Question 1

What credit score do I need for a mortgage in 2026?

Accepted Answer

As of November 2025, Fannie Mae removed the hard 620 credit score minimum, shifting to holistic underwriting. While many lenders still prefer 620+, borrowers with lower scores may qualify if they have strong compensating factors like large down payments, low debt-to-income ratios, or significant cash reserves. FHA loans accept scores as low as 580 with 3.5% down, or 500 with 10% down.

Question 2

What is the difference between pre-qualification and pre-approval?

Accepted Answer

Pre-qualification is an informal estimate based on self-reported financial information with no documentation required. Pre-approval is a formal commitment where lenders verify your income, assets, credit, and employment. Pre-approval carries more weight with sellers because it confirms you can secure financing. In competitive markets, pre-approval letters are often required to submit serious offers.

Question 3

How much down payment do I need to buy a house?

Accepted Answer

The ideal down payment depends on your financial situation. While 20% down avoids PMI and reduces monthly payments, it is not mandatory. FHA loans require just 3.5% down, VA loans offer $0 down for eligible veterans, and conventional loans accept 3-5% for qualified buyers. According to NAR research, first-time buyers averaged 8% down in 2024.

Question 4

How do mortgage points work and should I buy them?

Accepted Answer

Mortgage points, or discount points, are upfront fees paid to lower your interest rate. One point equals 1% of your loan amount and typically reduces your rate by 0.25%. For example, on a $400,000 loan, one point costs $4,000. Points make sense if you plan to keep the loan long enough to recoup the upfront cost through lower monthly payments, typically 5-7 years.

Question 5

What is PMI and how can I avoid paying it?

Accepted Answer

Private Mortgage Insurance (PMI) protects lenders when you put down less than 20%. It typically costs 0.5-1.5% of the loan amount annually. You can avoid PMI by putting 20%+ down, using a piggyback loan, choosing lender-paid PMI with a higher rate, or selecting a VA loan if eligible. Once you reach 20% equity, you can request PMI removal.

Question 6

Should I get a 15-year or 30-year mortgage?

Accepted Answer

30-year mortgages offer lower monthly payments and more budget flexibility, ideal for first-time buyers. 15-year mortgages have higher payments but significantly lower total interest costs and faster equity building, typically with 0.5-0.75% lower rates. Many borrowers start with 30-year terms and make extra principal payments.

Question 7

What is debt-to-income ratio and why does it matter?

Accepted Answer

Debt-to-income (DTI) ratio compares your monthly debt payments to gross monthly income. Front-end DTI includes only housing costs (PITI), while back-end DTI includes all debts. Most lenders require back-end DTI below 43-50%. Lower DTI improves approval odds and interest rates.

Question 8

Can I refinance my mortgage with bad credit?

Accepted Answer

Yes, refinancing with bad credit is possible but more challenging. FHA streamline refinances require no credit check for existing FHA loans. VA IRRRL offers simplified refinancing for VA loan holders. Conventional lenders typically want 620+ scores, but some portfolio lenders accept lower scores with higher rates.

Question 9

Can I buy a house if I have student loan debt?

Accepted Answer

Yes, student loans do not disqualify you from homeownership, but they impact your debt-to-income ratio. Lenders typically count 0.5-1% of your loan balance as monthly payment even if deferred. Income-driven repayment plans can help by lowering your counted payment. Focus on maintaining good credit and keeping total DTI below 43%.

Question 10

How long does it take to close on a house?

Accepted Answer

The average mortgage closing takes 30-45 days from contract acceptance to keys in hand. Cash purchases can close in 7-14 days. Timeline factors include loan type (FHA/VA take longer), appraisal scheduling, title work, and underwriting complexity. Pre-approval and responsive communication help ensure on-time closing.

Frequently Asked Questions About Mortgages

Getting Started

What credit score do I need for a mortgage in 2026?

What is the difference between pre-qualification and pre-approval?

How much down payment do I need to buy a house?

Costs & Payments

How do mortgage points work and should I buy them?

What is PMI and how can I avoid paying it?

Should I get a 15-year or 30-year mortgage?

Loan Options

What is debt-to-income ratio and why does it matter?

Can I refinance my mortgage with bad credit?

The Process

Can I buy a house if I have student loan debt?

How long does it take to close on a house?

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