Mortgage FAQs

Lenders typically use the 28/36 rule to determine how much you can borrow. This means your monthly mortgage payment shouldn't exceed 28% of your gross monthly income, and your total debt payments (including your mortgage) shouldn't exceed 36% of your gross monthly income.

Factors that affect affordability include:

• Your income and employment stability
• Your credit score and history
• Your existing debt obligations
• Your down payment amount
• Current interest rates
• Property taxes and insurance costs in your area

For a more precise estimate, try our mortgage calculator or speak with one of our mortgage specialists.

Credit score requirements vary by loan type:

• Conventional loans: Typically 620 or higher
• FHA loans: Minimum 580 for a 3.5% down payment; 500-579 for a 10% down payment
• VA loans: No official minimum, but lenders often look for 620+
• USDA loans: Typically 640 or higher

Higher credit scores generally qualify you for better interest rates and loan terms. If your score is below these thresholds, you may want to work on improving it before applying, or explore specialized loan programs designed for borrowers with lower credit scores.

Down payment requirements vary by loan type:

• Conventional loans: Typically 3-20% (20% avoids private mortgage insurance)
• FHA loans: Minimum 3.5% with credit score of 580+; 10% with credit score of 500-579
• VA loans: 0% down payment for qualified veterans and service members
• USDA loans: 0% down payment for eligible rural properties

Many first-time homebuyer programs offer down payment assistance that can reduce the amount you need to save. Our mortgage specialists can help you explore these options and find the best fit for your situation.

Pre-qualification: A quick, informal process where a lender provides an estimate of how much you might be able to borrow based on self-reported information about your finances. No verification is performed.

Pre-approval: A more thorough process where a lender verifies your financial information (income, assets, credit) and provides a conditional commitment to lend a specific amount. Pre-approval carries more weight with sellers and is often required before making an offer.

We recommend getting pre-approved before beginning your home search, as it gives you a clear budget and demonstrates to sellers that you're a serious buyer who can secure financing.

Common mortgage types include:

• Fixed-rate mortgages: Interest rate remains the same for the entire loan term (typically 15, 20, or 30 years)
• Adjustable-rate mortgages (ARMs): Interest rate is fixed for an initial period, then adjusts periodically based on market conditions
• FHA loans: Government-backed loans with lower down payment requirements
• VA loans: For eligible veterans, active-duty service members, and surviving spouses
• USDA loans: For eligible rural and suburban homebuyers
• Jumbo loans: For loan amounts that exceed conforming loan limits

Each loan type has its own advantages and requirements. Our mortgage specialists can help you determine which option best fits your financial situation and homeownership goals.

Your debt-to-income ratio is the percentage of your gross monthly income that goes toward paying debts. Lenders use this to assess your ability to manage monthly payments and repay debts.

• Front-end DTI: The percentage of income that would go toward housing costs (typically should be below 28%)
• Back-end DTI: The percentage of income that goes toward all debt payments, including housing (typically should be below 36-43%, depending on the loan type)

Lower DTI ratios improve your chances of mortgage approval and may help you qualify for better rates. If your DTI is high, you might consider paying down existing debt or increasing your income before applying for a mortgage.

A typical mortgage payment includes:

• Principal: Payment toward the loan balance
• Interest: Cost of borrowing the money
• Property taxes: Annual taxes assessed by local government, usually collected monthly in escrow
• Homeowners insurance: Protects against damage to your home, usually collected monthly in escrow
• Mortgage insurance: Required if down payment is less than 20% on conventional loans
• HOA fees: If applicable, though these are typically paid separately

These components are often referred to as PITI (Principal, Interest, Taxes, and Insurance). Our mortgage calculator can help you estimate your total monthly payment based on these factors.

Interest rates significantly impact your monthly payment and the total cost of your loan. Even a small difference in rate can mean thousands of dollars over the life of a loan.

Factors affecting your interest rate include:

• Credit score
• Down payment amount
• Loan term
• Loan type
• Current market conditions
• Points purchased to lower the rate
• Property location

You can use our mortgage calculator to see how different interest rates affect your monthly payment and total loan cost.

Closing costs are fees and expenses paid when finalizing a mortgage, typically ranging from 2-5% of the loan amount. These may include:

• Loan origination fees
• Appraisal fees
• Title insurance
• Attorney fees
• Recording fees
• Prepaid items (property taxes, homeowners insurance, interest)
• Discount points (optional fees to lower interest rate)

Some closing costs may be negotiable, and in some cases, sellers may agree to pay a portion of these costs. Your lender will provide a Loan Estimate that outlines expected closing costs within three business days of your loan application.

Yes, options exist for borrowers with financial challenges:

• FHA loans accommodate lower credit scores (minimum 500)
• VA loans may be more flexible with credit requirements for eligible veterans
• Portfolio lenders (banks that keep loans rather than selling them) may offer more flexible terms
• Non-qualified mortgage (non-QM) loans serve borrowers who don't meet traditional requirements
• Down payment assistance programs can help with upfront costs
• Co-signers can help borrowers with limited credit history or income

Working with a knowledgeable mortgage broker who specializes in challenging situations can help identify the best options for your specific circumstances. Contact us to discuss your situation and explore available solutions.

The mortgage process typically takes 30-45 days from application to closing, though it can vary based on:

• Loan type
• Property type
• Your financial situation
• Lender workload
• Market conditions
• Completeness of your application and supporting documentation

Getting pre-approved and responding quickly to lender requests for information can help streamline the process. Our mortgage specialists work diligently to ensure a smooth and efficient experience for all our clients.