Mortgage FAQs

The amount a lender may approve and the payment that fits your budget are not necessarily the same. A lender reviews income, monthly debts, credit, assets, down payment and the loan program. Your personal budget should also account for principal and interest, property taxes, homeowners insurance, mortgage insurance, HOA dues when applicable, maintenance and emergency savings.

Compare the complete monthly housing cost rather than purchase price alone. Begin with the mortgage calculators, then request a personalized mortgage rate quote based on your actual scenario. The Consumer Financial Protection Bureau’s affordability guidance is another useful starting point.

Lenders do not always use these terms identically. A documented pre-approval generally includes a credit review and verification of income, assets and debts. It provides a tentative loan amount and can help show sellers that you have discussed financing with a lender. A prequalification may rely on more preliminary or unverified information.

Neither is a final loan approval or guarantee. The property, appraisal, title, insurance and updated borrower information must still meet loan requirements. Pre-approval letters also commonly expire, so update yours while actively shopping. Learn about the home-purchase mortgage process or review the CFPB’s pre-approval guidance.

The list depends on how you earn income and which program you use. Common documents include recent pay stubs, W-2s, tax returns when required, bank or investment statements and identification. Self-employed borrowers may need business tax returns, profit-and-loss information or other business records. Documentation may also be required for gift funds, retirement assets, rental income, large deposits or money converted from cryptocurrency.

Providing complete documents early can identify questions before you are under contract. Financial documents should be submitted through an approved secure application or document portal rather than ordinary email or appointment notes.

There is no single minimum credit score for every mortgage. Conventional, FHA, VA, USDA, jumbo and non-QM programs use different guidelines, and individual lenders may have additional requirements. Your overall credit profile can also affect pricing, mortgage insurance and the amount of documentation required.

For example, FHA loans can allow down payments as low as 3.5% for eligible borrowers, but that does not mean every borrower or lender will qualify at the same score. Ask for an evaluation based on your complete financial picture instead of assuming one score applies to every loan. See the CFPB’s FHA loan overview.

The required amount depends on the borrower, property and program. Some conventional programs permit as little as 3% down for eligible borrowers, while FHA may allow 3.5%. Eligible VA borrowers and certain USDA borrowers may have no-down-payment options. These examples are subject to eligibility, underwriting and property requirements.

A down payment is only part of the cash needed. Budget separately for closing costs, prepaid taxes and insurance, reserves, moving and repairs. A larger down payment can reduce the loan balance or mortgage insurance, but keeping adequate savings can also matter. Read the CFPB’s down-payment guidance.

Mortgage pricing changes with financial markets and can move from day to day. The rate available to a particular borrower can also depend on loan type, term, credit profile, down payment or equity, loan amount, property type, occupancy, points and the rate-lock period.

No single action guarantees a lower rate. Compare written Loan Estimates using the same loan type, term, lock period and points or credits. If you already have an offer, request a side-by-side mortgage quote review.

The interest rate is used to calculate principal-and-interest payments. The annual percentage rate, or APR, is a broader annualized cost measure that includes the interest rate plus certain points, broker fees and other loan charges.

APR can help compare similar loans, but it should not be the only comparison. Also review the monthly payment, cash to close, points, lender credits, loan term and whether the rate is fixed or adjustable. The CFPB explains mortgage rate and APR in more detail.

Discount points are upfront charges paid in exchange for a lower note rate. One point equals 1% of the loan amount, although you can pay more or less than one point. Compare the upfront cost with the expected monthly savings to estimate the break-even period.

Lender credits reduce eligible closing costs, usually in exchange for a higher rate. A temporary buydown is different: funds are used to reduce the borrower’s payments during an introductory period, while the underlying note rate remains unchanged. None is automatically best. Review your available cash, expected time in the loan and total cost. See the CFPB’s points and lender-credit guidance.

A rate lock generally protects agreed pricing through a stated expiration date, provided the loan closes on time and the application does not change in a way that affects pricing. If the rate is not locked, it can change with the market.

Longer locks or extensions may cost more, and a standard lock may not provide a lower rate if the market improves. Confirm the rate, points, lock expiration and extension policy in writing. The lock status appears on page one of the Loan Estimate. Read the CFPB’s rate-lock guidance.

Closing costs are expenses associated with obtaining the mortgage and completing the real-estate transaction. They can include lender charges, appraisal, title and escrow services, recording fees, prepaid interest, homeowners insurance and initial property-tax or escrow deposits. The down payment is separate from closing costs.

Cash to close combines the down payment and closing costs, then accounts for deposits, credits and other adjustments. There is no accurate flat amount for every transaction. Review both totals on the CFPB Loan Estimate explainer.

Sometimes. In a purchase, seller credits may cover eligible costs within program limits, and lender credits may reduce upfront costs in exchange for different pricing. Seller credits generally cannot replace a required down payment.

In a refinance, some costs may be added to the new balance if the appraisal, equity, loan limits and program permit it. A “no-closing-cost” loan generally means costs are offset by a lender credit, a higher rate or a higher loan balance—not that the expenses disappear. Compare the payment, balance, cash to close and total cost.

Conventional loans commonly require private mortgage insurance, or PMI, when the down payment is below 20%. For many covered mortgages, a borrower may request cancellation when the scheduled balance reaches 80% of the home’s original value and other requirements are met. Automatic termination rules may also apply.

FHA uses mortgage insurance premiums, or MIP, under different duration rules. VA and USDA have different program charges. Do not assume every type of mortgage insurance disappears at 20% current equity. Review the CFPB’s PMI cancellation guidance and ask how your specific program works.

A lender generally requires acceptable property insurance before closing, and the premium affects the total monthly housing expense. Obtaining coverage can take additional time for properties with wildfire, coastal, flood or other elevated risks, so request insurance quotes early rather than waiting until the end of escrow.

If traditional California coverage is unavailable, the California FAIR Plan may be a last-resort option. Its standard protection is limited, and separate coverage may be needed. The total package must still satisfy the lender. Review the California Department of Insurance guidance and Sean’s California FAIR Plan overview.

There is no single best mortgage for every first-time buyer. Conventional loans may offer low-down-payment options and cancellable mortgage insurance. FHA may provide more flexibility for some credit profiles. VA can be valuable for eligible service members and veterans, while USDA may provide no-down-payment financing for eligible borrowers and properties.

Compare the complete transaction: down payment, closing costs, monthly payment, mortgage insurance or guarantee fees, property eligibility and long-term plans. First-time status is not required for every low-down-payment or assistance program.

Many programs allow eligible gift funds for some or all of the down payment or closing costs. The lender must verify the donor, source and transfer. A true gift cannot require repayment, and program rules determine who may provide it and whether the borrower must contribute personal funds.

A qualifying co-borrower may add income and assets, subject to occupancy, credit and ownership rules. Co-borrowers become legally responsible for the mortgage, and missed payments can affect their credit. Read more about co-borrowers and gift funds.

Yes, when income, assets and documentation meet the chosen program’s requirements. For self-employed borrowers, a lender may review personal and business tax returns, ownership, income trends, cash flow and whether the business can continue supporting the income used to qualify. Bank-statement and other non-QM programs may be alternatives, but availability, pricing and documentation vary.

Retired borrowers may qualify using documented Social Security, pensions, annuities, retirement distributions, investments or other eligible sources. Certain programs may also permit qualifying calculations based on eligible assets. These are options to evaluate, not guaranteed approvals.

Potentially, but normally not as cryptocurrency at closing. For conforming underwriting, cryptocurrency used for down payment, closing costs or reserves generally must be converted to U.S. dollars, the exchange and source documented, and the money verified in a U.S.- or state-regulated financial institution before closing.

Fannie Mae also states that virtual currency may not be used directly for the purchase-contract earnest-money deposit. Other investors may have different requirements, so begin the documentation process before making large transfers. Read the cryptocurrency and homebuying guide, plus the official Fannie Mae and Freddie Mac guidance.

Yes, but both the borrower and property must qualify. A condominium loan may require review of the project’s insurance, budget, reserves, owner occupancy, litigation and HOA documents. Requirements vary by program and transaction.

Manufactured-home financing can depend on the construction date, foundation, condition, title, land ownership and whether the home is legally classified as real property. Ask for a property review early so financing issues do not appear late in escrow. Learn more about mobile and manufactured homes.

A refinance may be worth evaluating if it could lower the payment or rate, shorten the term, change an adjustable loan to a fixed rate, remove eligible mortgage insurance or access equity. There is no universal rate drop that makes refinancing worthwhile.

Compare the current loan with the proposed balance, payment, term, closing costs and break-even period. A lower payment can result partly from extending the term, which may increase total finance charges. Use the refinance calculator, review refinance options, or set a refinance alert based on your current loan.

A cash-out refinance replaces the existing mortgage with a larger new loan and provides the difference, after payoff and transaction costs, as cash. Approval depends on income, credit, property value, available equity and program limits.

The proceeds may be used for renovations or consolidating other debt, but the cash is borrowed against the home. A larger balance, different rate or longer term can increase the total mortgage cost. Compare the full cost and risk rather than focusing only on cash received or the new monthly payment.

A home equity line of credit, or HELOC, is generally a revolving second mortgage and often has a variable rate. A home equity loan is generally a closed-end second mortgage that provides a lump sum, often with a fixed rate. Both can leave the existing first mortgage in place.

A cash-out refinance replaces the first mortgage instead. Keeping an attractive first-mortgage rate may favor a second-lien option, while another situation may favor one new loan. Compare both payments, rates, fees, draw rules and repayment terms. Homeowners planning improvements can also read about after-renovation-value HELOC financing.

For mortgages acquired in 2026, the one-unit conforming loan limit in San Luis Obispo County is $1,000,500. The limits are $1,280,850 for two units, $1,548,250 for three units and $1,924,100 for four units. HUD’s published 2026 FHA limits for the county are the same amounts.

These are maximum loan amounts by unit count—not home-price limits, approval guarantees or the maximum for every program. Limits change annually. Sources: FHFA’s official 2026 county table and HUD’s 2026 FHA limit table.

The current Assist-to-Own program is available to eligible permanent and temporary County of San Luis Obispo employees. Official program information describes a deferred second mortgage equal to 3.5% of the first-mortgage amount, with no interest or monthly payment, plus up to another 2% as a gift—up to 5.5% total potential assistance.

Eligibility, income limits, credit, property, loan amount, funding and program availability apply, and terms can change. It is not available to every county resident. Review the official County Assist-to-Own page and Sean’s county employee assistance guide.