Woman writing on dry erase board during a financial training with Habitat for Humanity of Greater Nashville

What is a mortgage?

A guide to understanding types of mortgages and how they work

Grasping the ins and outs of purchasing a home can set homeowners up for long-term success. Habitat works with families in need of safe, affordable homes to unlock access to buyer-friendly home loans, commonly referred to as mortgages. We leverage more than four decades of organizational experience to connect homebuyers with the tools and resources needed to establish financial freedom and security.

Read on to learn more about the most common types of mortgages and the ways Habitat improves access to affordable mortgages.

What is a mortgage?

A mortgage is a common way of referring to any loan that uses real estate as collateral, meaning that a home is pledged as security for repayment and the lender can take back the home if the borrower defaults on their payments.

Learn the lingo: terms, interest and down payments

Mortgages come in many shapes and sizes. The menu of options is long and includes different terms — the length of time a borrower has to pay off their mortgage — as well as interest rates and how much down payment is required.

Becoming mortgage ready

When applying for a mortgage, lenders will review your financial portfolio — debt-to-income ratio, savings, income, credit history and credit score — to assess whether you qualify for a mortgage. Habitat partners with homebuyers to support them on their path toward mortgage readiness.

Exploring other mortgage options

Future homeowners may also consider other mortgage conditions like whether the loan is federally backed or held in portfolio by the lender.

Habitat as an affordable mortgage leader

As an experienced affordable mortgage provider, Habitat is committed to creating homeownership opportunities for under-resourced families. We know that when families can become homeowners through affordable and responsible mortgages, the entire community benefits.

Explore more of our financial education resources below, or find your local Habitat affiliate.

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Find your affiliate

Financial education

As a part of the homeownership process, we believe financial education builds a more solid foundation for long-term personal success and helps alleviate any concerns or barriers on the path to homeownership.

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Habitat Capital

Through Habitat Capital, Habitat helps our U.S. affiliates build homes and provide affordable mortgages. Habitat Capital creates and provides financial services and capital that enable equitable homeownership opportunities and affordable housing solutions for underserved people.

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