Mortgage FAQ: Answers to the
Questions Borrowers Ask Most

Credit score requirements vary by loan program. Generally: VA loans have no official minimum (lender standards vary); FHA loans typically require 580+ for maximum financing; conventional loans generally want 620+; jumbo loans usually require 700+. A higher credit score typically unlocks a lower interest rate, which can save thousands over the life of your loan. If your score is not where you would like it, a loan officer can often suggest steps to improve it before you apply.

• See which loan programs fit your credit profile →

Credit score requirements vary by lender and program. These are general industry ranges, not a commitment to lend.

Probably less than you think. VA loans and USDA loans both offer 0% down payment for eligible borrowers. FHA loans require as little as 3.5% down. Conventional loans can go as low as 3% down with programs like HomeReady and Home Possible. A larger down payment generally means a lower rate and no mortgage insurance, but it is not always necessary. Down payment assistance programs may also be available in your area.

• VA loan — 0% down for veterans →
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A common guideline is that your total monthly debt payments, including your new mortgage, should be no more than 43% of your gross monthly income (your debt-to-income ratio, or DTI). But the real answer depends on your income, debts, credit score, down payment, and the programs you qualify for. The fastest way to get a real number is to use our affordability calculator or talk to a loan officer.

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Pre-qualification is a quick, informal estimate of what you might borrow, usually based on self-reported income and credit, with no formal verification. Pre-approval is a more thorough review where a lender verifies your income, credit, and assets, then issues a formal letter stating how much they'll lend. Pre-approval carries more weight with sellers and gives you a clearer picture of your buying power. It's the step that turns you from a browser into a serious buyer.

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From application to closing, most purchase mortgages close in 30–45 days. Getting pre-approved typically takes 1–3 business days with complete documentation. Specialty programs like bank statement or DSCR loans often run on similar timelines, typically around 30 days when documentation is organized and responsive. Your loan officer will walk you through key milestones and keep you updated throughout the process.

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For most borrowers: government-issued ID, recent pay stubs (last 30 days), W-2s from the last 2 years, federal tax returns (last 2 years), and bank statements (last 2 months). For self-employed borrowers: bank statements typically substitute for W-2s and tax returns. For VA loans: Certificate of Eligibility plus standard documents. Your loan officer will give you a complete document checklist specific to your situation.

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• Upload documents in your secure portal →

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.

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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.

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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.

• Use our VA calculator — auto-calculates your funding fee →
• VA loan program details →
• Full definition: VA funding fee →

VA funding fee percentages are per the official VA schedule and subject to change. Confirm current rates with your loan officer.

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.

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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.

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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.

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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.

• Use our mortgage calculator to compare payments →

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.

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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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Refinancing makes sense when the monthly savings outweigh the cost of refinancing within your planned time in the home — called the break-even point. For example: if refinancing costs $5,000 in closing costs and saves you $200/month, your break-even is 25 months. If you plan to stay in the home longer than that, refinancing likely makes sense. Other reasons to consider refinancing: switching from an ARM to a fixed rate, removing PMI, shortening your loan term, or tapping equity. Use our refinance calculator to run your specific numbers.

• Calculate your refinance break-even →
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A cash-out refinance replaces your existing mortgage with a new, larger loan and gives you the difference in cash. If your home is worth $400,000 and you owe $250,000, you might refinance into a $300,000 loan and receive $50,000 in cash. Common uses: home improvements, debt consolidation, college costs, or funding an investment. Most lenders require you to retain at least 20% equity after the cash-out. VA cash-out refinancing is available for eligible veterans and can access more equity than conventional programs in many cases.

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The VA Interest Rate Reduction Refinance Loan (IRRRL), often called a VA streamline refinance, lets veterans with an existing VA loan refinance to a lower interest rate with minimal documentation and no appraisal required in most cases. It's one of the easiest refinance programs available: no income verification, no home appraisal (typically), and limited paperwork. The VA funding fee for an IRRRL is 0.5%, which is much lower than a purchase loan. You cannot take cash out with an IRRRL; for cash-out, use the VA cash-out refinance program.

• VA IRRRL program details →
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Refinancing does temporarily affect your credit score. The lender will pull a hard inquiry, which typically reduces your score by 5–10 points. This effect is usually temporary and recovers within a few months as you make on-time payments. If you are rate shopping with multiple lenders, credit bureaus generally treat multiple mortgage inquiries within a 14–45 day window as a single inquiry, so shopping around does not compound the impact. The long-term benefit of a lower rate typically far outweighs the short-term score impact.

It depends on the program. For a conventional rate-and-term refinance, most lenders want at least 20% equity (80% LTV or lower) to avoid PMI. For a conventional cash-out refinance, most lenders cap at 80% LTV, meaning you keep at least 20% equity after the cash-out. FHA Streamline refinances generally do not have a minimum equity requirement. VA IRRRL refinances also have no minimum equity requirement. VA cash-out refinances can typically go up to 90% LTV. If you have limited equity, a loan officer can identify which programs you qualify for.

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Closing costs are fees and expenses paid at the completion of a real estate transaction, separate from your down payment. They typically total 2–5% of the loan amount. Common closing costs include: appraisal fee, title search and title insurance, loan origination fee, recording fees, prepaid interest, homeowners insurance, and property tax escrow. On a $400,000 loan, expect roughly $8,000–$20,000 in closing costs. Some costs are negotiable; others are fixed by third parties. In some cases, the seller can contribute toward closing costs (seller concessions). Your loan officer can help you negotiate seller concessions.

Actual closing costs vary by transaction, location, and lender. This is an estimate range for informational purposes only.

PMI (Private Mortgage Insurance) is required on conventional loans when your down payment is less than 20% of the purchase price. It protects the lender if you default — not you — and typically adds 0.5–1.5% of the loan amount annually to your monthly payment. Ways to avoid PMI: put 20% or more down; use a VA loan (no PMI ever); use a USDA loan (has its own guarantee fee, not PMI); use a piggyback second mortgage to cover part of the down payment. On a conventional loan, PMI automatically cancels when you reach 20% equity (typically via payments and/or appreciation).

• Compare loan programs — some have no PMI →

DTI (debt-to-income ratio) is the percentage of your gross monthly income that goes toward monthly debt payments, including your new mortgage payment. It's one of the most important factors in mortgage approval. General DTI limits by program: conventional loans typically want 43–50% DTI or lower; FHA allows up to 50%; VA loans can go up to 65% in many cases; USDA is stricter at 41% back-end. High DTI is one of the most common reasons applications are declined. If your DTI is high, a loan officer can help you identify which programs accommodate it or strategies to reduce it.

• Calculate your affordability by DTI →

A home appraisal is an independent assessment of a property's market value, ordered by the lender to confirm the home is worth what you are paying (or refinancing). It's required on most purchase and refinance loans. The appraiser inspects the property and compares it to similar recent sales in the area. Cost is typically $400–$700 depending on property and location, paid by the borrower. Some refinance programs waive the appraisal requirement: VA IRRRL and FHA Streamline often do not require one. DSCR loans typically require an appraisal to confirm property value.

Appraisal requirements vary by program and lender. Confirm requirements with your loan officer.

Mortgage rates are tied to the broader bond market — specifically the 10-year Treasury yield — plus a margin lenders charge for profit and risk. Rates change daily (sometimes multiple times a day) based on economic data and Federal Reserve policy. Your personal rate is determined by: your credit score (higher = lower rate), your LTV/down payment (more down = lower rate), loan type (VA and FHA vs. conventional), property type (primary vs. investment), loan term (15 vs. 30 year), and market conditions when you lock your rate. Once you find your rate, you can lock it for typically 30–60 days while your loan processes.

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Mortgage rates change daily and are subject to credit approval. Rate Assumptions: see /legal/rate-assumptions.

Yes — being self-employed does not disqualify you, but it changes how lenders verify your income. Conventional lenders typically want 2 years of self-employment history and use your net taxable income from tax returns, which can be problematic if you take legitimate business deductions that reduce your reported income. Bank statement loans solve this: lenders calculate your income from average monthly deposits over 12–24 months rather than net income. If you own rental properties, a DSCR loan qualifies you on property cash flow with no personal income documentation required at all.

• Bank statement loan — no tax returns required →
• DSCR loan for self-employed investors →

Yes — student loan debt affects your DTI (debt-to-income ratio) calculation but does not automatically disqualify you. Lenders count your monthly student loan payment toward your total debt. If you are on an income-based repayment (IBR) plan, most lenders count the actual IBR payment. If your loans are in deferment, some programs count a percentage of the balance as a hypothetical payment. VA loans are particularly flexible with DTI and are often a strong option for veterans carrying significant student debt. A loan officer can model which program accommodates your specific debt load.

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Get pre-approved — not just pre-qualified, but pre-approved. Pre-approval involves a real review of your income, credit, and assets by a lender who then issues a formal letter stating how much they'll lend. It takes 1–3 business days with complete documentation and gives you three advantages: you know exactly what you can afford, you can move fast when you find a home, and sellers take your offer seriously. Start here — everything else follows from knowing your real number.

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Yes — two mortgage programs offer genuine 0% down payment: VA loans (for eligible veterans, active duty, and surviving spouses) and USDA loans (for eligible rural and suburban properties with income-qualifying borrowers). FHA loans go to 3.5% down. Down payment assistance programs (grants and second mortgages offered by state and local housing agencies) can further reduce or eliminate out-of-pocket costs on other program types. If saving for a down payment is what's holding you back from buying, it is worth talking to a loan officer — you may have more options than you think.

• VA loan — 0% down for veterans →
• USDA loan — 0% down in eligible areas →
• See all low-down-payment options →

Unlike conventional financing, which caps most borrowers at 10 financed properties, DSCR loans have no set limit on how many you can hold simultaneously. Each DSCR loan is evaluated on the individual property's cash flow and DSCR ratio, not your total personal debt load. Real estate investors who are actively scaling use DSCR loans for this reason. You will need to maintain qualifying credit, sufficient reserves, and each property must meet the program's DSCR threshold, but there's no hard cap on portfolio size. Real estate operators looking to scale quickly use DSCR loans specifically for this reason.

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• Talk to a loan officer about portfolio financing →