What credit score do I need for a mortgage?

Conventional loans typically require 620+, FHA loans may accept 580+, and VA/USDA loans have more flexible requirements. Higher scores get better rates.

Escrow is an account where a portion of your monthly payment is held to pay property taxes and insurance when due.

FAQ

Mortgage FAQ: Common Questions

Q: How much down payment do I need?

Conventional: 3-20%, FHA: 3.5%, VA: 0%, USDA: 0%. Putting down 20% or more avoids PMI on conventional loans.

Q: Should I lock my rate?

A rate lock guarantees your interest rate for a set period (typically 30-60 days). Lock when you're ready to finalize your loan to protect against rate increases.

Q: What are closing costs?

Closing costs are fees paid at loan closing, typically 2-5% of the loan amount. They include appraisal, title insurance, origination fees, and more.

Q: Can I negotiate mortgage rates?

Yes! Lenders have flexibility in their rates. Compare offers from multiple lenders and negotiate. Points can also buy down your rate.

Q: What is a good mortgage rate?

Good is relative to current market conditions. As of 2024, rates around 6-7% for 30-year fixed loans are typical. Your rate depends on credit, down payment, and loan type.

Get answers to the most frequently asked questions about mortgages, home buying, and financing.

Getting Started

How much house can I afford?

A common guideline is the 28/36 rule: spend no more than 28% of your gross monthly income on housing costs (mortgage, taxes, insurance) and no more than 36% on total debt (housing + car loans, credit cards, etc.). Use our affordability calculator for a personalized estimate.

What credit score do I need?

Conventional: 620+ (740+ for best rates)
FHA: 580+ with 3.5% down, 500-579 with 10% down
VA/USDA: More flexible, typically 620+

How much down payment do I need?

Conventional: 3-20%+ (under 20% requires PMI)
FHA: 3.5% minimum
VA: 0% for eligible veterans
USDA: 0% in eligible rural areas

Understanding Your Payment

What is escrow?

Escrow is an account managed by your lender where a portion of your monthly payment is deposited to cover property taxes and homeowner's insurance. This ensures these bills are paid on time.

What are closing costs?

Closing costs are fees paid when you close on your home, typically 2-5% of the loan amount. They include appraisal, title search and insurance, origination fees, recording fees, and more.

What is PMI?

Private Mortgage Insurance (PMI) is required on conventional loans when your down payment is less than 20%. It protects the lender, not you. Once you reach 20% equity, you can request its removal.

Rates and Locking

Should I lock my rate?

A rate lock guarantees your interest rate for a specific period (typically 30-60 days). Lock your rate when you're serious about a loan to protect against rate increases. Note that locks may have fees.

What is a good mortgage rate?

"Good" depends on current market conditions. As of 2024, 30-year fixed rates around 6-7% are typical. Your actual rate depends on your credit score, down payment, loan type, and lender.

Can I negotiate mortgage rates?

Yes! Mortgage rates are not set in stone. Get quotes from multiple lenders and negotiate. You can also pay points to buy down your rate. Always compare APRs, not just interest rates.

Loan Types

Fixed vs. ARM: Which is better?

Fixed-rate loans offer stability with consistent payments. ARMs start with lower rates but can adjust. ARMs make sense if you plan to sell within 5-7 years; fixed is better for long-term homeowners.

What's the difference FHA vs. conventional?

FHA loans have lower credit requirements and down payments (3.5%) but require mortgage insurance for the life of the loan. Conventional loans require PMI only until you reach 20% equity but have higher credit score requirements.