Answers to the Most Common Questions About Mortgages

How does the mortgage process work?

The mortgage process starts with pre-qualification or pre-approval, followed by house shopping, making an offer, applying for the loan, underwriting, and closing.

Each step involves paperwork, checks, and coordination with lenders, agents, and attorneys. Want a personalized walkthrough? Use our AI Mortgage Advisor to guide you step-by-step.

What documents are required to apply for a mortgage?

You typically need to provide proof of income, tax returns, bank statements, identification, and details about your debts and assets.

Lenders use these to verify your financial stability and calculate your income. Would you like a checklist tailored to your specific situation? Try our AI Mortgage Advisor.

How do mortgage lenders calculate income?

Most lenders calculate income based on your gross monthly income, that’s your income before taxes and deductions. They may have multiple income sources (such as W-2 wages, freelance 1099 income, commissions, or bonuses), depending on their consistency.

For self-employed borrowers, lenders usually average your net income from tax returns over the past two years.

Not sure how your income qualifies? The AI Mortgage Advisor can break it down based on your documentation.

Do mortgage lenders go by gross or net income?

Lenders typically use gross income, not take-home pay, to assess how much house you can afford. However, your debt-to-income (DTI) ratio is a significant factor. This compares your gross monthly income to your total monthly debts.

Want to see how your DTI compares to lender expectations? The AI Mortgage Advisor runs the numbers for you.

What’s the rule of thumb for mortgage payment vs income?

The standard guideline is the 28/36 rule:

• Your mortgage payment should be no more than 28% of your gross monthly income.

• Your total debt (including credit cards, car loans, student loans) should be no more than 36%

This is a rule of thumb, not a strict limit, but it serves as a helpful benchmark. Try the AI Mortgage Advisor to apply it to your actual budget.

What credit score is needed to get a mortgage?

Most lenders require a minimum credit score of 620, but better rates are usually available with scores of 740 or higher.

Some government-backed programs may accept scores as low as 620. Not sure where you stand? Our AI Mortgage Advisor can help you evaluate your options.

What’s the difference between pre-approval and pre-qualification?

Pre-qualification is a quick estimate based on self-reported information.
Pre-approval is a verified process that involves checking your credit and documentation.

Pre-approval is stronger and shows sellers you’re financially serious. Want to know which one you need? Ask our AI Mortgage Advisor.

How much should I put down on a house?

You can put down as little as 3% with some loans, but a 20% down payment helps you avoid private mortgage insurance (PMI) and may qualify you for better rates.

The right amount depends on your savings, risk tolerance, and long-term goals. Our AI Mortgage Advisor can recommend options that align with your specific financial profile.

What are points, and should I pay for them?

Points are upfront fees you pay to lower your interest rate. One point typically equals 1% of your loan amount.

Paying points makes more sense if you plan to stay in the home long enough to recoup the upfront cost. The AI Mortgage Advisor can run the math and help you decide.

What’s the difference between FHA, VA, and conventional loans?

• FHA loans: Backed by the government, low down payments, flexible credit requirements

• VA loans: For eligible veterans, no down payment required

• Conventional loans: Not government-backed, stricter requirements, but lower total costs if you qualify

Are you unsure which loan type best suits your situation? The AI Mortgage Advisor walks you through your options and offers a personalized match.

What fees should I expect when getting a mortgage?

Expect to pay fees for:

• Appraisal

• Credit checks

• Loan origination

• Title and escrow

• Recording and closing costs

These typically add up to 2%–5% of the loan amount. Some lenders offer credits or waive specific fees. Want a more precise estimate? The AI Mortgage Advisor breaks it down for you.

Should I go with a fixed or adjustable rate?

• Fixed-rate mortgages offer consistent monthly payments.

• Adjustable-rate mortgages (ARMs) start lower but can rise over time

If you’re staying in your home for a short term, an ARM might make sense. Otherwise, fixed-rate offers stability. The AI Mortgage Advisor compares both options and provides a recommendation tailored to your situation.

How do I compare mortgage offers?

Look beyond interest rates. Consider:

• Annual Percentage Rate (APR)

• Loan term (30-year vs. 15-year)

• Discount points and fees

• Monthly payment and total cost over time

Even slight differences can cost thousands. Use the AI Mortgage Advisor to compare offers side by side, with smart context built in.

Want a Smarter Way to Navigate Your Mortgage?

Skip the confusion and guesswork. Try the AI Mortgage Advisor, it’s:

• Fast and free

• Personalized based on your credit, income, and down payment

• Designed to guide you step-by-step through the mortgage process

Get clarity before you commit. Try the AI Mortgage Advisor now.