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Mortgages in the USA: What types of mortgages are available?
The mortgage market in the USA is very well developed. However, the market has traditionally operated in a slightly different way to that in Europe, so you might find some products or terminology that's unfamiliar if you’re used to the system elsewhere. Either way, before you commit to a mortgage, you need to know a bit about how the different products work, to make a considered decision.

The first thing you have to decide is whether you want a fixed rate, or variable rate product. Fixed rate mortgages guarantee the same interest rate will be applied for the duration of the agreement. In the USA, until the subprime crisis, it was fairly normal to get a fixed rate for the whole repayment term - so up to 30 years. This is in contrast to Europe, where such favourable terms would be offered for a short while only - usually up to five years. These days it’s harder, but still possible to get a long fixed rate in the USA, but you’ll have to fulfil strict criteria to do so.

Variable rate mortgages in the USA might be referred to as Adjustable Rate Mortgages (ARMs). Unlike a fixed rate product, these can cost more or less depending on how the interest rates change.

An alternative is a hybrid product, which comes with a fixed rate for a few years before reverting to a variable ARM product. These might be referred to as ‘3/1 ARM’ or ‘5/1 ARM’ for example, meaning they have a fixed rate for three or five years before moving to adjustable rates.

Different banks and brokers will offer different products, and not every customer can access all of the loans available. The rules and products available for expat buyers may vary depending on which state you're in, as will rates and requirement for documentation and so on. The information in this guide is intended to be a starting point, but it’s a good idea to get some specialist advice from a qualified financial advisor or mortgage broker, who can fully explain the options available to you.


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