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Citi’s offerings and lending guidelines may differ.","content:disclosures:global-floating-disclosure.json","Global Floating Disclosure","disclosures/global-floating-disclosure.json",{"title":91,"subtext":7,"portraitImage":92,"imageAlt":93,"imageWidth":94,"background":95,"borderRadius":96,"maxWidth":97,"paddingTopBottom":98,"paddingLeftRight":98,"gap":98,"variant":99},"Citi is #1 in Customer Satisfaction with Mortgage Origination - ***[J.D. Power 2025 Award](https://www.jdpower.com/business/awards)***","/media/jdpower-trophy.png","J.D. Power 2025 Trophy",48,"var(--brand-default)",0,650,16,"default",{"data":101,"body":103,"excerpt":-1,"toc":164},{"title":7,"description":102},"Key insights:",{"type":104,"children":105},"root",[106,117,137,159],{"type":107,"tag":108,"props":109,"children":110},"element","p",{},[111],{"type":107,"tag":112,"props":113,"children":114},"strong",{},[115],{"type":116,"value":102},"text",{"type":107,"tag":118,"props":119,"children":120},"ul",{},[121,127,132],{"type":107,"tag":122,"props":123,"children":124},"li",{},[125],{"type":116,"value":126},"A jumbo loan is a mortgage that is larger than conforming loan limits",{"type":107,"tag":122,"props":128,"children":129},{},[130],{"type":116,"value":131},"You might need a jumbo loan if you’re purchasing a luxury property or shopping in an area with a high cost of living",{"type":107,"tag":122,"props":133,"children":134},{},[135],{"type":116,"value":136},"Jumbo loans may require larger down payments and stronger credit profiles than conforming loans",{"type":107,"tag":108,"props":138,"children":139},{},[140,142,149,151,157],{"type":116,"value":141},"Some homes just cost more than a traditional mortgage allows you to borrow. Whether you’re eyeing a luxury house, shopping in a high-cost area or purchasing a multi-unit property, the amount you need to borrow may exceed the conforming loan limit. That limit sets the maximum size for a standard conforming ",{"type":107,"tag":143,"props":144,"children":146},"a",{"href":145},"/home-loans/articles/what-is-a-mortgage/",[147],{"type":116,"value":148},"mortgage",{"type":116,"value":150},". When a home’s price goes beyond it, a ",{"type":107,"tag":143,"props":152,"children":154},{"href":153},"/home-loans/jumbo-loan/",[155],{"type":116,"value":156},"jumbo loan ",{"type":116,"value":158},"can help bridge the gap.",{"type":107,"tag":108,"props":160,"children":161},{},[162],{"type":116,"value":163},"This guide walks through what jumbo loans are, how limits are set, when you might need one and what lenders look for.",{"title":7,"searchDepth":165,"depth":165,"links":166},2,[],{"data":168,"body":170,"excerpt":-1,"toc":188},{"title":7,"description":169},"A jumbo loan is a mortgage that exceeds the conforming loan limits set each year by the Federal Housing Finance Agency (FHFA). Conforming loans stay within these limits and can be purchased by Fannie Mae or Freddie Mac, which helps reduce risk for lenders.",{"type":104,"children":171},[172,176,181],{"type":107,"tag":108,"props":173,"children":174},{},[175],{"type":116,"value":169},{"type":107,"tag":108,"props":177,"children":178},{},[179],{"type":116,"value":180},"Jumbo loans don’t qualify for that backing. Because lenders hold more risk, they usually require stronger borrower credit profiles. That can mean higher credit score requirements, larger down payments and more documentation. The trade-off? Jumbo loans open the door to homes that conforming loans simply can’t cover.",{"type":107,"tag":182,"props":183,"children":187},"tip",{"icon":184,"text":185,"title":186},"Bulb","Fannie Mae and Freddie Mac are government-sponsored enterprises (GSEs) that buy mortgages from lenders.","PRO TIP:",[],{"title":7,"searchDepth":165,"depth":165,"links":189},[],{"data":191,"body":193,"excerpt":-1,"toc":232},{"title":7,"description":192},"Each year, the FHFA reviews home price trends across the U.S. and updates conforming loan limits to reflect how the housing market is changing. These limits set the maximum amount you can borrow with a conventional mortgage backed by Fannie Mae or Freddie Mac.",{"type":104,"children":194},[195,199],{"type":107,"tag":108,"props":196,"children":197},{},[198],{"type":116,"value":192},{"type":107,"tag":118,"props":200,"children":201},{},[202,212,222],{"type":107,"tag":122,"props":203,"children":204},{},[205,210],{"type":107,"tag":112,"props":206,"children":207},{},[208],{"type":116,"value":209},"Location:",{"type":116,"value":211}," Limits vary by state and county.",{"type":107,"tag":122,"props":213,"children":214},{},[215,220],{"type":107,"tag":112,"props":216,"children":217},{},[218],{"type":116,"value":219},"Property type:",{"type":116,"value":221}," Single-family and multi-unit homes have different limits.",{"type":107,"tag":122,"props":223,"children":224},{},[225,230],{"type":107,"tag":112,"props":226,"children":227},{},[228],{"type":116,"value":229},"Cost level of the area:",{"type":116,"value":231}," Higher-priced markets (like parts of California, New York, Hawaii and Washington, D.C.) have higher limits.",{"title":7,"searchDepth":165,"depth":165,"links":233},[],{"data":235,"body":237,"excerpt":-1,"toc":291},{"title":7,"description":236},"There isn’t one single jumbo loan cutoff that applies everywhere. Instead, there are two standard conforming loan limits, and which one applies depends on where the home is located:",{"type":104,"children":238},[239,258,281,286],{"type":107,"tag":108,"props":240,"children":241},{},[242,244,249,251,256],{"type":116,"value":243},"There isn’t one single ",{"type":107,"tag":112,"props":245,"children":246},{},[247],{"type":116,"value":248},"jumbo loan cutoff",{"type":116,"value":250}," that applies everywhere. Instead, there are two standard ",{"type":107,"tag":112,"props":252,"children":253},{},[254],{"type":116,"value":255},"conforming loan limits",{"type":116,"value":257},", and which one applies depends on where the home is located:",{"type":107,"tag":118,"props":259,"children":260},{},[261,271],{"type":107,"tag":122,"props":262,"children":263},{},[264,269],{"type":107,"tag":112,"props":265,"children":266},{},[267],{"type":116,"value":268},"Baseline conforming limit:",{"type":116,"value":270}," This applies to most counties across the U.S. and is usually around the $800,000 range, though the exact number changes annually.",{"type":107,"tag":122,"props":272,"children":273},{},[274,279],{"type":107,"tag":112,"props":275,"children":276},{},[277],{"type":116,"value":278},"High-cost area limit:",{"type":116,"value":280}," In more expensive markets, conforming loans are allowed to go higher to better reflect local home prices.",{"type":107,"tag":108,"props":282,"children":283},{},[284],{"type":116,"value":285},"Any loan amount above the applicable limit for your area is considered a jumbo loan.",{"type":107,"tag":108,"props":287,"children":288},{},[289],{"type":116,"value":290},"Each year, the FHFA reviews national home price trends and updates these limits. That’s why you’ll see them change from year to year, so to check the most up-to-date figures, it’s best to visit the FHFA website.",{"title":7,"searchDepth":165,"depth":165,"links":292},[],{"data":294,"body":296,"excerpt":-1,"toc":345},{"title":7,"description":295},"Most people discover they need a jumbo loan when they start matching their budget to real home prices. If the loan amount you need goes beyond standard limits, a jumbo loan may come into play. This can happen if you’re:",{"type":104,"children":297},[298,302],{"type":107,"tag":108,"props":299,"children":300},{},[301],{"type":116,"value":295},{"type":107,"tag":118,"props":303,"children":304},{},[305,315,325,335],{"type":107,"tag":122,"props":306,"children":307},{},[308,313],{"type":107,"tag":112,"props":309,"children":310},{},[311],{"type":116,"value":312},"Buying a higher-priced or luxury home:",{"type":116,"value":314}," The purchase price may push your loan amount beyond standard mortgage limits.",{"type":107,"tag":122,"props":316,"children":317},{},[318,323],{"type":107,"tag":112,"props":319,"children":320},{},[321],{"type":116,"value":322},"Shopping in a high-cost market:",{"type":116,"value":324}," In some areas, even fairly typical homes can exceed conforming loan limits.",{"type":107,"tag":122,"props":326,"children":327},{},[328,333],{"type":107,"tag":112,"props":329,"children":330},{},[331],{"type":116,"value":332},"Purchasing a 2–4 unit property:",{"type":116,"value":334}," Larger or multi-unit homes often require bigger loan amounts.",{"type":107,"tag":122,"props":336,"children":337},{},[338,343],{"type":107,"tag":112,"props":339,"children":340},{},[341],{"type":116,"value":342},"In need of a larger loan:",{"type":116,"value":344}," Even with a solid down payment, standard loan options may not cover the full amount you need.",{"title":7,"searchDepth":165,"depth":165,"links":346},[],{"data":348,"body":350,"excerpt":-1,"toc":439},{"title":7,"description":349},"Jumbo loans usually come with higher standards, but that doesn’t mean they’re out of reach. Lenders need to check whether you can comfortably handle a larger loan, so they tend to assess:",{"type":104,"children":351},[352,356],{"type":107,"tag":108,"props":353,"children":354},{},[355],{"type":116,"value":349},{"type":107,"tag":118,"props":357,"children":358},{},[359,375,390,404,414,424],{"type":107,"tag":122,"props":360,"children":361},{},[362,373],{"type":107,"tag":112,"props":363,"children":364},{},[365,371],{"type":107,"tag":143,"props":366,"children":368},{"href":367},"/home-buying/articles/what-credit-score-do-you-need-to-buy-a-house/",[369],{"type":116,"value":370},"Credit score",{"type":116,"value":372},":",{"type":116,"value":374}," Many lenders look for credit scores around 700 or higher, and some may expect even higher scores for larger loan amounts. This helps show a strong history of managing credit responsibly.",{"type":107,"tag":122,"props":376,"children":377},{},[378,388],{"type":107,"tag":112,"props":379,"children":380},{},[381,387],{"type":107,"tag":143,"props":382,"children":384},{"href":383},"/home-buying/articles/how-much-money-do-you-need-to-buy-a-house/",[385],{"type":116,"value":386},"Down payment",{"type":116,"value":372},{"type":116,"value":389}," Jumbo loans commonly require down payments of around 20%, though some lenders may ask for 20–30%, depending on the loan size and your overall financial profile.",{"type":107,"tag":122,"props":391,"children":392},{},[393,402],{"type":107,"tag":112,"props":394,"children":395},{},[396],{"type":107,"tag":143,"props":397,"children":399},{"href":398},"/home-buying/articles/what-is-a-good-debt-to-income-ratio/",[400],{"type":116,"value":401},"Debt-to-income ratio (DTI):",{"type":116,"value":403}," Lenders often look for a DTI of 43% or lower (though the 36% mark is preferred), meaning your total monthly debts take up a smaller share of your income. This helps ensure you can comfortably manage higher payments.",{"type":107,"tag":122,"props":405,"children":406},{},[407,412],{"type":107,"tag":112,"props":408,"children":409},{},[410],{"type":116,"value":411},"Income and employment:",{"type":116,"value":413}," You’ll need to show stable, verifiable income. Because the loan amount is larger, lenders may ask for additional documentation, such as tax returns or detailed income records, especially if your income varies.",{"type":107,"tag":122,"props":415,"children":416},{},[417,422],{"type":107,"tag":112,"props":418,"children":419},{},[420],{"type":116,"value":421},"Cash reserves:",{"type":116,"value":423}," Many jumbo loans require 6–12 months of cash reserves, sometimes more. Reserves are savings that could cover your mortgage payments in an emergency, like an unexpected job change or major expense.",{"type":107,"tag":122,"props":425,"children":426},{},[427,437],{"type":107,"tag":112,"props":428,"children":429},{},[430,436],{"type":107,"tag":143,"props":431,"children":433},{"href":432},"/home-buying/articles/home-appraisal/",[434],{"type":116,"value":435},"Appraisals",{"type":116,"value":372},{"type":116,"value":438}," Since jumbo loans are tied to higher-value homes, lenders often require more detailed appraisals or even multiple appraisals to confirm the property’s value.",{"title":7,"searchDepth":165,"depth":165,"links":440},[],{"data":442,"body":444,"excerpt":-1,"toc":457},{"title":7,"description":443},"Just like any mortgage, jumbo loans have their advantages and downsides.",{"type":104,"children":445},[446,450],{"type":107,"tag":108,"props":447,"children":448},{},[449],{"type":116,"value":443},{"type":107,"tag":451,"props":452,"children":456},"inline-table",{":headers":453,":rows":454,"table-layout":455},"[{\"value\":\"Pros\"},{\"value\":\"Cons\"}]","[{\"column\":{\"valueOne\":\"Access to higher-priced homes\",\"valueTwo\":\"Higher qualification standards\"}},{\"column\":{\"valueOne\":\"Competitive interest rates for strong borrowers\",\"valueTwo\":\"Larger down payment\"}},{\"column\":{\"valueOne\":\"No mortgage insurance in many cases\",\"valueTwo\":\"Potential for higher borrowing costs\"}},{\"column\":{\"valueOne\":\"Flexible use\",\"valueTwo\":\"Greater financial exposure\"}}]","basic",[],{"title":7,"searchDepth":165,"depth":165,"links":458},[],{"data":460,"body":462,"excerpt":-1,"toc":473},{"title":7,"description":461},"Both jumbo and conforming loans are common ways to finance a home. The key difference comes down to loan size. Here’s a look at how they compare.",{"type":104,"children":463},[464,468],{"type":107,"tag":108,"props":465,"children":466},{},[467],{"type":116,"value":461},{"type":107,"tag":451,"props":469,"children":472},{":headers":470,":rows":471,"table-layout":455},"[{\"value\":\"Jumbo loans\"},{\"value\":\"Conforming loans\"}]","[{\"column\":{\"valueOne\":\"Amount exceeds FHFA limits\",\"valueTwo\":\"Amount stays within FHFA limits\"}},{\"column\":{\"valueOne\":\"Stricter credit and income requirements\",\"valueTwo\":\"More flexible qualification standards\"}},{\"column\":{\"valueOne\":\"Larger down payments and cash reserves\",\"valueTwo\":\"Lower down payments are possible\"}},{\"column\":{\"valueOne\":\"Not eligible for purchase by Fannie Mae or Freddie Mac\",\"valueTwo\":\"Backed by Fannie Mae or Freddie Mac\"}}]",[],{"title":7,"searchDepth":165,"depth":165,"links":474},[],{"data":476,"body":478,"excerpt":-1,"toc":537},{"title":7,"description":477},"Qualifying for a jumbo loan often comes down to preparation. Small steps taken early can make a meaningful difference and help the process feel smoother once you apply.",{"type":104,"children":479},[480,484],{"type":107,"tag":108,"props":481,"children":482},{},[483],{"type":116,"value":477},{"type":107,"tag":118,"props":485,"children":486},{},[487,497,507,517,527],{"type":107,"tag":122,"props":488,"children":489},{},[490,495],{"type":107,"tag":112,"props":491,"children":492},{},[493],{"type":116,"value":494},"Strengthen your credit profile before applying:",{"type":116,"value":496}," Paying bills on time and keeping balances in check can help put you in a stronger position before you apply.",{"type":107,"tag":122,"props":498,"children":499},{},[500,505],{"type":107,"tag":112,"props":501,"children":502},{},[503],{"type":116,"value":504},"Lower your DTI:",{"type":116,"value":506}," Paying down existing debt can improve your overall cash flow and make higher loan amounts easier for lenders to support.",{"type":107,"tag":122,"props":508,"children":509},{},[510,515],{"type":107,"tag":112,"props":511,"children":512},{},[513],{"type":116,"value":514},"Save up:",{"type":116,"value":516}," A larger down payment and extra savings can help you meet lender requirements and feel more comfortable financially.",{"type":107,"tag":122,"props":518,"children":519},{},[520,525],{"type":107,"tag":112,"props":521,"children":522},{},[523],{"type":116,"value":524},"Keep income documentation organized:",{"type":116,"value":526}," Consistent, well-documented income helps lenders clearly understand your financial picture.",{"type":107,"tag":122,"props":528,"children":529},{},[530,535],{"type":107,"tag":112,"props":531,"children":532},{},[533],{"type":116,"value":534},"Avoid major financial changes:",{"type":116,"value":536}," Making large purchases, opening or closing credit accounts or changing jobs during underwriting can slow things down or complicate approval.",{"title":7,"searchDepth":165,"depth":165,"links":538},[],{"data":540,"body":541,"excerpt":-1,"toc":549},{"title":7,"description":7},{"type":104,"children":542},[543],{"type":107,"tag":544,"props":545,"children":548},"faq",{":faqs":546,"headline":547},"[{\"question\":\"What is the jumbo loan limit?\",\"answer\":\"The jumbo loan limit refers to the maximum loan size allowed for conforming mortgages in a given area. Any loan amount above that limit is considered a jumbo loan. Each year, the FHFA sets these figures.\"},{\"question\":\"Does the jumbo loan limit vary by location?\",\"answer\":\"Yes. Jumbo loan limits depend on county-level conforming loan limits, which are higher in certain high-cost areas.\"},{\"question\":\"How do I know if my loan exceeds the jumbo loan limit?\",\"answer\":\"You can check the figures on the FHFA website to see if your loan is higher than the conforming limit for your county and property type.\"},{\"question\":\"Can the jumbo loan limit change?\",\"answer\":\"Yes. The FHFA reviews and updates conforming loan limits annually, which can shift where the jumbo mortgage threshold begins.\"}]","Jumbo loan limit FAQs",[],{"title":7,"searchDepth":165,"depth":165,"links":550},[],{"data":552,"body":553,"toc":559},{"title":7,"description":86},{"type":104,"children":554},[555],{"type":107,"tag":108,"props":556,"children":557},{},[558],{"type":116,"value":86},{"title":7,"searchDepth":165,"depth":165,"links":560},[],{"data":562,"body":564,"toc":570},{"title":7,"description":563},"Citi is #1 in Customer Satisfaction with Mortgage Origination - J.D. Power",{"type":104,"children":565},[566],{"type":107,"tag":108,"props":567,"children":568},{},[569],{"type":116,"value":563},{"title":7,"searchDepth":165,"depth":165,"links":571},[],{"data":573,"body":575,"toc":592},{"title":7,"description":574},"For J.D. Power 2025 award information, visit jdpower.com/awards.",{"type":104,"children":576},[577],{"type":107,"tag":108,"props":578,"children":579},{},[580,582,590],{"type":116,"value":581},"For J.D. Power 2025 award information, visit ",{"type":107,"tag":143,"props":583,"children":587},{"href":584,"rel":585},"https://www.jdpower.com/business/awards",[586],"nofollow",[588],{"type":116,"value":589},"jdpower.com/awards",{"type":116,"value":591},".",{"title":7,"searchDepth":165,"depth":165,"links":593},[],{"_path":595,"_dir":84,"_draft":6,"_partial":6,"_locale":7,"slug":99,"content":596,"_id":597,"_type":78,"title":598,"_source":80,"_file":599,"_extension":78},"/disclosures/default","This page provides general information regarding mortgages or home equity lines of credit. Citi's offerings and lending guidelines may be different. This content is for educational purposes. It is not intended to provide legal, investment, tax, or financial advice and is not a substitute for professional advice. For advice about your specific circumstances, you should consult a mortgage professional and refer to the information and disclosures provided to you by the lender you choose regarding its products and services.\n\nTerms, conditions and fees for accounts, programs, products and services are subject to change without notice. This is not a commitment to lend. All loans and offers are subject to standard underwriting guidelines and required conditions. This offer contains information about U.S. domestic financial services provided by Citibank, N.A. and is intended for use domestically in the U.S. Certain restrictions may apply on all programs.","content:disclosures:default.json","Default","disclosures/default.json",{"_path":601,"_dir":84,"_draft":6,"_partial":6,"_locale":7,"content":602,"slug":603,"_id":604,"_type":78,"title":605,"_source":80,"_file":606,"_extension":78},"/disclosures/spanish-language-disclosure","\u003Csup>†\u003C/sup>Please be advised that verbal and written communication from Citi may be in English as we may not be able to provide servicing related communications in all languages. These communications may include, but are not limited to, account agreements, statements and disclosures, change in terms or fees; or any servicing of your account. If you need assistance in a language other than English, please contact us as we have language services that may be of assistance to you.\n\n\u003Cspan lang=\"es\">Por favor, tenga en cuenta que las comunicaciones verbales y escritas de Citi podrían estar únicamente en inglés, ya que, tal vez, no podamos proporcionar comunicaciones relacionadas con los servicios en todos los idiomas. Estas comunicaciones podrían incluir, entre otras, contratos, divulgaciones y estados de cuenta, cambios en los términos o en los cargos, así como cualquier documento de mantenimiento de su cuenta. Si necesita ayuda en un idioma distinto al inglés, por favor, comuníquese con nosotros, ya que tenemos servicios de idiomas que podrían serle útiles.\u003C/span>","spanish-language-disclosure","content:disclosures:spanish-language-disclosure.json","Spanish Language Disclosure","disclosures/spanish-language-disclosure.json",{"data":608,"body":610,"toc":621},{"title":7,"description":609},"This page provides general information regarding mortgages or home equity lines of credit. Citi's offerings and lending guidelines may be different. This content is for educational purposes. It is not intended to provide legal, investment, tax, or financial advice and is not a substitute for professional advice. For advice about your specific circumstances, you should consult a mortgage professional and refer to the information and disclosures provided to you by the lender you choose regarding its products and services.",{"type":104,"children":611},[612,616],{"type":107,"tag":108,"props":613,"children":614},{},[615],{"type":116,"value":609},{"type":107,"tag":108,"props":617,"children":618},{},[619],{"type":116,"value":620},"Terms, conditions and fees for accounts, programs, products and services are subject to change without notice. This is not a commitment to lend. All loans and offers are subject to standard underwriting guidelines and required conditions. This offer contains information about U.S. domestic financial services provided by Citibank, N.A. and is intended for use domestically in the U.S. Certain restrictions may apply on all programs.",{"title":7,"searchDepth":165,"depth":165,"links":622},[],{"data":624,"body":626,"toc":649},{"title":7,"description":625},"†Please be advised that verbal and written communication from Citi may be in English as we may not be able to provide servicing related communications in all languages. These communications may include, but are not limited to, account agreements, statements and disclosures, change in terms or fees; or any servicing of your account. If you need assistance in a language other than English, please contact us as we have language services that may be of assistance to you.",{"type":104,"children":627},[628,639],{"type":107,"tag":108,"props":629,"children":630},{},[631,637],{"type":107,"tag":632,"props":633,"children":634},"sup",{},[635],{"type":116,"value":636},"†",{"type":116,"value":638},"Please be advised that verbal and written communication from Citi may be in English as we may not be able to provide servicing related communications in all languages. These communications may include, but are not limited to, account agreements, statements and disclosures, change in terms or fees; or any servicing of your account. If you need assistance in a language other than English, please contact us as we have language services that may be of assistance to you.",{"type":107,"tag":108,"props":640,"children":641},{},[642],{"type":107,"tag":643,"props":644,"children":646},"span",{"lang":645},"es",[647],{"type":116,"value":648},"Por favor, tenga en cuenta que las comunicaciones verbales y escritas de Citi podrían estar únicamente en inglés, ya que, tal vez, no podamos proporcionar comunicaciones relacionadas con los servicios en todos los idiomas. Estas comunicaciones podrían incluir, entre otras, contratos, divulgaciones y estados de cuenta, cambios en los términos o en los cargos, así como cualquier documento de mantenimiento de su cuenta. Si necesita ayuda en un idioma distinto al inglés, por favor, comuníquese con nosotros, ya que tenemos servicios de idiomas que podrían serle útiles.",{"title":7,"searchDepth":165,"depth":165,"links":650},[],{"data":652,"body":653,"excerpt":-1,"toc":659},{"title":7,"description":185},{"type":104,"children":654},[655],{"type":107,"tag":108,"props":656,"children":657},{},[658],{"type":116,"value":185},{"title":7,"searchDepth":165,"depth":165,"links":660},[],{"data":662,"body":664,"excerpt":-1,"toc":670},{"title":7,"description":663},"Access to higher-priced homes",{"type":104,"children":665},[666],{"type":107,"tag":108,"props":667,"children":668},{},[669],{"type":116,"value":663},{"title":7,"searchDepth":165,"depth":165,"links":671},[],{"data":673,"body":675,"excerpt":-1,"toc":681},{"title":7,"description":674},"Higher qualification standards",{"type":104,"children":676},[677],{"type":107,"tag":108,"props":678,"children":679},{},[680],{"type":116,"value":674},{"title":7,"searchDepth":165,"depth":165,"links":682},[],{"data":684,"body":686,"excerpt":-1,"toc":692},{"title":7,"description":685},"Competitive interest rates for strong borrowers",{"type":104,"children":687},[688],{"type":107,"tag":108,"props":689,"children":690},{},[691],{"type":116,"value":685},{"title":7,"searchDepth":165,"depth":165,"links":693},[],{"data":695,"body":697,"excerpt":-1,"toc":703},{"title":7,"description":696},"Larger down payment",{"type":104,"children":698},[699],{"type":107,"tag":108,"props":700,"children":701},{},[702],{"type":116,"value":696},{"title":7,"searchDepth":165,"depth":165,"links":704},[],{"data":706,"body":708,"excerpt":-1,"toc":714},{"title":7,"description":707},"No mortgage insurance in many cases",{"type":104,"children":709},[710],{"type":107,"tag":108,"props":711,"children":712},{},[713],{"type":116,"value":707},{"title":7,"searchDepth":165,"depth":165,"links":715},[],{"data":717,"body":719,"excerpt":-1,"toc":725},{"title":7,"description":718},"Potential for higher borrowing costs",{"type":104,"children":720},[721],{"type":107,"tag":108,"props":722,"children":723},{},[724],{"type":116,"value":718},{"title":7,"searchDepth":165,"depth":165,"links":726},[],{"data":728,"body":730,"excerpt":-1,"toc":736},{"title":7,"description":729},"Flexible use",{"type":104,"children":731},[732],{"type":107,"tag":108,"props":733,"children":734},{},[735],{"type":116,"value":729},{"title":7,"searchDepth":165,"depth":165,"links":737},[],{"data":739,"body":741,"excerpt":-1,"toc":747},{"title":7,"description":740},"Greater financial exposure",{"type":104,"children":742},[743],{"type":107,"tag":108,"props":744,"children":745},{},[746],{"type":116,"value":740},{"title":7,"searchDepth":165,"depth":165,"links":748},[],{"data":750,"body":752,"excerpt":-1,"toc":758},{"title":7,"description":751},"Amount exceeds FHFA limits",{"type":104,"children":753},[754],{"type":107,"tag":108,"props":755,"children":756},{},[757],{"type":116,"value":751},{"title":7,"searchDepth":165,"depth":165,"links":759},[],{"data":761,"body":763,"excerpt":-1,"toc":769},{"title":7,"description":762},"Amount stays within FHFA limits",{"type":104,"children":764},[765],{"type":107,"tag":108,"props":766,"children":767},{},[768],{"type":116,"value":762},{"title":7,"searchDepth":165,"depth":165,"links":770},[],{"data":772,"body":774,"excerpt":-1,"toc":780},{"title":7,"description":773},"Stricter credit and income requirements",{"type":104,"children":775},[776],{"type":107,"tag":108,"props":777,"children":778},{},[779],{"type":116,"value":773},{"title":7,"searchDepth":165,"depth":165,"links":781},[],{"data":783,"body":785,"excerpt":-1,"toc":791},{"title":7,"description":784},"More flexible qualification standards",{"type":104,"children":786},[787],{"type":107,"tag":108,"props":788,"children":789},{},[790],{"type":116,"value":784},{"title":7,"searchDepth":165,"depth":165,"links":792},[],{"data":794,"body":796,"excerpt":-1,"toc":802},{"title":7,"description":795},"Larger down payments and cash reserves",{"type":104,"children":797},[798],{"type":107,"tag":108,"props":799,"children":800},{},[801],{"type":116,"value":795},{"title":7,"searchDepth":165,"depth":165,"links":803},[],{"data":805,"body":807,"excerpt":-1,"toc":813},{"title":7,"description":806},"Lower down payments are possible",{"type":104,"children":808},[809],{"type":107,"tag":108,"props":810,"children":811},{},[812],{"type":116,"value":806},{"title":7,"searchDepth":165,"depth":165,"links":814},[],{"data":816,"body":818,"excerpt":-1,"toc":824},{"title":7,"description":817},"Not eligible for purchase by Fannie Mae or Freddie Mac",{"type":104,"children":819},[820],{"type":107,"tag":108,"props":821,"children":822},{},[823],{"type":116,"value":817},{"title":7,"searchDepth":165,"depth":165,"links":825},[],{"data":827,"body":829,"excerpt":-1,"toc":835},{"title":7,"description":828},"Backed by Fannie Mae or Freddie Mac",{"type":104,"children":830},[831],{"type":107,"tag":108,"props":832,"children":833},{},[834],{"type":116,"value":828},{"title":7,"searchDepth":165,"depth":165,"links":836},[],[838,897,956,1004,1063,1119,1167,1213,1266],{"_path":839,"_dir":840,"_draft":6,"_partial":6,"_locale":7,"readTime":841,"l1":840,"linkNav":842,"heroMedia":846,"teaserImage":849,"slug":851,"sections":852,"hideFooterJdPower":6,"date":874,"subheadline":875,"headline":876,"isFeatured":6,"tags":877,"link":879,"seo":882,"hasSectionNavigation":27,"_id":885,"_type":78,"title":886,"_source":80,"_file":887,"_extension":78,"tagsDetails":888},"/articles/home-loans/is-heloc-interest-tax-deductible","home-loans",6,{"introText":843,"text":844,"to":845},"Ready for the next step?","Connect with a Citi Specialist","/contact",{"landscape":847,"portrait":848},"/media/is-heloc-interest-tax-deductible-mobile.jpg","/media/is-heloc-interest-tax-deductible-desktop.jpg",{"src":850},"/media/is-heloc-interest-tax-deductible-teaser.jpg","is-heloc-interest-tax-deductible",[853,856,859,862,865,868,871],{"title":854,"content":855},"When HELOC interest may be tax-deductible","In general, HELOC interest may be tax-deductible when the funds are used to buy, build or substantially improve the home that secures the loan. In other words, the money needs to go back into the home itself, not just pass through your account on the way to something else.\n\n Substantial improvements can include projects like renovating a kitchen, adding new space or upgrading major systems such as roofing, plumbing or electrical. These kinds of improvements don’t just maintain your home, they enhance it or extend its lifespan.\n\nIf your HELOC is helping you invest in your home in a meaningful way, the interest may qualify for a deduction.\n\nIn order to take advantage of tax-deductible interest, you must also itemize your deductions on your tax return.",{"title":857,"content":858},"When HELOC interest is not deductible","Once HELOC funds move outside of your home, the tax treatment changes. If you use the\nmoney for personal expenses (like [paying off debt](/home-loans/articles/using-home-equity-to-pay-down-debt/), covering tuition, booking travel or buying a car) the interest isn’t deductible under current IRS rules.\n\nEven if those decisions support your broader financial goals, they aren’t tied to improving the property itself, which is what determines eligibility.\n\nWhere things get a bit more layered is if you use your HELOC money for multiple types of expenses. If your HELOC is used for both home improvements and personal expenses, the interest doesn’t fall neatly into one category. Instead, it’s divided based on how the funds were used. The portion tied to home improvements may qualify for a deduction, while the portion used for personal expenses does not.\n\nThat said, if you take the standard deduction on your taxes, you won’t be able to deduct HELOC interest, even if you’ve used the funds for home improvement purposes.",{"title":860,"content":861},"Current IRS rules to know","The rules around HELOC interest were reshaped by the Tax Cuts and Jobs Act in 2017.\nBefore these changes, interest on [home equity borrowing](/home-loans/articles/heloc-vs-home-equity-loan/) was sometimes deductible even if the funds were used for personal expenses. Under current rules, that’s no longer the case. Today, the focus is much narrower: The interest is only eligible when the funds are used to buy, build or substantially improve the home that secures the loan.\n\nThere are also limits on how much mortgage debt can qualify for interest deductions. For\nloans taken out after December 15, 2017, interest is generally deductible on up to $750,000 of combined mortgage debt for married couples filing jointly, or $375,000 for married filing separately. This limit applies across your primary mortgage and any home equity borrowing combined, not each loan separately.\n\nThese guidelines set the foundation for how HELOC interest is treated today. While the rules themselves are fixed for now, the cost of borrowing can still shift over time. [Interest rates](/home-loans/articles/fed-rate-impact-heloc-home-equity/), for example, move with broader market conditions as well as factors like your [loan type](/tags/loan-types/), property details, location and loan-to-value ratio. That affects how much interest you may pay overall, even though it doesn’t change whether the interest qualifies for a deduction.",{"title":863,"content":864},"How to track and document eligible interest","When it comes to claiming a deduction, your records tell the story. That means keeping documentation that shows how your HELOC funds were used and when. This can include receipts, contractor invoices, bank statements and any notes that help connect the spending back to your home.\n\nIf you’re using your HELOC for a mix of expenses, keeping track as you go can save you a headache later. Separating your costs and their documentation into eligible and ineligible categories makes it much easier to see what qualifies and what doesn’t, instead of trying to untangle everything when you’re filing your taxes.",{"title":866,"content":867},"When to talk to a tax professional","Some HELOC situations are fairly straightforward. Others can get more complex, especially when the funds have been used for different purposes over time.\n\nFor example, if part of your HELOC went toward home improvements and another part was used for personal expenses, figuring out what qualifies for a deduction isn’t always clear-cut. The same goes if you’re unsure whether a project meets the IRS definition of a substantial improvement.\n\nIn these situations, a tax professional can help you sort through the details. They can explain how your specific usage fits within current rules, what may qualify for a deduction, how\nto report it accurately and whether it makes sense to itemize deductions on your return.",{"title":869,"content":870},"Understand the rules before you claim","Using your home equity can open up meaningful possibilities, whether you’re improving your space, tackling long-awaited projects or simply creating a bit more flexibility in your\nfinances.\n\nWhen tax deductions come into play, it’s natural to have questions. The details are nuanced, but with a clear understanding of how your HELOC is being used and how that fits within IRS rules, it becomes much easier to navigate.\n\n\n::callout{title=\"Curious about how much you may be able to borrow with a HELOC?\" body=\"Our [HELOC Calculator](/calculators/heloc/) can help you run the numbers.\" :media='{\"landscape\":\"/media/article-callout-landscape.png\",\"portrait\":\"/media/article-callout-portrait.jpg\"}'}\n::",{"title":872,"hideTitle":27,"content":873},"HELOC interest FAQs","::faq{headline=\"HELOC interest FAQs\" :faqs='[{\"question\":\"Is HELOC interest tax-deductible in all cases?\",\"answer\":\"No, HELOC interest is typically only tax-deductible when the funds are used to buy, build or substantially improve the home securing the loan and when IRS requirements are met.\"},{\"question\":\"Can I deduct HELOC interest used for personal expenses?\",\"answer\":\"In most cases, no. If the funds are used for expenses like debt consolidation, travel or other personal costs, the interest is generally not deductible.\"},{\"question\":\"Are there limits on deductible mortgage interest?\",\"answer\":\"Yes, the IRS places limits on the total amount of mortgage debt that can qualify for interest deductions, which may affect how much HELOC interest you can deduct.\"},{\"question\":\"Do I need to itemize to claim HELOC interest? \",\"answer\":\"Yes, you typically need to itemize deductions on your tax return in order to claim mortgage interest, including eligible HELOC interest.\"},{\"question\":\"What if I used my HELOC for multiple purposes?\",\"answer\":\"If your HELOC was used for both qualifying home improvements and other expenses, only the portion tied to eligible uses may be deductible, which is why keeping detailed records is important.\"}]'}\n::","2026-07-27T14:17:00.000Z","**Key insights**\n\n* HELOC interest may be tax-deductible when funds are used to buy, build or\n  substantially improve the home securing the loan\n* Interest typically isn’t deductible if the money is used for personal expenses like debt\n  consolidation or travel\n* Keeping clear records of how you use HELOC funds can help support any deduction you\n  plan to claim\n\nTapping into your home equity can feel like unlocking a financial tool you didn’t even realize you had. Whether you’re planning renovations, covering a big expense or creating a bit more breathing room in your budget, a [HELOC ](/home-loans/heloc/)(home equity line of credit) can offer flexibility when you need it.\n\nA HELOC allows you to borrow against the value you’ve built up in your home over time. Unlike a traditional loan that gives you a lump sum upfront, a HELOC works more like a credit line. You can draw from it as needed, repay what you borrow and draw again during a set period. That flexibility is a big reason many homeowners turn to HELOCs, especially for projects that happen in stages or expenses that don’t arrive all at once.\n\nBut when tax season comes around, many homeowners find themselves wondering the same thing: Is HELOC interest tax-deductible? The answer is: It can be, but it depends on how you use the funds and whether you meet certain IRS guidelines.\n\nIf you’re using your home equity to borrow, it’s worth understanding how those choices today may affect your taxes later.","Is HELOC interest tax-deductible?",[878,840],"heloc",{"to":845,"introText":880,"body":881,"text":844},"Have questions about using your home equity?","You don’t have to figure it all out on your own—we’re here to help.",{"title":883,"description":884},"Is HELOC Interest Tax-Deductible? | Mortgage.com","HELOC interest may be tax-deductible in some cases. Learn when interest may qualify, IRS rules to know and how your usage impacts eligibility.","content:articles:home-loans:is-heloc-interest-tax-deductible.json","Is Heloc Interest Tax Deductible","articles/home-loans/is-heloc-interest-tax-deductible.json",[889,893],{"label":890,"slug":878,"seo":891},"HELOC",{"description":892},"Learn more about heloc with helpful articles, tools, and guides to support your homeownership journey.",{"label":894,"slug":840,"seo":895},"Home Loans",{"description":896},"Explore resources about home loans—including types, requirements, and how to choose the right mortgage option.",{"_path":898,"_dir":840,"_draft":6,"_partial":6,"_locale":7,"readTime":841,"l1":840,"linkNav":899,"heroMedia":900,"teaserImage":903,"slug":905,"sections":906,"hideFooterJdPower":6,"date":931,"subheadline":932,"headline":933,"isFeatured":6,"tags":934,"link":937,"seo":941,"hasSectionNavigation":27,"_id":944,"_type":78,"title":945,"_source":80,"_file":946,"_extension":78,"tagsDetails":947},"/articles/home-loans/when-is-your-first-mortgage-payment-due",{"introText":843,"text":844,"to":845},{"landscape":901,"portrait":902},"/media/when-is-the-first-mortgage-payment-due-mobile.jpg","/media/when-is-the-first-mortgage-payment-due-desktop.jpg",{"src":904},"/media/when-is-the-first-mortgage-payment-due-teaser.jpg","when-is-your-first-mortgage-payment-due",[907,910,913,916,919,922,925,928],{"title":908,"content":909},"When your first mortgage payment is usually due","In most cases, your first mortgage payment is due on the first day of the month after your first full month in the home.\n\n::callout{title=\"First mortgage payment timing\" body=\"If you close on June 15, your first full month is July, so your first payment is due August 1. If you close on June 30, your first full month is still July, so your first payment is also due August 1.\" :media='{\"landscape\":\"/media/article-callout-landscape.png\",\"portrait\":\"/media/article-callout-portrait.jpg\"}'}\n::\n\n\nThat gap can feel a little strange at first, especially if you close in the middle of the month and wait\nmore than four weeks for your first bill. But nothing’s gone wrong. That pause is completely normal and just part of how mortgage payments are set.",{"title":911,"content":912},"Why there’s often a gap before your first payment","When you close on your home, you’ll usually pay something called prepaid interest. This is the interest that builds up from the day you close through the end of that month.\n\n In simple terms, you’re covering those first few days (or weeks) of interest upfront, rather than rolling them into your first monthly payment. That way, when your regular payment schedule begins, your interest lines up with a full month.\n\nYour closing date plays a big role in how much prepaid interest you’ll pay. \n\n* Closing earlier in the month means more days of interest upfront, but a longer gap before your first mortgage payment\n* Closing later in the month means fewer days of interest upfront, but your first mortgage payment will come around sooner\n\nNeither option is better or worse. It simply affects when you pay that interest and how your cash flow looks in those first few weeks of homeownership.",{"title":914,"content":915},"What your first mortgage payment includes","Your first mortgage payment is made up of a few different things. It—and each payment you make afterward—includes:\n\n* **Principal:** This is the portion that goes toward paying down your loan balance over time\n* **Interest:** This is the cost of borrowing the money \n\n If your loan includes an [escrow](/home-buying/articles/what-is-escrow/) account (which many do), your payment may also include:\n\n* [Property taxes](/home-buying/articles/are-property-taxes-included-in-mortgage-payment/)\n* [Homeowners insurance](/home-buying/articles/what-is-homeowners-insurance/)\n* [Private mortgage insurance ](/home-buying/articles/pmi-home-loan/)(PMI), if applicable\n\nInstead of juggling multiple bills, everything is bundled into one monthly payment, which can help make things easier to manage.\n\nYou might also notice that your first payment is a little higher than what you’ll pay in the months that follow. That can happen because of timing differences or how escrow is initially set up. Once that first payment is out of the way, your monthly amount will usually settle into a more consistent pattern, helping to make it easier to plan and budget going forward.",{"title":917,"content":918},"How to find your exact due date","While this general timeline gives you a good idea of what to expect, your exact payment date comes down to the details of your specific loan.\n\nAnd luckily, you don’t have to guess. You can find your first payment date in a few key places:\n\n* Your [closing disclosure](/home-buying/articles/closing-disclosure/), which outlines the final terms of your loan\n* Your loan documents, where your payment schedule is clearly stated\n* Any welcome communication from your loan servicer, which typically arrives shortly after closing\n\nIf you’re not completely sure, it’s always okay to double-check. Mortgage documents can feel like a lot to take in all at once, and taking a moment to confirm the details can give you real peace of mind.",{"title":920,"content":921},"What happens if you pay early or late?","Once your payment schedule begins, staying on track becomes part of your routine, but there’s usually a bit of flexibility built in.\n\nMost lenders offer a grace period, often around 15 days after your due date. During\nthis time, you can still make your payment without a late fee.\n\nIf a payment is made after that window:\n\n* You may be charged a late fee\n* It could begin to affect your credit score if delays continue \n\n On the flip side, paying early is generally fine. In some cases, it may even slightly reduce the interest that builds up, depending on how your lender applies payments.",{"title":923,"content":924},"Tips for preparing for your first payment","You’ll generally have a small gap between closing and your first mortgage payment, but\ndon’t let it catch you off guard. A little preparation can help you feel more\nin control from day one.\n\nThere are a few things you can do to help prepare for your first payment:\n\n* Confirm your loan servicer details so you know exactly where and how to send your payment\n* Set up autopay so you typically don’t have to worry about missing a due date\n* Plan for your first payment amount, especially if it’s slightly higher than usual \n\n Even small steps can help you start off on the right foot and avoid any last-minute stress.",{"title":926,"content":927},"Start strong with your mortgage payments","Your first mortgage payment might feel like one more unknown in an already busy process. But once you understand the timing, it generally becomes much easier to navigate.\n\nThat initial gap after closing is completely normal. By knowing when your payment is due, understanding what it includes and taking a few simple steps to prepare, you’re helping to set yourself up for a steady, confident start as a homeowner.",{"title":929,"hideTitle":27,"content":930},"First mortgage payment FAQs","\n\n::faq{headline=\"First mortgage payment FAQs\" :faqs='[{\"question\":\"When is my first mortgage payment due after closing?\",\"answer\":\"Your first payment is usually due on the first day of the month after your first full month in the home. For example, if you close in mid-June, your first payment is typically due August 1.\"},{\"question\":\"Why don’t I make a payment right after closing?\",\"answer\":\"At closing, you typically pay prepaid interest that covers the remaining days of that month. This allows your regular payment schedule to begin with a full month, rather than starting mid-cycle.\"},{\"question\":\"Will my first mortgage payment be higher than usual?\",\"answer\":\"It can be, depending on timing and how your escrow account is set up. Some first payments include initial adjustments that don’t carry over into future months.\"},{\"question\":\"What happens if I miss my first payment?\",\"answer\":\"Many lenders offer a grace period of 15 days, but payments made after that window may result in a late fee and could affect your credit if the delay continues.\"},{\"question\":\"How do I confirm my exact payment date?\",\"answer\":\"You can find it in your closing disclosure, loan documents or in communication from your loan servicer after closing. If you’re unsure, reach out to your loan provider.\"}]'}\n::","2026-07-27T14:14:00.000Z","**Key insights:**\n\n* Your first [mortgage](/home-loans/articles/what-is-a-mortgage/) payment is usually due on the first day of the month after your first full month in the home\n* There’s often a gap between closing and your first payment because of prepaid interest\n* Your first payment may include principal, interest and escrow costs like property taxes and homeowners\n  insurance\n* You can confirm your exact due date in your closing disclosure, loan documents or through your loan servicer\n\nYou’ve signed the paperwork, received the keys and stepped into homeownership. So when is your first mortgage payment due? Many new homeowners [close on their home](/home-buying/articles/closing-on-a-house/) and then—nothing happens right away. No immediate bill, no instant withdrawal, just a bit of quiet that can feel surprisingly uncertain.\n\nIf you’re thinking, “Shouldn’t I be paying something already?” that’s completely normal. The timing of the first mortgage payment often catches people off guard, especially after the fast pace of closing. Shouldn’t you start paying as soon as the house is officially yours?\n\nMortgages don’t quite work like that. There’s a built-in delay that’s part of how interest is calculated and scheduled. Once you understand why that gap exists, the timeline starts to make more sense, and you can typically move forward feeling confident about what to expect next.","When is the first mortgage payment due?",[935,936],"first-time-buyer","home-buying",{"to":845,"introText":938,"body":939,"text":940},"Have questions about your first mortgage payment?","We’re here to help walk you through the timeline."," Connect with a Citi Specialist",{"title":942,"description":943},"When Is the First Mortgage Payment Due? | Mortgage.com","Review the typical timeline for your first mortgage payment. Learn why there’s a gap after closing and what to expect in your first monthly payment.","content:articles:home-loans:when-is-your-first-mortgage-payment-due.json","When Is Your First Mortgage Payment Due","articles/home-loans/when-is-your-first-mortgage-payment-due.json",[948,952],{"label":949,"slug":935,"seo":950},"First Time Buyer",{"description":951},"Learn more about first time buyer with helpful articles, tools, and guides to support your homeownership journey.",{"label":953,"slug":936,"seo":954},"Home Buying",{"description":955},"Learn more about home buying with helpful articles, tools, and guides to support your homeownership journey.",{"_path":957,"_dir":840,"_draft":6,"_partial":6,"_locale":7,"readTime":841,"l1":840,"linkNav":958,"heroMedia":959,"teaserImage":962,"slug":964,"sections":965,"hideFooterJdPower":6,"date":990,"subheadline":991,"headline":992,"isFeatured":6,"tags":993,"link":994,"seo":997,"hasSectionNavigation":27,"_id":1000,"_type":78,"title":1001,"_source":80,"_file":1002,"_extension":78,"tagsDetails":1003},"/articles/home-loans/what-is-a-mortgage-modification",{"introText":843,"text":844,"to":845},{"landscape":960,"portrait":961},"/media/_what-is-a-mortgage-modification-mobile.jpg","/media/_what-is-a-mortgage-modification-desktop.jpg",{"src":963},"/media/_what-is-a-mortgage-modification-teaser.jpg","what-is-a-mortgage-modification",[966,969,972,975,978,981,984,987],{"title":967,"content":968},"What a mortgage modification is","A mortgage modification is a change to the terms of your existing home loan, offered when you’re experiencing financial hardship. Instead of replacing your mortgage, your lender adjusts parts of it to help make your payments more manageable. The goal is simple: to help you stay in your home and avoid falling further behind.\n\nIf your financial situation has shifted, a mortgage modification may offer a way to reshape your loan so it better fits your current circumstances.",{"title":970,"content":971},"How a mortgage modification works","A mortgage modification isn’t automatic. You need to apply before your lender reviews the request.\n\nAfter you apply, your lender will take a close look at your financial situation. They’ll want to understand what’s changed and decide whether you can realistically keep up with modified payments.\n\nFrom there, the lender may adjust your loan in one or more ways:\n\n* **Lower interest rate:** This can [reduce your monthly payment ](/home-loans/articles/how-to-lower-mortgage-payment/)and the amount you pay overall\n* **Longer loan term:** Spreading payments over more years can make them smaller\n* **Principal forbearance (in some cases):** A portion of what you owe may be set aside temporarily to help ease payments\n\nThe exact changes will depend on your situation, but the goal is to create a payment plan that’s more manageable and sustainable over time.",{"title":973,"content":974},"Who may qualify for a mortgage modification","Mortgage modifications are typically designed for homeowners experiencing financial hardship.\n\nHardships could include:\n\n* Job loss or reduced income\n* Illness or medical expenses\n* Divorce or major life changes\n* Unexpected financial strain\n\nThat said, hardship alone isn’t enough. Lenders also look for signs that:\n\n* You can afford the modified payments\n* Your situation is stable enough moving forward\n\nIn other words, they’re trying to strike a balance, offering relief while ensuring the new plan is sustainable.",{"title":976,"content":977},"Mortgage modification vs. refinancing","It’s easy to mix up mortgage modification and [refinancing](/refinancing/). While both options can change how your mortgage works, they’re designed for different circumstances.\n\n::inline-table{tableLayout=\"basic\" :headers='[{},{\"value\":\"Mortgage modification\"},{\"value\":\"Refinancing\"}]' :rows='[{\"column\":{\"valueOne\":\"Purpose\",\"valueTwo\":\"Helps homeowners who are struggling to keep up with payments due to financial hardship\",\"valueThree\":\"Helps homeowners improve their loan terms (like lowering their interest rate or changing the loan length) when they’re in a stable financial position\"}},{\"column\":{\"valueOne\":\"How it works\",\"valueTwo\":\"Adjusts the terms of your existing loan to make payments more manageable\",\"valueThree\":\"Replaces your current mortgage with a new one\"}},{\"column\":{\"valueOne\":\"Qualification\",\"valueTwo\":\"Based on demonstrating hardship and showing you can afford the updated payment\",\"valueThree\":\"Requires meeting standard lending criteria, including [credit score](/home-buying/articles/what-credit-score-do-you-need-to-buy-a-house/), income and [debt-to-income ratio](/home-buying/articles/what-is-a-good-debt-to-income-ratio/)\"}},{\"column\":{\"valueOne\":\"Credit score and income requirements\",\"valueTwo\":\"Often more flexible, since the focus is on your\\ncurrent situation rather than a perfect financial profile\",\"valueThree\":\"Typically stricter, as lenders need to\\nconfirm you qualify for a brand-new loan\"}}]'}\n::\n\nIf refinancing is like trading in your car for a new model, a mortgage modification is more like repairing your current one so it runs more smoothly. The key difference comes down to your financial situation. Refinancing is usually an option when financial situations are steady, while a mortgage modification is designed to help when they’re not.",{"title":979,"content":980},"Pros and cons of mortgage modification","Like most financial tools, a mortgage modification comes with both benefits and a few things to think through, but for many homeowners, it can offer a meaningful sense of relief during a difficult time.\n\n::inline-table{tableLayout=\"basic\" :headers='[{\"value\":\"Pros\"},{\"value\":\"Cons\"}]' :rows='[{\"column\":{\"valueOne\":\"May lower your monthly payments\",\"valueTwo\":\"You may pay more in interest over the life of the loan if you extend the term\"}},{\"column\":{\"valueOne\":\"May help you avoid foreclosure\",\"valueTwo\":\"Approval isn’t guaranteed\"}},{\"column\":{\"valueOne\":\"May help improve your credit score long-term if you’re able to stick with the new payment schedule\",\"valueTwo\":\"May initially impact your credit score if your lender reports it as a settlement\"}}]'}\n::",{"title":982,"content":983},"How to apply for a mortgage modification","The mortgage modification process may vary depending on your lender and your individual situation, but here’s a general overview of what to expect.\n\n### 1. Contact your loan servicer\n\nStart by reaching out to the company that services your\nmortgage. Let them know what’s changed financially, even if you’re still\ncurrent on payments but see challenges ahead. Having that conversation early\ncan help make it easier to explore available options.\n\n### 2. Share your financial details\n\nNext, you’ll be asked to provide a snapshot of your\nfinances. This often includes income, monthly expenses and a short explanation\nof what’s caused the hardship. It might feel like a lot of paperwork, but it’s\nsimply how your lender gets a full picture of your situation.\n\n### 3. Complete any required trial payment period\n\nIn some cases, your lender may set up a temporary payment\nplan to see how the new terms work in practice. Keeping up with these payments\nhelps demonstrate that the adjustment is realistic for you.\n\n### 4. Finalize the modification\n\nIf everything checks out, your lender will move forward with\nupdating your loan terms. At that point, your new payment structure becomes\nofficial.\n\nAlternatives to consider\n\nA mortgage modification isn’t the only option available. Depending on your situation, you might also want to explore:\n\n* **Forbearance:** A temporary pause or reduction in payments, often used during short-term hardship\n* **Repayment plans:** A way to catch up on missed payments gradually over time, rather than all at once\n* **Refinancing:** If your finances are more stable, refinancing could help you secure different loan terms, such as a lower interest rate or a new loan length",{"title":985,"content":986},"Explore your options to stay on track","If your mortgage feels harder to manage than it used to, the most important thing you can do is act early.\n\nReaching out to your lender may feel uncomfortable, but it’s often the first step toward finding a solution. Whether it’s a mortgage modification or another option, there are paths that may help you stay in your home and regain a sense of control.",{"title":988,"hideTitle":27,"content":989},"Mortgage modification FAQs","::faq{headline=\"Mortgage modification FAQs\" :faqs='[{\"question\":\"What is the main purpose of a mortgage modification?\",\"answer\":\"A mortgage modification is designed to help make your existing loan more affordable if you’re facing financial hardship by adjusting terms like your interest rate or loan length.\"},{\"question\":\"Will a mortgage modification hurt my credit score?\",\"answer\":\"It may have some impact depending on your payment history and whether the modification is reported as a settlement. But if a modification helps you avoid missed payments or foreclosure, it could limit longer-term credit score damage.\"},{\"question\":\"How long does the mortgage modification process take?\",\"answer\":\"Timelines can vary, but the process often takes several weeks to a few months. If a trial payment period is required, it can extend the timeline.\"},{\"question\":\"Can I apply for a mortgage modification more than once?\",\"answer\":\"In some cases, yes. If your financial situation changes again, your lender may review a new request, though approval isn’t guaranteed.\"},{\"question\":\"Do I need to be behind on payments to qualify?\",\"answer\":\"Not always. Some lenders may consider your application if you can show you’re at risk of falling behind due to financial hardship.\"}]'}\n::","2026-07-27T14:09:00.000Z","**Key insights:**\n\n* A mortgage modification changes your existing loan terms to help make payments more manageable\n* It’s often designed for homeowners facing financial hardship, such as job loss or medical issues\n* Lenders may adjust your interest rate, extend your loan term or offer temporary relief options\n* It’s different than refinancing because you keep your current loan but update the terms\n\nIf keeping up with your [mortgage](/home-loans/articles/what-is-a-mortgage/) has started to feel like running uphill in sand, you’re not alone. Life has a way of throwing curveballs like job changes, unexpected expenses or health issues, and sometimes your original loan just doesn’t fit your situation anymore.\n\nThat’s where ahome loan modification may come in. It’s one of several options that could help homeowners stay on track when things get tough.","What is a mortgage modification?",[935,840],{"to":845,"text":844,"introText":995,"body":996},"Looking for guidance tailored to your situation?","Explore your options and get expert support along the way.",{"title":998,"description":999},"What Is a Mortgage Modification? | Mortgage.com","Learn how a mortgage modification works, who may qualify and how changing your loan terms could help make payments more manageable during financial hardship.","content:articles:home-loans:what-is-a-mortgage-modification.json","What Is A Mortgage Modification","articles/home-loans/what-is-a-mortgage-modification.json",[948,893],{"_path":1005,"_dir":840,"_draft":6,"_partial":6,"_locale":7,"readTime":841,"l1":840,"linkNav":1006,"heroMedia":1007,"teaserImage":1010,"slug":1012,"disclosure":99,"sections":1013,"date":1044,"subheadline":1045,"headline":1046,"isFeatured":6,"tags":1047,"link":1049,"seo":1052,"hasSectionNavigation":27,"_id":1055,"_type":78,"title":1056,"_source":80,"_file":1057,"_extension":78,"tagsDetails":1058},"/articles/home-loans/types-of-loans",{"introText":843,"text":844,"to":845},{"landscape":1008,"portrait":1009},"/media/article-different-mortgage-loans-available-mobile-768x512.jpg","/media/article-different-mortgage-loans-available-desktop-520x638.jpg",{"src":1011},"/media/article-different-mortgage-loans-available-teaser-500x500.jpg","types-of-loans",[1014,1017,1020,1023,1026,1029,1032,1035,1038,1041],{"title":1015,"hideTitle":27,"content":1016},"Disclaimer","Disclaimer: Citi may have different eligibility criteria and/or product offerings than those mentioned on mortgage.com.",{"title":1018,"content":1019},"Conventional loans","Welcome to the most popular home loan option, a common route for buyers or refinancers with solid credit. A [conventional loan](/home-loans/conventional-loan/) is not backed directly by the government, but is supported by government-sponsored entities (GSEs) like Fannie Mae and Freddie Mac. These GSEs are responsible for keeping the mortgage market healthy and stable, so banks can offer more loans and people can afford to buy homes.  \n\n### Who qualifies for a conventional loan? \n\n* Credit score of at least 620 \n* 3––20% down payment saved up\n* Low debt-to-income ratio (often 36% or lower) \n\n::callout{title=\"Conventional Loans vs. Government-backed loans\" body=\"Government-backed loans are insured by government agencies, meaning agencies foot the bill if a borrower defaults. Conventional loans are supported by government-sponsored entities but aren’t government-insured, so lenders have stricter loan qualification requirements to minimize risk.\" :media='{\"landscape\":\"/media/gettyimages-174764619.png\",\"portrait\":\"/media/desktop-327x245.jpg\"}'}\n::\n\n### Pros and cons of conventional loans \n\n::content-table{:tableData='[{\"row\":[{\"column\":\"Pros\"},{\"column\":\"Cons\"}]},{\"row\":[{\"column\":\"Can be used to finance a wide range of properties\"},{\"column\":\"Stricter requirements for credit scores and financial stability\"}]},{\"row\":[{\"column\":\"Private mortgage insurance not required with down payment of 20% or more\"},{\"column\":\"Private mortgage insurance typically required if down payment is under 20%\"}]},{\"row\":[{\"column\":\"Offers generally lower interest rates to buyers with good credit\"}]}]'}\n::",{"title":1021,"content":1022},"FHA loans","Ready to dig into government-backed types of mortgage loans? First, let’s start with home loan options for low-income buyers and those with imperfect credit. A [Federal Housing Administration (FHA) loan](/home-loans/fha-loan/) is a great solution for those who don’t have sterling silver credit or much cash handy for a down payment. In fact, it’s considered one of the best mortgage loans for [first-time buyers](/home-buying/articles/first-time-home-buyer/)—though you don’t need to be a first-timer to qualify for one. If you qualify for an FHA loan, you’ll get interest rates comparable to those of conventional loans. Keep in mind that there are a few strings attached, such as limits and required fees.\n\n::tip{icon=\"Bulb\" text=\"You might know that first-time homeowners have access to special programs and loan terms. But did you know that some former homeowners can apply as first-timers? As long as you haven’t owned a home in the last three years, you may qualify for first-time buyer programs and land more favorable terms.\" title=\"Pro TIp\"}\n::\n\nFHA loan requirements \n\n* Credit score of at least 500 (varies by lender) \n* Down payment as low as 3.5%  \n* More lenient debt-to-income ratio (often capped at 43%) \n* Required upfront & annual fee instead of PMI\n\n### FHA vs. conventional loans\n\n::inline-table{tableLayout=\"basic\" :headers='[{\"value\":\"Feature\"},{\"value\":\"FHA Loan\"},{\"value\":\"Conventional Loan\"}]' :rows='[{\"column\":{\"valueOne\":\"Credit Score\",\"valueTwo\":\"580+ (sometimes 500+)\",\"valueThree\":\"620+\"}},{\"column\":{\"valueOne\":\"Down Payment\",\"valueTwo\":\"3.5%-10%\",\"valueThree\":\"3%-20%\"}},{\"column\":{\"valueOne\":\"PMI Requirements\",\"valueTwo\":\"Upfront & annual fee instead of PMI\",\"valueThree\":\"Mandatory if down payment is less than 20%\"}},{\"column\":{\"valueOne\":\"Best For\",\"valueTwo\":\"First-time buyers, lower credit scores\",\"valueThree\":\"Buyers with strong credit and higher income\"}}]'}\n::",{"title":1024,"content":1025},"VA loans","The U.S. Department of Veterans Affairs (VA) gives military folks an extra hand with mortgage. Military veterans, active-duty service members and surviving spouses can buy or refinance a \nhome with a [VA loan](/home-loans/va-loan/) for flexible requirements and generous loan terms. \n\n### Benefits of VA loans \n\n* Low interest rates compared to conventional loans  \n* Zero down payment required  \n* No limit on amount you can borrow \n\n### VA loan eligibility \n\n* Certificate of Eligibility (COE) to verify military service  \n* Credit score of 620+ typically required  \n* Debt-to-income ratio of 41% or less preferred  \n* For [primary residences](/home-buying/articles/primary-residence/) only",{"title":1027,"content":1028},"USDA loans","If you’re on the hunt for a quaint little spot in the country or the suburbs, the U.S. Department of Agriculture (USDA) may help you sort the wheat from the chaff of home loans. [USDA loans](/home-loans/usda-loan/) offer up great benefits for rural residents: no down payment, low interest rates and affordable insurance costs.  \n\n### USDA loan requirements\n\n* Credit score of 640+ often required  \n* Debt-to-income ratio of 41% or less preferred  \n* Household income can’t exceed 115% of regional median income \n* Upfront guarantee fee & annual fee instead of private mortgage insurance  \n\n### USDA loan vs. FHA loan\n\n::inline-table{tableLayout=\"basic\" :headers='[{\"value\":\"Feature\"},{\"value\":\"USDA Loan\"},{\"value\":\"FHA Loan\"}]' :rows='[{\"column\":{\"valueOne\":\"Down Payment\",\"valueTwo\":\"0%\",\"valueThree\":\"3.5%\"}},{\"column\":{\"valueOne\":\"Credit Score\",\"valueTwo\":\"640+ preferred\",\"valueThree\":\"580+ (sometimes 500+)\"}},{\"column\":{\"valueOne\":\"PMI Required?\",\"valueTwo\":\"Guarantee & annual fee instead of PMI\",\"valueThree\":\"Guarantee & annual fee instead of PMI\"}}]'}\n::",{"title":1030,"content":1031},"Jumbo loans","[Jumbo loans](/home-loans/jumbo-loan/) (aka non-conforming loans) are what they sound like: bigger loans for bigger price tags. Jumbo loans let you borrow more than the standard or “conforming” loan limits set by the Federal Housing Finance Agency (FHFA). You can finance a primary home, secondary home, vacation home or an investment property, but you’ll be up against strict financial requirements and sometimes higher interest rates because jumbo loans pose a greater risk to lenders.    \n\n### When do you need a jumbo loan? \n\n* Buying a high-cost or luxury property \n* Borrowing more than conforming loan limits \n* Financing properties not eligible for conventional loans  \n\n### Qualification for a jumbo loan \n\n* Minimum credit score of 700 \n* Debt-to-income ratio of 43% or less preferred  \n* Private mortgage insurance may or may not be required \n* Proof of consistent income in recent years",{"title":1033,"content":1034},"Adjustable-rate mortgages (ARMs)","Not only are there different types of mortgages, but there are also different types of interest rates. When you have an [adjustable-rate mortgage](/home-loans/adjustable-rate/), your interest rate fluctuates over the loan’s duration. Initially, the rate is fixed for a set period, typically 3 to 10 years. After that period, your interest rate can rise or fall based on market conditions, causing your mortgage bill to change with it. Adjustable-rate mortgages are appealing if you want to take advantage of the initial low-rate period and plan to sell or refinance soon. \n\n### How ARMs work \n\nOnce the initial rate period is over, why do rates change? Two factors are at play here: the index and the margin. The index is the baseline interest rate, which is influenced by broader economic conditions. The margin is outlined in your loan agreement and dictates just how much your rate can fluctuate over the life of the loan. Together, these two factors dictate your rate adjustment. Keep in mind that the unpredictability of adjustable rates can make it challenging to plan your mortgage budget.  \n\n### ARMs vs. fixed-rate mortgages\n\n::inline-table{tableLayout=\"basic\" :headers='[{\"value\":\"Feature\"},{\"value\":\"ARM\"},{\"value\":\"Fixed-Rate\"}]' :rows='[{\"column\":{\"valueOne\":\"Initial Interest Rate\",\"valueTwo\":\"Lower\",\"valueThree\":\"Higher\"}},{\"column\":{\"valueOne\":\"Payment Stability\",\"valueTwo\":\"Changes over time\",\"valueThree\":\"Stays the same\"}},{\"column\":{\"valueOne\":\"Best For\",\"valueTwo\":\"Short-term homeowners\",\"valueThree\":\"Long-term homeowners\"}}]'}\n::",{"title":1036,"content":1037},"Fixed-rate mortgages","[Fixed-rate mortgages](/home-loans/fixed-rate/) lock you into one constant interest rate during a loan. That means steady, predictable payments and no unwelcome surprises on your mortgage bill.  \n\n### Benefits of fixed-rate mortgages \n\n*  Predictable payments  \n* Protection from interest rate spikes \n*  Ability to accurately budget for mortgage payments \n\n### 15-year vs. 30-year fixed loans \n\nMost people choose a 15-year fixed or 30-year fixed loan, depending on their financial situation. If you can afford higher monthly payments, a 15-year fixed mortgage will cost you less in total interest over time. If you’re juggling several debts (hello, car payments and student loans), a 30-year fixed term can reduce financial pressure in the short term.   \n\n::inline-table{tableLayout=\"basic\" :headers='[{\"value\":\"Feature\"},{\"value\":\"15-Year\"},{\"value\":\"30-Year\"}]' :rows='[{\"column\":{\"valueOne\":\"Monthly Payment\",\"valueTwo\":\"Higher\",\"valueThree\":\"Lower\"}},{\"column\":{\"valueOne\":\"Total Interest Paid\",\"valueTwo\":\"Less\",\"valueThree\":\"More\"}},{\"column\":{\"valueOne\":\"Loan Payoff Time\",\"valueTwo\":\"Shorter\",\"valueThree\":\"Longer\"}}]'}\n::",{"title":1039,"content":1040},"Home equity line of credit (HELOC)","If you’re a current homeowner in need of cash flow, a HELOC could be a safe bet. A HELOC is a revolving credit line (much like a credit card) that lets you borrow against your home equity. HELOCs usually have lower interest rates because lenders shoulder less risk when your home is collateral.   \n\n### HELOC vs. home equity loan\n\n::inline-table{tableLayout=\"basic\" :headers='[{\"value\":\"Feature\"},{\"value\":\"HELOC\"},{\"value\":\"Home Equity Loan\"}]' :rows='[{\"column\":{\"valueOne\":\"Payout\",\"valueTwo\":\"Revolving credit line\",\"valueThree\":\"Lump Sum\"}},{\"column\":{\"valueOne\":\"Interest Rate\",\"valueTwo\":\"Variable\",\"valueThree\":\"Fixed\"}},{\"column\":{\"valueOne\":\"Best For\",\"valueTwo\":\"Ongoing expenses\",\"valueThree\":\"One-time expenses\"}}]'}\n::\n\nBest uses for a HELOC \n\n* Renovations that may increase your home value  \n* Consolidation of debts that have higher interest rates  \n* Ongoing access to funds for big projects or emergencies",{"title":1042,"hideTitle":27,"content":1043},"Types of home loan FAQs","::faq{headline=\"Types of home loan FAQs\" :faqs='[{\"question\":\"What is the difference between a fixed-rate and an adjustable-rate mortgage?\",\"answer\":\"The interest rate for a fixed-rate mortgage stays the same over the life of the loan, so you always know how much you’ll owe. In contrast, adjustable-rate mortgages (ARMs) fluctuate with market conditions, meaning the interest rate can rise or fall over time, impacting your mortgage payment.\"},{\"question\":\"How do I determine which home loan type is best for me?\",\"answer\":\"Weighing different types of home loans? When choosing the right mortgage, two factors come into play: meeting eligibility requirements and feeling financially comfortable with the terms of the loan. Before deciding, compare the loans you qualify for and do a little math to see which loan will save you the most money over the life of the loan.\"},{\"question\":\"What are the benefits of government-backed loans like FHA, VA and USDA?\",\"answer\":\"Government-backed loans typically have more forgiving requirements and favorable terms compared to conventional loans. FHA loans accept lower credit scores and down payments as low as 3.5%. VA loans boast no down payments or private mortgage insurance for military folks. USDA loans help rural buyers avoid a down payment altogether.\"},{\"question\":\"Can I qualify for a home loan with a low credit score?\",\"answer\":\"Having a low credit score may limit your options, but government-backed loans like FHA, VA and USDA loans can help you secure a home without perfect finances. Also, consider looking into local charities or organizations that help community members become homeowners.\"},{\"question\":\"What is private mortgage insurance (PMI), and when is it required?\",\"answer\":\"Lenders rely on private mortgage insurance to protect the money you’re borrowing. If you put down less than 20%, lenders typically require you to get mortgage insurance to cover potential losses in case you miss payments.\"},{\"question\":\"How does my down payment affect my loan options?\",\"answer\":\"A larger down payment sets you up for success. The more you put down, the better. It is easier to qualify for loans, lock in a low interest rate and avoid mortgage insurance when your down payment is 20% or more.\"}]'}\n::","2026-06-22T10:59:00.000Z","Conventional loans, government loans, jumbo loans—oh my! Picking the right type of home loan is just as important as putting down roots, but there are lots of options to sift through. Let’s get familiar with mortgage types so you can understand your options and decide which path is a good fit, whether you’re hoping to buy or refinance.","Understanding different home loan types",[936,1048,840],"loan-types",{"introText":1050,"body":1051,"text":844,"to":845},"Want an expert’s POV on the right loan for you?","Get a professional’s take on your financial needs and ideal loan options.",{"title":1053,"description":1054},"Understanding Different Home Loan Types | Citi Mortgage","Explore the different types of mortgage loans available, including conventional, FHA, VA, jumbo, and more. Find the best home loan for your needs.","content:articles:home-loans:types-of-loans.json","Types Of Loans","articles/home-loans/types-of-loans.json",[1059,952,893],{"label":1060,"slug":1048,"seo":1061},"Loan Types",{"description":1062},"Explore resources about loan types—including types, requirements, and how to choose the right mortgage option.",{"_path":1064,"_dir":840,"_draft":6,"_partial":6,"_locale":7,"readTime":841,"l1":840,"linkNav":1065,"heroMedia":1066,"teaserImage":1069,"slug":1071,"sections":1072,"hideFooterJdPower":6,"date":1094,"subheadline":1095,"headline":1096,"isFeatured":6,"tags":1097,"link":1100,"seo":1104,"hasSectionNavigation":27,"_id":1107,"_type":78,"title":1108,"_source":80,"_file":1109,"_extension":78,"tagsDetails":1110},"/articles/home-loans/how-much-of-your-income-should-go-toward-a-mortgage",{"introText":843,"text":844,"to":845},{"landscape":1067,"portrait":1068},"/media/how-much-of-your-income-should-go-toward-a-mortgage-mobile.jpg","/media/how-much-of-your-income-should-go-toward-a-mortgage-desktop.jpg",{"src":1070},"/media/how-much-of-your-income-should-go-toward-a-mortgage-teaser.jpg","how-much-of-your-income-should-go-toward-a-mortgage",[1073,1076,1079,1082,1085,1088,1091],{"title":1074,"content":1075},"The 28% rule: The most common guideline","One of the most widely used affordability guidelines is known as the 28% rule. The idea is that your total monthly housing costs add up to no more than about 28% of your income before taxes. This includes your mortgage payment, property taxes and homeowners insurance. If your home has a homeowners association, those fees may also be part of the total.\n\n28% isn’t a strict rule or a hard limit, though. It’s a helpful guideline that gives you a sense of what may feel manageable. Many buyers find that staying around this range makes it easier to cover everyday expenses, keep saving and handle unexpected home costs without feeling stretched.",{"title":1077,"content":1078},"The 36% rule: Looking beyond housing costs","The 28% rule looks only at your housing costs, but lenders also want to understand how your full monthly budget comes together. To do that, they look at something called your [debt-to-income ratio](/home-buying/articles/what-is-a-good-debt-to-income-ratio/), often shortened to DTI. \n\n In simple terms, this means adding up all the regular debt payments you make each month, not just your mortgage. That can include things like car payments, student loans, credit card minimums and personal loans. \n\n Lenders look at how your monthly debt payments compare to your income before taxes. 36% is a common benchmark, but some lenders consider slightly higher DTIs—up to around 43%—under certain circumstances.\n\n Even if your housing payment feels manageable on its own, having a lot of other monthly debt can limit how much you’re approved to borrow. That’s why lenders look at the whole picture, not just your estimated mortgage payment.",{"title":1080,"content":1081},"How do lenders decide what you can afford?","When you apply for a mortgage, lenders look at your full financial picture rather than\nfocusing on a single percentage. This helps them understand what you\ncan reasonably manage month to month.\n\nThey’ll usually consider things like: \n\n::inline-table{tableLayout=\"basic\" :rows='[{\"column\":{\"valueOne\":\"Income consistency\",\"valueTwo\":\"How steady your income has been over time and how predictable it looks going forward \"}},{\"column\":{\"valueOne\":\"[Credit score](/home-buying/articles/what-credit-score-do-you-need-to-buy-a-house/) and history\",\"valueTwo\":\"How you’ve handled borrowing and payments in the past shows how you manage financial commitments\"}},{\"column\":{\"valueOne\":\"[Down payment](/home-buying/articles/how-much-down-payment-for-a-house/) amount\",\"valueTwo\":\"How much you’re able to put down upfront, which can affect both your loan structure and your monthly payment \"}},{\"column\":{\"valueOne\":\"Existing debt\",\"valueTwo\":\"Other regular payments you already have, such as car loans, student loans or credit cards\"}},{\"column\":{\"valueOne\":\"[Loan type](/home-loans/)\",\"valueTwo\":\"How your mortgage is structured, which can influence the monthly payment\"}},{\"column\":{\"valueOne\":\"[Property taxes](/home-buying/articles/are-property-taxes-included-in-mortgage-payment/) and [insurance](/home-buying/articles/what-is-homeowners-insurance/)\",\"valueTwo\":\"Costs that vary by location but play a meaningful role in your overall monthly housing expense\"}}]'}\n::\n\nJust because a lender says you can afford a certain amount, though, doesn’t mean it’s the right fit for you. Many buyers choose a smaller monthly payment so their budget still has room for savings, everyday expenses and life’s surprises.",{"title":1083,"content":1084},"How to calculate a mortgage payment that feels comfortable","If you’d like a simple way to estimate a monthly mortgage payment using common guidelines, you can walk through these steps: \n\n1. **Start with your gross monthly income.** Look at how much you earn each month before taxes. This gives you a starting point for the rest of the calculation. \n2. **Estimate a housing payment using the 28% guideline.** Take your monthly income and calculate about 28% of it. This gives you a rough idea of a housing payment that many buyers find manageable.\n3. **Check how this fits with your other monthly debts.** Add up payments for debts like car loans, student loans or credit cards, then look at how they compare to your income. Remember, lots of lenders prefer your total monthly debts to stay under about 43% of your income before taxes.\n4. **Think about what feels comfortable for you based on your goals.** Numbers are helpful, but they’re not the whole story. You might prefer a lower payment so you have room for savings, travel or future expenses or more breathing room each month. \n\n[Mortgage calculators](/calculators/affordability/) can be a helpful way to test different scenarios. You can see how changes to the home price, down payment or loan type affect your monthly costs, which makes it easier to compare options and spot a payment range that feels workable.\n\nAs you explore those scenarios, it can also help to look at the range of home loan options available that support different financial situations, from [conventional loans](/home-loans/conventional-loan/) and [VA loans](/home-loans/va-loan/) to [programs geared toward buyers who need more flexibility](/home-loans/fha-loan/). Reviewing loan types alongside your budget can give you a clearer sense of how different choices may shape your monthly payment.",{"title":1086,"content":1087},"What the 28% guideline looks like in real life","Seeing percentages translated into dollars can make them easier to understand. These examples show how the 28% guideline might translate into a real-life monthly mortgage payment: \n\n* If your monthly income is $5,000, 28% comes out to roughly $1,400 for a monthly housing payment. \n* If your monthly income is $8,000, 28% works out to around $2,240 per month for housing costs.  \n\nThese figures include common housing costs like your mortgage payment, property taxes and homeowners insurance. They’re meant to provide examples, not to set a spending target. Your own comfortable number may be higher or lower depending on your budget and priorities.",{"title":1089,"content":1090},"Turning guidelines into a comfortable budget ","Many buyers start with familiar benchmarks like the 28% guideline for housing costs and a broader look at total monthly debt. These numbers offer a helpful framework, but they don’t replace your own sense of what feels manageable.  \n\nThe most important step is choosing a monthly payment that fits your income, leaves room for other goals and feels sustainable over time. By understanding common guidelines, reviewing your full budget and exploring different loan options, you can move forward with more clarity as you plan for homeownership.",{"title":1092,"hideTitle":27,"content":1093},"Mortgage income ratio FAQs","::faq{headline=\"Mortgage income ratio FAQs\" :faqs='[{\"question\":\"What percentage of income should go toward a mortgage?\",\"answer\":\"The 28% guideline is often used as a starting point because it gives lenders and buyers a quick way to estimate whether a housing payment may be manageable. It suggests that your total monthly housing costs, not just the mortgage payment, should fall at or under 28% of your pre-tax income. While it’s a helpful reference, it’s not a hard limit, and the right number can vary depending on your income, debt and overall budget.\"},{\"question\":\"Can I spend more than 28% of my income on a mortgage?\",\"answer\":\"Some buyers do, especially if they have lower overall debt. Lenders review your full financial picture to determine affordability.\"},{\"question\":\"Does the 28% guideline apply to take-home pay or gross income? \",\"answer\":\"The 28% guideline is based on gross income, which is your income before taxes and other deductions. Lenders use gross income because it provides a consistent way to compare affordability across borrowers.\"},{\"question\":\"What if my housing costs are less than 28% of my income?\",\"answer\":\"Spending less than 28% on housing can give you more flexibility in your budget. It may leave additional room for savings, other financial goals or unexpected expenses, though the right amount ultimately depends on your personal priorities.\"}]'}\n::","2026-06-22T07:02:00.000Z","**Key insights:**\n\n* One common guideline, the 28% rule, suggests spending no more than 28% of your pre-tax income on housing\n* Lenders may want all your monthly debts, including your mortgage payment, to fall below 36% of your gross income\n* The right percentage of income for your mortgage depends on your personal financial situation\n\nBuying a home is a big milestone. For many people, it’s also one of the largest financial commitments they’ll ever make. If you’re wondering, “How much of my monthly income should go toward a [mortgage](/home-loans/articles/what-is-a-mortgage/) payment?” you’re asking the same question many buyers do at the very beginning of the process. You want a number that feels realistic, fits your income, leaves room for other priorities and doesn’t stretch your budget too thin.\n\nThere isn’t a single “right” percentage that works for everyone. Your comfort level depends on your income, existing debts, lifestyle and long-term financial goals. But there are well-established guidelines that can help you think through affordability to find a monthly payment amount you’re comfortable with.","How much of your income should go toward a mortgage?",[840,1098,1099],"budget-planning","down-payments",{"to":845,"introText":1101,"body":1102,"text":1103},"What fits your budget?","We’re here to help you talk through the numbers","Connect with A Citi Specialist",{"title":1105,"description":1106},"How Much of Your Income Should Go Toward a Mortgage? | Mortgage.com","Explore how much of your income should go toward a mortgage. Learn how the 28% and 36% rules work and how to choose a payment that fits your budget.","content:articles:home-loans:how-much-of-your-income-should-go-toward-a-mortgage.json","How Much Of Your Income Should Go Toward A Mortgage","articles/home-loans/how-much-of-your-income-should-go-toward-a-mortgage.json",[1111,893,1115],{"label":1112,"slug":1098,"seo":1113},"Budget Planning",{"description":1114},"Learn more about budget planning with helpful articles, tools, and guides to support your homeownership journey.",{"label":1116,"slug":1099,"seo":1117},"Down Payments",{"description":1118},"Learn more about down payments with helpful articles, tools, and guides to support your homeownership journey.",{"_path":1120,"_dir":840,"_draft":6,"_partial":6,"_locale":7,"readTime":1121,"l1":840,"linkNav":1122,"heroMedia":1123,"teaserImage":1126,"slug":1128,"sections":1129,"date":1142,"subheadline":1143,"headline":1144,"dateModified":1145,"isFeatured":6,"tags":1146,"link":1149,"seo":1152,"hasSectionNavigation":27,"_id":1155,"_type":78,"title":1156,"_source":80,"_file":1157,"_extension":78,"tagsDetails":1158},"/articles/home-loans/how-to-lower-mortgage-payment",5,{"introText":843,"text":844,"to":845},{"landscape":1124,"portrait":1125},"/media/how-to-lower-your-mortgage-payment-mobile-768x512.jpg","/media/how-to-lower-your-mortgage-payment-desktop-520x638.jpg",{"src":1127},"/media/how-to-lower-your-mortgage-payment-teaser-500x500.jpg","how-to-lower-mortgage-payment",[1130,1133,1136,1139],{"title":1131,"content":1132},"Options to lower your mortgage payment without refinancing","Not every solution requires a new loan. These options focus on reducing expenses tied to your mortgage, like insurance, taxes or how your loan is structured.\n\n### **Recast your mortgage**\n\nA mortgage recast lets you make a one-time lump-sum payment toward your principal. In return, your lender recalculates your monthly payments—based on your new, lower balance—while keeping your original interest rate and term. This can reduce your monthly payments without the closing costs or paperwork of refinancing. Just note that recasts are typically available only for conventional loans in good standing, and some lenders charge a small administrative fee.\n\n::tip{icon=\"Bulb\" title=\"PRO TIP\" text=\"Not all lenders offer mortgage recasts, and government-backed loans (FHA, VA, USDA) usually aren’t eligible. Be sure to check with your lender before making a lump-sum payment.\"}\n::\n\n### **Eliminate Private Mortgage Insurance (PMI)**\n\nIf you put down less than 20% when you bought your home, you’re likely paying PMI, a type of insurance that protects the lender if you stop making payments. In most cases, lenders are required to cancel it once you reach 22% equity, as long as your payments are current. For more details, check your lender’s policy or official [PMI removal guidelines](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/).\n\n::content-table{body=\"At a glance: when PMI can be removed\" :tableData='[{\"row\":[{\"column\":\"Equity in home\"},{\"column\":\"What happens with PMI*\"}]},{\"row\":[{\"column\":\"20%\"},{\"column\":\"You may be able to request removal (an appraisal is often required)\"}]},{\"row\":[{\"column\":\"22%\"},{\"column\":\"Lender must remove automatically on most conventional loans (if your payments are current)\"}]}]' support=\"*Not all loans are eligible for PMI removal. Check your lender’s guidelines.\"}\n::\n\n### **Appeal your property taxes**\n\nIf your home’s assessed value seems higher than comparable homes in your neighborhood, you may be overpaying on property taxes. Filing an appeal with local tax authorities—using comparable sales data as evidence—could lower your assessment. When escrow is included in your monthly payment, a lower tax bill can reduce your escrow payments, which may bring down your monthly mortgage amount.\n\n::tip{icon=\"Bulb\" text=\"Even a small change in property tax assessments can change your escrow amount. Your lender will adjust your monthly mortgage payment after your next escrow analysis.\" title=\"PRO TIP\"}\n::\n\n### **Shop around for homeowners’ insurance**\n\nYour homeowners’ insurance is typically part of your monthly mortgage payment (through escrow), so finding a lower premium can make a real difference. Compare providers annually or consider raising your deductible or bundling policies to potentially lower monthly mortgage costs without changing your loan.",{"title":1134,"content":1135},"Options that involve refinancing or loan adjustments","Sometimes the most effective way to lower your mortgage payment is to change the terms of your loan. These options often bring more savings but come with additional considerations.\n\n### **Refinance to a lower interest rate or longer term**\n\nRefinancing replaces your current mortgage with a new one, possibly with a lower interest rate or with a longer repayment term. Either option can lower your monthly payment.\n\nSwitching [mortgage types](/home-loans/articles/types-of-loans/) can sometimes help you save. For example, refinancing from a fixed-rate loan to an [adjustable-rate mortgage (ARM)](/home-loans/adjustable-rate/) may initially lower your mortgage payment. But there are risks to consider. Refinancing comes with closing costs, extending your term can increase the total interest you pay and, in the case of an ARM, your payment can rise in the future if interest rates go up.\n\n::tip{icon=\"Bulb\" title=\"PRO TIP\" text=\" Try our [Mortgage Refinance Calculator](/calculators/refinance/) to estimate how much you could save—or lower your mortgage payments—before deciding if refinancing is right for you..\"}\n::\n\n### **Consider a mortgage loan modification**\n\nA mortgage loan modification changes the terms of your existing loan. Lenders may reduce your interest rate, extend the term or switch the loan type to help you afford your payments. This is typically an option for borrowers facing hardship who may not qualify for refinance. While it can make payments affordable, it requires documentation and may lengthen repayment or affect your credit. Carefully consider what kind of modification is offered because if you still can’t make the payments, you could risk losing your home.\n\n### **Explore forbearance**\n\nForbearance is a temporary pause or reduction in payments. It’s helpful during financial emergencies like natural disaster, job loss or medical expenses. It won’t erase your debt, and you’ll need to repay missed payments later either as a lump sum, through a repayment plan or by adding them to your loan balance. Forbearance is best viewed as a last resort, but it can buy you time when you need it most.",{"title":1137,"content":1138},"Smart money moves to manage payments","You don’t always need to change your loan to feel some relief. A few financial strategies can help reduce mortgage stress over time.\n\n### **Adjust your budget and payment schedule**\n\nMaking biweekly mortgage payments, instead of monthly ones, can slightly lower your loan term and interest over time. It also spreads costs more evenly.  Budgeting carefully—especially by cutting nonessential spending—can improve your [debt-to-income ratio](/home-buying/articles/what-is-a-good-debt-to-income-ratio/) and free up more money for housing costs. Just make sure your biweekly payments still meet the monthly minimum payment your lender requires.\n\n::callout{:media='{\"landscape\":\"/media/article-callout-landscape.png\",\"portrait\":\"/media/article-callout-portrait.jpg\"}' title=\"Did you know?\" body=\"Making biweekly payments chalks up to 26 half-payments per year—equal to 13 full payments. That one extra payment each year can reduce your principal faster.\"}\n::\n\n### **Make extra principal payments when possible**\n\nEven modest extra payments—$50 or $100 a month—can help reduce your balance and lifetime interest. Pay extra only when your budget allows, but know that every bit counts toward building equity.",{"title":1140,"hideTitle":27,"content":1141},"FAQs about lowering your mortgage","::faq{headline=\"FAQs about lowering your mortgage\" :faqs='[{\"question\":\"What’s the best way to lower your mortgage payment?\",\"answer\":\"There’s no single best way—it depends on your loan, equity and goals. Some homeowners benefit from refinancing or recasting, while others save by removing PMI, adjusting insurance or appealing property taxes. The right approach depends on your loan terms and financial circumstances.\"},{\"question\":\"Can I lower my mortgage payment without refinancing?\",\"answer\":\"Potentially, yes. Options may include recasting after a lump-sum principal payment, requesting PMI removal when you have sufficient equity, appealing your property tax assessment or making changes to homeowners’ insurance. Each option has its own requirements and potential savings.\"},{\"question\":\"Will removing PMI lower my mortgage payment?\",\"answer\":\"Yes, if you’re eligible. Once you reach about 20% equity in your home, you can typically request cancellation. Your lender may require an appraisal. PMI is also automatically removed at 22% equity if your payments are current.\"},{\"question\":\"Can you negotiate mortgage payments with your lender?\",\"answer\":\"In certain circumstances, yes. If you’re experiencing financial hardship you may be able to request a loan modification, repayment plan or temporary forbearance. These options require lender approval and documentation, and they may affect your credit or loan terms.\"},{\"question\":\"Is it better to refinance or recast a mortgage?\",\"answer\":\"The answer depends on your financial situation. A recast involves making a lump-sum payment and recalculating your existing loan. Refinancing replaces your mortgage with a new one that may have a different rate, term or loan type. Both have pros, cons, costs and eligibility requirements, so it’s important to review the details with your lender before deciding.\"},{\"question\":\"How do I know if recasting my mortgage is an option?\",\"answer\":\"Start by asking your lender if they offer mortgage recasting—it’s typically available only on conventional loans. You’ll also need to be current on payments, make a significant lump-sum payment toward the principal and pay a small processing fee. Government-backed loans (FHA, VA, USDA) usually don’t qualify.\"},{\"question\":\"Can property taxes or insurance change changes lower my monthly mortgage?\",\"answer\":\"Yes—if you escrow these costs. A successful tax appeal or a lower homeowners’ insurance premium can reduce the escrow portion of your monthly payment after your next escrow analysis. These changes won’t affect your principal and interest payment, but they can lower your total monthly mortgage payment after your lender updates your escrow.\"}]'}\n::","2025-10-03T15:25:00.000Z","If rising interest rates and everyday expenses are squeezing your budget, you’re not alone. Many homeowners are looking for ways to lower mortgage payments and make monthly costs more manageable. The good news is there are several strategies—some simple, some more involved—that may help bring your payment down. Whether you’re looking to cut costs without changing your loan or exploring bigger-picture options like refinancing, here’s what to know.","How to lower mortgage payments","2026-01-08T06:31:00.000Z",[840,1147,1148],"refinancing","lower-payments",{"introText":1150,"body":1151,"text":844,"to":845},"Wondering how to lower your mortgage payment?","We can walk you through the options and potential next steps.",{"title":1153,"description":1154},"How to Lower Mortgage Payments | Mortgage.com","There are different ways to lower your monthly mortgage payment. Explore strategies like refinancing, recasting, and removing PMI to reduce housing costs.","content:articles:home-loans:how-to-lower-mortgage-payment.json","How To Lower Mortgage Payment","articles/home-loans/how-to-lower-mortgage-payment.json",[1159,893,1163],{"label":1160,"slug":1148,"seo":1161},"Lower Payments",{"description":1162},"Learn more about lower payments with helpful articles, tools, and guides to support your homeownership journey.",{"label":1164,"slug":1147,"seo":1165},"Refinancing",{"description":1166},"Learn more about refinancing with helpful articles, tools, and guides to support your homeownership journey.",{"_path":1168,"_dir":840,"_draft":6,"_partial":6,"_locale":7,"readTime":1169,"l1":840,"linkNav":1170,"heroMedia":1171,"teaserImage":1174,"slug":1176,"sections":1177,"date":1196,"subheadline":1197,"headline":1198,"isFeatured":6,"tags":1199,"leadGenLoanPurpose":890,"link":1201,"seo":1204,"hasSectionNavigation":27,"_id":1207,"_type":78,"title":1208,"_source":80,"_file":1209,"_extension":78,"tagsDetails":1210},"/articles/home-loans/heloc-to-buy-another-property",3,{"introText":843,"text":844,"to":845},{"landscape":1172,"portrait":1173},"/media/can-you-use-a-heloc-to-buy-another-property-mobile-768x512.jpg","/media/can-you-use-a-heloc-to-buy-another-property-desktop-520x638.jpg",{"src":1175},"/media/can-you-use-a-heloc-to-buy-another-property-teaser-500x500.jpg","heloc-to-buy-another-property",[1178,1181,1184,1187,1190,1193],{"title":1179,"content":1180},"What is a HELOC?","A [home equity line of credit (HELOC)](/home-loans/heloc/) is a flexible way to borrow cash using the equity in your home. It offers a revolving line of credit—like a credit card—that lets you borrow as needed up to a set limit over a predetermined period. Your lender will set your terms and borrowing limit based on how much home equity you have and the strength of your financial profile.\n\nHELOCs have two stages:\n\n* **Draw period:** When you can take out funds as needed, usually paying only interest on what you borrow.\n* **Repayment period:** When you pay back the principal and additional interest as a monthly payment.\n\nWondering how to pay for something using a HELOC balance? Homeowners often use HELOCs to fund big expenses when they aren’t sure how much they’ll need—think home renovations or large expenses. But keep in mind that HELOC [interest rates](/rates/) are typically [variable rather than fixed](/home-loans/articles/fixed-vs-adjustable-rate/), so your repayments could increase if rates rise.",{"title":1182,"content":1183},"How a HELOC can be used to buy another property","Want to take on a residential investment property, snag a [second home](/home-buying/articles/second-home/) or buy rental property with a HELOC? If you are short on liquid cash but have a solid chunk of home equity, it’s possible to use a HELOC for a down payment. In rare cases, you may even have enough equity to buy a property outright! HELOCs typically let you borrow up to 85% of your home’s market value, minus what you owe on the mortgage. For instance, if your house is worth $400,000, your maximum borrowing potential would be $340,000. But if you still owe $100,000 on your mortgage, you could borrow the difference—up to $240,000 as a down payment financing option.\n\n### **Lender rules and requirements**\n\nEvery lender has different requirements, especially when it comes to funding second properties with HELOCs. In general, you need a stronger financial profile to prove you can juggle multiple properties and additional debt. Let’s check out common requirements.\n\n* **Loan-to-value (LTV) ratio:** Your LTV compares your mortgage balance to your home’s current market value. Most banks require an LTV of 85% or less, so you should aim to have about 20% equity in your home. \n* **Minimum [credit scores](/home-buying/articles/what-credit-score-do-you-need-to-buy-a-house/):** For HELOCs in general, many lenders want to see a FICO® score of at least 680. When the loan is for another property, lenders may expect even higher scores.\n* **DTI/income requirements:**  A [debt-to-income (DTI) ratio](/home-buying/articles/what-is-a-good-debt-to-income-ratio/) of 43% or less shows you can comfortably pay off your debts with your monthly income. Some lenders will allow a higher DTI of up to 50% with a strong FICO credit score. Your lender may have specific income criteria as well.\n* **Property restrictions:** Not every lender will let you use home equity to buy another place, especially if you still need a mortgage to pay it off. Some lenders even reserve home equity loans for [primary home](/home-buying/articles/primary-residence/) expenses only, like renovations or repairs.\n* **Minimum loan:** Some lenders have a minimum amount they are willing to loan. In certain states, the minimum amount of a HELOC loan is set by law.",{"title":1185,"content":1186},"Pros and cons of using a HELOC to buy another property","::content-table{:useBullets=true :tableData='[{\"row\":[{\"column\":\"Pros\"},{\"column\":\"Cons\"}]},{\"row\":[{\"column\":\"Quick access to cash without draining savings or liquidating other investments\"},{\"column\":\"Payments can rise if interest rates increase\"}]},{\"row\":[{\"column\":\"Flexible funding for unexpected expenses after closing\"},{\"column\":\"Not always allowed to finance a second property\"}]},{\"row\":[{\"column\":\"Often lower rates than personal loans or credit cards\"},{\"column\":\"Adds more debt and reduces available home equity, which can be risky if property values fall\"}]},{\"row\":[{\"column\":\"Long repayment period (up to 20 or sometimes 30 years) to help manage costs\"},{\"column\":\"Risk of foreclosing on your primary residence if you can’t keep up with payments\"}]}]'}\n::",{"title":1188,"content":1189},"Alternatives to a HELOC for buying another property","* **[Cash-out refinance](/refinancing/articles/cash-out/)**: Replace your existing mortgage with a larger one and pocket the difference in cash. You’ll get a lump sum at a fixed rate, but you must accept new loan terms.\n* **[Home equity loan](/home-loans/home-equity/)**: Borrow a lump sum loan against your home’s equity with predictable, fixed payments, though this option is  [less flexible than a HELOC](/home-loans/articles/heloc-vs-home-equity-loan/).\n* **Personal loan:** Access funds without using your home as collateral, though interest rates are typically higher than conventional mortgage rates.\n* **Retirement account loan**: Tap into a 401(k) or similar plan, but keep in mind that this will chip away at your retirement savings.\n* **Savings or investment funds**: Dip into your reserves or liquidate investments to cover costs and avoid new debt.",{"title":1191,"content":1192},"Steps to apply for a HELOC","1. **Check your fit:** Use our [HELOC calculator](/calculators/heloc/) to estimate how much you could borrow and what your monthly payments might be. Is a HELOC right for your budget?\n2. **Know your numbers:** Double check your credit score, mortgage balance, home value and DTI ratio.\n3. **Research & prequalify:** Compare rates, fees and terms and see if you prequalify with a lender.\n4. **Apply & wait for approval:** Submit your documents and the lender will verify your information. If they approve your application, they’ll set your borrowing limits and terms.\n5. **Close & use your funds:** Sign the [closing papers](/home-buying/articles/closing-documents/), access your funds and borrow only what you need to avoid unnecessary interest charges.",{"title":1194,"hideTitle":27,"content":1195},"FAQs","\n\n::faq{headline=\"FAQs\" :faqs='[{\"question\":\"Can you use a HELOC for a rental or investment property purchase?\",\"answer\":\"Yes, some lenders allow HELOCs for rental or investment properties, but many reserve them for primary residences.\"},{\"question\":\"What credit score do you need to use a HELOC for another property?\",\"answer\":\"A credit score of 680 or higher is typically required, though lender requirements vary.\"},{\"question\":\"Can a HELOC cover the full purchase price of a second home or investment property?\",\"answer\":\"HELOCs rarely cover the full price of a second property, but this would depend on the purchase price and your home equity amount. Lenders only let you borrow a portion of your home equity and set borrowing limits based on your financial profile.\"},{\"question\":\"What are the risks of using a HELOC for real estate investing?\",\"answer\":\"Your monthly payments could rise if interest rates go up, your home is at risk if you can’t afford payments and borrowing too much can strain your budget.\"}]'}\n::","2025-09-29T13:10:00.000Z","Wondering how to pull equity out of your house to finance a new property? You can use a HELOC for real estate investing, but you need to weigh the financial impact and potential limitations. A HELOC leverages your current home equity to secure a revolving line of credit that you can draw from when needed, up to a set limit. If you want to use home equity financing to scoop up a new property, you should know the ground rules, pros and cons and other ways to access property investment funding.","Can you use a HELOC to buy another property?",[936,1200,840],"refinancing-process",{"introText":1202,"body":1203,"text":844,"to":845},"Still not sure about using a HELOC for another property?","We can help you sort through the pros, cons and potential next steps.",{"title":1205,"description":1206},"Can You Use a HELOC to Buy a Second Home? | Citi Mortgage","Learn if you can use a HELOC to buy another property, how lenders view it, pros and cons, and the rules for investment and vacation homes. ","content:articles:home-loans:heloc-to-buy-another-property.json","Heloc To Buy Another Property","articles/home-loans/heloc-to-buy-another-property.json",[1211,952,893],{"label":1212,"slug":1200},"Refinancing Process",{"_path":1214,"_dir":840,"_draft":6,"_partial":6,"_locale":7,"readTime":1215,"l1":840,"linkNav":1216,"heroMedia":1217,"teaserImage":1220,"slug":1222,"sections":1223,"date":1251,"subheadline":1252,"headline":1253,"dateModified":1254,"isFeatured":6,"tags":1255,"link":1256,"seo":1259,"hasSectionNavigation":27,"_id":1262,"_type":78,"title":1263,"_source":80,"_file":1264,"_extension":78,"tagsDetails":1265},"/articles/home-loans/what-is-a-mortgage",10,{"introText":843,"text":844,"to":845},{"landscape":1218,"portrait":1219},"/media/article-what-is-a-mortgage-mobile-768x512.jpg","/media/article-what-is-a-mortgage-desktop-520x638.jpg",{"src":1221},"/media/article-what-is-a-mortgage-teaser-500x500.jpg","what-is-a-mortgage",[1224,1227,1230,1233,1236,1239,1242,1245,1248],{"title":1225,"content":1226},"How does a mortgage loan work?","Browsing online real estate listings is fun, but what if you see your dream home and want to do something about it? Most of us can’t afford to buy an entire house with cash. That’s where a mortgage comes in.  \n\n::callout{:media='{\"landscape\":\"/media/article-callout-landscape.png\",\"portrait\":\"/media/article-callout-portrait.jpg\"}' title=\"What is a mortgage loan?\" :body='\"A mortgage is a specific type of loan that helps you cover the cost of buying property. \\nWith a mortgage, like other loans, you borrow money from a  lender and pay it back over time with interest. In the meantime, you get to settle in and make the place your home.\"'}\n::",{"title":1228,"content":1229},"Who’s involved in a mortgage loan?","A mortgage loan might be one of the biggest loans you ever take out. There’s more to it than simply handing the seller a check. There are safety measures involved to protect all major players, including the:  \n\n* **Mortgage lender:** This is the financial institution that lends you money and ultimately determines your interest rate. A bank, like Citi, or a mortgage company will act as your lender. They’ll just need to make sure you can manage the payments—but more on that in a bit.  \n* **Borrower:** You’re the star of this show, and you’re making a promise to pay back the loan over time. It’s a big responsibility, sure, but it’s how most Americans break into homeownership.  \n* **Co-borrower:** A co-borrower is someone who jumps in alongside the primary borrower to apply for the mortgage. It might be a spouse, partner or perhaps a close family member who’s willing to share the responsibility of paying back the loan. If both you and the co-borrower have a [solid credit score](/home-buying/articles/what-credit-score-do-you-need-to-buy-a-house/) and a steady income, it can lead to better loan terms or a bigger loan amount, which may help you afford a pricier home. \n\nCiti’s [online mortgage application process](https://online.citi.com/US/ag/mortgage/your-citi-account)  makes it easy to add a co-borrower and explore the best loan options for you before making a decision.",{"title":1231,"content":1232},"What’s included in a mortgage payment?","A mortgage payment is broken down into several costs. Depending on factors like your down payment amount and where the home’s located, your payment may include: \n\n* **Principal:** This part goes toward paying back the amount you borrowed. You can chip away at it slowly, like most homeowners do, or make additional payments to reach “paid in full” status a bit faster. \n* **Interest:** Consider this the cost of borrowing money. It’s the extra amount you pay the lender for giving you a loan. \n* **[Mortgage insurance premium (MIP)](/home-buying/articles/mortgage-insurance/):** This comes into play for certain mortgages, especially with a [Federal Housing Administration (FHA) loan](/home-loans/fha-loan/). It requires an upfront fee and annual payments, typically divided into monthly installments. The cost depends on the loan amount, term and loan-to-value ratio. If you put down less than 10% on an [FHA loan](/home-loans/fha-loan/), MIP lasts for the loan duration. With a down payment of 10% or more, MIP can be removed after 11 years.\n* **[Private mortgage insurance (PMI)](/home-buying/articles/pmi-home-loan/):** This may be required if you make less than a 20% down payment. It protects the lender in case you default on your loan.  \n* **Taxes and insurance:** You’ll generally put funds into an escrow account (kind of like a safety deposit box) to cover property taxes and homeowners insurance. With some loans and lenders, you can choose to forgo escrow as part of your monthly mortgage payment and instead pay these fees directly.  \n\n  * Property taxes are tallied based on the assessed value of your home and are used to pay for things like schools, roads and public safety—pretty important. Tax rates can vary a lot depending on the [cost of living](/calculators/cost-of-living/) in your area and may increase over time, so be sure to build these costs into your budget.  \n  * [Homeowners insurance](/home-buying/articles/what-is-homeowners-insurance/) is essential. It protects you in case unexpected damage or theft occurs. The cost of this coverage depends on the value of your home, the level of protection you choose and your location. \n\n::tip{icon=\"Bulb\" title=\"PRO TIP\" text=\"When choosing a mortgage, consider if there are any penalties for [early repayment](/refinancing/articles/how-to-pay-off-your-mortgage-faster/). Many homeowners aim to pay off their mortgage early by making additional payments regularly or when they come into extra money. Always verify that you won’t incur fees for achieving your financial goals ahead of schedule.\"}\n::",{"title":1234,"content":1235},"Types of mortgage loans","When it comes to mortgages, there are lots of [loan options](/home-loans/) to choose from. While most mortgages work more or less the same way, each may have different pros and cons, so be sure to fully assess your situation when choosing the right one for you.\n\n\nThese are some of the most common mortgage options:   \n\n### Institutional lender loans\n\nBanks and other private financial entities, such as Citi, offer mortgage programs that feature flexible eligibility requirements and lower expenses for [first-time home buyers](/home-buying/articles/first-time-home-buyer) and [experienced buyers](/tags/loan-process/) alike. For instance, [Citi's HomeRun® Mortgage](/home-loans/home-run) is a unique program that requires a low [down payment ](/home-buying/articles/how-much-down-payment-for-a-house)and helps people from various financial backgrounds purchase a home. Heads up: this program is available in select markets only and income limitations may apply.\n\n::disclaimer-dialog{buttonCopy=\"HomeRun Terms & Conditions\" :dialogCopy='\"## HomeRun Terms & Conditions\\n\\n\\nHomeRun® is available in markets with Citibank branches for loans on the primary residence of borrowers who qualify, and is also subject to income, property, product and other restrictions. To be eligible for up to 97% financing, the property must be a single-family home (including condos, co-ops and planned unit development) with a loan amount up to $832,750. Certain condo and co-op projects may be subject to lower LTVs. Single-family homes in certain high-cost markets with loan amounts between $832,751 and $1,249,125 are eligible for up to 95% financing. Non-traditional credit on conforming loan sizes requires 5% down payment. Non-traditional credit is not permitted on loans exceeding conforming loan limits. Two-unit properties are eligible for 89.99% financing with loan amounts up to $1,066,250, or 85% up to $1,599,375 in certain high-cost markets. In addition to home buying education, borrowers of two-unit properties must participate in landlord training from a Citi-approved community agency prior to closing. HomeRun is not available on cash-out refinance transactions.\"'}\n::\n\n### Conventional conforming loans:\n\nThese loans conform to guidelines set by the Federal Housing Finance Agency (FHFA) and are eligible for purchase by Fannie Mae and Freddie Mac. They're popular because they usually cost less than non-conforming loans and work well for buyers with fairly solid financial histories. \n\n### Government-insured mortgages:\n\nSimilar to conventional loans, these mortgages are offered by institutional lenders and are insured or guaranteed by the government. Being government-backed translates to some pretty big benefits for borrowers. Here are some of the popular government-backed loan types:  \n\n* **[FHA loans](/home-loans/fha-loan):** Backed by the FHA, these loans are great for first-time home buyers or those with a lower credit score. With lower down payments and flexible guidelines, FHA loans could be more accessible for eligible borrowers than conventional mortgages. \n* **[VA loans](/home-loans/va-loan):** The U.S. Department of Veterans Affairs backs loans to benefit veterans, active service members and surviving spouses. With perks like no required down payment (for those with 100% of their loan guarantee benefit) and no private mortgage insurance, they’re a way of saying “thank you” on the home front.\n\n\n### Jumbo mortgages\n\nWhen your real estate dreams outgrow that starter house, a [jumbo loan](/home-loans/jumbo-loan/) might be just what you need. These loans exceed government limits and are designed for high-priced properties.  \n\nNow, there are two types of jumbo loans: non-conforming and agency. Non-conforming jumbo loans are larger, privately backed loans with flexible terms. Agency jumbo loans are also large, but they have government backing and are available only in areas where homes cost more, making them more uniform and generally cheaper. Let’s break it down: \n\n::inline-table{tableLayout=\"basic\" :headers='[{\"value\":\"Feature \"},{\"value\":\"Non-Conforming Jumbo Loan \"},{\"value\":\"Agency Jumbo Loan \"}]' :rows='[{\"column\":{\"valueOne\":\"Backing \",\"valueTwo\":\"Private lenders (no government backing) \",\"valueThree\":\"Supported by government agencies (Fannie Mae, Freddie Mac) \"}},{\"column\":{\"valueOne\":\"Loan Limits \",\"valueTwo\":\"Exceeds the standard limits set by FHFA \",\"valueThree\":\"Exceeds standard limits, but within higher limits for high-cost areas \"}},{\"column\":{\"valueOne\":\"Guidelines \",\"valueTwo\":\"Vary by lender; more flexible, but stricter qualifications \",\"valueThree\":\"Uniform and strict, adhering to government agency guidelines \"}},{\"column\":{\"valueOne\":\"Interest Rates \",\"valueTwo\":\"Generally higher due to increased risk \",\"valueThree\":\"Typically lower due to government backing \"}},{\"column\":{\"valueOne\":\"Risk and Security \",\"valueTwo\":\"Higher risk for lenders; more stringent borrower qualifications \",\"valueThree\":\"Less risky due to government support; more secure for borrowers \"}},{\"column\":{\"valueOne\":\"Flexibility \",\"valueTwo\":\"More flexibility in loan amounts and underwriting \",\"valueThree\":\"Less flexibility, must meet specific criteria \"}}]'}\n::",{"title":1237,"content":1238},"How to qualify for a mortgage","Qualifying for a mortgage could be easier than you think. To get an idea of what you could afford, start by using our [Affordability Calculator](https://www.mortgage.com/calculators/affordability/). If your credit score or savings account need some attention, no sweat. Now you have a clear goal to work toward.\n\nWhen you know you can afford to buy a home, here are the next steps:  \n\n* **Get pre-approved:** This is an important step that shows sellers you mean business and have the financial backing to prove it. In a seller’s market, coming armed with pre-approval can help you stand out from the crowd. With Citi,  you can apply to [get pre-approved](/home-loans/articles/how-to-get-pre-approved/) with our SureStart® Pre-Approval.   \n* **Get final approval:** When you’ve found a home and you’re ready to [make an offer](/home-buying/articles/how-to-make-an-offer/), your lender will finalize the details of your loan. This is yet another layer of security that shows the seller you’re in it to win it. Citi makes it easy to move from pre-approval into the final approval stages.   \n* **Close on your loan:** This is the grand finale where you sign the official papers, handle last-minute details and take hold of those precious house keys. [Closing](/home-buying/articles/closing-on-a-house/) could be the longest part of the entire process if your search moved quickly.",{"title":1240,"content":1241},"How are interest rates set by lenders?","Interest rates may fluctuate often and are determined by a mix of factors, including: \n\n* Broad market conditions  \n* Type of loan  \n* Credit score  \n* Location   \n* Type of property   \n* Purpose of the loan   \n* Loan-to-value ratio  \n\nYou can set yourself up to secure better loan terms by  [improving your credit score](/home-buying/articles/what-credit-score-do-you-need-to-buy-a-house/) and decreasing your [debt-to-income ratio](/home-buying/articles/what-is-a-good-debt-to-income-ratio/). If interest rates happen to drop while you’re working on improving your financial profile, that’s a bonus, but at least you’ll know you’ve done everything in your power to secure a favorable rate.   \n\nDifferent loan options also come with varying interest rates based on their risk assessment and market position. It’s best to chat with a mortgage specialist to help you find a loan with the best interest rate for your unique financial situation.   \n\nCurious to see Citi’s latest interest rates? Check out [today’s current rates](/rates/) to compare loan types. Then, you can plug different interest rates into the [Mortgage Calculator](/calculators/monthly/) to see the potential impact on your monthly payment.",{"title":1243,"content":1244},"Fixed-rate vs. adjustable-rate mortgages","Here are two types of mortgage interest rates you're sure to encounter: \n\n* **[Fixed-rate mortgage:](/home-loans/fixed-rate)** This is a home loan that has an interest rate that will stay the same for the entire life of your loan and your payments will always be predictable.  \n* **[Adjustable-rate mortgage (ARM):](/home-loans/adjustable-rate)** An option for those who are comfortable with change, this rate adjusts with the market. Rates may start out low for an initial period but will shift over time. \n\n**Mortgage terms: 15 vs. 30 years** \n\n* **30-year mortgage:** This is the most popular option because it can keep monthly payments low by spreading out expenses over a longer period. However, it will end up costing more in interest.  \n* **15-year mortgage:** By paying more each month, you’ll save on interest in the long run. It’s not for everyone, but if you’ve got the financial flexibility, a shorter loan term is worth considering.",{"title":1246,"content":1247},"Mortgage terms defined","As promised, here are some handy definitions of common real estate terms:\n\n::inline-table{tableLayout=\"basic\" :headers='[{\"value\":\"Term \"},{\"value\":\"Definition \"}]' :rows='[{\"column\":{\"valueOne\":\"Amortization \",\"valueTwo\":\"Consider this your journey to owning your home outright. Each payment you make covers some interest and chips away at the principal, taking you one step closer to full ownership.\"}},{\"column\":{\"valueOne\":\"Down Payment \",\"valueTwo\":\"This upfront chunk of cash helps you secure a loan. It’s where saving pays off because the bigger the down payment, the smaller the loan. Not quite there yet? Explore FHA loans or ask your lender for ideas.\"}},{\"column\":{\"valueOne\":\"Escrow \",\"valueTwo\":\"These special accounts hang on to your real estate tax and homeowners insurance funds so they’re safe until needed. It’s much easier than saving money you'd be tempted to spend––and that’s the point.\"}},{\"column\":{\"valueOne\":\"Interest Rate \",\"valueTwo\":\"Interest rate is the cost of borrowing money from the lender, and it is represented as the percentage of extra money you’ll have to pay in order to borrow the loan.\"}},{\"column\":{\"valueOne\":\"Mortgage Note \",\"valueTwo\":\"These important contracts spell out all the essential terms of your loan.  Be sure to read it carefully so you know exactly what you’re signing up for. If you need help with understanding the terms, your lender will be happy to translate.\"}},{\"column\":{\"valueOne\":\"Loan Servicer \",\"valueTwo\":\"Once your loan is finalized, they’ll be your primary point of contact. They’ll collect your monthly payments, manage your escrow account and answer any questions you might have.\"}}]'}\n::\n\nLearning everything there is to know about home buying is a lot, but you’re never really alone. From your local [real estate agent](/home-buying/articles/what-is-a-real-estate-agent) to the lender you choose to work with, you’ll be surrounded by support from start to finish. Now get out there and stake your claim.",{"title":1249,"content":1250,"hideTitle":27},"Mortgage FAQs","::faq{headline=\"Mortgage FAQs\" :faqs='[{\"question\":\"What is a mortgage?\",\"answer\":\"A mortgage is a loan that helps you buy a home, and your property acts as collateral. It’s a contract between you and a lender—you get the keys to your dream home, and in return, you agree to pay back the loan over time, usually in monthly payments. It’s how most people become homeowners.\"},{\"question\":\"How does a mortgage work?\",\"answer\":\"When you take out a mortgage, you borrow money from a lender to purchase a home and then pay it back bit by bit—typically over 15 to 30 years. Each payment is split between the loan principal (the amount you borrowed) and the interest, which is what the lender charges for loaning you the money. Your home is held as the collateral.\"},{\"question\":\"What are the main parts of a mortgage payment?\",\"answer\":\"Your mortgage payment usually includes four parts, often called PITI: principal, interest, taxes and insurance. The principal is the amount you borrowed. The interest is what you pay the lender for borrowing that money. Property taxes are paid to your local government. Lastly, you’ll owe insurance, which can include homeowners insurance and sometimes mortgage insurance if your down payment is below 20%.\"},{\"question\":\"What types of mortgage loans are available?\",\"answer\":\"There are several types of mortgage loans that suit different financial situations. Conventional loans are popular for borrowers with strong credit and stable incomes. Then you have government-backed options with more lenient requirements, like FHA and VA loans. FHA loans are often ideal for first-time buyers with lower credits scores or smaller down payments, while VA loans offer valuable benefits for veterans and active-duty service members. You can also choose between fixed-rate mortgages, where your interest stays the same, and adjustable-rate mortgages (ARMs), which start with a lower rate that can change over time based on market conditions.\"},{\"question\":\"What credit score is needed to get a mortgage?\",\"answer\":\"Credit requirements vary by loan type, but generally, a score of 620 is the minimum for conventional loans. Government-backed loans like FHA loans may accept lower scores—sometimes as low as 500. Keep in mind that the higher your credit score, the better your interest rate is likely to be, so it’s worth checking your credit score early and taking steps to improve it, if needed.\"},{\"question\":\"How much do I need for a down payment on a mortgage?\",\"answer\":\"Down payment requirements vary by loan type. With a conventional loan you may be able to put down as little as 3% to 5%. FHA loans typically require 3.5%, and VA  loans may offer 0% down options. While putting 20% down can help you avoid paying for private mortgage insurance, many buyers successfully purchase homes with smaller down payments.\"},{\"question\":\"What’s the difference between prequalification and pre-approval?\",\"answer\":\"Prequalification is a quick estimate of how much you might be able to borrow based on basic financial information you provide, while pre-approval involves a lender reviewing your financial stats in detail to formulate a specific loan amount. Pre-approval is more official and carries more weight with sellers, showing you’re ready to buy.\"},{\"question\":\"Can I pay off my mortgage early?\",\"answer\":\"Yes, in many cases you can pay off your mortgage early without penalty, and doing so can save you money on interest over time. Just be sure to check with your lender to confirm there are no prepayment penalties. If allowed, making extra payments can be a smart strategy as long as it works for your budget.\"}]'}\n::","2025-06-18T09:18:00.000Z","**Key insights:**\n\n* When buying a home, most people will use a mortgage loan, which allows them to pay for the home over time   \n* Your mortgage terms, such as interest rate and length, will depend on a variety of factors, including your credit score and the type of mortgage  \n* You can increase your likelihood of qualifying for better terms by boosting your credit score and comparing lenders  \n\nIf you’re considering buying a home, you’re in the perfect spot to learn how mortgages work. While a mortgage is similar to other types of loans, it’s designed specifically to help you buy property. Since homeownership is such a big step for many people, it’s important to know how a mortgage works. Let’s start with the mortgage basics.","What is a mortgage? Understanding home loans","2026-07-17T13:20:00.000Z",[840,935,936],{"introText":1257,"text":844,"to":845,"body":1258},"Ready to find the right loan for you?","Let’s take the next step toward your new home.",{"title":1260,"description":1261},"What Is a Mortgage? How Home Loans Work & What to Expect | Mortgage.com"," A mortgage is a loan designed to help you buy property. We define mortgages, explain how they work and break down the home loans available to buyers.","content:articles:home-loans:what-is-a-mortgage.json","What Is A Mortgage","articles/home-loans/what-is-a-mortgage.json",[948,952,893],{"_path":1267,"_dir":840,"_draft":6,"_partial":6,"_locale":7,"readTime":1268,"l1":840,"linkNav":1269,"heroMedia":1271,"teaserImage":1274,"slug":1276,"disclosure":99,"sections":1277,"date":1296,"subheadline":1297,"headline":1298,"isFeatured":6,"tags":1299,"link":1300,"seo":1304,"hasSectionNavigation":27,"_id":1307,"_type":78,"title":1308,"_source":80,"_file":1309,"_extension":78,"tagsDetails":1310},"/articles/home-loans/15-vs-30-year-mortgage",7,{"introText":843,"text":844,"to":845,"ariaLabel":1270},"N/A",{"landscape":1272,"portrait":1273},"/media/article-15v30-year-mortgage-mobile-768x512.jpg","/media/article-15v30-year-mortgage-desktop-520x638.jpg",{"src":1275},"/media/article-15v30-year-mortgage-teaser-500x500.jpg","15-vs-30-year-mortgage",[1278,1281,1284,1287,1290,1293],{"title":1279,"content":1280},"What’s the difference between a 15 year and a 30 year mortgage?","It might seem straightforward, but the loan term is just one part of the bigger picture. The real impact lies in how each loan affects your monthly payment, interest rate and the total amount you’ll pay over the life of the loan. A 30 year vs. 15 year mortgage comparison can help you better understand how much interest you’ll pay, how quickly you’ll build equity and what you can afford based on your income and financial goals.  \n\n***Which is better: 15 year mortgage vs. 30 year mortgage?*** \n\nGood question. The answer to whether a 15 year mortgage or a 30 year mortgage is better depends on your individual situation. A shorter loan term means you’ll pay less in interest and own your home sooner—but it also comes with higher monthly payments. If you're focused on affordability and flexibility, a 30 year loan may offer more breathing room. Consider your personal finances, long-term goals and how each option fits into your broader real estate plan. \n\n### Loan term length\n\nJust like the names suggest, a 15 year mortgage is paid off in 15 years, and a 30-year mortgage takes—you guessed it—30. The 30 year option is more popular with home buyers because stretching the payments out makes them easier to manage month to month. But with a 15 year mortgage, you’ll own your home outright a lot faster and build equity a lot quicker along the way. \n\n### Monthly payments \n\nFor many people, this is the number that counts most. One of the easiest ways to see how these two loan options stack up is through a monthly payment comparison. With a 15 year mortgage, your payments are higher because you’re knocking out the loan in half the time. The upside? More of your money goes straight toward the principal instead of interest. A 30 year mortgage, in contrast, comes with lower monthly payments, which can give you more breathing room in your budget or make it easier to qualify for a mortgage. \n\n### Total interest paid \n\nIf you didn’t account for this number, don’t worry—you’re not alone. A lot of people overlook total interest paid. So, while a 30 year mortgage might come with a smaller monthly payment, it’ll cost you more in the long run. Why? Because you’re stretching those payments out over three decades and often at a higher interest rate. On the flip side, a 15 year mortgage usually comes with a lower interest rate and much less total interest. You’re paying more each month, but you’re saving big overall.",{"title":1282,"content":1283},"Pros and cons of a 15 year mortgage","As they say, sometimes less is more. If you’ve got a bit of wiggle room in your budget, whether from a steady high income or a surprise windfall, a 15 year mortgage could be a smart way to make that extra cash work harder. It comes with some solid perks, but there are a few trade-offs to consider too. Let’s take a look at a few key factors. \n\n### Lower interest costs \n\nIf saving six figures in interest sounds good to you, a 15 year mortgage might be worth a closer look. These loans typically come with lower rates than 30 year options, and since you’re paying interest over a shorter period, the total cost of borrowing is much lower. For example, on a $400,000 loan with 20% down, a 15 year mortgage could save you over $250,000 in interest compared to a 30 year option (based on interest rates as of May 2025). \n\n### Faster payoff \n\nPaying off your home in half the time doesn’t just sound good—it can fast-track your path to financial freedom. You’ll build equity quicker, which opens the door to more flexibility down the road through cash-out options like a [HELOC](/home-loans/heloc/). When the time is right, you can then tap into your home’s value for renovations, big purchases or your next big investment move. \n\n::quote{icon=\"Mortgage\" quote=\"Paying off your home in half the time doesn’t just sound good—it can fast-track your path to financial freedom.\"}\n::\n\n### Higher monthly payments \n\nIf you’re juggling student loans, car payments or childcare costs, a 15 year fixed rate mortgage might feel out of reach. That’s because the monthly payment is significantly higher due to the shortened mortgage term. While you’ll pay off your home faster and save on interest over the life of the loan, the upfront costs can strain your monthly budget. \n\nSince your payments go toward both principal and interest, compressing repayment into a shorter window means writing bigger checks each month. If your personal finances are tight or your income fluctuates, it might be harder to qualify for a 15 year loan or sustain those higher monthly payments in the long term. A mortgage calculator can help you compare costs and see which option works better for your situation.  \n\n::inline-table{tableLayout=\"basic\" :headers='[{\"value\":\"Factor\"},{\"value\":\"15-Year Mortgage\"},{\"value\":\"30-Year Mortgage\"}]' :rows='[{\"column\":{\"valueOne\":\"Loan term\",\"valueTwo\":\"15 years\",\"valueThree\":\"30 years\"}},{\"column\":{\"valueOne\":\"Monthly payments\",\"valueTwo\":\"Higher\",\"valueThree\":\"Lower\"}},{\"column\":{\"valueOne\":\"Interest rates\",\"valueTwo\":\"Slightly lower\",\"valueThree\":\"Slightly higher\"}},{\"column\":{\"valueOne\":\"Total interest paid\",\"valueTwo\":\"Less over time\",\"valueThree\":\"More over time\"}},{\"column\":{\"valueOne\":\"Equity build-up\",\"valueTwo\":\"Faster\",\"valueThree\":\"Slower\"}}]'}\n::",{"title":1285,"content":1286},"Pros and cons of a 30-year mortgage","For many U.S. homeowners, the 30 year loan is still the standard—and for good reason. Spreading payments across 30 years results in lower monthly payments, freeing up cash for other goals like retirement, education or investments in real estate or other products and services. \n\nHowever, this flexibility comes with trade-offs. You’ll pay more in interest payments over the life of the loan, and it’ll take longer to build equity. It’s important to weigh the short-term affordability against the long-term cost. \n\n###  Lower monthly payments \n\nThe biggest perk of a 30 year mortgage? Lower monthly payments. Stretching the loan over a longer period makes each payment easier to handle, potentially helping you [afford a home](/calculators/affordability/) that wouldn’t be feasible with a shorter loan term. \n\n::tip{icon=\"Bulb\" text=\"Just one extra payment per year on a 30 year mortgage can cut about 4–5 years off your loan. Just make sure your lender applies that extra payment to the principal, not future interest or upcoming installments.\" title=\"Pro Tip\"}\n::\n\n### \nFlexibility and budgeting \n\nIf having more flexibility in your budget matters to you, a 30 year term has the edge. With lower monthly payments, you’ll have more money to put toward retirement, invest in your future or simply cover everyday expenses like groceries and gas. Plus, because the monthly payment is lower, it’s often easier to qualify for a 30 year vs. 15 year mortgage. \n\n### More interest paid over time \n\nA 30-year mortgage can ease the monthly pinch, but it comes at a long-term cost. Even with a slightly higher interest rate, paying interest for twice as long can add up to hundreds of thousands of dollars over the life of the loan. You’re essentially trading short-term affordability for long-term cost.",{"title":1288,"content":1289},"Which one should you choose?","Just like choosing the right home, there’s no one-size-fits-all answer here. But understanding how each loan option fits into your larger financial picture can help you decide with confidence. Let’s walk through a few considerations. \n\n### Factors to consider \n\n* **Monthly budget:** Can you afford higher payments without sacrificing savings or other goals? If not, a 30 year loan may be the safer bet. \n* **Income stability:** If your income fluctuates, the lower, more predictable payments of a 30 year loan offer more security. \n* **Financial goals:** Want to build equity fast or be debt-free sooner? A 15 year mortgage gets you there quicker. \n* **Qualification:** 15 year loans typically require higher income and lower debt, making them tougher to qualify for. \n* **Flexibility:** A 30 year mortgage gives you wiggle room, and you can often pay extra to shorten the term if your budget allows. \n\n### Example scenarios: Which works best? \n\n* **A young couple buying their first home:** If you’re a [first-time home buyer](/home-buying/articles/first-time-home-buyer/) deciding between a long-term vs. short-term loan, a 30 year mortgage is usually the better fit. It keeps monthly payments lower, which frees up cash for other priorities like car payments, student loans or handling unexpected homeownership costs. Plus, the flexibility helps when you’re still growing your income and figuring out long-term goals. \n* **A mid-career professional with a high income:** A 15 year mortgage could be a smart move here. With a steady, higher income, you’re well-equipped to handle the larger payments. This option helps you build equity faster, pay less in interest and own your home outright sooner. It’s a solid play if you’re focused on long-term wealth building. \n* **A couple nearing retirement:** It depends on your finances, but a 30 year mortgage often offers more breathing room. The lower monthly payments can help stabilize your budget, especially on a fixed income. However, if being mortgage-free by retirement is a priority and you can swing it, a 15 year term might be worth considering.",{"title":1291,"hideTitle":27,"content":1292},"15 vs. 30 year mortgage frequently asked questions","::faq{headline=\"15 vs. 30 year mortgage FAQs\" :faqs='[{\"question\":\"Can I switch from a 30 year to a 15 year mortgage later?\",\"answer\":\"Yes, you can switch from a 30 year to a 15 year mortgage—most often by refinancing. Refinancing lets you swap your current loan for one with a shorter term, a potentially lower rate and a faster path to full homeownership. It can be a smart move if your income has increased or you’re looking to cut down on long-term interest costs. Not ready to refi? You can still get ahead by making extra payments toward your principal. Just be sure to check with your lender first—some loans have prepayment penalties or specific instructions for how to apply extra payments. \"},{\"question\":\"Does a shorter term always mean better savings?\",\"answer\":\"Typically, a 15 year mortgage can save you a lot in interest and help you build equity sooner. But if you compare mortgage terms, you’ll see that the trade-off is higher monthly payments, which can tighten your budget and leave less room for other priorities like saving for retirement or covering unexpected expenses. If the faster mortgage payoff timeline puts too much strain on your finances, the long-term savings might not be worth the short-term stress.\"}]'}\n::",{"title":1294,"content":1295},"Ready to explore your options?","It’s not just the term to consider—it’s the type of loan, too. Take time to explore your [options](/home-loans/) to find the one that fits your needs and financial goals best.","2025-05-30T11:25:00.000Z","You’ve been searching for your dream home. You’ve checked out school districts, calculated commute times and fine-tuned your monthly budget. Now, you’re down to one big decision: 15 vs. 30 year mortgage. Whether you want to save on interest  tover the life of the loan or prefer smaller monthly payments, the right loan term can help you reach your goals. Let's compare 15 year vs. 30 year mortgage options to help you choose which works best for your budget and long-term plans.","15 vs. 30 year mortgage: Which loan term is right for you?",[840,1048],{"introText":1301,"body":1302,"text":844,"to":845,"ariaLabel":1303},"Need help choosing between a 15 year and a 30 year mortgage?","We’re here to help.","n/a",{"title":1305,"description":1306},"15 vs 30 Year Mortgage: Big Difference | Citi Mortgage","Choosing between a 15- or 30-year mortgage? Compare the pros, cons, costs, and savings of each loan term to find out which is right for you. ","content:articles:home-loans:15-vs-30-year-mortgage.json","15 Vs 30 Year Mortgage","articles/home-loans/15-vs-30-year-mortgage.json",[1059,893],1785187498341]