Plain-English guides for
homebuyers and investors.

Getting pre-approved for a mortgage means a lender has reviewed your income, credit, and assets and issued a formal letter stating the loan amount they will offer. The process typically takes 1 to 3 business days when you submit complete documentation. A pre-approval letter strengthens your offer with sellers and tells you exactly how much home you can afford before you start searching.

The minimum credit score to buy a house depends on the loan program. FHA loans accept scores as low as 500 with 10% down or 580 with 3.5% down. VA and USDA loans have no published minimum but most lenders require 580 to 640. Conventional loans typically require 620. Higher scores qualify for lower interest rates, with the best pricing reserved for scores of 740 and above.

Yes, you should get pre-approved before house hunting. A pre-approval letter tells you exactly how much you can borrow, proves to sellers that you are a serious buyer, and shortens the time from accepted offer to closing. Most real estate agents will not show homes to buyers who are not pre-approved, and many sellers reject offers that do not include a pre-approval letter.

Private Mortgage Insurance (PMI) is a monthly premium lenders require when your down payment is below 20% of the purchase price on a conventional loan. It protects the lender if you default, not you. PMI typically costs 0.3% to 1.5% of the original loan amount per year, split into monthly payments. You can avoid PMI by putting 20% down, using a piggyback loan, choosing a VA loan, opting for lender-paid PMI, or buying out the premium upfront.

Pre-qualification is an informal estimate of how much you might borrow, based on self-reported income and credit with no document verification. Pre-approval is a formal review where a lender verifies your income, assets, and credit before issuing a letter with a specific loan amount. Pre-approval carries weight with sellers. Pre-qualification does not.

Buying your first home involves more steps than most buyers expect, but each one is manageable when you know what is coming. The process starts months before you make an offer with checking your credit, building your savings, gathering documents, and getting pre-approved. This checklist covers every step in order, with the specific actions to take at each stage.

The minimum credit score for a mortgage in 2026 depends on the loan program. VA loans have no official VA minimum, though most lenders set their own floor of 580 to 620. FHA loans require 580 for a 3.5% down payment. Conventional loans generally require 620 or higher. Jumbo loans typically require 700 or more. A November 2025 Fannie Mae and Freddie Mac update removed the mandatory score floor for conventional loans, but most lenders still apply their own minimum of 620.

The VA IRRRL (Interest Rate Reduction Refinance Loan) lets veterans with an existing VA loan refinance to a lower interest rate with minimal documentation, no income verification, no home appraisal in most cases, and no out-of-pocket costs if the funding fee is financed. The VA funding fee for an IRRRL is 0.5%, the lowest of any VA loan transaction. The loan must produce a lower rate or move the borrower from an adjustable to a fixed rate.

VA loans give eligible veterans, active duty servicemembers, and surviving spouses access to home financing with no down payment, no private mortgage insurance, and competitive rates. The process starts with obtaining a Certificate of Eligibility (COE) from the VA and finding a VA-approved lender. This guide walks every step from eligibility verification to closing day.

A cash-out refinance replaces your existing mortgage with a new, larger loan and gives you the difference in cash at closing. A HELOC adds a revolving line of credit secured by your home equity without replacing your existing mortgage. Cash-out refinancing makes more sense when you want a fixed rate, a large lump sum, or a lower first mortgage rate. A HELOC makes more sense when you want flexible access to funds over time and do not want to reset your existing mortgage.

A bank statement loan lets self-employed borrowers qualify for a mortgage using 12 to 24 months of personal or business bank statements instead of W-2s and tax returns. Lenders calculate qualifying income from average monthly deposits rather than taxable net income. This solves a real problem: business owners who legally reduce their taxable income through deductions often cannot qualify under conventional guidelines even when their actual cash flow is strong.

Self-employed borrowers can qualify for a mortgage. The process is different from W-2 qualification but not harder when you use the right loan program. Conventional lenders use tax returns, which can understate income for borrowers who take legitimate business deductions. Bank statement loans solve this by qualifying based on average monthly deposits rather than net taxable income. DSCR loans qualify investors based on property cash flow with no personal income documentation required.

A DSCR loan qualifies an investor based on what a rental property earns, not what the investor earns personally. There are no W-2s, no tax returns, and no personal DTI calculation. Lenders divide the property's net operating income by the monthly debt payment to get the DSCR ratio. A ratio of 1.0 or higher typically qualifies. This makes DSCR the primary financing tool for real estate investors who are self-employed, have complex income, or have hit the 10-property limit on conventional financing.

An FHA loan requires a minimum credit score of 580 for a 3.5% down payment, or 500 to 579 for a 10% down payment, per HUD guidelines. The loan must be for a primary residence, and the property must meet FHA minimum property standards. FHA loans require mortgage insurance premium (MIP): an upfront premium of 1.75% of the loan amount plus an annual premium paid monthly. MIP lasts the life of the loan when the down payment is less than 10%.

A USDA loan is available for properties in areas the USDA designates as rural or suburban based on population density, not only farmland. Borrowers must also meet income limits that vary by county and household size. More properties qualify than most borrowers expect: many suburban communities outside major metros are USDA-eligible. The fastest way to check is the USDA's online eligibility map at eligibility.sc.egov.usda.gov.

A common rule is that your total housing payment should stay under 28% of your gross monthly income, and your total debt payments should stay under 36%. Most loan programs allow a debt-to-income ratio up to 43% to 50% with compensating factors. On a $100,000 household income at a 7% rate, that translates to a home price of roughly $330,000 to $420,000 depending on down payment, taxes, and existing debt.

Your debt-to-income ratio (DTI) is the percentage of your gross monthly income that goes toward monthly debt payments. To calculate it, add up all your monthly debt payments (including the new mortgage payment), then divide by your gross monthly income. A borrower earning $8,000 per month with $3,200 in total monthly debt has a DTI of 40%. Most conventional lenders want 43 to 50% or below.

Mortgage closing costs are fees and expenses paid at the completion of a home purchase or refinance, separate from the down payment. They typically total 2 to 5% of the loan amount. On a $400,000 loan, that is $8,000 to $20,000. Some closing costs are fixed by third parties and not negotiable. Others, including the origination fee, can be negotiated. Seller concessions and lender credits are two common ways to reduce cash needed at closing.

Mortgage discount points are fees paid upfront at closing to reduce the interest rate on your loan. One point equals 1% of the loan amount. On a $400,000 loan, one point costs $4,000 and typically reduces the rate by 0.125 to 0.25 percentage points. Whether paying points makes sense depends entirely on how long you plan to stay in the home, calculated using the break-even point.

Buying a house costs more than the down payment. On a $400,000 home with a 5% down payment, a buyer needs roughly $20,000 for the down payment plus $8,000 to $20,000 in closing costs plus prepaid expenses, for a total cash needed at closing of $30,000 to $45,000 before moving costs. Understanding every line item removes the surprises that derail closings.