Most mortgage questions fall into six categories, and buying a home is only one of them. This page answers the ones we field most often across purchases, refinances, home equity, credit, self-employed and investor income, and what the whole thing costs.
By Julia LuisMortgage Loan Officer · Mortgage-World.comBuying, refinancing and equity borrowing have different rules, different credit floors and different documentation — the same score can qualify you for one and not another. Below, the questions we are asked most, grouped by what you are actually trying to do, with links to the full answer on each.
Buying
Mortgage Questions About Buying a Home
How much do I need for a down payment? Between nothing and 3.5% on most first purchases. VA and USDA require zero, conventional starts at 3%, and FHA at 3.5%. Twenty percent is the point where conventional mortgage insurance ends, not a requirement to buy. On most first-time files the down payment can be gifted in full by a family member.
What credit score do I need to buy? 580 for FHA at 3.5% down, 620 for conventional. VA and USDA publish no minimum. We place FHA and VA files down to 500 FICO with a larger down payment.
How much house can I afford? Underwriting allows roughly 43% to 50% of gross monthly income for all debt combined, then subtracts your car, card and student loan payments. What remains covers principal, interest, taxes, insurance and any HOA fee. Work in monthly payment first and let the price follow.
Do I need to be a first-time buyer for the good programs? No. FHA, VA, USDA and conventional financing have no such requirement. Only state assistance programs do, and most define it as not having owned in three years — see our first-time buyer program. Our step-by-step buying guide covers the whole sequence.
Refinancing
Mortgage Questions About Refinancing
How do I know if refinancing is worth it? Divide your total closing costs by your monthly savings. That is the number of months to break even. If you will own the home comfortably past that point, it pays. There is no “one percent rule” — it is arithmetic, not a threshold.
What kinds of refinance are there? Three. Rate-and-term lowers your rate or shortens the term with no money out. Cash-out replaces your loan with a larger one and hands you the difference, generally up to 80% of value. FHA Streamline and VA IRRRL are reduced-documentation options for borrowers who already have those loans. The refinance guide walks through all three.
Can I refinance with bad credit? Often yes, if you are lowering your rate rather than taking cash out. FHA and VA streamlines can skip the appraisal and most income documentation, and some versions are non-credit-qualifying.
Will refinancing restart my loan? Only if you choose a new 30-year term. You can refinance into 15 or 20 years, or into a term matching what you have left. Ask for the new payoff date, not just the new payment.
Home equity
Mortgage Questions About Home Equity
How do I reach my equity without losing my low rate? A cash-out refinance reprices your entire balance at today’s rate. A HELOC or a fixed second mortgage leaves your first loan untouched and prices only the new money. If your current rate is well below today’s, that difference usually decides it — see the full comparison.
How much equity can I actually access? Plan on keeping roughly 20% in the home. So the reachable amount is the value, minus 20%, minus what you still owe.
Is a HELOC risky? It is secured by your home and the rate is usually variable. The part people miss is the step up when the draw period ends and you move from interest-only to full repayment. Ask what the payment becomes then, before you open the line.
Credit and qualifying
Mortgage Questions About Credit and Qualifying
Which credit score do lenders use? All three bureaus are pulled and you qualify on the middle score, not the best or the average. With two borrowers, most programs use the lower of the two middle scores.
Does the score requirement change by transaction? Yes, and this surprises people. Cash-out refinancing is stricter than rate-and-term. Investment property is stricter than a primary residence. Second homes sit in between. The same score opens different doors depending on what you are doing — our credit score guide breaks it down by program.
How fast can I improve my score? If the issue is high balances, 30 to 60 days is realistic — utilisation is 30% of the score and re-reports monthly. If the issue is late payments or a bankruptcy, plan in months.
Does shopping lenders hurt my credit? Not meaningfully. Mortgage inquiries inside a 14- to 45-day window count as a single event.
Self-employed and investors
Mortgage Questions About Self-Employed and Investor Income
I write off most of my income. Can I still qualify? Yes, through programs that do not use tax returns. Bank statement loans qualify on 12 or 24 months of business deposits instead, which is the standard answer for self-employed borrowers whose returns understate real income.
Can I buy an investment property without proving personal income? Yes. A DSCR loan qualifies on the property’s rent rather than your income or tax returns, and we place those in all 50 states.
What if I have no income documentation at all? There are Non-QM programs underwritten on credit, reserves and the property. They price higher and require more down, and they close files that conventional lending will not touch.
Costs, rates and timing
Mortgage Questions About Costs, Rates and Timing
What are closing costs? Lender fees, third-party fees like appraisal and title, and prepaid taxes and insurance. Together they run 2% to 5% of the price. On a purchase, a seller credit written into the contract is the most effective way to reduce what you bring.
Should I pay points? Only if you will hold the loan long enough to recover them. Same break-even arithmetic as a refinance: cost divided by monthly savings.
How long does the process take? Pre-approval takes a day or two once documents are in. Contract to closing is typically 30 to 45 days, and a streamline refinance can be faster.
When should I lock my rate? Once you are under contract on a specific property. Before that there is nothing to lock against. For where rates sit and what moves them, see our rates explainer, and the Freddie Mac weekly survey for the national average.
What does a broker do that a bank does not? A bank offers its own products. A licensed broker submits one file to multiple wholesale lenders, which matters most when something about your situation is not standard. The CFPB’s home-buying guide is a good neutral reference on comparing offers either way.
- Down payments start at 0% to 3.5%, and on most first purchases the money can be gifted in full.
- Break-even = closing costs ÷ monthly savings is the whole refinance decision. There is no one-percent rule.
- Cash-out reprices your entire balance; a HELOC or second lien prices only the new money.
- Lenders use your middle score, and requirements tighten for cash-out and for investment property.
- Self-employed borrowers can qualify on bank deposits, and investors on the property’s rent rather than personal income.
- Closing costs run 2% to 5%; on a purchase, a seller credit is the biggest lever on what you bring.
Common questions
More Mortgage Questions
Can I get a mortgage while self-employed for under two years?
Sometimes. Conventional and government programs generally want a two-year history, but bank statement and Non-QM programs are more flexible, particularly where you worked in the same field before going independent.
Can I buy a home in one state while living in another?
Yes. We are licensed in New Jersey, Connecticut and Florida for consumer mortgages, and DSCR investment loans are available in all 50 states regardless of where you live.
What is the difference between prequalified and pre-approved?
A prequalification is unverified arithmetic. A pre-approval means a lender pulled your credit and reviewed your actual income and asset documents. Only the second belongs on an offer.
Do I need reserves after closing?
Not always required, but always advisable. Programs vary; some require several months of payments in the bank, particularly on investment property or larger loan amounts.
Can I use rental income to qualify?
Yes, with documentation. Existing rental income is typically documented on tax returns or leases; on a DSCR loan the property’s projected rent does the qualifying by itself.
What happens if my credit changes before closing?
The file is re-pulled shortly before closing and the approval is re-issued at the new numbers. No new accounts, no financed purchases, no job changes without telling your loan officer first.
Keep reading
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Ask us the question that is not on this page
A licensed loan officer on our team will answer it against your actual situation rather than in general — purchase, refinance, equity, self-employed or investment. New Jersey, Connecticut and Florida, plus DSCR investment loans in all 50 states.
Written and reviewed by Julia Luis, Mortgage Loan Officer of Mortgage-World.com, NMLS #1630225. About the author
Mortgage-World.com LLC is a licensed mortgage brokerage serving New Jersey, Connecticut and Florida. NMLS #1630225 (verify on NMLS Consumer Access) · Florida license MLB 1987 · Family owned since 2017.
535 Bergen Blvd, Suite 2, Ridgefield, NJ 07657 · 888.958.5382 · Mon–Sun 8am–10pm EST
Last reviewed August 2026. This article is general information for educational purposes, not a loan approval, a rate quote, or a commitment to lend. Program guidelines, rates and limits change, and every file is underwritten on its own facts. Mortgage-World.com is not an agency of the state or federal government and is not affiliated with the Federal Housing Administration. Equal Housing Lender.
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