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If only shopping for a mortgage were as much fun as shopping for shoes — or a smartphone or a big-screen TV. Hunting down bargains and saving a few bucks is worth an afternoon or two, right? But the time and effort it takes to decode jargon and apply to lenders when shopping for a mortgage loan may not give off the same vibe.
Still, you can make this as pain-free as possible.
Here are six steps to determining which mortgage loan is right for you.
1. Figure out how much you can afford
Since this is a six-figure purchase, you're probably wondering if it's within your financial reach. Figure out how much you can realistically afford, not just what a lender says you qualify for.
If you have a decent credit score, lenders will likely be more optimistic about how much house you can buy than you are. They also determine your monthly borrowing limit based on your debt-to-income ratio. Keep in mind, their job is selling a loan; your job is to pay it back. So leave some room in your budget for living life.
2. Set a savings goal for the upfront costs
Lenders not only want you to qualify for a loan, they want you to have money in the bank for the down payment and a long list of closing costs, too.
The down payment always seems like a big ask, but it's to your advantage to cushion your purchase with a little instant home equity by putting down as much as you comfortably can. A larger down payment gives you immediate equity in your home, reduces your loan amount, and can even lower your monthly payments. A too-small down payment can be risky. If the real estate market downturns even slightly, you could have a big loan on a home that's worth less than you owe.
3. Consider the length of the mortgage loan
The phrase "30-year mortgage" suggests a long-term commitment. But there are also 10- and 15-year loans. Some lenders even offer loans in varying lengths. The right one depends on how you want to balance your monthly payment with long-term costs.
Shorter term loans (like 15-year mortgages) come with:
- Lower interest rates
- Higher monthly payments
- Less interest paid over time
Longer term loans (like 30-year mortgages) come with:
- More flexibility in your budget
- Lower monthly payments
- More interest paid over time
As you can see comparing the loan terms above, if your budget allows for the bigger payment of a shorter-term loan, you're likely to see two benefits: a significant reduction in total interest expense over the life of the mortgage and a better mortgage rate.
Ultimately, the right loan term should align with your financial goals, lifestyle and how long you plan to stay in the home.
4. Choose the right type of mortgage
This is where most articles dive into a bunch of mind-numbing mortgage terms. Just know there are specialized loan options available for different types of borrowers:
- With a military connection. (See VA loans.)
- Who want to live in a rural or suburban area. (See USDA loans.)
- Who have a lower credit score. (See FHA loans.)
- Who are buying a house that's more expensive than standard loan guidelines allow. (See jumbo loans.)
If you don't fit any of the descriptions above, you're probably a good candidate for the conventional loans most lenders like best.
5. Know how mortgage interest rates work
The interest rate, which determines your borrowing costs, is another key factor in choosing the right mortgage. Mortgage rates move a lot. Without getting too technical, here is what matters: You can either lock in a fixed rate for the life of the loan or choose a variable rate that moves with the market and adjusts periodically.
A guaranteed-for-the-life-of-the-loan fixed-rate mortgage may start out a little higher than the go-with-the-market adjustable-rate mortgage, or ARM. But the lower ARM rate, which often resets twice a year after an initial term of three, five, seven or 10 years, can fluctuate up or down.
If you are certain you'll move, refinance or pay off the mortgage before the guaranteed rate on an ARM expires, the adjustable-rate mortgage may be a good option. However, if you live in the house past the introductory period and decide you want to stay in the home, interest rates available for a refinance into a fixed rate loan may be considerably higher by then.
6. Shop mortgage lenders like a bargain-hunter
We saved the most important way to get the best mortgage for last: Shop three or more lenders. Shop like you would for a product you like to enthusiastically bargain-hunt for.
Because what you save on a home by shopping for the lender with the best mortgage rate and the lowest origination fee could buy you a lot of shoes, smartphones and big-screen TVs.
NerdWallet writer Isabella Angelos contributed to this story.
This article has been updated to reflect the most recent fact-checking as of March 27, 2026.
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