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A lender is the company that funds your loan. A loan officer helps you choose a loan and guides you through the application, and may work for a bank, credit union or mortgage company. A mortgage broker works with multiple wholesale lenders to compare options and find a good fit for you. All must be licensed or registered through the Nationwide Multistate Licensing System (NMLS), and you can look up any NMLS number at nmlsconsumeraccess.org.

A mortgage broker compares loan options from multiple wholesale lenders, so you can see more programs and pricing than a single lender offers. Wholesale pricing can lead to competitive rates and fees, and a broker can match borrowers in unique situations, such as self-employment or lower credit, with lenders that fit. You get one point of contact from application to closing, and the broker's compensation is disclosed on your Loan Estimate and Closing Disclosure.

Lenders focus on your debt-to-income ratio (DTI): your total monthly debt payments, including the new housing payment, divided by your gross monthly income. Many loan programs aim for a DTI around 43% or lower, though some allow higher with strong credit, savings or other compensating factors. Your housing payment includes principal, interest, property taxes, homeowners insurance, mortgage insurance and any HOA dues. A pre-approval shows exactly what you qualify for.

A credit score is a three-digit number, typically ranging from 300 to 850, that summarizes how you manage credit. It is based on your credit reports from Equifax, Experian and TransUnion, and is influenced by your payment history, how much of your available credit you use, the length of your credit history, the types of credit you have and new credit applications. Paying on time and keeping card balances low are the best ways to improve it. You can check your credit reports for free at AnnualCreditReport.com.

Private mortgage insurance (PMI) is usually required on conventional loans with less than 20% down, and it protects the lender if the loan defaults. Under federal law, you can ask your servicer to cancel PMI once your balance reaches 80% of the home's original value, provided you have a good payment history. It ends automatically when your balance is scheduled to reach 78%, and no later than the midpoint of your loan term.

An FHA loan is insured by the Federal Housing Administration and is popular with first-time buyers because of its flexible credit guidelines and 3.5% minimum down payment. FHA loans require an upfront mortgage insurance premium, which can be added to the loan, plus an annual premium paid monthly. With less than 10% down, the annual premium lasts for the life of the loan unless you refinance. FHA loans are for primary residences and have county-based loan limits.

VA loans are guaranteed by the U.S. Department of Veterans Affairs for eligible veterans, active-duty service members, qualifying National Guard and Reserve members, and some surviving spouses. Eligible borrowers can often buy with no down payment and no monthly mortgage insurance. Most borrowers pay a one-time VA funding fee, which can be financed into the loan, though some veterans are exempt. You will need a Certificate of Eligibility (COE), which your loan officer can usually request for you.

USDA loans are backed by the U.S. Department of Agriculture for homes in eligible rural and suburban areas. They offer no-down-payment financing for borrowers whose household income falls within local limits. USDA loans include an upfront guarantee fee and an annual fee, and the home must be your primary residence.

A conventional loan is any mortgage that is not insured or guaranteed by a government agency. A conforming loan is a conventional loan that meets Fannie Mae and Freddie Mac guidelines, including a maximum loan amount set each year by the Federal Housing Finance Agency (FHFA), with higher limits in high-cost areas. A jumbo loan is larger than the conforming limit and usually requires stronger credit, a larger down payment and more cash reserves.

It depends on your credit, down payment, income and the home you are buying. Conventional loans often suit borrowers with good credit and let you remove mortgage insurance as your equity grows. FHA loans offer more flexible credit guidelines with 3.5% down. VA loans can offer no down payment for eligible service members and veterans, and USDA loans can offer no down payment in eligible rural and suburban areas. A loan officer can compare the monthly payment and total cost of each option for your situation.

A pre-qualification is a quick estimate based on information you provide. A pre-approval goes further: the lender reviews your credit, income, assets and documents to confirm how much you can borrow. Sellers and real estate agents take pre-approvals more seriously, so it is best to get pre-approved before you start shopping.

A fixed-rate mortgage keeps the same interest rate and principal and interest payment for the life of the loan. An adjustable-rate mortgage (ARM) starts with a fixed rate for an initial period, such as 5, 7 or 10 years, then adjusts periodically based on a market index plus a margin, within set caps. An ARM may make sense if you plan to sell or refinance before the fixed period ends, while a fixed rate offers long-term stability.

A 30-year mortgage has lower monthly payments, which can make qualifying easier and leave more room in your budget. A 15-year mortgage has higher payments but usually a lower interest rate, so you pay far less interest overall and build equity faster. You can also choose a 30-year loan and make extra principal payments when it suits you.

The interest rate is the cost of borrowing the loan amount, and it determines your monthly principal and interest payment. The annual percentage rate (APR) reflects the interest rate plus certain loan costs, such as points, origination fees and mortgage insurance, expressed as a yearly rate. Comparing APRs helps you compare the overall cost of different loan offers.

Discount points are optional upfront fees paid at closing to lower your interest rate. One point equals 1% of the loan amount. Paying points can make sense if you plan to keep the loan long enough for the monthly savings to exceed the upfront cost, known as the break-even point.

A rate lock guarantees your interest rate and loan terms for a set period, commonly 30 to 60 days, while your loan is processed. If rates rise during that time, your rate is protected. If closing is delayed past the lock expiration, you may need to pay for an extension. Your loan officer can help you decide when to lock.

Closing costs typically range from about 2% to 5% of the loan amount. They can include lender fees, the appraisal, credit report, title services and insurance, government recording fees, prepaid interest, and initial deposits for property taxes and homeowners insurance. Sellers can often contribute toward your closing costs through seller concessions, within limits set by your loan program.

A Loan Estimate is a standardized three-page form your lender must provide within three business days of receiving your application. It shows your estimated interest rate, monthly payment and closing costs, which makes it easy to compare offers from different lenders. It replaced the older Good Faith Estimate and Truth in Lending disclosure.

The Closing Disclosure is a five-page form that lists the final terms and costs of your loan. You must receive it at least three business days before closing, so you have time to compare it with your Loan Estimate and ask about any changes. Certain changes, such as an APR increase beyond a set tolerance or a change in loan product, start a new three-day waiting period.

Most lenders ask for photo ID, pay stubs covering the last 30 days, W-2s from the last two years, and the last two months of bank and asset statements. Self-employed borrowers usually provide two years of personal and business tax returns. Depending on your situation, you may also need letters explaining large deposits, a gift letter, or documents such as a divorce decree.

An escrow account, sometimes called an impound account, is set up by your loan servicer to collect a portion of your property taxes and homeowners insurance with each monthly payment. The servicer then pays those bills for you when they are due. Escrow accounts are reviewed each year, so your payment can change if your taxes or insurance premiums change.

Yes, most loan programs allow gift funds from eligible donors, such as family members. You will need a signed gift letter stating the money does not need to be repaid, and your lender will document the transfer of funds. Rules on who can give and how gift funds can be used vary by loan type.

Yes. Lenders usually want two years of self-employment history and qualify you based on the income shown on your tax returns, often averaged over two years. If write-offs lower your taxable income, bank statement loans and other non-QM options can qualify you based on your deposits instead, typically with a higher rate or larger down payment.

Refinancing can make sense if you can lower your interest rate or monthly payment, shorten your loan term, switch from an adjustable to a fixed rate, remove mortgage insurance, or access equity. Compare your total closing costs with your monthly savings to find your break-even point. If you plan to stay in the home beyond that point, a refinance may be worthwhile.

Both let you borrow against your home equity while keeping your first mortgage in place. A home equity loan gives you a lump sum, usually with a fixed rate and fixed payments. A home equity line of credit (HELOC) works more like a credit card: you draw funds as needed during a draw period, usually at a variable rate, then repay over a set repayment period.

If the appraisal is lower than the purchase price, your lender will base the loan on the lower value. Options include renegotiating the price with the seller, covering the difference with additional cash, requesting a reconsideration of value with supporting comparable sales, or canceling the purchase if your contract includes an appraisal contingency.

Most purchase loans close about 30 to 45 days after an accepted offer, though timelines vary with the loan type, appraisal scheduling and how quickly documents are provided. Getting pre-approved early and responding quickly to document requests are the best ways to stay on schedule.

Yes. Conventional loans can be used for second homes and investment properties, typically with higher down payments and rates than a primary residence. Investors may also qualify using rental income, including through DSCR loans that focus on the property's cash flow. FHA, VA and USDA loans are for primary residences, though FHA and VA loans can be used for a 2 to 4 unit property if you live in one of the units.

At closing, you review and sign your final loan documents, including the promissory note and the document that secures the loan with your property. You also provide your remaining funds, usually by wire transfer or cashier's check. Once the transaction is complete, ownership transfers and you receive the keys. Always confirm wiring instructions by phone, using a number you know is legitimate, to protect yourself from wire fraud.