Buying or refinancing a home comes with a lot of questions. Here are straightforward answers to some of the mortgage questions borrowers ask most often. Because every borrower and property is different, we'll also help you understand how the answer applies to your situation.
How much house you can afford depends on more than your income. Your monthly debts, credit, available funds, interest rate, property taxes, homeowners insurance, mortgage insurance when applicable, and loan program can all affect your payment and buying power.
We also believe there's a difference between how much you can qualify for and how much you're comfortable spending each month. We'll help you look at both before you start shopping.
The amount you need depends on the loan program, purchase price, closing costs, prepaid expenses, available seller concessions, and whether you qualify for down payment assistance.
Your down payment is only one part of the equation. Before you make an offer, we can estimate your total cash needed to close so you have a more complete picture.
No. Many homebuyers purchase with considerably less than 20% down, and some eligible borrowers may qualify for financing with no down payment.
The amount required depends on the loan program, property, occupancy, and borrower qualifications. A larger down payment can have benefits, but 20% is not a universal requirement.
There isn't one credit score required for every mortgage. Credit requirements vary by loan program, lender guidelines, property type, and other factors in the loan.
Your credit score is also only one part of the approval decision. Income, debts, assets, payment history, and the overall loan profile can matter too.
If your credit isn't perfect, don't assume that means you can't buy a home. Let us look at the complete picture.
There is no single income amount required to qualify for a mortgage. What matters is how your qualifying income compares with your monthly obligations and the proposed housing payment.
The home price, interest rate, taxes, insurance, mortgage insurance, existing debts, and loan program all affect how much income may be needed.
Your debt-to-income ratio, or DTI, compares certain monthly debt obligations with your qualifying monthly income. Mortgage lenders use it as one factor in evaluating your ability to manage the proposed mortgage payment along with your other debts.
Acceptable ratios vary depending on the loan program and overall loan profile, so there isn't one DTI limit that applies to every borrower.
A mortgage pre-approval may involve a credit inquiry so the lender can evaluate your credit history and mortgage qualifications.
If you're concerned about how the credit review may affect you, ask us before applying. We'll explain what type of credit review is being used and what to expect.
The terms are sometimes used differently across the mortgage industry, but a pre-approval generally involves a more complete review of your financial information and credit than a basic pre-qualification.
At @Home Mortgage, our goal isn't simply to hand you a letter. We want you to understand your estimated payment, cash needed to close, financing options, and potential issues before you make an offer.
A pre-approval isn't permanent. Financial information and credit documentation can become outdated, and mortgage rates and your personal circumstances can change.
If you've been shopping for a while, we may need to update information before issuing or renewing your pre-approval. Always check with us before making an offer if some time has passed or your finances have changed.
Potentially, yes. Having student loan debt does not automatically prevent you from qualifying for a mortgage.
How the student loan payment is considered can depend on the loan program and the documentation available. We'll review your student loans along with your other monthly obligations when evaluating your financing options.
Yes. Self-employed borrowers can qualify for mortgages, although documenting qualifying income may be different than it is for a salaried employee.
Depending on the loan and your circumstances, we may review tax returns, business information, bank statements, or other documentation. We also offer alternative financing options for some borrowers whose income doesn't fit traditional mortgage documentation.
Gift funds may be permitted for eligible expenses with many mortgage programs, subject to the particular program's rules.
Requirements can vary based on the loan program, source of the gift, relationship to the borrower, and how the funds are documented. Talk with us before transferring gift funds so we can tell you what documentation will be needed.
Closing costs vary from transaction to transaction. They can include lender charges, appraisal and other third-party services, title-related costs, recording charges, prepaid interest, homeowners' insurance, and amounts needed to establish an escrow account when applicable.
Rather than relying on a generic percentage, we'll estimate the costs for your actual transaction so you can plan for the complete amount needed at closing.
Your down payment is the portion of the purchase price you pay rather than finance with the mortgage.
Closing costs are expenses associated with obtaining the mortgage and completing the real estate transaction. You may also have prepaid expenses and initial escrow deposits.
That's why a buyer's total cash needed at closing can be different from the down payment alone.
Mortgage insurance may be required depending on your loan program and financing structure.
For example, conventional loans may require private mortgage insurance (PMI) in certain situations, while FHA financing has its own mortgage insurance requirements.
Whether you need mortgage insurance, what it costs, and how long it applies depend on the particular loan.
An escrow account allows your mortgage servicer to collect money as part of your mortgage payment for certain property-related expenses, commonly property taxes and homeowners' insurance.
The servicer holds those funds and pays the applicable bills when they become due. Because taxes and insurance costs can change, the escrow portion of your mortgage payment can change over time.
Earnest money is a deposit a buyer may make after an offer is accepted to demonstrate their commitment to the purchase.
When properly documented and credited in the transaction, the earnest money deposit is generally applied toward the amount the buyer owes at closing rather than being an additional charge on top of it.
The amount, timing, and circumstances under which earnest money may be refundable are generally addressed in the purchase agreement, so those questions should also be discussed with your real estate agent.
Yes, some eligible borrowers may qualify for mortgage programs that do not require a down payment.
VA and USDA/Rural Development financing are two examples, although borrower and property eligibility requirements apply. Down payment assistance may also help eligible borrowers reduce the amount they need upfront with other loan programs.
Neither loan is automatically better for everyone.
FHA financing may be attractive to borrowers who benefit from its down payment and credit flexibility. Conventional financing can offer advantages for other borrowers, including different mortgage insurance structures and financing options.
We'll compare the estimated payment, cash needed to close, qualification requirements, and longer-term costs rather than choosing a loan based solely on the name of the program.
Yes. Down payment assistance options are available for eligible Michigan homebuyers, and the requirements vary by program.
@Home Mortgage also offers @Home Access, which may provide up to 3.5% in down payment assistance for qualified borrowers. It is not limited to first-time homebuyers and does not have a program income limit.
