A mortgage loan is a long-term financial agreement where a lender provides a borrower with funds to purchase a property, with the house itself serving as collateral. The borrower repays the loan through regular installments over a set period, typically 15 to 30 years, including principal and interest. This allows homebuyers to acquire property without the full upfront cost.

The mortgage loan system is critical to the U.S. housing market as it enables individuals to afford homes through structured payments. According to the Federal Reserve, U.S. household mortgage debt exceeded $13.8 trillion in 2023, accounting for 67% of all household debt. This reflects the widespread reliance on mortgages for homeownership. Data from the U.S. Census Bureau shows that 90% of recent homebuyers used mortgage financing, with the average loan amount reaching $417,200 in 2022. Fixed-rate mortgages, which offer predictable monthly payments, dominate the market, with 75% of new loans as of 2023 (Federal Housing Finance Agency). Low interest rates have further driven demand, as the 30-year fixed rate averaged 6.5% in 2023—a historic high but still below pre-2008 peaks. These factors collectively sustain liquidity in real estate, enabling economic growth through homeownership investment and wealth accumulation. The system balances risk for lenders and accessibility for borrowers, underpinning the stability of the U.S. housing market.