Thinking about buying your first home? Whether you’re just starting your research or ready to apply, it helps to understand the mortgage basics. In this guide, we’ll break down what a mortgage is, how it works, and what you can expect throughout the homebuying process.
What Is a Mortgage?
A mortgage is a loan from a lender that helps you buy or refinance a home. In return, you agree to repay the loan—plus interest—over time, usually in monthly installments. Because mortgages are secured loans, the home itself serves as collateral. If you don’t meet the terms of the loan, your lender can take possession of the property through foreclosure.
Explore our mortgage loan options
How Does a Mortgage Work?
Your lender gives you a lump sum to purchase a home, and you pay it back—typically over 15 to 30 years—with interest. Most mortgages are amortized, meaning each payment reduces both the loan’s principal and the interest owed.
Unlike unsecured loans, if you fail to repay your mortgage, the lender can sell your home to recover the money they loaned you.
Who’s Involved in the Mortgage Process?
Borrower: You, the person buying the home.
Lender: The financial institution providing your loan. V.I.P. Mortgage, for example, is a trusted lender offering personalized guidance and competitive rates.
Co-signer (optional): Someone who agrees to take responsibility for the loan if the borrower defaults, but who doesn’t have ownership of the home.
What’s Included in a Mortgage Payment?
Most monthly mortgage payments include the following:
Principal: The amount you borrowed
Interest: What you pay to borrow the money
Taxes and Insurance: If you have an escrow account, these will be bundled into your monthly payment
Mortgage Insurance: May be required if you put down less than 20%
Types of Mortgage Insurance
PMI (Private Mortgage Insurance): Required for conventional loans with less than 20% down.
MIP (Mortgage Insurance Premium): Required for FHA loans regardless of down payment size.
VA Funding Fee and USDA Guarantee Fee: These apply to government-backed loans in place of monthly insurance.
Learn more about FHA, VA, and USDA loans
Steps to Getting a Mortgage
Get Pre-Approved: Strengthens your offer and sets your home shopping budget. Start your pre-approval here
Shop for Homes: Work with a real estate agent to find the right fit.
Submit Your Application: Once you have a home under contract, you’ll apply for final loan approval.
Close the Loan: Sign paperwork, pay closing costs, and get your keys!
Common Types of Mortgages
Conventional Loans: Not government-backed; often require higher credit scores but offer flexibility.
FHA Loans: Backed by the Federal Housing Administration, great for first-time buyers with lower credit scores.
VA Loans: 0% down and no PMI for eligible veterans and active military.
USDA Loans: 0% down for rural homebuyers who meet income limits.
Jumbo Loans: Used when the home’s price exceeds conventional loan limits.
Compare different mortgage types
What Affects Your Interest Rate?
Credit Score
Debt-to-Income (DTI) Ratio
Loan Type and Term
Down Payment Size
Market Conditions
While market rates are outside your control, keeping your credit healthy and minimizing debt can help you qualify for the best possible rate.
Fixed vs. Adjustable-Rate Mortgages (ARMs)
Fixed-Rate Mortgage: Keeps your interest rate the same for the entire term.
ARM: Starts with a lower fixed rate, then adjusts up or down based on market trends after a set number of years.
Should you choose a fixed or adjustable rate? Find out here
Mortgage Glossary Highlights
Amortization: How loan payments are split between principal and interest.
Down Payment: The cash you pay upfront toward the purchase.
Escrow: An account that holds your tax and insurance payments.
Interest Rate: The cost to borrow money.
Loan Servicer: The company that manages your payments after closing.
See our full mortgage glossary
Final Thoughts: Mortgages Make Homeownership Possible
Buying a home may be the biggest financial decision of your life—but it doesn’t have to be the most stressful.
At V.I.P. Mortgage Las Vegas, we’re committed to helping you understand your options and take the next step with confidence. Ready to get started?
Get pre-approved today or contact our team for personalized support.
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