Mortgage Resource Guide
Basics
154 articles10 sections
Mortgages and loan types
- What Is a Mortgage and How Does It Work?Start here A mortgage is a home loan secured by the home itself. You repay principal and interest monthly, usually over 30 years, and the lender can foreclose if you stop paying.
- What Are the Different Types of Mortgage Loans? The main types are conventional (conforming or nonconforming), FHA, VA, and USDA loans. Credit, down payment, and location decide the fit.
- What Is the Difference Between a Loan and a Mortgage? A mortgage is a loan secured by real estate, so the lender can foreclose if you stop paying. Most other loans are secured by a car or by nothing at all.
- What Is the Difference Between Government-Insured Loans and Conventional Loans? FHA, VA, and USDA loans are backed by a federal agency and allow lower down payments and scores. Conventional loans are not, but their PMI can be canceled.
Down payments
- Are There Any Mortgage Loans with No Down Payment? Yes. VA and USDA loans allow 0% down for eligible buyers, and assistance programs can cover the minimum on FHA or conventional loans. Fees and closing costs remain.
- What Is a Down Payment? A down payment is the part of the price you pay upfront. Minimums: 0% for VA and USDA, 3% conventional, 3.5% FHA. Under 20% down, conventional loans add PMI.
Qualifying and credit
- How Can I Get a Mortgage with a Bad Credit Score? Start with FHA (500 with 10% down, 580 with 3.5%), find lenders whose minimums fit, meet waiting periods after bankruptcy, and pay down cards.
- How Do I Qualify for a Mortgage If I Am Self-Employed? Lenders usually want two years of tax returns and qualify you on net business income after write-offs, adding back noncash items such as depreciation.
- How Do I Qualify for a Mortgage? Lenders check your credit score, debt-to-income ratio, documented income, cash for the down payment, and the appraisal. Limits vary by loan type.
- What Is Debt-to-Income Ratio? DTI is your monthly debt payments divided by gross monthly income. Most mortgages cap it between 41% and 50%, which sets the largest payment you can get.
- What Is the Minimum Credit Score Required for a Mortgage? FHA needs 580 for 3.5% down or 500 with 10% down. Fannie Mae generally needs 620 if manually underwritten. VA and USDA set no minimum, but lenders often do.
Terms, payments, and equity
- Should I Pay My Mortgage Early? Pay extra on your mortgage after you get any employer match, clear high-rate debt, and build savings. Each extra dollar earns your loan's rate.
- What Are the Advantages of a 15-Year vs. a 30-Year Mortgage? A 15-year loan has a lower rate, far less interest, and faster equity. A 30-year loan has a payment about 22% lower and is easier to qualify for.
- What Is an Escrow Account? A mortgage escrow account collects part of each payment to pay your property taxes and insurance. Federal rules cap the cushion at 2 months and require a yearly review.
- What Is Home Equity? Home equity is your home's market value minus every loan secured by it. A $450,000 home with $300,000 in loans has $150,000 of equity.
- What Is the Average Mortgage Length? The standard U.S. mortgage term is 30 years, but selling or refinancing pays off the loan sooner.
Shopping and applying
- What Is the Process of Applying for a Mortgage? Check credit, get preapproved, compare Loan Estimates, apply, lock, clear underwriting and appraisal, then close. A purchase loan averages about 43 days to close.
- What Should I Look for in a Mortgage? Compare Loan Estimates line by line: rate and APR, points or credits, lender fees, cash to close, mortgage insurance, and whether the rate, payment, or balance can rise.
- Where Can I Get a Mortgage? From banks, credit unions, non-bank mortgage companies (including online lenders), mortgage brokers, or state housing agency programs. Check any lender in NMLS first.
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