Question 1

What is an FHA loan and who qualifies?

Accepted Answer

An FHA loan is a government-backed mortgage insured by the Federal Housing Administration. It's designed for borrowers with lower credit scores or smaller down payments. Generally: 3.5% down with 580+ credit; 10% down with 500–579. FHA loans require mortgage insurance premium (MIP) regardless of down payment amount. They're popular with first-time buyers and those rebuilding credit.

Question 2

Who qualifies for a VA loan?

Accepted Answer

VA loans are available to: active duty servicemembers (with sufficient service), veterans (with honorable or qualifying discharge), National Guard and Reserve members (with qualifying service), and surviving spouses of veterans who died in service or from a service-connected disability. VA loans offer 0% down payment, no PMI, and competitive rates. The VA funding fee applies unless you are exempt due to a service-connected disability.

Question 3

What is the VA funding fee and how much is it?

Accepted Answer

The VA funding fee is a one-time fee paid to the VA that helps keep the loan program funded for future veterans. For a first-time VA loan user with no down payment, the fee is generally 2.15% of the loan amount. For subsequent use it is typically 3.3%. If you put 5% or more down, the fee is reduced. Veterans with a service-connected disability rating of 10% or more are generally exempt from the fee entirely. The fee can be rolled into your loan so you do not need to pay it out of pocket at closing.

Question 4

What is a USDA loan and what areas qualify?

Accepted Answer

A USDA loan is a government-backed mortgage for properties in eligible rural and suburban areas, offering 0% down payment to income-qualifying borrowers. More areas qualify than most people expect — many suburban communities outside major metros are USDA-eligible. Income limits apply and vary by location and household size. USDA loans are often overlooked but can be an excellent option for buyers who do not want to use their savings for a down payment.

Question 5

What is a DSCR loan?

Accepted Answer

A DSCR (Debt Service Coverage Ratio) loan qualifies borrowers based on a property's rental income rather than personal income — no W-2s or tax returns required. It's designed for real estate investors. Lenders calculate DSCR by dividing the property's net operating income by its total debt obligations. A DSCR of 1.0 means the property's income covers its debt payments; most lenders want 1.0 or higher. Self-employed investors, LLC borrowers, and portfolio builders commonly use DSCR loans to expand their holdings without the limitations of conventional income documentation.

Question 6

What is a bank statement loan?

Accepted Answer

A bank statement loan allows self-employed borrowers to qualify for a mortgage using 12–24 months of personal or business bank statements instead of tax returns or W-2s. Income is calculated from average monthly deposits rather than taxable net income, which solves the write-off problem: business owners who legally reduce their taxable income through deductions often cannot qualify conventionally even when their cash flow is strong. Bank statement loans typically require 10–20% down depending on occupancy and credit.

Question 7

What's the difference between a fixed-rate and adjustable-rate mortgage?

Accepted Answer

A fixed-rate mortgage locks your interest rate for the full loan term. Your principal and interest payment never changes regardless of what happens to market rates. An adjustable-rate mortgage (ARM) starts with a fixed rate for an introductory period (commonly 5, 7, or 10 years), then adjusts periodically based on a market index. ARMs often start with a lower rate than fixed loans, which can work in your favor if you plan to sell or refinance before the adjustment period begins. For long-term homeowners, a fixed rate offers predictability and protection from rate increases.

Question 8

What is a jumbo loan and when do I need one?

Accepted Answer

A jumbo loan is a mortgage that exceeds the conforming loan limits set by Fannie Mae and Freddie Mac. The 2025 baseline limit is $806,500 in most U.S. counties, with higher limits in high-cost areas like California, New York, and Hawaii. If you need to borrow more than the conforming limit, you will need a jumbo loan. Jumbo loans typically require stronger credit (generally 700+), larger down payments (10–20%), and more cash reserves than conforming loans.

Question 9

What is a non-qualified mortgage?

Accepted Answer

Non-QM (non-qualified mortgage) loans are mortgage products designed for borrowers who do not meet Fannie Mae or Freddie Mac's standard guidelines — not because they are risky, but because their financial situation does not fit a traditional mold. Non-QM loans are legal, regulated, and widely used. Common Non-QM programs include: DSCR loans (for investors), bank statement loans (for self-employed), 1099 loans (for contractors), asset depletion loans (for high-net-worth borrowers with assets but limited income), and bridge loans. They typically require larger down payments and carry slightly higher rates than conventional loans.

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