Mortgage FAQs

Conventional loans aren't insured or guaranteed by the federal government and often fit borrowers with stronger credit and down payments. FHA loans are insured by the Federal Housing Administration and allow lower credit scores and down payments. VA loans are guaranteed by the Department of Veterans Affairs for eligible Veterans, active-duty and retired military, and certain surviving spouses, and often require no down payment. The best fit depends on your finances and goals.

A jumbo loan is a mortgage that exceeds the conforming loan limits set each year by the Federal Housing Finance Agency (FHFA). Limits are higher in high-cost areas, and jumbo loans often have stricter credit, reserve, and down payment requirements. In higher-priced markets such as San Diego, jumbo financing may be needed for some purchases.

Lenders look at your income, monthly debts, credit, down payment, and savings. A key measure is your debt-to-income (DTI) ratio, which compares your monthly debt payments with your gross monthly income. Beyond approval, consider what monthly payment fits your budget, including taxes, insurance, and any HOA dues. A pre-approval can give you a clearer price range. Reach out to our team, and we'll help you work through all of this.

Closing costs typically include lender fees, an appraisal, title and escrow charges, recording fees, prepaid taxes and insurance, and interest. They vary by loan, price, and location. Your Loan Estimate lists your costs within 3 business days of applying, and your Closing Disclosure shows final numbers before closing. In some cases, a seller may contribute toward costs, depending on the loan program. Contact our team, and we will walk you through what to expect.

It depends on the loan program. Some conventional programs allow as little as 3% down, FHA loans allow as little as 3.5% down, and many VA loans don't require a down payment. A larger down payment can lower your monthly payment and may reduce or eliminate mortgage insurance. Jumbo and non-QM loans often require more. Get in touch, and our team will help you compare your options.

There is no single best month to get a mortgage, because the right time depends more on your finances and goals than on the calendar. Winter, including December, can mean less competition and more motivated sellers, while spring and summer bring more listings and more buyers. Interest rates follow the broader economy, not the season, so they can't be reliably timed by month. The best time is when your credit, savings, and income are ready and the payment fits your budget. A loan officer can help you see where you stand.

To be cross qualified means that the listing agent will require the buyer to submit a second mortgage loan application to a lender of the seller’s choosing. Typically the listing agent is trying to protect the seller’s interests by ensuring the buyer has a strong probability of being able to obtain a loan. This allows for a “second set of eyes” to validate the pre-qualification letter submitted to the buyers lender. While a buyer can never be forced to use a particular lender, it is in the seller’s best interest to have offers, with loans, cross qualified.

Pre-qualification is a quick estimate of what you might be able to borrow, based on information you share. Pre-approval is a deeper review. You complete an application and provide income, asset, and credit documentation, and the lender evaluates it before issuing a letter. A pre-approval letter shows sellers you're a serious buyer, but it isn't a final loan commitment. Final approval depends on the property and a full underwriting review. Reach out to our team, and we'll walk you through the next step.

The interest rate is the yearly cost of borrowing the loan amount, shown as a percentage. The APR (annual percentage rate) includes the interest rate plus certain lender fees and costs, so it reflects a more complete yearly cost of the loan. Use the APR to compare loan offers side by side, and review your Loan Estimate for the full details.

Advantages: Through the collection of these housing expenses gradually throughout the year, this helps avoid the sticker shock when these sometimes large and infrequent (typically once or twice a year) bills become due. Assurance money to pay those bills will be there when the bill(s) come due. Your mortgage servicer will manage this account and pay the bills on your behalf.

Disadvantages: Unable to collect interest on money held in the impound account. Decrease the amount of money you can put in an emergency fund since the lender keeps a little extra in your impound account, in order to ensure the extra cushion needed in order to keep making the insurance and tax payments if you stop making your monthly mortgage payments. If you have the option of “waiving” impounds, you will typically pay a fee of .125% of the loan amount at closing or opt to take a slightly higher mortgage rate.

Your servicer estimates your yearly property tax and insurance bills and collects one twelfth each month. Federal rules require an annual review of the account. Any excess is typically refunded or credited, and a shortage is billed to you or added to your payment, so your monthly payment can change even with a fixed rate. FHA and USDA loans generally require an impound account, and for conventional loans it often depends on your down payment.

An impound account, also called an escrow account, is held by your lender or servicer to pay your property taxes and homeowners insurance. You pay one twelfth of the yearly amount with each mortgage payment, and the servicer pays the bills when they're due. The upside is no large lump-sum bills. The downsides are a higher monthly payment and no interest on the balance. Many government-backed loans require one. For other loans it depends on your down payment and lender, and waiving it may cost a fee or a higher rate.

Federal rules require lenders to make a reasonable, good-faith determination that you can repay a mortgage, and investors who buy loans expect the file to support that decision. That's why lenders verify income, assets, credit, and the property itself. Gathering pay stubs, W-2s or tax returns, bank statements, and ID early is the best way to avoid delays.

Supplemental taxes are an extra property tax bill that California counties issue after a home is sold or new construction is completed. The county reassesses the property at its new value starting the first day of the month after the change. The bill covers the difference for the rest of the tax year. It is typically the buyer's responsibility, usually isn't included in an impound account, and often isn't sent to the lender, so ask your lender who pays.

For more information, you can watch this video from the County of San Diego that explains supplemental tax bills and how they work. Most counties have their own website that can be searched for additional information as well.

A contingency removal date is the deadline to complete or remove a condition in your home purchase contract. A loan contingency lets you cancel without losing your earnest money deposit if you can't secure financing by that date. Contracts often include similar protections for the appraisal and home inspection. Once you remove a contingency, you generally can't back out for that reason without risking your deposit, so confirm your loan status with your loan officer before each deadline.

Not much, if you shop within a short window. Each lender credit check can have a small effect on your score, but within a 45-day window, multiple mortgage credit checks are recorded as a single inquiry. That lets you compare lenders and Loan Estimates without stacking up penalties. Some scoring models use a shorter window, so aim to compare offers within about 2 weeks.

An appraisal is an independent estimate of a home's market value, completed by a licensed appraiser. Your lender requires one to confirm the home is worth enough to support the loan amount. It is different from a home inspection, which checks the condition of the property. If the appraisal comes in lower than the purchase price, your loan officer and agent can review options, such as renegotiating the price or bringing more cash to closing.

A streamline refinance is a simplified refinance for borrowers who already have a government-backed loan, such as an FHA or VA loan. It typically requires less documentation than a standard refinance, and the new loan must provide a clear benefit, such as a lower payment or a more stable rate. An FHA streamline requires that your current loan is FHA insured and that you're current on payments. Eligibility and waiting periods vary, so check with a loan officer.

Yes, many self-employed homeowners refinance. Lenders typically review tax returns to document income, and some borrowers may qualify using alternative documentation, such as bank statements, through non-QM programs. Requirements depend on the program, so speak with our team about which option fits your situation.

Lenders typically ask for recent pay stubs, W-2s or tax returns, bank and asset statements, your current mortgage statement, homeowners insurance information, and photo ID. Self-employed borrowers may need profit and loss statements or more years of tax returns. Your loan officer will confirm the exact list for your loan type.

Possibly. If you have a conventional loan with private mortgage insurance (PMI) and your home has gained value, a refinance based on a new appraisal may remove PMI if your loan-to-value ratio is low enough. Some FHA borrowers refinance into a conventional loan for the same reason. You can also ask your servicer about canceling PMI without refinancing, so compare both paths.

A refinance usually causes a small, temporary dip. The lender checks your credit, and the new loan replaces an older account. Credit checks from multiple mortgage lenders within a 45-day window are recorded as a single inquiry, so you can compare offers without stacking up penalties. Making on-time payments afterward helps your score recover.

It can. If you refinance a loan you've paid on for several years into a new 30-year loan, your payoff date moves out, and you may pay more interest over time, even if the monthly payment drops. You can choose a shorter term, such as 15 or 20 years, or a term that matches your remaining years, to avoid restarting the clock. Compare total interest, not only the monthly payment.

A cash-out refinance replaces your first mortgage with a new, larger one, so the new rate applies to your whole balance. A home equity loan or HELOC is a separate second loan that leaves your first mortgage in place. If your current rate is lower than rates available today, a second loan may let you keep it. If you prefer one payment or want to change your rate, a cash-out refinance may fit better. Connect with our team, and we can compare both for your situation.

A rate-and-term refinance replaces your loan to change the interest rate, the loan term, or both, without taking extra cash. A cash-out refinance replaces your loan with a larger one and gives you the difference in cash, using your home equity. Cash-out loans typically have stricter equity and pricing requirements because the loan balance increases.

Most refinances take about 30 to 45 days to close, though timing depends on how quickly you provide documents, appraisal scheduling, and loan complexity. Having your recent pay stubs, tax documents, and bank statements ready and responding quickly to requests can help avoid delays.

Refinance costs typically include lender fees, an appraisal, title and escrow charges, recording fees, and prepaid items such as taxes and insurance. The total varies by loan amount, loan type, and property location, and your Loan Estimate lists the exact costs. Where the program allows it, some borrowers roll costs into the new loan or choose a lender credit with a higher rate, but both change what you pay over time, so compare offers carefully.

Divide your total refinance closing costs by your monthly savings. The result is the number of months it takes to recoup the cost. For example, if closing costs are $6,000 and your new payment is $200 lower, the break-even point is 30 months. If you expect to move or sell sooner, refinancing may not pay off. Your Loan Estimate shows the costs. Talk to our team, and we'll help you run your numbers.

Refinancing can make sense when the savings or benefits outweigh the costs and you plan to stay in the home long enough to recoup them. Common goals include lowering your monthly payment, shortening your loan term, switching from an adjustable rate to a fixed rate, removing mortgage insurance, or accessing home equity. Your break-even point can help you decide.

A refinance replaces your current mortgage with a new loan. Homeowners refinance to change the interest rate, adjust the loan term, switch between fixed and adjustable rates, or turn home equity into cash. The process is similar to buying a home. You apply, the lender reviews your finances and usually orders an appraisal, and you close on the new loan, which pays off the old one.

Yes, VA loans are assumable with lender approval. The buyer must qualify with the servicer, and the funding fee for an assumption is 0.5%. Your VA entitlement may stay tied to the loan unless the buyer is an eligible Veteran who substitutes their own entitlement, so ask how an assumption would affect your future VA loan use.

Generally, yes. VA entitlement tied to a loan can be restored after the property is sold and the loan is repaid in full. If a buyer assumes your loan, your entitlement can be restored only if the buyer is an eligible Veteran who substitutes their own entitlement. Otherwise, it stays tied to the loan until it is repaid. Confirm your status with your lender.

Often yes, with planning. Many lenders and title companies can arrange remote or mobile notary closings, and some allow a power of attorney if the document meets lender and title requirements. Rules vary, so ask your loan officer early to confirm what your lender and title company accept.

Often, yes. Many lenders treat Basic Allowance for Housing (BAH) as qualifying income when it is documented, such as on your Leave and Earnings Statement (LES). Lender guidelines vary, so ask your loan officer how BAH and your other military pay will be counted.

Possibly. You may be able to use remaining VA entitlement to buy again while keeping your current home, if you qualify based on income, credit, and available entitlement. Lenders may require a down payment depending on your remaining entitlement and the loan amount, and they will count your existing mortgage payment. A portion of rental income may help, depending on lender guidelines.

Many service members keep their home and rent it out after a PCS. With a VA loan, you must first occupy the home as your primary residence, but you can generally rent it out later. Consider the rent compared with your payment and costs, landlord insurance, and local rental rules. Also consider how a rental affects buying your next home.

As early as you have an idea of your timeline. A pre-approval can be completed before you move, and it helps you understand your budget while you search. Many purchases take 30 days or more from contract to closing, so starting early reduces the risk of overlapping with your report date or a temporary stay.

You can start the process before you arrive. Many service members get pre-approved ahead of a move, tour homes remotely or on a house-hunting trip, and close after orders are confirmed. Because VA loans require that you intend to occupy the home, lenders may ask about your orders and timeline, so share your plans early. Reach out, and our team will help you plan around your move.

The VA doesn't set a minimum credit score, but most lenders do. These lender requirements, called overlays, vary by lender. Your overall profile matters too, including credit history, income, debts, and assets. A loan officer can review your credit and tell you where you stand.

Yes. A VA cash-out refinance lets eligible borrowers replace an existing mortgage, including one that isn't a VA loan, with a new VA loan and take cash from their equity. VA allows loans up to 100% of the appraised value, though many lenders set a lower limit. The funding fee for first-time use is 2.15% unless you're exempt.

An Interest Rate Reduction Refinance Loan (IRRRL), often called a VA streamline refinance, lets eligible borrowers refinance an existing VA loan into a new VA loan with a lower interest rate or a more stable one. It typically requires less paperwork than a standard refinance, and the funding fee is 0.5%. The new loan must provide a tangible benefit, and waiting periods and other requirements apply.

Often yes. VA loans allow sellers to contribute toward certain buyer costs, but VA limits seller concessions, which are generally capped at 4% of the home's value in addition to customary closing costs. Your loan officer and agent can explain which costs qualify before you write an offer.

Yes. The VA home loan is a lifetime benefit. You may be able to use remaining entitlement to buy another home while keeping your current one, or restore entitlement after you sell or pay off a prior VA loan. As a rule of thumb, lenders want enough remaining entitlement to guaranty at least 25% of the new loan for a no-down-payment purchase. Otherwise, a down payment may be required. Later use can also mean a higher funding fee unless you're exempt.

Yes. VA loans are for a primary residence that you or an eligible dependent will occupy, and you'll certify your intent to live there. You can't use a VA loan for a vacation home or an investment property. If you later move, such as for a PCS, you may be able to keep the home and rent it out, so talk with your lender about your plans.

For borrowers with full entitlement, VA doesn't set a maximum loan amount, and there have been no county loan limits since January 1, 2020. Your lender still sets its own limits, and you must qualify based on income, credit, and the appraised value. If you have reduced entitlement from a prior VA loan, county loan limits and a down payment may apply.

The VA funding fee is a one-time charge that helps sustain the VA loan program. For a purchase loan with first-time use, the fee is 2.15% with less than 5% down, 1.5% with 5% or more down, and 1.25% with 10% or more down. For later use with less than 5% down, the fee is 3.3%, and an IRRRL fee is 0.5%. Borrowers who receive VA disability compensation, surviving spouses who receive DIC, and active-duty members with a Purple Heart are among those exempt. VA can change these rates, so confirm current amounts with your loan officer.

No. VA loans don't require monthly private mortgage insurance. Instead, most borrowers pay a one-time VA funding fee, which can be paid at closing or financed into the loan. Some borrowers, such as those who receive VA disability compensation, are exempt from the fee.

Many VA loans don't require a down payment, as long as the sales price doesn't exceed the appraised value. A down payment may be needed if you have reduced entitlement or the loan amount is above certain limits. A larger down payment can also lower the VA funding fee. Your loan officer can estimate what applies to you.

A Certificate of Eligibility (COE) confirms to lenders that you qualify for the VA loan benefit. You can request one through VA's online portal, by mail, or through your lender, who can often request it for you. Have your service information ready, such as a DD214 for Veterans or a statement of service for active-duty members.

Eligible borrowers include Veterans, active-duty service members, retired military, many National Guard and Reserve members, and certain surviving spouses. Service requirements depend on when and how long you served. For example, service members generally need at least 90 continuous days of active service, and Guard and Reserve members may qualify through qualifying active service or 6 creditable years. You also need to meet the lender's credit and income standards. Not sure if you qualify? Ask our team, and we'll help you find out.

A VA loan is a home loan made by a private lender and partially guaranteed by the U.S. Department of Veterans Affairs. That guarantee lets lenders offer terms such as no down payment for many borrowers and no monthly mortgage insurance. The process mirrors other loans. You confirm eligibility with a Certificate of Eligibility, get pre-approved, find a home, and then complete the VA appraisal and underwriting before closing.

Possibly. Some non-QM programs have shorter waiting periods after credit events such as a bankruptcy or foreclosure than conventional loans do, but terms vary by program and may include a larger down payment or different pricing. A loan officer can review your timeline and options.

A DSCR (debt service coverage ratio) loan is an investor loan that qualifies you based on a property's rental income compared with its expenses, rather than your personal income or tax returns. It's commonly used to buy or refinance rental properties. Requirements, such as down payment and credit, depend on the program.

A bank statement loan is a type of non-QM loan that uses your bank statements, often from the past 12 or 24 months, to verify income instead of tax returns. It's commonly used by self-employed borrowers, business owners, and gig workers whose tax returns may not reflect their full cash flow. Requirements such as down payment and credit vary by program.

Yes. Investor cash flow loans, also called DSCR (debt service coverage ratio) loans, let you qualify using the rental income the property is expected to earn instead of your personal income. Requirements, such as down payment and credit, depend on the program.

Non-QM loans can be a beneficial option for many borrowers, but they aren’t best for everyone. They give you more flexible ways to qualify, which may be the difference between being a house hunter and a homeowner. Since they don’t follow traditional guidelines, lenders consider them riskier and may require a higher down payment, a higher interest rate, and other terms to lower that risk. Talk to our team to discuss what’s right for you.

Not always. Some non-QM programs use other documents, such as bank statements or rental income, instead of tax returns. Requirements depend on the program.

Yes. Self-employed buyers are among the most common non-QM borrowers. Depending on your situation, we may be able to use bank statements, 1099s, or a profit and loss statement instead of tax returns.

Non-QM loans can help people who may not meet traditional financing requirements due to financial circumstances, employment, homebuying situation, type of home being purchased, or the high cost of the home. That includes self-employed buyers, investors, and buyers with strong savings but less regular income.

A non-QM loan is a home loan that uses flexible ways to verify your income and finances instead of standard bank guidelines. Non-QM stands for non-qualified mortgage. Instead of relying only on W-2s and tax returns, we can look at things like bank statements, 1099s, rental income, or your assets.