A forward mortgage is the most common type of home loan used by buyers to purchase or refinance a home. Unlike a reverse mortgage, a forward mortgage requires the borrower to make monthly payments to the lender, gradually paying down the loan balance and increasing their equity in the property.
The term “forward” highlights the directional flow of payments from the borrower to the lender, reducing the debt and growing ownership over time. This contrasts with a reverse mortgage, where equity is borrowed against and loan balances increase.
The typical forward mortgage process involves the lender providing a one-time loan amount to cover the home’s purchase price minus any down payment. The borrower agrees to repay this loan in monthly installments over a set period, commonly 15 or 30 years. Each payment includes principal—the amount reducing the loan balance—and interest, which is the cost of borrowing.
Early payments mostly cover interest, but over time, a larger share goes toward principal in a process called amortization. As the principal is paid down or as the property value rises, the borrower’s home equity—the portion of the home owned outright—increases. Building equity is a key way homeowners accumulate wealth.
There are several types of forward mortgages, including fixed-rate loans with stable payments and adjustable-rate mortgages (ARMs) where rates vary after an initial fixed period. Government-backed options such as FHA, VA, and USDA loans provide more accessible paths to homeownership for many buyers.
For more details on different mortgage types, see Fixed-Rate Mortgages, Adjustable-Rate Mortgages, and Government-Backed Loans.
Understanding how a forward mortgage works can help you make informed decisions about financing your home purchase. Unlike reverse mortgages, which are designed for seniors to tap home equity without monthly payments, forward mortgages require steady repayment but build your equity and homeownership in a predictable way.
For a clear comparison, visit our detailed page on Reverse Mortgages.
Sources:
- Consumer Financial Protection Bureau: https://www.consumerfinance.gov/owning-a-home/mortgages/what-is-a-mortgage/
- IRS Publication 936, Home Mortgage Interest Deduction: https://www.irs.gov/pub/irs-pdf/p936.pdf
- FHA Loans Overview: https://www.hud.gov/program_offices/housing/fhahistory