1. How much do I need for a down payment?

It depends on the loan type. Conventional loans typically require 3-5% down, while FHA loans need at least 3.5%. VA and USDA loans offer zero down payment for eligible buyers. A 20% down payment is ideal to avoid private mortgage insurance (PMI), but it’s not required.

2. What credit score do I need to buy a house?

Most lenders prefer a credit score of 620 or higher for conventional loans. FHA loans allow scores as low as 580 (or even 500 with a higher down payment). VA and USDA loans don’t have strict minimums but usually require at least 620.

3. How do I know how much home I can afford?

A good rule of thumb is to spend no more than 28-30% of your gross monthly income on housing costs, including mortgage, taxes, and insurance. A lender can pre-approve you based on your income, debts, and credit history.

4. What is mortgage pre-approval, and why do I need it?

Pre-approval means a lender has reviewed your credit, income, and finances and is willing to lend you a specific amount. It strengthens your offer when buying a home and helps you understand your price range.

5. What’s the difference between a fixed-rate and an adjustable-rate mortgage (ARM)?

A fixed-rate mortgage has the same interest rate for the entire loan term, while an ARM starts with a lower rate for a set period (e.g., 5 years) before adjusting up or down based on market rates.

6. What are closing costs, and how much should I expect to pay?

Closing costs cover lender fees, appraisal, title insurance, and other expenses. They typically range from 2-5% of the home price and are due at closing. Some sellers may agree to pay part of these costs.

7. How long does it take to buy a home?

Once you have an accepted offer, the closing process usually takes 30-45 days. The full timeline varies depending on financing, inspections, and negotiations.

8. Do I need a home inspection?

Yes, a home inspection is highly recommended. It helps uncover potential issues with the structure, roof, plumbing, electrical, and more, allowing you to negotiate repairs or reconsider your purchase.

9. What is an appraisal, and why is it required?

An appraisal is a professional estimate of the home’s value, required by lenders to ensure they are not lending more than the property is worth. If the appraisal is lower than the offer price, you may need to negotiate or pay the difference.

10. What is private mortgage insurance (PMI), and do I need it?

PMI is required for conventional loans when you put down less than 20%. It protects the lender if you default. FHA loans have their own version of mortgage insurance, while VA and USDA loans do not require PMI.

11. Can I buy a home if I’m self-employed?

Yes! You’ll need to provide at least 2 years of tax returns, bank statements, and profit/loss statements to show stable income. Non-QM loans may offer additional flexibility for self-employed buyers.

12. What’s the best loan program for first-time homebuyers?

First-time buyers often use FHA loans (low down payment), VA loans (for veterans), USDA loans (for rural areas), and Conventional 3% down programs. State and local first-time homebuyer programs may also offer grants or assistance.

13. How much should I save for homeownership costs beyond the down payment?

Beyond the down payment, you’ll need savings for closing costs (2-5% of the home price), moving expenses, home maintenance, and emergency repairs.

14. What happens if my offer is outbid?

If your offer is outbid, you can choose to increase your offer, improve your terms (such as waiving contingencies), or look for another property. A good real estate agent can help you craft a competitive offer.

15. Can I buy a home with student loan debt?

Yes! Lenders look at your debt-to-income (DTI) ratio to ensure you can afford a mortgage. Some loan programs, like FHA and VA, offer flexible guidelines for buyers with student loans.

16. What happens if interest rates go up before I close?

If interest rates rise, your monthly payment could increase. To protect yourself, you can lock in your rate with your lender to secure today’s rate before closing.

17. Can I use gift money for a down payment?

Yes, many loan programs allow gift funds from family members, employers, or charitable organizations. Your lender will need a gift letter confirming that the money does not have to be repaid.

18. What is an escrow account, and how does it work?

An escrow account is used to hold property taxes and homeowner’s insurance payments. Your lender collects these costs monthly as part of your mortgage payment and pays them on your behalf.

19. What if I have bad credit? Can I still buy a home?

Yes, but options may be limited. FHA loans allow scores as low as 500-580, and VA/USDA loans have flexible guidelines. Improving your credit before applying can help you secure better terms.

20. What’s the next step if I’m ready to buy a home?

The next step is to get pre-approved for a mortgage. This helps you understand your budget and makes you a stronger buyer in the market. Contact me today to start your pre-approval process!

Need More Help? Let’s Talk!

Buying a home is a big decision, but you don’t have to do it alone. If you have more questions or are ready to start the mortgage process, reach out today! I’d love to help you find the best loan option for your needs.