Questions people
actually ask

Pre-qualification is a conversation: you state your income and debts, and a lender tells you roughly what that supports. Nothing is verified. Pre-approval is underwriting: the lender collects pay stubs, W-2s or returns, and bank statements, pulls your credit, and issues a letter based on documents it has actually read. Sellers treat the two very differently, and only the second one survives an offer being scrutinised.

Less than most people think, and the minimum depends on the programme: 3% on some conventional products, 3.5% on FHA at a 580 credit score, and zero on VA and USDA for those who qualify. Twenty percent is not a requirement — it is the point at which a conventional loan carries no mortgage insurance. The real question is not whether you can buy with less but what the insurance costs and how long it runs, which differs sharply by programme.

Budget 2–5% of the purchase price for closing costs — on a $310,000 house, roughly $6,200 to $15,500 — covering lender fees, title insurance, the appraisal, recording, and prepaid taxes and insurance into escrow. On top of that: earnest money at offer, which is credited back at closing but leaves your account first; the inspection, paid on the day; and a reserve, because a purchase that clears the down payment with nothing left cannot absorb a repair in month three.

HUD Handbook 4000.1 permits 3.5% down on FHA at a 580 score and 10% down from 500. Conventional underwriting generally starts around 620. Individual lenders layer stricter overlays on top of both, so a programme minimum is a floor rather than a promise. Score also affects pricing, but how much on any given day is a question for live quotes rather than for a web page.

This site does not publish a figure, and you should be sceptical of sites that do. The parts that take the longest — the appraiser’s diary and the title company’s queue — are third parties on their own calendars, and no lender controls either. What is within your control is having documents ready before they are asked for, which is the difference between a fast file and a slow one.

Under the Homeowners Protection Act of 1998 (12 U.S.C. 4901), borrower-paid PMI must be cancelled on request when the scheduled balance reaches 80% of the original value, and terminated automatically at 78%. Both thresholds are measured against the ORIGINAL value, not a new appraisal, so appreciation does not count toward automatic termination. Overpaying the loan does move the date, because the test is on the balance.

No, and this is the error worth correcting. HUD Mortgagee Letter 2013-04 fixes the duration of FHA annual MIP on the loan-to-value at origination: above 90% it runs for the full mortgage term, and at or below 90% it runs for 11 years. There is no balance test and no 80% threshold. On a $310,000 purchase with 3.5% down, a calculator applying the conventional rule stops counting at $17,814 while the borrower actually pays $32,850 — an understatement of $15,036.

Two premiums. Up-front MIP is 1.75% of the base loan amount (HUD Handbook 4000.1 II.A.2) and is normally financed into the loan, where it also accrues interest. Annual MIP is charged monthly on the average outstanding balance for each year at rates set by HUD Mortgagee Letter 2023-05, keyed on loan size, term and LTV — 0.55% on a typical high-LTV 30-year loan, and 0.50% at exactly 90%.

Often, yes, and by more than the extra equity. Ten percent down lands the loan at exactly 90% LTV, which is at the threshold rather than above it, so the annual premium falls to 0.50% and the duration falls from the full term to 11 years. On a $310,000 house that takes the total annual MIP from $32,850 to $14,428 for $20,150 more cash at closing. It is the largest cliff edge in FHA pricing and nothing in the process points it out.

No monthly mortgage insurance of any kind, at any loan-to-value. The one-time funding fee under 38 U.S.C. 3729 is the whole of it. That is the structural difference from both FHA and a low-down-payment conventional loan, and on a typical purchase it is worth $130 to $200 a month for a decade or more.

It is a percentage of the loan under 38 U.S.C. 3729, at the rates in VA Circular 26-23-06: first use is 2.15% below 5% down, 1.50% at 5–9.99%, and 1.25% at 10% or more; a subsequent use is 3.30% below 5% down but drops to the same 1.50% at 5% down. On a $400,000 purchase that means a repeat user pays $13,200 with nothing down and $5,700 with 5% down — $7,500 of fee removed by $20,000 of cash. An IRRRL streamline is 0.50%.

The lender lends against the lower of the appraised value and the contract price, so the gap becomes your problem: pay the difference in cash, renegotiate the price, challenge the appraisal with better comparable sales, or walk away if your contract has an appraisal contingency. It is the most common way a purchase falls apart after an accepted offer, which is why the contingency is worth keeping.

An escrow account collects one-twelfth of your annual property tax and insurance with each payment and pays those bills when they fall due. Both amounts change — assessments are often re-struck after a sale, and insurance premiums move — so the servicer performs an annual analysis and adjusts the payment. A payment rising with no change to your loan is almost always this.

Not meaningfully. The scoring models used in mortgage lending treat multiple mortgage enquiries within a short shopping window as a single enquiry, precisely so that comparing lenders is not penalised. Comparing Loan Estimates from more than one lender is the single highest-value hour in the process.

It is the final itemisation of your loan and it must reach you at least three business days before closing. Put it beside the Loan Estimate you were given and compare line by line. Some figures are permitted to move and some are not, and asking about every one that changed is free before you sign and expensive afterwards.

Because the two slowest steps belong to third parties — the appraiser and the title company — and neither works to a lender’s schedule. Any site advertising a guaranteed closing time is advertising something outside its control. This one does not, on purpose.