If you are thinking about financing a house, apartment or even an investment property, this guide will show you in less than 15 minutes what really matters: how much to put down, what interest rates to expect, what extra costs are included, and how to choose the most advantageous bank or program.
1. How does real estate financing work in the US?
In the United States, real estate financing is called mortgageIt's a contract in which the bank or financial institution lends the amount needed for the purchase, and the property serves as collateral. You pay monthly installments that include:
- Main: the part that reduces your debt.
- Fees: cost of borrowing money.
- Taxes and insurance: usually charged together (escrow).
- Mortgage insurance (when applicable).
In other words, the installment is not just a “bank payment”, but rather a package of different charges.
2. How much down payment do I need?
One of the first points that raises doubts is the down payment. Unlike in Brazil, where it's common to put down 20% or more, in the US, there are programs that allow you to buy a house for much less:
- 3%: Special conventional programs (Fannie Mae, Freddie Mac).
- 3,5%: FHA (Federal Housing Administration) program.
- 0%: VA (veterans) and USDA (eligible rural areas) programs.
- 20% or more: Standard conventional financing (avoids PMI insurance).
In practice, the median entry fee to the US is 9% for first-time home buyers and 18% for general buyers.
3. What will interest rates look like in 2025?
Rates vary greatly depending on your credit score, down payment amount, property type, and bank. To give you an idea of national averages as of September 2025:
- 30 years fixed (conventional): around 6,5% per year.
- 15 years fixed (conventional): around 5,6% per year.
- FHA 30 years: effective rates (APR) between 6.7% and 7.0%, depending on the lender.
- Variable Rates (ARM): They start lower, but can rise after a few years.
Remember: what really matters is the APR (Annual Percentage Rate), which includes interest + embedded costs (insurance, fees and points).
4. Costs embedded in financing
Many people are surprised to discover that, in addition to the entrance fee, they have to pay several closing costs. They usually stay between 2% and 5% of the property price. See the main ones:
- Origination fee: fee charged by the bank to open the loan.
- Appraisal fee: professional property appraisal (on average US$$ 400–700).
- Credit report fee: credit history check (US$ 30–50).
- Title insurance: insurance against problems with the property title.
- Escrow (prepaids): advance deposit of taxes and home insurance.
- PMI or MIP: mortgage insurance charged when the down payment is low.
- Discount points: optional fee to reduce interest (1 point = 1% of the loan amount).
These costs appear in the Loan Estimate, mandatory document that the bank provides.
5. Financing methods
There are several financing options, and each one suits a different profile:
- Conventional (Conforming)
- Minimum entry: 3% to 20%.
- PMI required with down payment less than 20%.
- FHA
- Down payment: 3.5% (FICO ≥ 580) or 10% (FICO 500–579).
- More accessible for those with low credit.
- Mandatory mortgage insurance (MIP).
- Effective rates in 2025: between 6.7% and 7.0% APR.
- VA (Veterans Affairs)
- Exclusive to military personnel, veterans and some spouses.
- Zero down payment and very advantageous conditions.
- USDA
- Zero down payment for properties in specific rural areas.
- Income limit to qualify.
- Jumbo Loan
- For properties above US$ 806,500 (in 2025, in standard areas).
- Requires excellent credit and a larger down payment.
- ARM (Adjustable-Rate Mortgage)
- Lower initial rate.
- Adjustment after 5, 7 or 10 years.
- Recommended for those who intend to sell before the adjustment.
6. The financing step by step
- Set your budget: Take into account down payment, closing costs, and emergency fund.
- Check your credit score: the higher the rate, the lower the interest.
- Request pre-approval: strengthens your proposal in the negotiation.
- Compare at least 3 banks: Get Loan Estimates the same day.
- Choose the financing method: evaluate deadline and conditions.
- Lock your interest rate (rate lock): ensures that it will not rise until closing.
- Finish with the closing: signing of papers and transfer of the house.
7. Tips for paying less
- If possible, give 20% input to eliminate PMI.
- Improve your credit before applying.
- Compare APR and not just the advertised interest rate.
- Analyze whether it is worth paying discount points.
- Don't accept the first bank: negotiate rates and fees.
8. Most advantageous banks and institutions
There is no single bank that is always the best, but some stand out:
- Bank of America and US Bank: good packages for current account customers.
- Rocket Mortgage: online ease and speed, competitive FHA rates (e.g., ~5.99% nominal, 6.8% APR).
- Veterans United: leader in VA loans.
- Local Credit Unions: often offer lower rates.
- Prosperity Home Mortgage and Movement Mortgage: highlight in customer satisfaction
No. There are programs that allow 3% or 3.5% down payment. But 20% avoids PMI insurance.
It is Private Mortgage Insurance, an insurance paid when the down payment is less than 20% in conventional financing.
This is the Annual Percentage Rate, which includes interest and financing costs. It reflects the true cost of the loan.
On average 30 to 45 days, but it can be faster in digital processes.
In most cases, the buyer. However, it is possible to negotiate with the seller to cover part of the cost (seller concessions).
Depending on the contract, if interest rates fall, you may be able to refinance to reduce your payment.
Yes. Banks require fire and disaster insurance to protect the property.
In some cases, yes. Some banks and credit unions offer special programs for foreigners or recent immigrants, but they typically require more documentation, a larger down payment (20% or more), and proof of financial stability.
Conclusion
Financing a property in the US may seem complex, but with information and planning, you can make this process a safe achievement. The secret lies in know your options, compare proposals and be aware of the embedded costs.
Whether it's your first home or an investment, remember: financing is a tool to achieve a dream, but it's only worthwhile when used with caution.
With this guide in hand, you'll be better prepared to take the next step toward homeownership in the United States.
