Mortgage Basics: How Financing Works When Buying a Home in Memphis

If you’ve never bought a home before, the mortgage process can feel like a lot. But it’s simpler than it looks once you break it down. Here’s what you actually need to know.

What Is a Mortgage?
A mortgage is a loan you use to buy a home. You borrow money from a lender, buy the house, and then pay the lender back over time — usually 30 years. The house itself serves as collateral, which is why the lender cares so much about its value.

How Much Can You Borrow?
That depends on your income, your debts, your credit score, and how much you have for a down payment. Lenders look at your debt-to-income ratio — basically, how much of your monthly income already goes to bills.

What About the Down Payment?
You don’t need 20% down. Depending on the loan type, you could put down as little as 3% to 3.5%. There are also down payment assistance programs in Tennessee that can help — especially for first-time buyers. There are also some 100% options out there.

Fixed vs. Adjustable Rate
Most buyers choose a fixed-rate mortgage, which means your interest rate stays the same for the life of the loan. An adjustable rate starts lower but can change over time. For most people in Memphis buying a primary home, fixed is the safer choice.

What’s Included in Your Monthly Payment?
Your mortgage payment usually covers four things: principal (paying down the loan), interest, property taxes, and homeowner’s insurance. These last two are often held in an escrow account and paid on your behalf by the lender for when those bills are due.

The Best First Step
Get pre-approved before you start looking at homes. It tells you exactly what you can afford, and it makes your offer much more competitive when you find the right house.

I work with trusted lenders who speak English and Spanish and specialize in helping buyers like you to navigate this process without stress.

Call or text me at (901) 374-8225.