Home Loans · NMLS #1784218
Mortgage FAQ.
50 questions answered in plain English — no jargon, no hedging. Pre-approval, credit, down payments, loan types, rates, closing costs, and commercial financing.
01 / 07
Getting Started & Pre-Approval
What is the first step to getting a mortgage?
The first step is a pre-qualification conversation — not a formal application. You'll share your income, assets, monthly debts, and credit range so your loan officer can tell you which programs you qualify for and at what purchase price. This takes 10 minutes and costs nothing. Only after you decide to move forward do you submit a full application with supporting documents.
What is the difference between pre-qualification and pre-approval?
Pre-qualification is an informal estimate based on self-reported information — useful for understanding your options but not taken seriously by sellers. Pre-approval is a conditional commitment from an underwriter after verifying your income, assets, employment, and credit. A pre-approval letter tells a seller you're a serious, vetted buyer. In competitive markets, submitting an offer without pre-approval almost always means losing to the buyer who has one.
How long does mortgage pre-approval take?
Once all documents are submitted, most pre-approvals are issued within 24–72 hours. Rush approvals — for buyers in active contract situations — can often be completed same-day. The bottleneck is usually document gathering on the borrower's side, not underwriting. Having your last two pay stubs, two months of bank statements, two years of W-2s, and a government-issued ID ready shortens the timeline significantly.
How long does a mortgage pre-approval stay valid?
Most pre-approvals are valid for 60–90 days. After that, the lender will ask to refresh your credit pull and verify that your income and employment haven't changed. If you're actively shopping for a home and approaching the expiration date, contact your loan officer proactively — the refresh process usually takes 24 hours.
Does getting pre-approved hurt my credit score?
A mortgage pre-approval requires a hard credit inquiry, which typically reduces your score by 3–5 points temporarily. However, credit bureaus treat multiple mortgage inquiries within a 14–45 day window as a single inquiry — so shopping with two or three lenders in the same two-week period won't compound the impact. The score typically recovers within 3–6 months of normal credit activity.
What documents do I need to apply for a mortgage?
Standard required documents: last two years of W-2s (or 1099s and tax returns if self-employed), last 30 days of pay stubs, last two months of bank statements for all accounts, government-issued photo ID, and the purchase contract once you're under contract. Additional documents may be needed for self-employed borrowers (P&L statement, business tax returns), investment properties (current leases, Schedule E), or gift funds (gift letter and donor's bank statement).
Can I get pre-approved before I find a home?
Yes — and you should. Getting pre-approved before you start touring homes does three things: it confirms your budget so you don't waste time looking at price points you won't qualify for, it lets you submit an offer the same day you find the right home, and it gives the seller confidence that your offer is real. Sellers in luxury markets routinely reject offers that aren't accompanied by a pre-approval letter.
What is a conditional approval and what conditions are common?
A conditional approval means underwriting has reviewed your file and is prepared to approve the loan, subject to specific outstanding items. Common conditions: updated pay stub or bank statement, signed gift letter, homeowner's insurance binder, explanation letter for a large deposit or employment gap, clear title commitment, and satisfactory appraisal. Most conditions are cleared within a few days. Once all conditions are satisfied, you receive a clear to close.
02 / 07
Credit & Income
What credit score do I need to buy a home?
Minimum credit scores by program: FHA loans require 580 for 3.5% down (500–579 qualifies with 10% down). VA loans have no official minimum but most lenders want 580–620. Conventional loans require at least 620; most lenders prefer 660+ for the best pricing. Jumbo loans generally require 700+, and some super-jumbo programs want 720+. The score that gets you approved is the floor — your actual rate improves significantly at 700, 720, and 740+.
How does my debt-to-income (DTI) ratio affect my mortgage?
DTI is your total monthly debt payments divided by your gross monthly income. Conventional loans typically allow up to 45% back-end DTI (all debts including the new mortgage payment); FHA allows up to 57% with compensating factors; VA has no hard cap but 41% is the general guideline. To lower your DTI: pay off installment loans, reduce credit card balances, or pay off a car loan before closing. Adding a co-borrower with income and no debt is another effective strategy.
Can I get a mortgage if I'm self-employed?
Yes. Self-employed borrowers typically need two years of personal tax returns, two years of business tax returns (if applicable), a year-to-date profit and loss statement, and two months of business and personal bank statements. The key issue: lenders use the net income from your tax returns, not gross revenue — if you write off a lot, your qualifying income may be lower than expected. Portfolio lenders and bank statement programs (12 or 24 months of deposits) are often a better fit for high-earning self-employed buyers.
What is a bank statement loan?
A bank statement loan uses 12 or 24 months of personal or business bank deposits — instead of tax returns — to calculate qualifying income. It's designed for self-employed borrowers whose tax returns understate their actual income due to legitimate deductions. Typical terms: 10–20% down, slightly higher rate than conventional, requires 12–24 months of clean bank statements. Strong credit (680+) is usually required.
Can I get a mortgage with a gap in my employment history?
Yes, with explanation. Lenders generally require two years of employment history, but gaps are not automatic disqualifiers. A gap of less than 30 days usually requires no explanation. Longer gaps need a letter of explanation — returning from medical leave, family caretaking, education, or a career transition are all accepted with documentation. The key is that you're currently employed (at least 30 days at your current job) and the gap is explainable.
Can non-U.S. citizens or foreign nationals get a mortgage in Florida?
Yes. Permanent residents with a green card qualify for most conventional and FHA programs on the same terms as citizens. Non-permanent residents (valid work visa — H-1B, L-1, O-1, etc.) can qualify for conventional loans with a valid visa and two years of U.S. income history. Foreign nationals without a U.S. visa, Social Security number, or credit history can access foreign national mortgage programs — typically requiring 30–35% down, higher rates, and a U.S. bank account.
Does rental income from investment properties count toward qualifying income?
Generally yes, with documentation. For existing rental properties: lenders use 75% of gross rents minus the mortgage payment from your Schedule E. For a newly purchased investment property: some programs allow future rental income if you have a lease in place; others require 30% equity and documented management experience. The rules vary by loan type — conventional, FHA, and portfolio programs each handle rental income differently.
03 / 07
Down Payment
How much do I need for a down payment?
Minimum down payment requirements by program: VA loans — 0%. USDA loans — 0% (rural areas). FHA loans — 3.5% with 580+ credit score. Conventional loans — 3% for first-time buyers, 5% otherwise. Jumbo loans — typically 10–20% depending on loan size and lender. Commercial loans — 20–35%. Putting 20%+ down on a conventional loan eliminates PMI and gives you access to the best rate tiers.
Can I use a gift for the down payment?
Yes — most loan programs allow gift funds from an immediate family member (parent, sibling, spouse, or grandparent). You'll need a signed gift letter stating the amount, the source, the relationship, and that no repayment is required. The donor's bank statement showing the withdrawal and your bank statement showing the deposit are also required. Business partners, employers, and unrelated parties are typically not eligible gift donors for conventional loans (FHA has more flexibility).
Can I use retirement account funds for a down payment?
Yes. 401(k): most plans allow you to borrow up to 50% of the vested balance (max $50,000) with no penalty — repaid through payroll deductions. IRA: first-time buyers can withdraw up to $10,000 penalty-free (though ordinary income tax still applies). Roth IRA contributions (not earnings) can be withdrawn at any time tax- and penalty-free. If you take a full withdrawal, the tax hit can be substantial — talk to a tax advisor before liquidating retirement accounts.
What is down payment assistance (DPA)?
Down payment assistance programs provide grants or low-interest second mortgages to help buyers cover the down payment and sometimes closing costs. In Florida, the Florida Housing Finance Corporation offers several programs — including the Florida Assist and Florida HLP — providing up to $10,000 in assistance for income-eligible buyers. Income and purchase price limits apply, and you must use a participating lender. DPA is most effective for first-time buyers in the $200K–$500K price range.
What is an 80/10/10 loan?
An 80/10/10 is a piggyback structure: an 80% first mortgage, a 10% second mortgage (often a HELOC), and a 10% down payment. The goal is to avoid PMI without putting 20% down. It works well for buyers with strong credit and enough cash for 10% down but who want to preserve liquidity. The second mortgage typically carries a higher rate than the first. Run the numbers against a single loan with PMI — depending on your rate and credit score, one structure often beats the other.
Does a higher down payment always mean a lower rate?
Not always — but it helps. Conventional loans use loan-to-value (LTV) as a pricing factor: lower LTV (higher down payment) generally improves your rate tier. However, the rate improvement between 10% and 20% down is typically smaller than between 5% and 10%. The bigger benefit of 20%+ down is eliminating PMI — which can add $100–$400/month to your payment on a mid-range loan. Some buyers get a better financial outcome by putting 10% down, investing the rest, and accepting a modestly higher payment.
04 / 07
Loan Types & Programs
What is an FHA loan and who should use it?
An FHA loan is insured by the Federal Housing Administration, which lets approved lenders offer lower down payments and accept lower credit scores than conventional programs. Key terms: 3.5% down with 580+ credit, 10% down with 500–579 credit, mortgage insurance premium (MIP) required for the life of the loan (if less than 10% down), and loan limits apply by county. FHA is best for first-time buyers or buyers with credit challenges. The downside: MIP doesn't drop off like PMI does on conventional loans, and FHA has property condition requirements that can complicate offers on older or distressed homes.
What is a VA loan and who qualifies?
VA loans are guaranteed by the U.S. Department of Veterans Affairs, available to eligible veterans, active-duty service members, National Guard and Reserve members (with qualifying service), and surviving spouses of veterans who died in service or from a service-connected disability. Benefits: 0% down payment, no PMI, competitive rates, and no loan limit for full entitlement. Eligibility requires a Certificate of Eligibility (COE) and meeting the lender's credit and income requirements. There is a VA funding fee (0.5–3.3% of the loan, financed into the loan) that replaces PMI.
What is a USDA loan?
USDA loans are backed by the U.S. Department of Agriculture for properties in eligible rural and suburban areas. They offer 0% down payment, no monthly PMI (just an upfront guarantee fee and annual fee), and competitive rates — but income limits and property location eligibility apply. In Central Florida, some areas in Osceola, Polk, and Hernando Counties are USDA-eligible. Not every property or buyer qualifies; check the USDA eligibility map before assuming this program works for your target property.
What is a jumbo loan and what makes it different?
A jumbo loan is any loan that exceeds the conforming loan limit set by the Federal Housing Finance Agency — $806,500 for most of Florida in 2025. Because jumbo loans can't be sold to Fannie Mae or Freddie Mac, lenders hold them in portfolio and apply their own underwriting standards. This means: stricter credit requirements (typically 700+ FICO), larger down payment (usually 10–20%), more assets required in reserves (6–12 months of payments), and slightly higher rates than comparable conforming loans. In markets like Dr. Phillips, Windermere, and Isleworth, jumbo financing is the norm rather than the exception.
What is a portfolio loan?
A portfolio loan is one the lender keeps on its own books rather than selling to Fannie Mae or Freddie Mac. Because the lender takes on the risk itself, it can set its own underwriting rules — which often means more flexibility for self-employed borrowers, non-warrantable condos, short-term rental properties, and complex income structures. Portfolio loans typically require stronger credit, larger down payments, and carry slightly higher rates than conforming loans, but they open doors that standard programs close.
What is a construction-to-permanent loan?
A construction-to-permanent (C2P) loan, also called a one-time close construction loan, funds the construction of a new home and then automatically converts to a permanent mortgage at completion. During construction, you pay interest only on drawn funds. At conversion, you begin standard P&I payments. The advantage: one set of closing costs, one appraisal, and a locked rate (sometimes) at the start. These loans are complex — the builder must be approved, draw schedules must be managed, and the final appraised value must meet the original estimate.
What is a bridge loan and when does it make sense?
A bridge loan is a short-term loan (usually 6–12 months) that uses equity in your current home to fund the purchase of a new one before your existing home is sold. It makes sense when: you've found the right next home before your current one is under contract, you're competing against cash buyers and want to make a non-contingent offer, or you need to close on the new purchase before your current close date. Bridge loans carry higher rates and fees than permanent financing — they're a tactical tool, not a long-term solution. The math only works if your current home sells quickly.
What is a DSCR loan?
A Debt Service Coverage Ratio (DSCR) loan qualifies the borrower based on the rental income of the investment property, not the borrower's personal income or tax returns. The DSCR is calculated as: gross monthly rent ÷ total monthly housing payment (PITIA). A DSCR above 1.0 means the property generates more income than it costs. Most lenders want a DSCR of 1.0–1.25+. DSCR loans are ideal for real estate investors with complex income, large portfolios, or who are retired and want to keep acquisitions off their personal tax picture.
05 / 07
Interest Rates & Loan Terms
What is the difference between a fixed-rate and adjustable-rate mortgage?
A fixed-rate mortgage locks your interest rate for the full loan term — 30, 20, or 15 years. Your principal and interest payment never changes regardless of what happens to market rates. An adjustable-rate mortgage (ARM) has a fixed period (commonly 5, 7, or 10 years) followed by annual adjustments based on an index (usually SOFR). ARMs typically start at lower rates than fixed loans. They make sense if you plan to sell or refinance before the adjustment period begins — if you stay longer, you take on rate risk.
What is a 5/1, 7/1, or 10/1 ARM?
The first number is the fixed period in years; the second number is how often the rate adjusts after that. A 5/1 ARM is fixed for 5 years, then adjusts once per year. A 7/1 ARM is fixed for 7 years, then adjusts once per year. Caps limit how much the rate can change: a 2/2/5 cap means the rate can't increase more than 2% at first adjustment, 2% at any subsequent adjustment, or 5% over the life of the loan. On a $1M loan, a 5/1 ARM that's 1% lower than a 30-year fixed saves roughly $833/month during the fixed period.
What is a rate lock and how long does it last?
A rate lock is a commitment from the lender to hold a specific interest rate for a set period — usually 30, 45, or 60 days. It protects you from rate increases between application and closing. Rate locks typically cost nothing for 30–45 days; longer locks (60–90 days) may have a fee. If your closing is delayed past the lock expiration, you either pay to extend (typically 0.125–0.25% of the loan) or take the prevailing market rate. Lock timing is important in a volatile rate environment — your loan officer should advise on when to lock based on where rates are moving.
What is the difference between interest rate and APR?
The interest rate is what you pay on the borrowed amount — it determines your monthly principal and interest payment. APR (Annual Percentage Rate) is a broader measure that folds in lender fees, discount points, mortgage insurance, and other costs of obtaining the loan, expressed as an annualized rate. APR is always equal to or higher than the interest rate. When comparing loan offers from multiple lenders, APR is more useful than rate alone because it accounts for origination fees and points — a lender with a lower rate but higher fees may have a higher APR than a competitor.
What are mortgage points and should I buy them?
Each discount point equals 1% of the loan amount and reduces the interest rate by approximately 0.25% (varies by lender and market). Buying points makes sense if you plan to stay in the home long enough to recoup the upfront cost through monthly savings. The break-even point: divide the cost of the points by the monthly savings. On a $600K loan, one point costs $6,000 and saves roughly $90/month — you break even in about 67 months (5.5 years). If you plan to sell or refinance sooner, skip the points and keep the cash.
What is a rate buydown?
A rate buydown is a seller or builder concession that temporarily reduces the buyer's interest rate. A 2/1 buydown reduces the rate by 2% in year one and 1% in year two; year three onward the full rate applies. A 3/2/1 buydown reduces the rate by 3%, 2%, and 1% in years one, two, and three. The cost is typically funded by the seller as a closing cost concession. In a buyer's market, asking for a buydown is often more valuable than asking for a price reduction — it reduces your initial payments and lets you settle in before the full payment kicks in.
How often do mortgage rates change, and how should I track them?
Mortgage rates move daily — sometimes significantly — in response to economic data releases (jobs reports, CPI, GDP), Federal Reserve policy decisions, and bond market activity. Rates are most directly tied to the 10-year U.S. Treasury yield. A Fed rate hike doesn't automatically raise mortgage rates, but signals about future monetary policy do. For buyers actively shopping, check rates weekly. If you're within 45 days of a purchase, lock when you see a level you can comfortably afford — trying to time the market's low often leads to missing acceptable rates while waiting for better ones.
06 / 07
Monthly Payment, PMI & Escrow
What is included in a monthly mortgage payment?
A full mortgage payment is often expressed as PITI: Principal (portion that reduces your loan balance), Interest (cost of borrowing), Taxes (property taxes collected monthly and held in escrow), and Insurance (homeowner's insurance, also escrowed). If you put less than 20% down on a conventional loan, PMI is added. If you're in an HOA community, your HOA dues are separate — not included in PITI but part of your monthly housing cost. Flood insurance (if required by your lender) may also be escrowed.
What is PMI and when can I remove it?
Private mortgage insurance (PMI) is required on conventional loans when your down payment is less than 20%. It protects the lender — not you — in the event of default. Typical cost: 0.2–1.5% of the loan amount annually, paid monthly (roughly $100–$500/month on a $400K–$600K loan). PMI automatically cancels when your loan balance reaches 78% of the original purchase price. You can request cancellation at 80% LTV. To get there faster: make extra principal payments, or request a new appraisal if your home's value has increased significantly.
What is an escrow account?
An escrow account is a third-party account managed by your loan servicer that collects a portion of your property taxes and homeowner's insurance with each monthly payment. Instead of paying a large tax bill twice a year and an annual insurance premium, your lender collects 1/12 of each annually recurring amount each month. Your servicer pays these bills directly when they come due. Escrow accounts are required for most FHA, VA, and conventional loans with less than 20% down. Some lenders allow escrow waivers for borrowers with 20%+ equity — usually with a small rate adjustment.
How much are closing costs in Florida?
Florida buyers typically pay 2–3% of the purchase price in closing costs. Key line items: origination/lender fees ($500–$2,000+), appraisal ($500–$800 for residential, $1,500–$5,000 for luxury or commercial), title insurance (lender's policy required; owner's policy customary in Florida and usually paid by the seller but negotiable), recording fees, prepaid interest (from closing date to first payment), and escrow setup (2–3 months of property tax and insurance). On a $700K purchase, budget $14,000–$21,000 for closing costs — before the down payment.
What is a Closing Disclosure and when do I receive it?
The Closing Disclosure (CD) is a federally required five-page document that details the final terms of your loan — rate, monthly payment, loan costs, and cash to close. Lenders must provide the CD at least three business days before closing. Review it carefully against your Loan Estimate and question any charges that increased significantly. Common closing cost changes that require a new three-day waiting period: a change in APR greater than 0.125%, a change in the loan product, or the addition of a prepayment penalty.
What is a Loan Estimate?
A Loan Estimate (LE) is a standardized three-page disclosure the lender must provide within three business days of receiving your complete loan application. It shows your estimated interest rate, monthly payment, and closing costs — formatted so you can compare it directly against estimates from other lenders. Some fees on the LE are fixed (can't increase at closing); others can increase by up to 10%; and some (like prepaid interest and homeowner's insurance) can change without limit. The LE is a good-faith estimate — shop at least two or three lenders and compare LEs side by side.
07 / 07
Commercial & Investment Loans
How is a commercial mortgage different from a residential one?
Commercial mortgages finance income-producing properties — office, retail, industrial, multifamily (5+ units), mixed-use, and special-use properties. Key differences: underwriting is primarily based on the property's income (DSCR) and the borrower's business financials — not just personal W-2 income. Down payments are higher (20–35%). Loan terms are shorter (5, 7, or 10 years with a 20–25 year amortization, often with a balloon payment). Rates are higher. Recourse vs. non-recourse terms matter. And the due diligence process — environmental reports, rent rolls, operating statements — is more intensive than residential.
What is the minimum down payment for commercial property?
Commercial lenders typically require 20–35% down depending on property type and loan program. Owner-occupied commercial properties (where you operate your business) can qualify for SBA 504 loans with as little as 10% down. Pure investment properties generally require 25–30% down. Hospitality, special-use (gas stations, car washes), and construction projects often require 30–35%. Strong sponsors with significant net worth and liquidity can sometimes negotiate lower down payments on stabilized properties with clean operating histories.
What is a DSCR loan and how is it calculated?
DSCR stands for Debt Service Coverage Ratio — the ratio of a property's net operating income to its total debt service. Formula: NOI ÷ Annual Debt Service = DSCR. A DSCR of 1.25 means the property generates 25% more income than it costs to service the debt. Most commercial lenders require a minimum DSCR of 1.20–1.25. Below 1.0 means the property can't cover its own mortgage. For residential investment properties (1–4 units), DSCR loans are available based solely on the gross rent divided by the total monthly payment — no personal income verification required.
What is an SBA loan and what properties does it finance?
The Small Business Administration offers two real estate loan programs: SBA 7(a) — up to $5M, can be used for owner-occupied commercial property, business acquisition, equipment, and working capital. Down payment 10–15%. SBA 504 — specifically for owner-occupied commercial real estate and major equipment. Up to $5.5M from the SBA (lender provides a matching piece). Down payment as low as 10%. SBA loans have longer terms (10–25 years), lower down payments, and fully amortizing structures — but require the business to occupy at least 51% of the property and meet SBA size standards.
What is a commercial bridge loan?
A commercial bridge loan is short-term financing (typically 6–36 months) used to bridge the gap between a property's current state and its stabilized value. Common use cases: acquiring a value-add property that doesn't meet permanent lender DSCR requirements yet, funding a renovation before refinancing into permanent debt, or closing quickly when permanent financing isn't ready. Bridge loans carry higher rates (typically prime + 2–5%) and usually require an exit strategy — either a sale or a refinance into permanent financing within the term.
What is a cap rate and how does it affect commercial lending?
Capitalization rate (cap rate) is the ratio of a property's net operating income to its purchase price — a measure of return independent of financing. Formula: NOI ÷ Purchase Price = Cap Rate. Commercial lenders use cap rates to assess whether a property is priced appropriately relative to market. If a lender's underwriting cap rate is higher than the purchase price cap rate, the property may not appraise at the purchase price, reducing the loan amount. Understanding the relationship between going-in cap rate, lender underwriting cap, and debt yield is essential when structuring commercial acquisitions.
How do I finance a short-term rental (Airbnb/VRBO) property?
Financing for short-term rentals (STRs) depends on the property type and your strategy. Primary residence: you can use conventional financing if you occupy the property and rent it part-time. Investment property: conventional Fannie/Freddie guidelines don't count Airbnb income for qualifying, but DSCR lenders do — using actual or projected short-term rental income from AirDNA or comparable rental histories. Portfolio lenders also offer STR-friendly programs. Rates are typically 0.5–1% higher than long-term rental investment loans. Some HOA and condo communities prohibit STRs — verify the governing documents before financing.
What is a multifamily loan and how many units trigger commercial underwriting?
Residential mortgage guidelines apply to properties with 1–4 units — these finance under standard Fannie/Freddie or FHA rules. Properties with 5 or more units are classified as commercial multifamily and underwrite differently: income is evaluated via the rent roll and operating statement, not the borrower's personal tax returns alone. Fannie Mae DUS and Freddie Mac Optigo programs finance 5+ unit properties with competitive rates and 75–80% LTV. For smaller community banks and portfolio lenders, terms vary widely. A 5-unit building that looks like a residential duplex on the outside gets very different financing than a 4-unit one.
Still have questions?
Talk to Ryan directly.
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Ryan Solberg · MLO NMLS #1784218 · Mortgageinc NMLS #2028516 · Licensed in Florida · Equal Housing Opportunity