FAQ
Questions I hear every week.
Straight answers to the most common ones. If yours isn't here, ask me.
Getting started
What's the next step if I'm ready to buy?
Get pre-approved. It shows you your budget and makes you a stronger buyer.
What is pre-approval, and why do I need it?
A lender has reviewed your credit, income and finances and is willing to lend you a specific amount. It strengthens your offer and shows you your price range.
How much home can I afford?
A good rule of thumb is keeping housing costs (mortgage, taxes and insurance) to about 28 to 30% of your gross monthly income. Pre-approval gives you the real number.
What's the best loan for first-time buyers?
Common picks are FHA, VA, USDA and conventional 3% down. State and local programs may also offer assistance.
Down payment and costs
How much do I need for a down payment?
It depends on the loan. Conventional can be 3 to 5%, FHA 3.5%, and VA and USDA can be zero down for eligible buyers. 20% avoids PMI but isn't required.
What are closing costs?
Lender fees, appraisal, title insurance and other expenses, usually 2 to 5% of the price. Sellers sometimes cover part of them.
Can I use gift money for my down payment?
Yes, many programs allow gifts from family, employers or charitable organizations, with a gift letter confirming it doesn't need to be repaid.
What is PMI, and do I need it?
Conventional loans require PMI under 20% down. FHA has its own mortgage insurance. VA and USDA don't require PMI.
What else should I save for?
Closing costs, moving, maintenance and an emergency cushion.
What is an escrow account?
It holds your property taxes and homeowner's insurance. You pay into it monthly with your mortgage, and the bills are paid for you.
Credit and qualifying
What credit score do I need?
Conventional usually starts at 620. FHA can go to 580, or 500 with more down. VA and USDA usually look for 620.
Can I buy with bad credit?
Often, yes. Options are more limited, and improving your credit first can get you better terms.
Can I buy if I'm self-employed?
Yes. Plan on two years of tax returns, or look at bank statement and P&L loans for more flexibility.
Can I buy with student loans?
Yes. Lenders look at your debt-to-income ratio, and FHA and VA have flexible guidelines.
The process
How long does it take?
Usually 30 to 45 days from accepted offer to closing.
What happens if my offer gets beat?
Raise your offer, improve your terms, or move to the next home. Your pre-approval stays ready.
What if rates go up before I close?
Your payment could rise. Locking your rate protects you until closing.
Fixed rate or ARM?
A fixed rate stays the same for the whole loan. An ARM starts lower for a set period, then adjusts with the market.
What is an appraisal?
A professional estimate of the home's value. If it comes in low, you may renegotiate or cover the difference.
Do I need a home inspection?
It's strongly recommended. It catches problems early so you can negotiate repairs.