A home mortgage is a long-term loan used to purchase or refinance real estate, where the property serves as collateral. Borrowers repay the principal and interest through monthly installments over 15–30 years, with terms varying based on creditworthiness, loan type, and market conditions.

Mortgages are central to U.S. homeownership, enabling individuals to acquire property with upfront costs as low as 3–20% of the purchase price. According to the Federal Reserve’s 2023 Survey of Consumer Finances, 63.7% of U.S. homeowners own their homes outright, while 36.3% hold mortgages. The average mortgage balance was $385,800 in 2023, with 30-year fixed rates averaging 7.0% (Federal Housing Finance Agency). These rates directly influence affordability; higher rates reduce borrowing capacity, as seen in 2022 when mortgage applications fell 18% year-over-year due to rising rates (Mortgage Bankers Association).

Mortgage products, such as conventional, FHA, and VA loans, cater to different needs. For example, FHA loans require only 3.5% down, aiding first-time buyers, while VA loans offer zero-down options for veterans. The U.S. Census Bureau notes that homeownership rates dropped to 64.8% in Q1 2023, partly due to affordability challenges. However, mortgages remain vital for wealth accumulation, as homeownership accounts for 34% of household net worth (Federal Reserve). Lenders also benefit from stable cash flows, with mortgage-backed securities (MBS) generating trillions in liquidity since 2008.

In summary, mortgages facilitate homeownership by spreading purchase costs over time, but rising rates and high home prices pose challenges. Policymakers and lenders continue to innovate, such as with adjustable-rate mortgages (ARMs) and down payment assistance programs, to sustain access to credit. Data underscores the balance between financial security for borrowers and systemic stability for markets.