Dana O'Brien

An FHA loan is a government-backed mortgage insured by the Federal Housing Administration that’s available to first-time and repeat buyers. It requires a minimum 3.5% down payment, upfront mortgage insurance (rolled into the loan), and monthly mortgage insurance for the life of the loan.

A First-Time Homebuyer Conventional Loan is offered by lenders and is not backed by the government. It has a slightly lower minimum down payment of 3%. It still requires mortgage insurance, but borrowers can remove it once you reach 20% equity. It’s often a better option for buyers with strong credit scores.

A home inspection and an appraisal are not the same. They serve different purposes.

An inspection is optional, but highly recommended. It provides a detailed report on the condition of the property including the structure, systems, and any safety issues. It is paid for directly by the buyer and is not included in closing costs.

An appraisal is required by the lender. It determines the market value of the property to ensure it meets loan requirements. The cost is typically included in closing costs.

Closing costs include lender fees, third-party fees, and prepaid amounts for property taxes and homeowners’ insurance. The buyer typically pays their own closing costs at closing.

The amount you will need for a mortgage down payment depends on where you are in your homeownership journey. If you’re a first-time homebuyer, your minimum down payment is 3% of the purchase price of property. If you’ve owned a home in the last three years, the minimum down payment is 5%. For investment or multi-unit properties, a higher down payment of 15-25% is typically required.

Once you apply, your loan officer will review your application and request income and asset documents. After you submit the needed documentation, preapproval typically happens within one day.

After you find a home and sign a purchase agreement, the typical closing timeframe is 30 – 45 days. 

An Adjustable-Rate Mortgage (ARM) is a type of mortgage where the interest rate can change over time based on market conditions.

For the initial period of the mortgage, the interest rate is fixed for a set time. Commonly 3, 5, 7, or 10 years. After the initial period, the rate adjusts periodically (usually annually) according to a specific index plus a margin.

ARM loans often start with a lower initial interest rate than a fixed-rate mortgage. They can be a good option if you plan to sell or refinance before the adjustment period begins.

 Any time after the loan closes our member(s) can relock their adjustable rate mortgage (ARM) loan with a current ARM loan rate at time of request. Members can request to relock the rate an unlimited amount of times during the life of the loan. The only requirement is that the loan must be current.

Lenders use your debt-to-income ratio (DTI) to determine how much of your gross monthly income goes toward paying your monthly debts. It includes your housing payment (mortgage or rent), credit card payments, car loans, student loans, and other recurring debts. Most lenders prefer a DTI of 43% or lower for mortgage approval.