Frequently Asked Questions About Mortgages
General answers to common mortgage questions. Loan guidelines vary by lender and program and change over time, so treat these as a starting point rather than a quote for your specific situation.
What credit score do I need to get a mortgage?
It depends on the loan program. FHA loans often accept scores starting in the high-500s to low-600s range, while conventional loans commonly look for scores in the high-600s or above for the best pricing. VA and USDA loans don't set a fixed minimum themselves, but lenders typically apply their own overlays. These are general guidelines — exact requirements vary by lender and can change.
How much down payment do I need?
Some programs, like VA and USDA loans, can allow no down payment for eligible borrowers and properties. FHA loans often allow as little as 3.5% down, and some conventional programs allow around 3% down for qualifying first-time buyers. A larger down payment can reduce or eliminate mortgage insurance and lower your monthly payment.
What is private mortgage insurance (PMI)?
PMI is insurance that protects the lender, not the borrower, and is commonly required on conventional loans when the down payment is below 20%. It's usually added to your monthly payment and can often be removed once you reach a certain amount of equity. FHA loans use a different mortgage insurance structure that often lasts for the life of the loan.
What's the difference between pre-qualification and pre-approval?
Pre-qualification is a quick, informal estimate based on information you provide, without verification. Pre-approval involves the lender verifying your income, assets, and credit, and typically results in a letter that carries more weight with home sellers.
What is a debt-to-income (DTI) ratio?
DTI compares your total monthly debt payments to your gross monthly income, expressed as a percentage. Lenders use it to gauge how much additional mortgage payment you can reasonably take on, alongside your existing obligations like car loans, student loans, and credit cards.
What are closing costs?
Closing costs are the fees paid to finalize a mortgage, including items like the appraisal, title insurance, lender origination fees, and recording fees. They commonly total a few percent of the loan amount, though the exact figure depends on the loan, location, and lender.
Should I choose a fixed-rate or adjustable-rate mortgage?
It depends on how long you plan to stay in the home and your comfort with potential payment changes. A fixed rate offers predictability for the life of the loan, while an adjustable-rate mortgage (ARM) can offer a lower initial rate that may change after a set period. See our fixed vs. ARM guide for more detail.
Can I get a mortgage if I'm self-employed?
Yes, though self-employed borrowers typically need to provide additional documentation, such as two years of tax returns and profit-and-loss statements, since lenders need to verify consistent, qualifying income without pay stubs or W-2s.