A fixed rate mortgage keeps the same interest rate for the full life of the loan, which means your payment stays the same from month one to the last payment. An adjustable rate mortgage starts with a lower rate that changes after a set period, usually three, five, seven, or ten years. After that period ends, your rate adjusts periodically based on market conditions, which means your payment can go up or down. Fixed rates offer predictability. Adjustable rates offer a lower starting payment but come with uncertainty later. Your choice depends on how long you plan to stay in your home and your comfort with payment changes.

Affordability depends on your income, debts, down payment, and the interest rate you qualify for. Lenders typically look at your debt-to-income ratio, which compares your monthly debt payments to your gross monthly income. Most lenders want that ratio below 43 percent. The larger your down payment, the less you need to borrow. The lower your existing debts, the more loan you can carry. Your monthly payment also depends on the loan term, your credit profile, and current market rates. Work through the numbers with an actual application to see what fits your budget, not just what you're approved for.

Mortgage insurance protects the lender if you default on your loan. You pay the premium, but the lender gets the benefit. Most lenders require mortgage insurance if your down payment is less than 20 percent. The size of your down payment determines the insurance cost, so a 10 percent down payment costs more to insure than a 15 percent down payment. In some cases, you can remove mortgage insurance once you've paid down enough of the loan and built enough equity in the home. Ask about this when you apply so you understand the timeline.