Obviously, most first time home buyers have to take out a mortgage to pay for a new home. Early in the home buying process, smart shoppers should find and meet with a professional lender so that they can understand what mortgage, budget and monthly payments they can handle. A variety of factors determine the type of mortgage loan that is best for each individual, and a key aspect of choosing the right loan deals with what affects your average mortgage payment.

To avoid costly mistakes, discuss these three factors with your lender to determine an average mortgage payment that falls within your budget and comfort zone:

#1: Length of the mortgage. Fortunately, mortgages are available in a wide variety of lengths. Fifteen, twenty, and thirty year loans are the most common options. A longer loan life will give you a lower average mortgage payment; however, you will end up paying more in interest in the long run. Keep in mind, even if you choose a thirty year mortgage, you can most likely make extra payments to pay it off faster. Talk to your lender and have them run a few scenarios to decide on the length of loan that best suits your budget.

#2: Variety of interest rates. You need to decide if you want a fixed or variable interest rate for your loan. A fixed rate means the rate never changes even with market fluctuations, so you know up front the amount you will be required to pay every month for the life of the loan. A variable rate–you guessed it–fluctuates depending on the market. Variable interest rates are attractive to buyers who plan to move or refinance in the next few years, especially if current interest rates are low. This decision can be especially confusing, so make sure you ask your lender to explain it in detail.

#3: Size of your down payment. A larger-than-average down payment affects all aspects of the home buying process. The more you pay down, the less financing you need, which lowers your average mortgage payment. You may end up choosing a shorter loan length if you have a larger down payment. Additionally, if you have a less-than-average down payment, your average mortgage payment will be higher and a longer mortgage term may be best for you.

Choosing a loan with a monthly mortgage payment that fits into your budget is crucial for your long-term financial stability. Talk to your lender about the type of loan that makes sense for your individual needs, and take steps to get prequalified for the right loan for you.

If you’re looking to get prequalified for a mortgage, schedule a pre-approval appointment now!