aug 7, 2019 | ## Example: the shortfall You owe $320,000 and find a buyer at $300,000. After $20,000 of selling costs, $280,000 goes to the lender, leaving $40,000 unpaid. The lender (and any second-lien holder) must approve the price and the closing figures before the sale can close. Owing more than the home is worth is the risk the [home equity risks guide](https://mortgage-math-us.com/home-equity/home-equity-risks/) warns about. Ask in writing whether the lender will waive that deficiency or can still collect it; rules vary by state and loan. Debt that is forgiven can count as taxable income unless an exclusion applies, so check IRS guidance or a tax professional. ## Credit and future borrowing A short sale still hurts your credit, but the wait for a new conventional loan is shorter than after a foreclosure. Fannie Mae generally requires 4 years (2 years with documented extenuating circumstances), compared with 7 years after a foreclosure. Your servicer may offer a [loan modification](https://mortgage-math-us.com/glossary/loan-modification/) or [forbearance](https://mortgage-math-us.com/glossary/forbearance/) first, or a deed-in-lieu, where you hand the home back in exchange for canceling the debt. [Getting a mortgage after foreclosure](https://mortgage-math-us.com/blog/mortgage-after-bankruptcy-or-foreclosure/) covers rebuilding credit after either. ## Sources - [Fannie Mae Selling Guide B3-5.3-07](https://selling-guide.fanniemae.com/sel/b3-5.3-07/significant-derogatory-credit-events-waiting-periods-and-re-establishing-credit) — Fannie Mae waiting period after a preforeclosure (short) sale or deed-in-lieu; Fannie Mae waiting period after a preforeclosure (short) sale or deed-in-lieu, with documented extenuating circumstances; Fannie Mae waiting period after a foreclosure (Aug 7, 2019) - [Freddie Mac My Home: Options to leave your home](https://myhome.freddiemac.com/getting-help/options-to-leave) - [CFPB: If I can’t pay my mortgage loan, what are my options?](https://www.consumerfinance.gov/ask-cfpb/if-i-cant-pay-my-mortgage-loan-what-are-my-options-en-268/) _General information, not financial advice._ --- # Streamline refinance > A streamline refinance replaces an FHA, VA or USDA loan with a new loan of the same type using reduced credit and income paperwork. Rules and limits. URL: https://mortgage-math-us.com/glossary/streamline-refinance/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A streamline refinance** replaces an existing government-backed mortgage with a new loan of the same type using reduced documentation and underwriting — often without full income verification or a new appraisal. FHA’s Streamline Refinance and the VA’s [IRRRL](https://mortgage-math-us.com/glossary/irrrl/) are the best-known versions; USDA has a similar streamlined option for its loans. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | FHA: days since the current loan closed | 210 days | [FDIC Affordable Mortgage Lending Guide (summary of HUD Handbook 4000.1)](https://www.fdic.gov/system/files/2024-07/streamline-refinance.pdf) | Oct 28, 2026 | | FHA: monthly payments already made | 6 | [FDIC Affordable Mortgage Lending Guide (summary of HUD Handbook 4000.1)](https://www.fdic.gov/system/files/2024-07/streamline-refinance.pdf) | Oct 28, 2026 | | FHA: most cash you can take out | $500 | [HUD: Streamline Refinance](https://hud.gov/hud-partners/single-family-streamline) | Oct 28, 2026 | | Partial upfront MIP refund on an FHA-to-FHA refinance within | 3 years | [HUD FHA fact sheet](https://www.hud.gov/hud-partners/housing-fha-fact-sheet) | Oct 28, 2026 | ## FHA Streamline rules - The current loan must be FHA-insured and not delinquent. - At least 210 days must have passed since it closed, with 6 monthly payments made. - The refinance must give you a net tangible benefit, such as a lower combined rate and MIP or a move from an adjustable to a fixed rate. - You can’t take out more than $500 in cash. You pay a new [upfront mortgage insurance premium](https://mortgage-math-us.com/glossary/upfront-mortgage-insurance-premium/), but part of the old one is refunded if you refinance within 3 years of the earlier loan. ## “Streamline” isn’t “free” The word refers to paperwork, not price. There are still closing costs, paid in cash, rolled into the loan where allowed, or covered by a higher rate through lender credits. Check the [break-even point](https://mortgage-math-us.com/glossary/break-even-point/) before you sign. For a conventional loan, the usual route is a regular [rate-and-term refinance](https://mortgage-math-us.com/glossary/rate-and-term-refinance/). The [streamline refinance guide](https://mortgage-math-us.com/refinancing/streamline-refinance/) compares the FHA and VA versions. ## Sources - [FDIC Affordable Mortgage Lending Guide (summary of HUD Handbook 4000.1)](https://www.fdic.gov/system/files/2024-07/streamline-refinance.pdf) — FHA Streamline: days that must pass since the current loan closed; FHA Streamline: monthly payments already made (Oct 28, 2026) - [HUD: Streamline Refinance](https://hud.gov/hud-partners/single-family-streamline) — FHA Streamline: most cash a borrower can take out (Oct 28, 2026) - [HUD FHA fact sheet](https://www.hud.gov/hud-partners/housing-fha-fact-sheet) — FHA upfront premium is partly refunded on an FHA-to-FHA refinance within (Oct 28, 2026) - [HUD: Streamline refinance](https://hud.gov/hud-partners/single-family-streamline) - [VA: Interest Rate Reduction Refinance Loan](https://www.va.gov/housing-assistance/home-loans/loan-types/interest-rate-reduction-loan/) _General information, not financial advice._ --- # Title insurance > Title insurance covers losses from title problems that predate your purchase, like old liens or ownership claims. Lender’s vs owner’s policies explained. URL: https://mortgage-math-us.com/glossary/title-insurance/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **Title insurance** protects against losses from problems with a property’s title that existed before you bought it, such as a previous owner’s unpaid taxes, a contractor’s unpaid bill or someone else’s claim to the home. Lenders usually require a lender’s policy; an owner’s policy, which protects you, is generally optional. ## Two policies, two beneficiaries *Lender’s and owner’s title insurance compared* | | Lender’s policy | Owner’s policy | |---|---|---| | Protects | The lender’s loan | You and your equity | | Required? | Usually, by the lender | Generally optional | | Shown on the Loan Estimate | Section B or C | Section H, “Other” | | How it’s paid | One premium at closing | One premium at closing | The lender’s policy does nothing for you: if a valid claim surfaces, you’re the one who must deal with it, and only an owner’s policy covers your stake. Who pays for the owner’s policy, buyer or seller, follows local custom and the purchase contract. ## Shopping for it The CFPB notes you can usually shop for title insurance separately from your mortgage, and buying both policies from the same company is usually cheaper than buying them separately. In a few states, including [Texas](https://mortgage-math-us.com/location/texas/), the state sets the premium rates, so the premium itself doesn’t vary between title companies. The title company also runs the search for existing [liens](https://mortgage-math-us.com/glossary/lien/) before closing. Compare the totals in the [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/). ## Related terms - [Closing costs](https://mortgage-math-us.com/glossary/closing-costs/) and [recording fee](https://mortgage-math-us.com/glossary/recording-fee/) ## Sources - [CFPB: What is owner’s title insurance?](https://www.consumerfinance.gov/ask-cfpb/what-is-owners-title-insurance-en-164/) - [CFPB: What is lender’s title insurance?](https://www.consumerfinance.gov/ask-cfpb/what-is-lenders-title-insurance-en-163/) _General information, not financial advice._ --- # Transfer tax > A transfer tax is a state or local tax on the sale of real estate, based on the price and paid when the deed is recorded. Rates and payers by state. URL: https://mortgage-math-us.com/glossary/transfer-tax/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer A **transfer tax** is a state or local tax charged when real estate changes hands, usually a percentage of the sale price collected when the deed is recorded. Rates and the party who pays (buyer, seller or both) are set by state law, local custom and your contract, and 16 states have no statewide transfer tax at all. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Delaware statewide rate | 2.5% | [Delaware Division of Revenue](https://revenue.delaware.gov/first-time-home-buyer-tax-credit/) | Apr 16, 2024 | | Pennsylvania state rate | 1% | [Pennsylvania Department of Revenue](https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/realty-transfer-tax) | Oct 28, 2026 | | Washington, first bracket | 1.1% | [Washington Department of Revenue](https://dor.wa.gov/taxes-rates/other-taxes/real-estate-excise-tax) | Oct 28, 2026 | ## What it costs in a few states *Statewide transfer tax on a $360,000 sale (local taxes not included)* | State | Rate on file | Tax | Paid by (default) | |---|---|---|---| | Delaware | 2.5% | $9,000 | Split | | Washington | 1.1% | $3,960 | Seller | | Pennsylvania | 1% | $3,600 | Split | | New Hampshire | 1.5% | $5,400 | Split | | Vermont | 0.5% | $3,352 | Buyer | | Michigan | 0.86% | $3,096 | Seller | | Texas | 0% | $0 | — | Washington and Vermont use graduated rates, so the rate shown is the first bracket; the tax column applies the full schedule. The payer is the default under state law or custom, and your purchase contract can change it. Many counties and cities add their own tax on top, so check your [state page](https://mortgage-math-us.com/location/), for example [Pennsylvania](https://mortgage-math-us.com/location/pennsylvania/). ## On your Loan Estimate Transfer taxes appear in section E, “Taxes and Other Government Fees.” They’re in the group of charges that can’t increase at all from the Loan Estimate to closing unless a valid changed circumstance occurs. A [mortgage recording tax](https://mortgage-math-us.com/glossary/mortgage-recording-tax/), charged on the loan rather than the price, is a separate line in some states. The [closing cost calculator](https://mortgage-math-us.com/tools/closing-cost-calculator/) computes both for your state. ## Related terms - [Recording fee](https://mortgage-math-us.com/glossary/recording-fee/) and [closing costs](https://mortgage-math-us.com/glossary/closing-costs/) ## Sources - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [Texas Constitution, Art. VIII §29](https://capitol.texas.gov/tlodocs/84R/amendments/html/SJ00001H21.HTM) — State real estate transfer tax (Jan 1, 2016) - [Delaware Division of Revenue](https://revenue.delaware.gov/first-time-home-buyer-tax-credit/) — State real estate transfer tax (Apr 16, 2024) - [Washington Department of Revenue](https://dor.wa.gov/taxes-rates/other-taxes/real-estate-excise-tax) — State real estate transfer tax (Oct 28, 2026) - [Pennsylvania Department of Revenue](https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/realty-transfer-tax) — State real estate transfer tax (Oct 28, 2026) - [New Hampshire Department of Revenue Administration](https://www.revenue.nh.gov/taxes-glance/real-estate-transfer-tax) — State real estate transfer tax (Oct 28, 2026) - [Vermont Department of Taxes](https://tax.vermont.gov/property/property-transfer-tax) — State real estate transfer tax (Oct 28, 2026) - [Michigan Department of Treasury](https://www.michigan.gov/taxes/business-taxes/misc/state-real-estate-transfer-tax-srett) — State real estate transfer tax (Oct 28, 2026) - [CFPB: Can my final mortgage costs increase from what was on my Loan Estimate?](https://www.consumerfinance.gov/ask-cfpb/can-my-final-mortgage-costs-increase-from-what-was-on-my-loan-estimate-en-172/) _General information, not financial advice._ --- # Underwriting > Underwriting is the lender’s review of your income, assets, debts, credit and the home to decide whether to approve the mortgage and on what terms. URL: https://mortgage-math-us.com/glossary/underwriting/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **Underwriting** is the lender’s review of your mortgage application to decide whether to approve the loan and on what terms. The underwriter verifies your income, assets, debts and credit history, checks the property’s value, and tests the file against the rules of the agency or investor that will buy or insure the loan. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Fannie Mae: oldest a credit, income or asset document can be at closing | 4 months | [Fannie Mae Selling Guide B1-1-03](https://selling-guide.fanniemae.com/sel/b1-1-03/allowable-age-credit-documents-and-federal-income-tax-returns) | Apr 2, 2025 | | Fannie Mae: employment re-verified within this many days of closing | 10 business days | [Fannie Mae Selling Guide B3-3.1-04](https://selling-guide.fanniemae.com/sel/b3-3.1-04/verbal-verification-employment) | Oct 7, 2026 | ## What the underwriter checks The federal [ability-to-repay rule](https://mortgage-math-us.com/glossary/ability-to-repay/) requires most lenders to make a reasonable, good-faith determination that you can repay, so they must consider and document your income, assets, employment, credit history and monthly expenses. In practice that means pay stubs, W-2s or tax returns, bank statements, a credit report and an [appraisal](https://mortgage-math-us.com/glossary/appraisal/). On a Fannie Mae loan, those documents can be no more than 4 months old on the note date, and your employment is re-verified within 10 business days before closing. ## Possible outcomes Most files run through [automated underwriting](https://mortgage-math-us.com/glossary/automated-underwriting/) first, and an underwriter then reviews the findings. The result is an approval, a conditional approval listing what’s still needed (a letter explaining a credit event, a missing bank statement, a payoff), a suspended file waiting for information, or a denial, which must come with an adverse action notice. Clearing conditions quickly keeps your closing date on track. Because the lender can re-check your credit and job before closing, avoid new debt, job changes or large unexplained deposits until the loan funds. The [pre-approval guide](https://mortgage-math-us.com/buying/pre-approval/) shows how to get the file ready early. ## Related terms - [Debt-to-income ratio](https://mortgage-math-us.com/glossary/debt-to-income-ratio/) and [credit score](https://mortgage-math-us.com/glossary/credit-score/) ## Sources - [Fannie Mae Selling Guide B1-1-03](https://selling-guide.fanniemae.com/sel/b1-1-03/allowable-age-credit-documents-and-federal-income-tax-returns) — Fannie Mae: credit, income, employment and asset documents may be no older than this on the note date (Apr 2, 2025) - [Fannie Mae Selling Guide B3-3.1-04](https://selling-guide.fanniemae.com/sel/b3-3.1-04/verbal-verification-employment) — Fannie Mae: employment re-verified no more than this many business days before the note date (Oct 7, 2026) - [CFPB: What is the ability-to-repay rule?](https://www.consumerfinance.gov/ask-cfpb/what-is-the-ability-to-repay-rule-en-1787/) _General information, not financial advice._ --- # Upfront mortgage insurance premium (UFMIP) > UFMIP is FHA’s one-time mortgage insurance charge, a share of the base loan paid at closing or financed. How much it adds and when part is refunded. URL: https://mortgage-math-us.com/glossary/upfront-mortgage-insurance-premium/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **The upfront mortgage insurance premium (UFMIP)** is a one-time charge of 1.75% of the base loan amount on most FHA loans. You can pay it in cash at closing, but most borrowers finance it, adding it to the loan balance. It comes on top of the annual [mortgage insurance premium](https://mortgage-math-us.com/glossary/mortgage-insurance-premium/). ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Upfront premium (share of the base loan) | 1.75% | [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) | Feb 22, 2023 | | Minimum FHA down payment | 3.5% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 | | Partial refund on an FHA-to-FHA refinance within | 3 years | [HUD FHA fact sheet](https://www.hud.gov/hud-partners/housing-fha-fact-sheet) | Oct 28, 2026 | ## Example Buy a $361,000 home with the minimum 3.5% down and the base loan is $348,365. The UFMIP is $6,096. Financed, it brings the loan to $354,461, which adds about $42 to the monthly payment at 7.24% — and roughly $8,860 of interest over 30 years on top of the premium itself. Paying it in cash avoids that interest but raises your [cash to close](https://mortgage-math-us.com/glossary/cash-to-close/). FHA lets you finance the premium on top of the base loan, so it doesn’t eat into your down payment — but it does raise the balance you start with, so your [loan-to-value ratio](https://mortgage-math-us.com/glossary/loan-to-value-ratio/) begins slightly higher. ## Refund on an FHA-to-FHA refinance The premium isn’t refunded when you sell or pay off the loan. If you refinance into a new FHA loan within 3 years, part of the original UFMIP is credited toward the new one, and the credit shrinks each month. That matters most for an FHA [streamline refinance](https://mortgage-math-us.com/glossary/streamline-refinance/). The [FHA loans guide](https://mortgage-math-us.com/loan-types/fha-loans/) covers the rest of the program’s costs. ## Sources - [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026) - [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year) - [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment (Oct 28, 2026) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA upfront mortgage insurance premium (Feb 22, 2023) - [HUD FHA fact sheet](https://www.hud.gov/hud-partners/housing-fha-fact-sheet) — FHA upfront premium is partly refunded on an FHA-to-FHA refinance within (Oct 28, 2026) - [CFPB: What is mortgage insurance and how does it work?](https://www.consumerfinance.gov/ask-cfpb/what-is-mortgage-insurance-and-how-does-it-work-en-1953/) _General information, not financial advice._ --- # USDA loan > A USDA loan is a mortgage guaranteed by USDA Rural Development for moderate-income buyers in eligible rural areas, with no down payment required. URL: https://mortgage-math-us.com/glossary/usda-loan/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A USDA loan** — formally a Single Family Housing Guaranteed Loan — is a mortgage from an approved private lender that USDA Rural Development guarantees, letting eligible buyers finance the full price with 0% down. It is limited to homes in eligible rural areas and to households earning no more than 115% of the area median income. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Household income limit (share of area median) | 115% | [USDA Rural Development](https://www.rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-guaranteed-loan-program) | Oct 28, 2026 | | Share of the loan USDA guarantees to the lender | 90% | [USDA Rural Development](https://www.rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-guaranteed-loan-program) | Oct 29, 2026 | | Upfront guarantee fee | 1% | [USDA Rural Development](https://www.rd.usda.gov/media/file/download/usda-rd-sfh-guarantee-loan-program-101-jan-2026.pdf) | FY2026 | | Annual fee | 0.35% | [USDA Rural Development](https://www.rd.usda.gov/media/file/download/usda-rd-sfh-guarantee-loan-program-101-jan-2026.pdf) | FY2026 | ## Two eligibility tests: place and income The address must fall in an area USDA classes as eligible — mostly rural places and small towns — which you can check on USDA’s eligibility map. The income test counts the whole household, not just the people on the loan. The home must be your primary residence. Because USDA guarantees 90% of the loan to the lender, the program can do without a down payment. Separately, USDA lends directly to low- and very-low-income buyers through its Direct loan program. ## What the guarantee costs Instead of mortgage insurance, you pay an upfront guarantee fee of 1%, which can be financed, and an annual fee of 0.35% collected in monthly payments. On a $250,000 loan, that’s $2,500 upfront and about $875 in the first year, roughly $73 a month, against about $115 a month of FHA [mortgage insurance premium](https://mortgage-math-us.com/glossary/mortgage-insurance-premium/) at 0.55%. See the [USDA loans guide](https://mortgage-math-us.com/loan-types/usda-loans/) for the debt ratios and how to check an address. ## Related terms - [Down payment](https://mortgage-math-us.com/glossary/down-payment/) - [FHA loan](https://mortgage-math-us.com/glossary/fha-loan/) and [VA loan](https://mortgage-math-us.com/glossary/va-loan/), the other government-backed options ## Sources - [USDA Rural Development](https://www.rd.usda.gov/media/file/download/usda-rd-sfh-guarantee-loan-program-101-jan-2026.pdf) — USDA guaranteed loan upfront guarantee fee; USDA guaranteed loan annual fee (FY2026) - [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA annual MIP, 30-year loan, more than 95% LTV (Feb 22, 2023) - [USDA Rural Development](https://www.rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-guaranteed-loan-program) — USDA guaranteed loan down payment; USDA guaranteed loan income limit (share of area median income); USDA guaranteed loan: loan note guarantee to approved lenders (Oct 28, 2026) - [USDA Rural Development: Single Family Housing Guaranteed Loan Program](https://www.rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-guaranteed-loan-program) _General information, not financial advice._ --- # VA entitlement > VA entitlement is the amount the VA will guarantee to your lender. How full and remaining entitlement work and when you need a down payment. URL: https://mortgage-math-us.com/glossary/va-entitlement/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **VA entitlement** is the amount the Department of Veterans Affairs will guarantee to a lender on your behalf if you default on a VA loan. Most lenders want your entitlement, a down payment, or both to cover 25% of the loan, so the entitlement you have available decides how much you can borrow with no money down. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | VA guaranty on most loans | 25% | [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/loan-limits/) | Aug 12, 2025 | | County limit used in the example (2026 baseline) | $832,750 | [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) | 2026 limit | ## Full vs remaining entitlement You have **full entitlement** if you’ve never used the benefit or had it restored, typically by selling the home and paying off the earlier VA loan. With full entitlement the VA sets no loan limit; the lender decides what you can afford. You have **remaining entitlement** if part of it is still tied up, for example in a VA loan you haven’t paid off. The guaranty is then based on your county’s one-unit [conforming loan limit](https://mortgage-math-us.com/glossary/conforming-loan-limit/). Your Certificate of Eligibility shows what you have. > **Worked example: Remaining entitlement in a county at $832,750** > > 25% of the county limit is $208,188. Subtract $50,000 already used and $158,188 remains. Most lenders would lend up to 4 times that — $632,750 — with no down payment. On a $700,000 loan, they would want $16,813 down to fill the gap. See the [VA loans guide](https://mortgage-math-us.com/loan-types/va-loans/#entitlement) and [using a VA loan twice](https://mortgage-math-us.com/blog/using-a-va-loan-twice/). ## Related terms - [VA loan](https://mortgage-math-us.com/glossary/va-loan/) and [VA funding fee](https://mortgage-math-us.com/glossary/va-funding-fee/) ## Sources - [FHFA](https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026) — 2026 baseline conforming loan limit (one-unit) (2026 limit) - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/loan-limits/) — VA guaranty on loans above $144,000 (share of the loan amount) (Aug 12, 2025) - [VA: Loan limits and entitlement](https://www.va.gov/housing-assistance/home-loans/loan-limits/) _General information, not financial advice._ --- # VA funding fee > The VA funding fee is a one-time charge on most VA-backed loans, set by loan type, down payment and prior use. Current rates and who is exempt. URL: https://mortgage-math-us.com/glossary/va-funding-fee/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **The VA funding fee** is a one-time charge, set as a percentage of the loan amount, that most borrowers pay on a VA-backed home loan. The rate depends on the loan type, your down payment and whether you’ve used the benefit before; you can pay it at closing or finance it. VA loans have no monthly mortgage insurance. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Purchase, first use, less than 5% down | 2.15% | [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) | Apr 7, 2023 | | Purchase, after first use, less than 5% down | 3.3% | [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) | Apr 7, 2023 | | Purchase, 10% or more down | 1.25% | [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) | Apr 7, 2023 | | IRRRL (streamline refinance) | 0.5% | [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) | Apr 7, 2023 | ## Funding fee rates | Loan | First use | After first use | |---|---|---| | Purchase, less than 5% down | 2.15% | 3.3% | | Purchase, 5% to under 10% down | 1.5% | 1.5% | | Purchase, 10% or more down | 1.25% | 1.25% | | Cash-out refinance | 2.15% | 3.3% | | [IRRRL](https://mortgage-math-us.com/glossary/irrrl/) | 0.5% | 0.5% | On a $350,000 purchase with no down payment, the fee is $7,525 the first time and $11,550 on a later use. Putting 10% down cuts it to $3,938. ## Who doesn’t pay You’re exempt if you receive VA compensation for a service-connected disability, or are eligible for it but get retirement or active-duty pay instead; if you’re an eligible surviving spouse receiving Dependency and Indemnity Compensation; or if you’re an active-duty Purple Heart recipient. If a disability rating is later awarded with an effective date before your closing, you may get a refund. See the [VA loans guide](https://mortgage-math-us.com/loan-types/va-loans/), [VA entitlement](https://mortgage-math-us.com/glossary/va-entitlement/) and [using a VA loan twice](https://mortgage-math-us.com/blog/using-a-va-loan-twice/). ## Sources - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) — VA funding fee, first use, less than 5% down; VA funding fee, after first use, less than 5% down; VA funding fee, 10% or more down (Apr 7, 2023) - [VA: Funding fee and closing costs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) _General information, not financial advice._ --- # VA loan > A VA loan is a mortgage from a private lender guaranteed by the Department of Veterans Affairs, often with no down payment or monthly mortgage insurance. URL: https://mortgage-math-us.com/glossary/va-loan/ Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team ## Quick answer **A VA loan** is a home loan made by a private lender and partly guaranteed by the U.S. Department of Veterans Affairs for eligible veterans, service members and some surviving spouses. The guaranty lets lenders offer 0% down when the price doesn’t exceed the appraised value, with no monthly mortgage insurance. ## Key facts | Fact | Value | Source | As of | |---|---|---|---| | Down payment VA requires | 0% | [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/loan-types/purchase-loan/) | Jan 7, 2026 | | VA guaranty on most loans | 25% | [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/loan-limits/) | Aug 12, 2025 | | Funding fee, first use, under 5% down | 2.15% | [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) | Apr 7, 2023 | | VA debt-to-income guideline | 41% | [38 CFR 36.4340](https://www.ecfr.gov/current/title-38/chapter-I/part-36/subpart-B/section-36.4340) | Oct 23, 2026 | ## The guaranty and the funding fee Instead of mortgage insurance, the VA promises to repay the lender part of any loss — up to 25% of the loan on most loans — through your [VA entitlement](https://mortgage-math-us.com/glossary/va-entitlement/). In exchange, most borrowers pay a one-time [VA funding fee](https://mortgage-math-us.com/glossary/va-funding-fee/), which can be financed. On a first-use $350,000 loan with less than 5% down, the fee at 2.15% is $7,525. Veterans who receive VA disability compensation, and some others, are exempt. ## Who qualifies Eligibility depends on your service history or status as a surviving spouse; the VA confirms it with a Certificate of Eligibility (COE). The lender still underwrites you: VA uses a debt-to-income guideline of 41% alongside a [residual income](https://mortgage-math-us.com/glossary/residual-income/) test, and the home must be your primary residence. The [VA loans guide](https://mortgage-math-us.com/loan-types/va-loans/) covers the fee table and entitlement in depth. ## Related terms - [IRRRL](https://mortgage-math-us.com/glossary/irrrl/), the VA streamline refinance ## Sources - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) — VA funding fee, first use, less than 5% down (Apr 7, 2023) - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/loan-types/purchase-loan/) — VA purchase loan down payment (price at or below appraised value) (Jan 7, 2026) - [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/loan-limits/) — VA guaranty on loans above $144,000 (share of the loan amount) (Aug 12, 2025) - [38 CFR 36.4340](https://www.ecfr.gov/current/title-38/chapter-I/part-36/subpart-B/section-36.4340) — VA debt-to-income guideline (higher ratios need documented compensating factors) (Oct 23, 2026) - [CFPB: What is a VA loan?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-va-loan-en-113/) - [VA: Purchase loan](https://www.va.gov/housing-assistance/home-loans/loan-types/purchase-loan/) _General information, not financial advice._ --- # About MortgageMath US > Who runs MortgageMath US, what the site covers and how every number is researched, sourced, dated and reviewed before it is published. URL: https://mortgage-math-us.com/about/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Who we are MortgageMath US is an independent website about home loans in the United States, published by an independent publisher with no ties to any lender, broker, real estate brokerage or insurer. Pages are written and maintained by our editorial team. We don’t take applications, sell leads or make loans; the site exists to explain the numbers so readers can make their own decisions with a lender. ## What the site covers We focus on the questions people ask before and during a mortgage: how much house they can afford, what the monthly payment will be, whether refinancing is worth it, which loan type fits and what help their state offers. The site is organised into five topic hubs — loan types, buying, refinancing, home equity and first-time buyers — plus a page for every state and Washington, DC, twenty major housing markets, seven calculators, a glossary and a blog. ## How the numbers work Every figure on the site lives in one database table with its value, unit, region, source link and as-of date. Pages pull numbers from that table when they are displayed, so when a source publishes an update — a new conforming loan limit, a new week of Freddie Mac’s rate survey, a new year of Census data — one change updates every page that uses it. You can see the whole table in our facts API. - **Official sources first:** FHFA, HUD, the CFPB, the US Census Bureau, Freddie Mac, Fannie Mae, VA, USDA and state housing finance agencies. - **Dates on everything:** each number shows when it was published or last checked. - **No invented figures:** if we can’t source a number, we leave it out rather than estimate it. Read the full [editorial policy](https://mortgage-math-us.com/editorial-policy/) for how pages are researched, reviewed and corrected. ## How we make money The site is free to read. It may show clearly labelled display advertising; advertisers never choose, review or influence what we write. See the [advertising disclosure](https://mortgage-math-us.com/advertising-disclosure/). ## Contact Spotted an error or out-of-date figure? Use the [contact page](https://mortgage-math-us.com/contact/) — corrections are our first priority. ## Sources _General information, not financial advice._ --- # Advertising disclosure > How MortgageMath US is funded, how ads are labelled and kept separate from editorial content, and what advertisers can and cannot influence. URL: https://mortgage-math-us.com/advertising-disclosure/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## How the site is funded MortgageMath US is free to read. To pay for research and hosting, the site may display advertising served by networks such as Google AdSense. Ads may come from mortgage lenders, insurers, real estate services and other companies. ## How ads are shown - Every ad sits in a reserved box labelled **“Advertisement”**, separate from the article text. - Ads never appear on our trust pages, such as this one, the privacy policy or the editorial policy. - We do not style ads to look like navigation, buttons or our own content, and we never ask readers to click them. - Ad boxes have a fixed size, so they never push the page around while you read. ## What advertisers can’t do Advertisers and ad networks do not choose topics, see content before it is published, or influence which loans, lenders or programs we mention. We do not accept paid placements, sponsored rankings or payment for reviews, and we do not publish ratings of lenders. ## Affiliate links The site does not currently use affiliate links. If that changes, affiliate links will be labelled where they appear and listed on this page. ## Questions Read the [editorial policy](https://mortgage-math-us.com/editorial-policy/) for how content is made, or [contact us](https://mortgage-math-us.com/contact/) with any question. ## Sources _General information, not financial advice._ --- # Contact us > Send MortgageMath US a correction, a question about a figure or a suggestion for a guide or calculator. We read every message. URL: https://mortgage-math-us.com/contact/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## How we can help Use the form below to report an error, ask where a figure comes from, or suggest a guide or calculator. Corrections come first: if a number on the site is wrong or out of date, include the page address and, if you have it, a link to the newer source. > **Note: What we can’t do** > > We are not a lender or broker and can’t review your finances, quote a rate or recommend a specific loan. For a decision about your own mortgage, talk to a licensed loan officer or a HUD-approved housing counselor. ## What happens to your message We store your name, email address and message so we can reply, and delete them when they are no longer needed. We never add you to a mailing list or share your details. See the [privacy policy](https://mortgage-math-us.com/privacy/). ## Sources _General information, not financial advice._ --- # Cookie policy > The few cookies and browser storage items MortgageMath US uses, why each exists, and how advertising cookies are handled with your consent. URL: https://mortgage-math-us.com/cookies/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## The short version Reading MortgageMath US sets no tracking cookies. Our page-view statistics are counted on the server without cookies. 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URL: https://mortgage-math-us.com/editorial-policy/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Our standard Every page should let a reader check every number. We publish only figures we can trace to an official or primary source, we show the date each one applies to, and we would rather leave a gap than fill it with a guess. We never invent quotes, reviews, ratings, testimonials, people or offers. ## How pages are researched **How a page is made** 1. **Start from the question** — Each page answers the questions people actually search for, such as “how much house can I afford” or “is refinancing worth it”. 2. **Collect official figures** — We go to the agency that sets or measures the number: FHFA for conforming loan limits, HUD for FHA limits and premiums, the CFPB for consumer rules, Freddie Mac’s Primary Mortgage Market Survey for average rates, the US Census Bureau’s American Community Survey for home values, taxes and incomes, Fannie Mae’s Selling Guide for underwriting limits, and state housing finance agencies for local programs. 3. **Record source and date** — Each figure goes into our facts table with its source link and as-of date. Pages read from that table, so a single update corrects every page that uses the number. 4. **Show the maths** — Worked examples are calculated from those facts when the page loads, using the same formulas as our calculators. 5. **Review before publishing** — A second pass checks every figure against its source, every link, and that the page answers the question in its first paragraph. ## Writing tools We use software to help draft and check pages, including AI writing assistants. Software never supplies figures: every number on the site comes from the facts table described above, and every page is reviewed against its sources before it goes live. ## How often figures are updated | Figure | Source | Update cycle | |---|---|---| | Average mortgage rates | Freddie Mac PMMS | Automatically each week | | Conforming loan limits | FHFA | Each year when announced (late November) | | FHA loan limits | HUD | Each year when announced | | Home values, taxes, incomes | US Census Bureau ACS | Each year when released | | State programs | State housing finance agencies | At least every 180 days | | Everything else | Cited on the page | Reviewed at least every 180 days | The “Last reviewed” date on each page shows when it was last checked in full. ## Corrections If you find an error, tell us through the [contact page](https://mortgage-math-us.com/contact/). 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URL: https://mortgage-math-us.com/privacy/ Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team ## Summary We collect as little as possible. Reading the site does not require an account, and our own analytics store no IP addresses, no cookies and no identifiers. This policy is maintained by the publisher of MortgageMath US. ## Page-view statistics When a page loads, our server records: the time, the page address, the domain of the referring site (for example, google.com — never the full referring address), a country code only if our hosting provider supplies one, the device type (mobile, tablet or desktop) and, for automated visitors, the crawler’s name. We do not store your IP address, your browser’s full user-agent string or any identifier that could follow you between visits. These records are kept for up to 400 days and are used only to understand which pages are useful. ## Calculators Calculations run on the page itself. 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It is free to use for personal, non-commercial purposes. ## No advice, no offers Nothing on the site is an offer to lend, a commitment, or financial, tax or legal advice. Calculator results are estimates based on the inputs and published averages; lenders use their own pricing and underwriting. Always rely on your Loan Estimate, Closing Disclosure and licensed professionals for decisions. See the [disclaimer](https://mortgage-math-us.com/disclaimer/). ## Accuracy We work to keep every figure accurate and dated, and we cite our sources so you can check them. Rates, limits and programs change, and we can’t guarantee that every figure is current at the moment you read it. ## Content and quoting The text, design, calculators and code are protected by copyright. You may quote short passages with a link back to the page. The facts in our facts API come from public sources; please cite those sources when you reuse them. 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