Buying a home in the US almost always means a mortgage. The terms and structure differ from a Korean home loan, so it's confusing at first. Why is a 30-year fixed the default? What are conforming, jumbo, and PMI? How much down do you really need? Here it is, built from figures published by federal agencies.
One point up front. PMI ending at 78% is not the whole story. The Consumer Financial Protection Bureau states a separate rule: "your lender or servicer must end the PMI the month after you reach the midpoint of your loan's amortization schedule." On a 30-year loan that is year 15. Even if prices stall and your balance never reaches 78%, this rule ends it.
The basic structure
Your monthly payment is often called PITI — Principal, Interest, Taxes, Insurance. Unlike Korea, US property taxes and insurance are usually collected monthly alongside the loan.
| PITI part | What it is |
|---|---|
| P — Principal | Paying down what you borrowed |
| I — Interest | Large share early on |
| T — Taxes | Property tax escrowed monthly |
| I — Insurance | Home insurance + PMI (if <20% down) |
Fixed or adjustable — what people actually choose
The CFPB publishes the split, and there is a clear break in it.
| Period | Fixed-rate | Adjustable-rate |
|---|---|---|
| 2008–2022 | 85–95% | 5–15% |
| Historically | 70–75% | 25–30% |
After the financial crisis, almost everyone moved to fixed. "The 30-year fixed is the default" was not always true — it is a habit that set after 2008. Before then, one borrower in four took an ARM.
How much does a shorter term save? The same CFPB page says the rate is "usually lower—by as much as a full percentage point." That single line is the case for a 15-year fixed. The monthly payment rises in exchange.
| Type | Feature | Best for |
|---|---|---|
| 30-yr fixed | Fixed rate, stable payment | Long stay, stability |
| 15-yr fixed | Up to a point lower, far less total interest, higher payment | Strong cash flow |
| ARM | Low intro rate, then adjusts | Short hold |
And if rates fall, you can refinance.
Conforming vs jumbo — 2026 limits
Stay at or below the conforming limit and pricing and underwriting are friendlier; go above and you are in jumbo territory. The Federal Housing Finance Agency announced the 2026 values on 25 November 2025.
| Tier | 2026 limit (1-unit) | Note |
|---|---|---|
| Conforming baseline | $832,750 | +$26,250 from $806,500 in 2025 |
| High-cost area ceiling | $1,249,125 | 150 percent of the baseline |
| Jumbo | Above the limit | Higher rate, stricter terms |
FHFA describes the increase as a 3.26 percent adjustment reflecting home price appreciation. Knowing that the high-cost ceiling is set at exactly 1.5× the baseline lets you estimate next year's figure yourself.
Down payment and PMI — the rules, precisely
You do not need 20%. But under 20% adds PMI, raising your monthly cost. The CFPB sets out three separate ways it ends.
| Route | Trigger |
|---|---|
| Cancellation on request | You have the right to ask on the date the balance is scheduled to fall to 80 percent of the original value |
| Automatic termination | The servicer must terminate on the date the balance is scheduled to reach 78 percent |
| Midpoint rule | Ends the month after the midpoint of the amortization schedule — year 15 on a 30-year loan |
⚠️ Check the scope. The CFPB states these rules cover mortgages for single-family principal residences that closed on or after July 29, 1999 — and that FHA and VA loans have different requirements and are excluded. Do not assume FHA's MIP follows the same rules as PMI.
Note the benchmark is the original value. Rising prices do not automatically accelerate cancellation; using current market value takes a separate request and an appraisal.
If you're a veteran — the VA loan
Published by the Department of Veterans Affairs. The page was last updated 15 January 2026; the rates below took effect 7 April 2023.
| Down payment | First use | Subsequent use |
|---|---|---|
| Less than 5% | 2.15% | 3.3% |
| 5% or more | 1.5% | 1.5% |
| 10% or more | 1.25% | 1.25% |
An Interest Rate Reduction Refinancing Loan (IRRRL) carries 0.5%. There is one more thing worth knowing here.
There is a cap on what the seller can cover for you. In VA's own words: "We don't limit credits for a loan's closing costs, but we do limit seller's concessions to no more than 4% of your home's reasonable value." That 4% is your ceiling when negotiating.
Tax — how much mortgage interest is deductible
IRS Publication 936 sets the limits plainly, and the date you took the debt decides which applies.
| When the debt was secured | Deduction limit |
|---|---|
| After December 15, 2017 | $750,000 ($375,000 if married filing separately) |
| After October 13, 1987 and before December 16, 2017 | $1,000,000 ($500,000 if married filing separately) |
Three practical points from the same publication:
- Form 1098 — pay $600 or more of mortgage interest on any one mortgage in a year and you will generally receive one, sent by January 31 of the following year.
- Points — for ratable deduction eligibility the number of points cannot exceed 4 if the loan period is 15 years or less, or 6 if more than 15 years.
- Second home — you must use it more than 14 days, or more than 10% of the days it is rented at a fair rental, whichever is longer.
It is easy to miss that the limit runs on loan balance, not interest paid. The cut applies to principal above the threshold, and only the interest attributable to the excess is lost. And when refinancing a pre-2018 loan, checking whether the older limit can be preserved is worth real money.
Don't forget closing costs
Beyond the down payment, closing costs are a separate line — appraisal, title insurance, prepaid taxes and insurance, and lender fees.
| Item | What it covers |
|---|---|
| Appraisal | Valuing the property |
| Title insurance and search | Protection against title defects |
| Origination fee | Opening and underwriting the loan |
| Prepaids (escrow) | Property tax and insurance held in advance |
| Points (optional) | Paying a fee to lower the rate |
So the cash you need is down payment + closing costs. On a VA loan, the 4% seller concession cap above is a negotiating lever.
What affects approval
- Credit score (FICO) — a higher score buys a better rate.
- DTI — the CFPB's own worked example: mortgage $1,500 + auto loan $100 + other $400 = $2,000 against $6,000 gross income, a DTI of 33 percent.
- Cash reserves — including closing costs.
- Stable income — the core of underwriting.
Get pre-approved before shopping, and use a rate lock to hold your rate for a few weeks.
Questions you may have
30-year vs 15-year fixed?
The 15-year runs, in the CFPB's phrase, "by as much as a full percentage point" lower and saves a great deal of interest, but costs more monthly. Your cash flow decides.
Do I pay PMI forever?
No — request at 80%, automatic at 78%, or the month after the amortization midpoint, whichever comes first. FHA and VA follow different rules.
Prices rose — can I drop PMI now?
The automatic rules run on the original value. Using today's market value requires a separate request and an appraisal.
What if my loan exceeds $832,750?
It becomes a jumbo. High-cost areas stay conforming up to $1,249,125.
Is all my mortgage interest deductible?
No. For debt secured after December 15, 2017, only the interest on the first $750,000 of principal qualifies.
Can a Korean resident get a US mortgage?
Products for non-residents exist, but down payment and rate requirements are stricter and vary by lender. Ask individually.
Sources and where to check
- Internal Revenue Service — Publication 936 (2025), Home Mortgage Interest Deduction. Source of the $750,000 / $375,000 and $1,000,000 / $500,000 limits and their dates, the $600 Form 1098 threshold and January 31 deadline, the 4 / 6 points test, and the 14 days or 10% of rental days, whichever is longer second-home test.
- Consumer Financial Protection Bureau — When can I remove private mortgage insurance (PMI) from my loan? (last reviewed 28 August 2023). Source of the 80% request, 78% automatic and midpoint rules, the coverage of loans closed on or after July 29, 1999, and the FHA and VA exclusion.
- Consumer Financial Protection Bureau — Understand the different kinds of loans available (updated 18 February 2026). Source of the fixed-versus-ARM shares (85–95% fixed in 2008–2022; historically 70–75% fixed, 25–30% ARM) and the "as much as a full percentage point" line.
- Federal Housing Finance Agency — FHFA Announces Conforming Loan Limit Values for 2026 (25 November 2025). Source of $832,750 (up $26,250, a 3.26 percent adjustment) and the $1,249,125 high-cost ceiling at 150 percent of the baseline.
- Department of Veterans Affairs — VA Funding Fee And Loan Closing Costs (updated 15 January 2026). Source of the funding fees (2.15 / 1.5 / 1.25% first use, 3.3 / 1.5 / 1.25% subsequent), the 0.5% IRRRL fee and the 4% seller concession cap.
Written as of July 2026. The conforming limits, PMI cancellation rules, VA funding fees and concession cap, mortgage interest deduction limits and the fixed-versus-ARM shares all come directly from the federal sources above. By contrast, current 30-year, 15-year and jumbo rates and the federal funds target, FHA's 3.5% down payment and its MIP rates and loan limits, USDA loan terms, the common "closing costs run 2–5% of price" figure, actual PMI cost (0.5–1% a year), the 43% DTI ceiling and the 620 and 740 credit-score thresholds could not be checked against a federal original. In particular, rates move weekly, so no rate figures are printed here — check the rate on the day you apply. This is general information, not lending advice; actual terms vary by credit and lender. See also the 2026 US housing outlook and the US paycheck calculator.
