Buying a home in the U.S. for the first time? This 2026 guide explains the home-buying process, mortgage rates, Conventional, FHA, VA and USDA loans, down payments, PMI, property tax, homeowners insurance, HOA fees, closing costs, home inspections, appraisals, buyer-agent compensation and closing requirements.
2026 U.S. Home Buying Guide｜Mortgage Rates, Down Payment, Property Tax, Closing Costs and Agent Fees
When buying a home in the United States for the first time, one of the biggest mistakes is looking only at the listing price.
If a house costs US$600,000, you may immediately think:
“If I put 20% down, I need US$120,000.”
But the real amount needed to buy a home is much more than the down payment.
U.S. home buyers also need to consider:
・Mortgage financing
・Interest rates
・Closing costs
・Property tax
・Homeowners insurance
・PMI or FHA mortgage insurance
・HOA fees
・Home inspection
・Appraisal
・Title insurance
・Buyer-agent compensation
・Moving and repair expenses
The way real estate-agent compensation works has also changed significantly since 2024.
It is no longer accurate to simply assume that “the seller always pays a fixed 5%–6% commission and the listing and buyer agents split it.”
Broker fees are not fixed by law, and buyers who work with agents using MLS systems generally need to sign a written buyer agreement before touring homes.
This agreement should clearly state the services provided and the agent’s compensation.
Below is a complete 2026 guide to the U.S. home-buying process.
How Does the U.S. Home Buying Process Work?
A typical owner-occupied home purchase usually follows this process:
-
Review your credit score, income and debts
-
Decide what monthly housing cost you can comfortably afford
-
Prepare your down payment and closing-cost funds
-
Compare multiple mortgage lenders
-
Obtain mortgage preapproval
-
Choose a buyer’s agent and review the buyer agreement
-
Begin touring homes
-
Submit an offer
-
Seller accepts the offer
-
Pay the earnest money deposit
-
Complete a home inspection
-
Lender orders an appraisal
-
Mortgage underwriting
-
Title search and title insurance
-
Purchase homeowners insurance
-
Receive the Closing Disclosure
-
Prepare cash to close
-
Sign closing documents
-
Complete the title transfer
-
Receive the keys
Contracts, escrow systems and closing procedures vary by state.
California, Texas, Florida and New York may all use noticeably different procedures.
That is why local real estate agents, mortgage lenders, title companies and real estate attorneys remain important.
What Are U.S. Mortgage Rates in 2026?
As of August 6, 2026, Freddie Mac reported the following national averages:
| Mortgage Type | National Average Rate |
|---|---|
| 30-Year Fixed Mortgage | 6.69% |
| 15-Year Fixed Mortgage | 6.01% |
The 30-year fixed average was 6.66% the previous week, so the latest reading represents a small increase.
However, this does not mean every borrower will receive a 6.69% rate.
Your actual mortgage rate may depend on:
・Credit score
・Down payment
・Debt-to-income ratio
・Loan amount
・Property type
・Primary residence or investment property
・Conventional, FHA, VA or Jumbo loan
・Loan term
・Discount points
・Rate-lock timing
・Property location
・Lender pricing
When comparing mortgages, do not ask only:
“What is your interest rate?”
Compare:
・Interest rate
・APR
・Discount points
・Origination charges
・Lender credits
・Closing costs
・Monthly payment
・Cash to close
A Loan Estimate is one of the best tools for comparing lenders side by side.
Do You Need a 20% Down Payment?
No.
The idea that U.S. buyers always need 20% down is a common misconception.
Some Conventional mortgages may allow:
3% down.
FHA loans may start at:
3.5% down.
Qualified VA and USDA borrowers may even be eligible for:
0% down.
Conventional Loan｜Down Payments May Start at 3%
A Conventional Loan is a mortgage that is not directly insured by government programs such as FHA, VA or USDA.
Conventional mortgages generally fall into:
Conforming Loans
and:
Non-Conforming or Jumbo Loans.
Some qualifying Conventional loans may allow a down payment as low as 3%.
However, if your down payment is below 20%, you will often need:
PMI
Private Mortgage Insurance.
PMI protects the lender, not the buyer.
A low down payment may help you purchase sooner, but it can also increase your monthly housing cost.
Why Do People Still Talk About 20% Down?
A 20% down payment can offer several advantages:
・Conventional loans generally avoid PMI
・Smaller mortgage balance
・Lower monthly principal and interest
・Lower loan-to-value ratio
・Potentially lower overall borrowing costs
・May strengthen an offer in some markets
But you should not necessarily use all of your available cash just to reach 20%.
When planning how much cash to use for a purchase, it is also wise to keep money available for moving, repairs and an emergency reserve.
A common benchmark is to maintain approximately three to six months of living expenses as an emergency cushion.
There is a big difference between:
“I can put 20% down”
and:
“I can put 20% down but will have no cash left afterward.”
2026 Conforming Loan Limits
For 2026, the FHFA baseline conforming loan limit for a one-unit property in most U.S. counties is:
US$832,750.
The maximum in qualifying high-cost areas is:
US$1,249,125.
Alaska, Hawaii, Guam and the U.S. Virgin Islands use special limits.
Loans above the local conforming limit may be considered:
Jumbo Mortgages.
Jumbo loans do not have one universal national underwriting standard.
A lender may require:
・Higher credit score
・Larger down payment
・More cash reserves
・Lower DTI
・More extensive income and asset documentation
This becomes especially important in high-cost markets such as California, New York and Seattle.
FHA Loan｜3.5% Down
FHA loans are insured by the Federal Housing Administration.
They are commonly used by:
・First-time home buyers
・Buyers with limited cash for a down payment
・Borrowers with credit profiles that may not be ideal for Conventional financing
・Buyers seeking more flexible qualification rules
The minimum down payment may start at 3.5%.
However, FHA does not mean “no mortgage insurance.”
FHA loans have:
Mortgage Insurance Premium, or MIP.
When comparing FHA and Conventional financing, do not look only at the down payment.
Compare:
・Interest rate
・MIP
・Upfront costs
・Monthly payment
・Rules for removing mortgage insurance later
2026 FHA Loan Limits
For 2026 FHA forward mortgages on one-unit properties:
Standard low-cost area floor:
US$541,287
High-cost area ceiling:
US$1,249,125
Actual limits vary by county.
An FHA borrower in Los Angeles County may therefore have a very different maximum loan amount than a borrower in a lower-cost Midwestern county.
VA Loan｜Qualified Borrowers May Put 0% Down
Eligible:
・Veterans
・Active-duty service members
・Certain surviving spouses
may qualify for a VA Home Loan.
Potential advantages include:
・No down payment for qualifying borrowers
・No PMI or FHA-style MIP
・Potentially competitive mortgage terms
・Certain closing costs may be paid by the seller
However, VA loans may include a:
VA Funding Fee.
USDA Loan｜Qualified Buyers May Put 0% Down
The USDA Section 502 Guaranteed Loan program helps eligible households purchase homes in qualifying rural areas.
Qualified borrowers may receive:
100% financing
or:
0% down.
Requirements generally include:
・Eligible location
・Household income limits
・Primary residence requirement
・Eligible borrower status
Household income generally cannot exceed the applicable program limit for the area.
A property being outside a major city does not automatically make it USDA eligible.
Both the address and household income must qualify.
How Much Down Payment Is Needed on a US$600,000 Home?
Looking only at down payment:
| Down Payment | Amount |
|---|---|
| 3% | US$18,000 |
| 5% | US$30,000 |
| 10% | US$60,000 |
| 20% | US$120,000 |
But this is not the total amount of cash you will need.
You also have to account for:
Closing costs.
How Much Are Closing Costs?
A practical budgeting range is often:
Approximately 2%–5% of the purchase price.
This does not include the down payment.
For a US$600,000 home:
2% closing costs:
US$12,000
5% closing costs:
US$30,000
If you put 20% down:
US$120,000
your total funds needed around closing could be approximately:
US$132,000–US$150,000
before adding:
・Moving expenses
・Furniture
・Renovations
・Immediate repairs
・Emergency savings
Do not prepare only the down payment.
What Is Included in Closing Costs?
The exact costs vary by state, county, loan and lender, but may include:
Loan Origination Charges
Fees charged by the lender to process and underwrite the mortgage.
Examples may include:
・Origination fee
・Underwriting fee
・Processing fee
Fee names and structures vary by lender.
Discount Points
Mortgage points are generally prepaid interest.
Paying points may allow a borrower to obtain a lower mortgage rate.
Whether this makes financial sense depends on:
How long you expect to keep the mortgage
＋
How much the rate is reduced
＋
The break-even period.
A lower interest rate does not automatically mean a cheaper loan.
Appraisal Fee
The lender typically orders an appraisal to estimate the property’s market value.
The appraisal mainly protects the lender.
The lender wants to know whether the home provides sufficient collateral for the mortgage.
Home Inspection
A home inspection is primarily for the buyer.
An appraisal and an inspection are not the same thing.
An inspector may review:
・Roof
・Electrical system
・Plumbing
・HVAC
・Foundation
・Water heater
・Windows
・Drainage
・Appliances
・Visible moisture or other defects
A successful appraisal does not mean the house passed a full condition inspection.
What Happens If the Inspection Finds Problems?
It depends on your purchase contract and whether you have an:
Inspection Contingency.
If a major defect is discovered, the contract may allow you to:
・Request repairs
・Request a seller credit
・Renegotiate
・Accept the property as-is
・Cancel under qualifying contract terms
The exact rights vary significantly by state and contract.
Do not assume that procedures in California work the same way in Texas or New York.
What Is a Title Search?
A title company or attorney investigates the property’s ownership history.
They may check:
・Whether the seller has the legal right to sell
・Existing liens
・Unpaid taxes
・Other claims
・Whether the title record is complete
Serious title problems can delay or prevent financing and closing.
What Is Title Insurance?
You may encounter:
Lender’s Title Insurance
and:
Owner’s Title Insurance.
The lender policy protects the mortgage lender.
The owner policy protects the homeowner.
Who pays, and whether a policy is considered customary, depends on the state and transaction.
How Does Property Tax Work?
The United States does not have one nationwide property-tax rate.
Property tax may be influenced by:
・State
・County
・City
・School district
・Special district
・Assessment rules
・Homestead exemptions
A US$800,000 property in:
California
Texas
Florida
or
New Jersey
may have very different annual property-tax bills.
When reviewing a property, do not look only at:
Listing Price.
Also check:
Estimated Property Tax.
Will Property Tax Stay the Same After Purchase?
Not necessarily.
Assessment rules vary by state.
Some jurisdictions reassess periodically.
Some may reassess after a sale.
Some offer Homestead Exemptions.
Some use assessment caps.
Additional charges may also come from:
School bonds
Special assessments
Special districts
Local measures
The previous owner’s property-tax bill may not be the same amount you will pay after purchasing the home.
Your Monthly Mortgage Payment Is More Than Principal and Interest
Many buyers use mortgage calculators that show only:
Principal
＋
Interest.
But the real monthly housing cost may include:
Principal
＋ Interest
＋ Property Tax
＋ Homeowners Insurance
＋ PMI or MIP
＋ HOA
Always check whether an “Estimated Mortgage Payment” includes all of these items.
What Is an Escrow Account?
Many mortgages use an:
Escrow Account.
For example:
Annual Property Tax:
US$12,000
Annual Homeowners Insurance:
US$2,400
Instead of paying US$14,400 all at once, your mortgage servicer may collect part of these costs every month.
The servicer places the money into escrow and pays the tax and insurance bills when they become due.
Because taxes and insurance may increase, your total monthly payment can rise even if you have a:
30-Year Fixed Rate Mortgage.
Is Homeowners Insurance Required?
If you have a mortgage, the lender will usually require it.
The home is collateral for the loan.
The lender wants protection if the property suffers a covered event such as:
・Fire
・Storm damage
・Theft
・Other covered losses
Are Flood and Earthquake Damage Included?
Standard homeowners insurance generally:
Does not include flood coverage.
It also usually:
Does not include earthquake coverage.
This matters in different regions.
For example:
Florida, the Texas Gulf Coast and Louisiana may require careful flood-risk review.
California buyers may want to research earthquake insurance.
Request insurance quotes before getting too far into the transaction.
In some areas, insurance costs can materially affect whether the property is affordable.
What Is HOA?
If you buy a:
・Condo
・Townhouse
・Gated community home
・Master-planned community property
you may have a:
Homeowners Association, or HOA.
Monthly fees might be:
US$100
US$300
US$600
or even:
US$1,000 or more.
HOA dues may pay for:
・Common-area maintenance
・Landscaping
・Pool
・Clubhouse
・Security
・A portion of building insurance
・Trash or other services
What is included varies widely by community.
Condo Buyers Should Look Beyond the Monthly HOA Fee
Also review:
・HOA financial statements
・Reserve funds
・Special assessments
・Pending litigation
・Insurance coverage
・Rental restrictions
・Pet rules
・Parking rules
・CC&Rs
If an association has insufficient reserves, homeowners may later receive a:
Special Assessment.
That can mean an unexpected additional payment for major repairs.
How Do U.S. Real Estate Agent Fees Work in 2026?
This is one of the most important recent changes in U.S. home buying.
In the past, people often said:
“The commission is 5%–6% and the seller pays it.”
That is no longer a reliable assumption.
Broker fees and commissions are not fixed by law.
They are:
Negotiable.
There is no law requiring:
3%
2.5%
or
6%.
Why Do Buyers Sign a Buyer Agreement Now?
Under current NAR MLS policies, agents working with buyers through participating MLS systems generally need a:
Written Buyer Agreement
before touring homes.
The agreement should explain:
・What services the agent provides
・The amount of compensation
・How the compensation is calculated
・The duration of the agreement
・Buyer and agent responsibilities
Compensation must be clearly and objectively defined.
The agreement should not simply say:
“Whatever the seller offers.”
Who Pays the Buyer Agent Fee?
Several arrangements are possible.
Seller Pays
A seller may still agree to contribute toward buyer-broker compensation.
However, this compensation is no longer offered in the MLS the same way it was historically.
Buyer Pays
If your buyer agreement states a specific fee and the seller does not cover enough of it, you may be responsible for the difference.
Negotiated in the Offer
A buyer may request:
Seller concessions
or other allowed credits or compensation arrangements in the purchase offer.
Whether the seller agrees depends on:
Market conditions
＋ Seller willingness
＋ Loan rules
＋ Purchase contract terms.
What Should You Ask a Buyer Agent Before Signing?
Ask:
-
What is your buyer-agent fee?
-
Is it a percentage, flat fee or another structure?
-
If the seller does not pay, how much would I owe?
-
How long does the agreement last?
-
Can I sign an agreement for one property or a shorter period?
-
How can I cancel the agreement?
-
What services are included?
-
How much support do you provide with offers and negotiations?
Do not wait until closing to understand agent compensation.
Listing Agent Fees Are Not Automatically 6%
Listing-agent compensation is also negotiable.
Possible structures may include:
Percentage
Flat fee
Limited service
Full service
or other arrangements.
The idea that “selling a house in America always costs 6% commission” should not be treated as a fixed fact.
What Is Mortgage Preapproval?
Before seriously shopping for a home, many buyers obtain a:
Preapproval Letter.
A lender may request:
・Credit report
・Pay stubs
・W-2 forms
・Tax returns
・Bank statements
・Investment statements
・Employment information
・Current debt information
・Evidence of down-payment funds
Self-employed buyers may also need:
・Business tax returns
・Profit and loss statements
・Business bank statements
・Additional income documentation
Preapproval is not final loan approval.
However, sellers in competitive markets often prefer buyers who have already started the mortgage qualification process.
Do Not Compare Only One Lender
It is worth comparing several mortgage lenders.
Even for the same borrower, property and date:
Different lenders may quote different:
Interest rates
Points
Origination fees
Lender credits
Mortgage insurance
Closing costs.
The best comparison is not a phone quote.
Ask for a formal:
Loan Estimate.
What Is a Loan Estimate?
After a lender receives the required information for a mortgage application, a Loan Estimate is generally provided within three business days.
It typically shows:
・Loan amount
・Interest rate
・Monthly principal and interest
・Projected payment
・Mortgage insurance
・Estimated taxes
・Insurance
・Closing costs
・Cash to close
Because lenders use a standardized format, it is one of the easiest ways to compare mortgage offers.
APR vs. Interest Rate
Interest Rate:
Primarily represents the rate charged on the mortgage principal.
APR:
Attempts to reflect certain loan costs as an annualized borrowing cost.
Two mortgages may have:
The same interest rate
but not the same overall cost.
If one lender offers a low rate but requires substantial points and fees, the APR may be higher.
What Is a Closing Disclosure?
Before closing, you receive one of the most important mortgage documents:
Closing Disclosure.
For covered mortgages, the lender generally must provide it at least:
3 business days
before the scheduled closing.
What Should You Check on the Closing Disclosure?
Compare it with your earlier Loan Estimate.
Review:
・Loan amount
・Interest rate
・Monthly payment
・Closing costs
・Mortgage insurance
・Property tax
・Homeowners insurance
・Lender credits
・Seller credits
・Cash to close
If you see:
An unfamiliar fee
or
A large unexpected change,
contact your lender and closing or escrow agent immediately.
Do not review the document for the first time at the signing table.
What Is Cash to Close?
Cash to Close is not simply the down payment.
It may include:
Down Payment
＋ Closing Costs
＋ Prepaid Expenses
＋ Escrow Deposits
－ Earnest Money
－ Seller Credits
－ Lender Credits
The final result is the amount you actually need to bring into the transaction at closing.
Watch Out for Wire Fraud
U.S. real estate closings are common targets for wire fraud.
Scammers may impersonate:
・Escrow companies
・Title companies
・Attorneys
・Real estate agents
・Mortgage lenders
and send an email telling you to wire a large amount of money to a new account.
Before sending closing funds:
Do not rely only on emailed wire instructions.
Use a previously verified official phone number for the title or escrow company and confirm:
Bank Name
Routing Number
Account Number
Reference Number.
If you suddenly receive a message saying:
“The wiring instructions changed,”
treat it as a major warning sign.
What Is Usually Included in an Offer?
A purchase offer may include:
・Purchase price
・Down payment
・Earnest money deposit
・Financing contingency
・Appraisal contingency
・Inspection contingency
・Closing date
・Seller credits
・Buyer-broker compensation arrangements
・Included appliances
・Possession date
Standard contracts vary by state.
California contingency procedures should not automatically be applied to Texas or New York transactions.
What Is Earnest Money?
An Earnest Money Deposit shows that the buyer is serious about the purchase.
After an offer is accepted, the funds are generally delivered within the contract deadline to:
Escrow
Title company
Attorney
or another agreed holder.
The deposit is usually credited toward:
Down Payment
or
Cash to Close.
However, if the buyer cancels in violation of the contract, whether the earnest money is refundable depends on the contract and applicable contingencies.
What Happens If the Appraisal Is Below the Purchase Price?
Example:
Purchase Price:
US$800,000
Appraisal:
US$750,000
The lender may not finance the transaction based on the US$800,000 value.
Possible outcomes include:
・Buyer pays the appraisal gap
・Seller lowers the price
・Both sides renegotiate
・The contract is handled under the appraisal contingency
Waiving an appraisal contingency in a competitive market can therefore create a significant cash risk.
Are There Tax Benefits to Owning a Home?
Possibly.
But it should not be simplified to:
“Buying a house automatically gives you a huge tax deduction.”
Mortgage Interest Deduction
For qualifying home-acquisition debt incurred after December 15, 2017, the general debt limit for the mortgage-interest deduction is:
US$750,000.
For Married Filing Separately:
US$375,000.
However, the actual deduction depends on:
・Whether you itemize deductions
・How the loan proceeds were used
・When the mortgage was obtained
・Mortgage balance
・Qualification of the primary or second residence
Not every homeowner benefits more from itemizing than from the standard deduction.
2026 SALT Deduction
For 2026, the general federal itemized deduction limit for qualifying State and Local Taxes is:
US$40,000.
For Married Filing Separately:
US$20,000.
The deduction may also be reduced based on Modified Adjusted Gross Income.
Qualifying SALT may include:
・State income tax or sales tax
・Real property tax
・Certain personal property taxes
HOA fees are generally not treated as a SALT deduction.
Actual tax benefits should be reviewed with a CPA based on the taxpayer’s income and filing situation.
Can Non-U.S. Citizens Get a Mortgage?
Yes.
Citizenship itself is not the only factor in mortgage eligibility.
Qualifying:
Permanent residents
and some:
Non-permanent residents
may be eligible for mortgages that meet Fannie Mae guidelines when the lender verifies lawful residency and all other underwriting requirements.
Borrowers still need to meet requirements involving:
・Income
・Credit
・Employment
・Assets
・DTI
・Occupancy
・Immigration or residency documentation
Can Foreign Nationals Without U.S. Income Buy a Home?
Some lenders offer:
Foreign National Mortgages.
These are often:
Portfolio Loans
or:
Non-QM products.
Typical requirements may include:
・Higher down payment
・Higher interest rate
・Larger cash reserves
・Foreign bank statements
・Foreign income documentation
・Passport and immigration documents
Terms vary substantially by lender.
Some states may also have restrictions affecting foreign ownership of certain land or property types.
International buyers are often better served by professionals familiar with cross-border transactions, including:
Real Estate Agent
＋ Mortgage Lender
＋ CPA
＋ Real Estate Attorney.
Costs First-Time Buyers Commonly Forget
It helps to divide homeownership costs into four layers.
Layer 1: At Closing
・Down payment
・Closing costs
・Prepaid property tax
・Insurance
・Escrow reserve
・Any buyer-agent fee not otherwise covered
Layer 2: Monthly
・Mortgage principal
・Interest
・Property tax
・Homeowners insurance
・PMI or MIP
・HOA
Layer 3: Annual
・Home maintenance
・Pest control
・Landscaping
・Pool maintenance
・HVAC maintenance
・Insurance increases
・Property-tax increases
Layer 4: Large Occasional Repairs
・Roof
・HVAC replacement
・Water heater
・Plumbing
・Electrical
・Foundation
・Appliances
The amount a bank is willing to lend you and the amount you can comfortably afford are not the same thing.
U.S. Mortgage Quick Comparison
| Loan Type | Minimum Down Payment Reference | Mortgage Insurance / Key Feature |
|---|---|---|
| Conventional | May start at 3% | PMI usually applies below 20% |
| FHA | 3.5% | FHA Mortgage Insurance applies |
| VA | Qualified borrowers may use 0% | No PMI; Funding Fee may apply |
| USDA | Qualified borrowers may use 0% | Property, income and borrower eligibility rules apply |
| Jumbo | Depends on lender | Underwriting is usually stricter |
Recommended Order for First-Time U.S. Home Buyers
Step 1: Decide on a Comfortable Monthly Payment
Do not begin with the maximum amount a bank says you can borrow.
First decide what level of:
Mortgage＋Tax＋Insurance＋HOA
you can comfortably pay every month for years.
Step 2: Review Your Available Cash
Calculate:
Down Payment
＋ Closing Costs
＋ Moving
＋ Immediate Repairs
and then leave an emergency reserve.
Three to six months of living expenses is a common planning benchmark.
Step 3: Review Credit and Debt
Credit history and DTI influence mortgage approval and pricing.
Before buying, try to avoid major financial changes such as:
・Large credit-card balances
・New auto loans
・Opening many new credit cards
・Quitting a job
・Changing to income that is difficult to document
Significant financial changes can affect underwriting.
Step 4: Compare Multiple Lenders
Obtain formal Loan Estimates.
Compare:
Rate
APR
Points
Fees
Cash to Close.
Step 5: Choose a Buyer’s Agent
Understand:
Services
＋ Fee
＋ Agreement term.
Do not assume the seller will automatically pay the entire buyer-agent fee.
Step 6: Do Not Look Only at the Listing Price
For every home, track:
Listing Price
Property Tax
HOA
Insurance Quote
Special Assessments
Expected Repairs.
Step 7: Stay Involved After the Offer Is Accepted
Important work still remains:
Inspection
Appraisal
Loan Underwriting
Title
Insurance
Closing.
Step 8: Review the Closing Disclosure Carefully
The Closing Disclosure should generally be available at least three business days before closing.
Compare it line by line with the Loan Estimate.
What Does a US$600,000 Home Really Require?
Assume a 20% down payment:
US$120,000.
Add an estimated 2%–5% in closing costs:
US$12,000–US$30,000.
That means funds needed around closing may already reach:
US$132,000–US$150,000.
You should ideally still have money available for:
Emergency Fund
＋ Moving Costs
＋ Furniture
＋ Repairs.
Do not treat:
“20% down”
as the same thing as:
“I can comfortably afford this home.”
Conclusion: Calculate the Total Housing Cost, Not Just the Mortgage
Buying a home in the United States is not simply:
Purchase Price − Down Payment = Mortgage.
A complete plan includes:
Down Payment
＋ Closing Costs
＋ Mortgage
＋ Property Tax
＋ Insurance
＋ PMI or MIP
＋ HOA
＋ Maintenance
＋ Agent Compensation.
With 30-year fixed mortgage rates still above 6% nationally in 2026, interest rates continue to have a major effect on monthly affordability.
At the same time, the real estate-agent compensation system has changed.
Buyers working with participating MLS agents generally need to understand and sign a written buyer agreement before touring homes, and broker compensation must be clearly defined and is negotiable.
For a first-time home buyer, the best first step is not immediately finding a “dream home.”
Start by understanding:
Your comfortable monthly payment
Available cash
Emergency reserves
Credit
Loan options
Property tax
Insurance
HOA.
Once those numbers are comfortable, shopping for a home becomes much safer and more realistic.
FAQ
Do you need 20% down to buy a home in the U.S.?
No.
Some Conventional loans may allow as little as 3% down, FHA loans may start at 3.5%, and eligible VA or USDA borrowers may qualify for 0% down.
What happens if you put less than 20% down?
Conventional mortgages will often require PMI, which increases the monthly housing cost.
What are U.S. mortgage rates in 2026?
As of August 6, 2026, Freddie Mac reported a national average of 6.69% for a 30-year fixed mortgage and 6.01% for a 15-year fixed mortgage.
Your actual quote depends on credit, down payment, loan type and lender.
How much are closing costs?
A practical planning range is approximately 2%–5% of the purchase price, excluding the down payment.
How much is 20% down on a US$600,000 home?
US$120,000.
You should also budget for closing costs, emergency savings, moving expenses and repairs.
Is property tax included in the mortgage payment?
Sometimes property tax and homeowners insurance are collected through an escrow account and included in the monthly payment.
Property tax itself is not part of the mortgage principal or interest.
Does an HOA fee disappear after the mortgage is paid off?
Usually not.
As long as the home remains in an HOA community, owners generally remain responsible for association dues.
Does homeowners insurance include flood coverage?
Standard homeowners insurance generally does not include flood insurance.
Flood coverage is usually purchased separately.
Does California homeowners insurance include earthquake damage?
Standard homeowners insurance generally does not cover earthquake damage.
Separate earthquake insurance may be considered depending on the location and risk.
Are real estate commissions fixed at 6%?
No.
Broker fees and commissions are not fixed by law and are negotiable.
Does the buyer always have to pay the buyer’s agent?
No.
A seller may still agree to contribute toward buyer-broker compensation or provide other concessions, but this is not automatic.
Do buyers need to sign a Buyer Agreement before touring homes?
Under current NAR MLS policies, buyers working with participating MLS agents generally need a written buyer agreement before touring homes, although state law and specific circumstances may vary.
When do you receive a Loan Estimate?
A lender generally provides it within three business days after receiving the required mortgage application information.
When do you receive the Closing Disclosure?
Generally at least three business days before the scheduled closing.
Can non-U.S. citizens get a mortgage?
Yes.
Eligible permanent residents and some non-permanent residents may qualify for mortgages that meet conventional lending requirements, subject to lender underwriting.
Can a foreign national without U.S. income buy a home?
Some lenders offer Foreign National Mortgages, but down payment, interest rate, reserve and documentation requirements are often different from standard conforming loans.
Is mortgage interest tax deductible?
It may be deductible for qualifying borrowers who itemize deductions.
For qualifying home-acquisition debt incurred after December 15, 2017, the general debt limit is US$750,000, subject to IRS rules and the taxpayer’s individual circumstances.
Disclaimer:
This article provides general information about U.S. real estate, mortgages and home-buying costs. It does not constitute real estate, mortgage, legal, investment, accounting or tax advice.
Mortgage rates may change daily. State real estate laws, property taxes, transfer taxes, agent-compensation rules, escrow procedures, closing costs, HOA requirements, insurance and loan eligibility also vary.
Before purchasing a home or signing a Purchase Agreement, Buyer Representation Agreement or mortgage documents, consult licensed real estate agents, mortgage loan officers, attorneys, CPAs, insurance professionals and the appropriate government agencies based on your individual situation.
Data Sources:
Freddie Mac, Consumer Financial Protection Bureau, Federal Housing Finance Agency, HUD/Federal Housing Administration, U.S. Department of Veterans Affairs, USDA Rural Development, Fannie Mae, Internal Revenue Service and National Association of REALTORS®.
Information effective date:
August 8, 2026.
Image Source:
Official government websites and official social media accounts.
