FAQ
What minimum credit score is needed to qualify for a mortgage?
The minimum credit score required depends on the type of loan you’re applying for:
• Conventional loans: Typically 620 or higher
• FHA loans: As low as 500 with specific requirements
• VA and USDA loans: Usually 580 or higher
Remember that higher credit scores can help you secure better rates and terms.
How much do I need for a down payment?
Down payment requirements vary by loan type:
• Conventional loans: As low as 3%
• FHA loans: 3.5% (for borrowers with a 580+ credit score)
• VA and USDA loans: Often require 0% down
Some programs, like Down Payment Assistance (DPA), can help cover a portion or all of your down payment.
What is the difference between pre-qualification and pre-approval?
• Pre-qualification: An initial estimate of how much you may qualify for based on self-reported financial information.
• Pre-approval: A more in-depth process where a lender verifies your financial information (income, credit, etc.), giving you a stronger position when making an offer.
How do I know how much house I can afford?
A good rule of thumb is to keep your monthly mortgage payment (including taxes and insurance) at or below 28% of your gross monthly income. A lender can provide a detailed affordability analysis based on your income, credit, and debts.
What are closing costs, and how much should I expect to pay?
Closing costs typically range from 2% to 5% of the loan amount, including fees like appraisal, title insurance, and lender fees. Some loan programs allow you to roll these costs into the loan or negotiate seller contributions.
Can I qualify for a mortgage if I’m self-employed?
Yes, self-employed borrowers can qualify for a mortgage. You may need to provide additional documentation, such as two years of tax returns, bank statements, or a profit and loss statement. Bank statement loans are also an excellent option for self-employed individuals with significant tax deductions.
What’s the difference between a fixed-rate and an adjustable-rate mortgage (ARM)?
• Fixed-rate mortgage: Your interest rate and monthly payment remain constant over the life of the loan.
• ARM: Starts with a lower fixed rate for a set period (e.g., 5, 7, or 10 years), then adjusts annually based on market rates. ARMs can offer initial savings but may increase over time.
Can I refinance my mortgage to lower my payments?
Refinancing can lower your monthly payments by securing a lower interest rate, extending the loan term, or switching to a loan program with better terms. Programs like FHA Streamline and VA IRRRL are designed for fast and easy refinancing.
What is a HELOC, and how does it work?
A Home Equity Line of Credit (HELOC) allows you to borrow against the equity in your home as a flexible, revolving line of credit. It’s ideal for funding home improvements, consolidating debt, or covering unexpected expenses. You only pay interest on the amount you borrow.
How long does it take to close on a home loan?
The closing timeline depends on the loan type and your financial situation. On average:
• Purchase loans: 30 to 45 days
• HELOCs and some refinances: As fast as a few days
Working with an experienced lender and providing necessary documentation promptly can speed up the process.