Nobody explains a mortgage to you before you need one. You arrive at the appointment already in love with a flat, and the vocabulary starts flying: amortisation, points, escrow, taux d’endettement, depending on which side of the Atlantic you are sitting.
In brief
- The 2026 US conforming limit is 832,750 dollars for one unit.
- Fixed rate buys certainty, an ARM buys a lower opening rate.
- In France, debt service is capped at 35 % of income.
- Pre-approval is what makes an offer credible.
What you are actually paying every month
The payment is not one thing, it is four, and lenders abbreviate them to PITI. Principal is the slice of the borrowed capital you hand back that month. Interest is what the loan costs you. Taxes and insurance are property charges that many lenders collect alongside the loan and pay out on your behalf.
The useful thing to understand early is how the first two behave over time. In the opening years, most of what leaves your account is interest, and the balance barely moves. That reverses slowly, which is why an extra payment made in year three is worth far more than the same payment made in year twenty.
The main types, and who each one is built for
Loan categories differ far more by eligibility than by headline rate, so start from which doors are open to you.
| Type | Built for | The catch |
|---|---|---|
| Fixed rate | Anyone who wants a payment that never surprises them, over 10 to 30 years | You pay for that certainty in the opening rate |
| Adjustable rate (ARM) | Buyers expecting to sell or refinance before the first adjustment | After the fixed period the rate moves with the market, not with your budget |
| FHA | Modest deposits and lower credit scores | Mortgage insurance premiums, upfront and annual, are part of the deal |
| VA | Eligible veterans, serving members, some surviving spouses | No monthly mortgage insurance, but a one off funding fee applies |
| USDA | Rural and some suburban buyers within income limits | Strict geographic eligibility, plus upfront and annual guarantee fees |
Jumbo loans sit above the conforming limits for expensive properties, and interest only products exist but suit a narrow set of circumstances.
The 2026 numbers worth knowing
These change every year, so check them rather than trusting a guide written two winters ago.
The Federal Housing Finance Agency announced on 25 November 2025 that the 2026 conforming loan limit for one unit properties is 832,750 dollars, an increase of 26,250 dollars on 2025, with the ceiling in designated high cost areas set at 1,249,125 dollars. Cross that line and you are shopping for a jumbo loan, with its own underwriting standards.
On the FHA side, the familiar thresholds hold: a 3.5 % minimum down payment with a credit score of 580 or above, and 10 % down for scores between 500 and 579. Note the vocabulary trap that catches a lot of first time buyers. FHA loans do not carry private mortgage insurance, they carry a government mortgage insurance premium, with an upfront charge of 1.75 % of the loan and an annual premium on top. Under HUD’s rules that annual premium runs for the life of the loan when you put down less than 10 %, and falls away after eleven years when you put down more.
VA loans need no down payment and charge no monthly mortgage insurance, but they do carry a funding fee: 2.15 % for a first use purchase with nothing down under the schedule in force since April 2023, rising for subsequent use and falling as you put money down. USDA loans also allow 100 % financing, funded by a 1 % upfront guarantee fee and a 0.35 % annual fee calculated on the remaining balance.
If the property is in France, the rules are different
This is the part that catches out readers buying on this coast rather than at home. French lending is governed by a national affordability rule rather than by product type. The Haut Conseil de stabilité financière caps total debt service at 35 % of income, borrower insurance included in the calculation, and limits the loan term to 25 years, extended to 27 where works represent at least 10 % of the operation. Banks may step outside both criteria for 20 % of their quarterly lending, and the HCSF confirmed for 2026 that these rules are not being relaxed.
Two practical consequences. Borrower insurance is not an optional extra here, it is inside the ratio that decides whether you are lent anything at all. And the ratio is calculated on your whole situation, so an existing loan at home eats into your French borrowing capacity even if the lender never sees the property it paid for. A French purchase also runs through a notaire, whose role has no direct equivalent in the American process.
The sequence, from first sums to keys
- Take an honest look at income, existing credit and, where it applies, your credit score.
- Set a budget from the payment you can carry, taxes, insurance and running costs included, not from the maximum offered.
- Approach several lenders. Banks, credit unions and specialist brokers price the same borrower differently, and the terms are negotiable.
- Get a pre-approval. It is a conditional commitment, and it is what makes a seller take your offer seriously.
- Find the property and make the offer, keeping a financing condition in it so you can withdraw if the loan falls through.
- File the full application with your documents: tax returns, payslips, bank statements.
- Let the valuation happen, and pay for your own survey or inspection as well. They answer two different questions.
- Clear the remaining conditions, then sign at closing, or at the notaire’s office in France.
The two steps people skip are the second and the seventh. A budget set by the bank rather than by you produces a house you cannot afford to heat, and a valuation carried out for the lender tells you what the property is worth to them, not what it will cost you to repair.
This article is general information about how mortgages work. It is not financial, tax or legal advice, and figures and eligibility rules change. Speak to a qualified broker, lender or notaire about your own situation before committing.
Financing sorted, now the viewing
The questions that save you the most money are the ones asked before the offer, not after it.
Published on 18 August 2026. Sources consulted in August 2026: Federal Housing Finance Agency announcement of the 2026 conforming loan limit values (25 November 2025), HUD and Department of Veterans Affairs programme rules, USDA guaranteed loan fees, and the Haut Conseil de stabilité financière lending standards for 2026.
