Frequently Asked Questions (FAQs) for Buyers

Buyer Frequently Asked Questions!

What are the minimum down payment amounts?

For primary residence:

Conventional mortgage, 3%-5%.
FHA, 3.5%
VA, 0%
USDA, 0% (only some addresses qualify)
Manufactured home in a park, 5%.
Other loan types have different down payment amounts.

Aside from getting qualified, what is the best question I can ask my lender?

The best thing a Buyer can find out is what is the APR of the loan. Many people focus on the rate only or think the rate and the APR are the same thing. The rate is the amount the lender charges the borrower. The APR is the rate plus(+) all the other fees built or "baked-in" the loan like points and more. A secondary number is to then ask, "What are the closing costs?" Then we find a truer number.

Something to be aware of, in many situations, a brokerage's fee is "baked-in" the rate, which means it is already included within the loan. This is the amount the brokerage charges the lender. They take out their fees and then give the mortgage loan officer a smaller amount.

Most loans are built with "baked-in" brokerage fees.

Let's look at the following scenario: I look at the rate on 3/11/2024 with my primary investor in Clark County, WA, and utilize the "baked-in" fee option (which means some fees are included in the loan) for a borrower with a credit score of 740, buying a $400,000 house with an FHA loan, then the loan rate is 7.697% plus(+) closing costs (remaining down payment + processing fee + underwriting fee + prepaid escrow fees like title and government fees) = a payment of $2,975.58 not including taxes + closing costs. Paying for points was not considered in this scenario.

The following calculation is based on the same scenario without the "baked-in" fee. The loan rate is 6.25% plus(+) closing costs (remaining down payment + processing fee + underwriting fee + prepaid escrow fees like title and government fees + $6,950 broker fee minus(-) $7,159.92 lender credit) = a payment of $2,594.10 not including taxes + closing costs.

The initial loan rate is determined by the lender based on risk criteria and then adjusted based on what fees covered by the loan.

What are things NOT to do when getting qualified for a mortgage?

1. Do not make major purchases like furniture, appliances, jewelry, vehicles, or vacations.
2. Don't change or quit your job.
3. Consult with your mortgage professional before withdrawing, depositing, or moving large amounts of money in or out of your bank account.
4. Do not pay off debts or collections (unless instructed to do so by a mortgage professional).
5. Avoid using cash for a good faith deposit - cash is difficult to verify and could result in a closing delay.
6. Don't have your credit report pulled too many times - this can hurt your credit score.