CONVENTIONAL
Eligibility and pricing can depend on the borrower, property, loan size, credit, income, assets, occupancy, and term. Some options allow lower down payments and may require private mortgage insurance.
HOME FINANCING
Understand the payment before you shop.
Compare the full monthly payment, cash to close, loan terms, taxes, insurance, HOA costs, maintenance, and reserves before deciding what fits.
START A FINANCING CONVERSATIONUnderstand the main financing paths.
The program name is only the start. Compare written terms using the same purchase price, down payment, timeline, and occupancy plan.
GOVERNMENT-BACKED OPTIONS
These programs may offer different down-payment, mortgage-insurance, fee, occupancy, and property requirements to eligible borrowers. Terms vary by program and lender.
SERVICE OR ELIGIBILITY-BASED OPTIONS
Some programs are available based on military service, public service, first-time-buyer status, or other qualifying circumstances. Eligibility, cost, protections, and property rules vary by program and lender.
RURAL AND LOCAL ASSISTANCE
Some loans and assistance programs depend on income, location, property, or occupancy. Assistance may be structured as a grant, forgivable or deferred loan, or repayable second mortgage, so review every condition.
Down payment is only one part of the cash plan.
Plan for the down payment, closing costs, prepaid taxes and insurance, deposits, moving expenses, repairs, and reserves. Putting more down can reduce the loan and some costs, but it should not leave you without a cushion.
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| APPROACH | POSSIBLE BENEFIT | QUESTION TO ASK |
|---|---|---|
| Lower down payment | Preserves cash for moving, closing costs, repairs, and emergency reserves | Which costs are required before closing, and what is the minimum qualifying down payment? |
| Moderate down payment | Can reduce loan size and lower total borrowing cost while maintaining some reserves | Where do rates, insurance, and fees change as the down payment increases? |
| 20 percent or more | May avoid borrower-paid private mortgage insurance on many conventional mortgages | What is the full monthly payment impact and what reserves remain after closing? |
| Low- or no-down-payment option | Can improve access for some buyers when eligibility is strong | How are monthly payments, program fees, reserve requirements, and repayment obligations handled? |
| Assistance programs | May help with down payment or closing costs through specific qualifying programs | Is the assistance a grant, forgivable loan, deferred-payment loan, repayable loan, or another structure, and what events trigger repayment? |
Mortgage insurance and program fees are not all the same.
Mortgage insurance generally protects the lender or program if the borrower defaults. It does not protect the homeowner from missed payments or foreclosure. Cost, duration, and cancellation rules depend on the loan.
Conventional private mortgage insurance
Many borrower-paid PMI loans have cancellation or termination rules tied to the scheduled loan balance, the property’s original value, payment status, and other conditions. Government-insured mortgages, lender-paid mortgage insurance, and other structures follow different rules. Ask the lender and servicer which rules apply.
Insured-loan costs
Some government-backed loans have upfront or recurring insurance, guarantee, or funding charges. Their amount, duration, and cancellation rules vary by program and loan terms, so compare the written disclosures.
One-time and recurring fees
Funding, guarantee, mortgage-insurance, and related program charges may be paid upfront, financed, or collected over time. Ask the lender to identify each charge and explain how it affects cash to close and the total loan cost.
Rates, fees, and credit all matter.
A quoted rate is only one part of the offer. Pricing can change with market conditions, lock status, points, credits, loan structure, and lender charges.
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Before you apply
- Review your credit reports early. If you find information you believe is inaccurate, dispute it with the credit-reporting company and the business that furnished it.
- Gather current income, asset, debt, and identification documents.
- Make required payments on time and ask the lender how changes in balances, accounts, or credit inquiries may affect the application.
- Talk with the lender before opening or closing accounts, taking on new debt, co-signing, or making a large purchase during the loan process.
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While the loan is active
- Avoid purchases or new debt that could change qualification during underwriting.
- Keep clear records for transfers, deposits, and movement between accounts.
- Report employment, income, debt, credit, or asset changes immediately.
- Respond to document requests through closing, even after an earlier approval.
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When comparing lenders
- Compare official Loan Estimates for the same loan amount, loan type, term, down payment, points or credits, and rate-lock status, issued as close together as practical.
- Confirm whether each rate is locked, then compare lock length, APR, points, credits, lender charges, estimated payment, and cash to close.
- Compare the full monthly housing obligation, including principal, interest, mortgage insurance, property taxes, homeowners insurance, and HOA dues when applicable.
- Ask what changes if closing is delayed or the rate lock needs an extension.
Fixed-rate and adjustable-rate mortgages solve different problems.
Read the Loan Estimate and ARM disclosures. The initial payment is only part of the comparison.
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| COMPARISON POINT | FIXED-RATE | ADJUSTABLE-RATE |
|---|---|---|
| Rate structure | The interest rate stays fixed for the full loan term | The initial interest rate is typically fixed for a stated period; after that, it may adjust at intervals defined in the loan terms |
| Payment behavior | Monthly principal and interest is predictable | Principal and interest payments may rise or fall after adjustments, subject to the index, margin, caps, floor, and other terms |
| Other housing costs | Taxes, insurance, and HOA costs can still change | Taxes, insurance, HOA costs, and rate changes can move separately |
| Planning view | Principal-and-interest budgeting does not depend on future rate adjustments | Budget against the maximum possible payment, not only the initial payment |
| Terms to compare | Compare rate, points, term, and total cost | Compare the index, margin, adjustment timing, initial and lifetime caps, and maximum possible payment |
Debt-to-income ratio is one part of approval and one part of affordability.
Debt-to-income ratio, or DTI, compares required monthly debt payments with gross monthly income. Lenders use program rules and their own underwriting standards. There is no single maximum that applies to every borrower or loan.
TOTAL REQUIRED MONTHLY DEBT PAYMENTS ÷ GROSS MONTHLY INCOME = DTI
This is only an illustration. The lender decides which income can be counted, which debts must be included, and how taxes, insurance, HOA dues, mortgage insurance, alimony, child support, or other obligations are treated.
- Ask what income the lender will count and what debts are included.
- Measure qualification against what you can actually afford after the move.
- Keep reserves for taxes, repairs, utilities, and any changes in insurance.
- Talk with your lender before changing debt structure.
- Gross monthly income
- $6,000
- Proposed housing payment
- $1,600
- Other required monthly debt
- $400
- Total monthly debt used in example
- $2,000
- Example DTI
- 33.3 percent
Common financing questions.
What is the difference between pre-qualification and pre-approval?
Lenders use these terms differently. Either letter may be based on preliminary information, verified documents, a credit review, or additional underwriting, and neither is final loan approval. Ask what the lender reviewed, which conditions remain, and how long the letter is valid.
Can I qualify with a lower credit score?
Possibly. Loan-program guidance and lender requirements are not always the same, and credit is only one part of underwriting. A lender can explain available paths, pricing, required reserves, and whether improving the file first may create a better result.
What if I am self-employed or my income changes?
Financing may still be available, but the lender may need additional history and documentation to determine stable qualifying income. Tax returns, business records, bank statements, contracts, or other records may be requested. Ask before changing how income is paid or documented.
What if I have recent late payments or another major credit event?
The answer depends on event type, timing, lender rules, and the rest of your file. Ask your lender to review your full report and map what can improve over time.
How much should I borrow?
Approval and comfort are different numbers. Build a budget with the complete housing payment, utilities, maintenance, HOA costs, insurance changes, transportation, savings, and an emergency reserve. Choose the number that supports your life, not simply the largest approval.
When should I lock the rate?
A rate lock generally covers a defined period and set of loan assumptions. Ask for the terms in writing, including cost, expiration, extensions, whether you can benefit if rates fall, and what changes can invalidate the lock. The right timing depends on the expected closing date and your risk tolerance.
Get clear on the numbers before the search gets serious.
Ethos can help you connect with a qualified mortgage professional, understand how financing affects the search, and prepare better questions. You choose the lender and loan.