Mortgage FAQ

Down payment requirements vary by loan type. Conventional loans can go as low as 3% down, FHA loans require 3.5%, and VA and USDA loans often allow 0% down for eligible borrowers. Putting 20% down lets you avoid private mortgage insurance (PMI), but it is not required to buy a home.

Minimum scores depend on the loan program. Conventional loans typically start at 620, FHA loans at 580 (or 500 with 10% down), and VA loans have no fixed minimum but most lenders look for 580–620. A higher score generally results in a lower interest rate and better terms.

Pre-qualification is a quick estimate based on information you provide verbally or online — it is not verified. Pre-approval is a formal review of your credit, income, and assets that results in a written commitment from the lender. Sellers take pre-approval letters much more seriously when reviewing offers.

A common guideline is to keep your total monthly housing payment at or below 28% of your gross monthly income, with all debts under 36–43%. Affordability depends on your income, debts, credit score, down payment, interest rate, taxes, and insurance. A mortgage calculator or pre-approval gives you a personalized number.

Private mortgage insurance (PMI) is required on most conventional loans when your down payment is less than 20%. It protects the lender if you default. You can typically request PMI removal once your loan balance reaches 80% of the home's original value, and it must automatically end at 78% under federal law.

A fixed-rate mortgage keeps the same interest rate for the entire loan term, so your principal and interest payment never changes. An ARM starts with a lower fixed rate for a set period (commonly 5, 7, or 10 years) and then adjusts periodically based on market rates. Fixed rates offer predictability; ARMs can offer short-term savings if you plan to move or refinance.

Closing costs are the fees and expenses required to finalize your mortgage — typically 2% to 5% of the loan amount. They include lender fees, appraisal, title insurance, taxes, and prepaid items like homeowners insurance. You'll receive a Loan Estimate within three business days of applying that itemizes these costs.

Most home purchase loans close in 30 to 45 days, though timelines vary based on loan type, appraisal scheduling, and how quickly documents are provided. Refinances typically take 30 to 45 days as well. Responding promptly to lender requests is the single biggest factor in a faster closing.

You'll generally need two years of W-2s or tax returns, recent pay stubs, two months of bank statements, photo ID, and information on any other properties or debts. Self-employed borrowers will also need profit-and-loss statements and business tax returns. Your loan officer will provide a full checklist tailored to your situation.

Conventional loans are not government-backed and often require stronger credit and larger down payments. FHA loans are insured by the FHA and allow lower credit scores and down payments. VA loans are guaranteed by the Department of Veterans Affairs for eligible service members and veterans, often with no down payment. USDA loans support buyers in eligible rural and suburban areas with no down payment.

Discount points are an upfront fee (typically 1% of the loan amount per point) paid to reduce your interest rate. Whether they make sense depends on how long you plan to stay in the home — calculate the break-even point (cost of points ÷ monthly savings) and compare it to your expected time in the loan.

Yes. Self-employed borrowers qualify using documented income, typically two years of personal and business tax returns plus year-to-date profit-and-loss statements. Bank statement and DSCR loan programs are also available for borrowers whose tax returns don't fully reflect their cash flow. Strong credit and reserves help strengthen your application.