Frequently Asked Questions About Mortgage Loans

Buying or refinancing a home involves many moving parts. Below are answers to some of the most common questions we receive from homebuyers, investors, and second-home clients.

If you don’t see your question here, feel free to reach out — we’re always happy to walk through your specific situation.

Getting Started

How much do I need for a down payment?

Down payment requirements vary depending on the loan program, property type, and occupancy.

Some common examples include:

• FHA loans: 3.5% down

• VA loans: 0% down (for eligible veterans)

• USDA loans: 0% down (in eligible rural areas)

• Conventional loans: As little as 3%–5% down for primary residences

• Second/Vacation homes: Often as low as 10%

• Investment properties: Typically 15%–25% down, depending on the scenario

Other factors — such as loan limits, property type, and overall financial profile — can also affect the required down payment.

The right structure depends on your goals, not just the minimum requirement.

What credit score do I need to qualify?

Credit score requirements vary by loan type. Most lenders use the lower of each borrower’s middle credit score from the three major credit bureaus.

FHA loans are generally more flexible with lower scores, often down to 580 depending on overall profile. Conventional loans generally go down to 620 but use tiered pricing that rewards stronger credit profiles with better terms.

Your credit score can impact:

• Interest rate

• Mortgage insurance costs

• Overall loan eligibility

Every borrower’s situation is different. Rather than focusing on a single number, it’s more important to understand how your full financial profile fits into available loan options.

When should I get pre-approved?

Many home buyers begin shopping before speaking with a lender. It is best to speak to a loan officer before shopping for homes.

Pre-approval is not only about seeing if you qualify or for how much. Often the bigger benefit is learning the real costs of a home purchase, how much the payment will be, what down payment is required, and closing costs.

A strong pre-approval:

• Provides you detailed information on costs, payments and cash requirements.

• Clarifies your true budget

• Identifies any issues early, and gives you a road map for any future purchase

• Strengthens your position when submitting an offer

In competitive or vacation-oriented markets, a fully documented and well-structured pre-approval can make a meaningful difference in how your offer is received.

Rates & Costs

What is APR?

APR (Annual Percentage Rate) is a government-required calculation intended to help consumers compare loan offers.

It is not the same as your interest rate.

You can read a detailed explanation here:
APR Explained: What Annual Percentage Rate Means on a Mortgage

What are discount points?

A discount point is a fee that equals 1% of the loan amount, and is used to “buy” a lower interest rate.

Paying points up front allows a borrower to secure a lower interest rate for the life of the loan.

These points can range from small amounts like .125% or .250% of the loan amount, up to 2 or 3%.

There is no set relationship between points and interest rate, such as paying 1 point lowers the rate by 1%. Rather, it varies widely between programs, daily markets and scenarios.

Whether paying points makes sense depends on:

• How long you expect to keep the loan

• The break-even timeline (will you save enough in monthly interest payments to recover the up front cost?)

• Your available cash reserves

In many cases, a careful break-even analysis is more important than simply choosing the lowest rate at any cost.

How do I know which rate option makes the most sense?

Choosing between rate options involves more than comparing numbers.

Important considerations include:

• How long you realistically expect to keep the property or loan

• Whether you anticipate refinancing

• The break-even timeline for paying points

• Your cash flow and liquidity priorities

A lower rate is not always better if it requires costs you may not recover.

The best option is the one that aligns with your financial timeline and overall strategy.

Loan Types & Property Questions

Can I use FHA for a 2–4 unit property?

Yes — FHA allows financing for 2–4 unit properties, provided the borrower occupies one of the units as a primary residence.

3- and 4-unit properties have additional qualifying guidelines and documentation requirements.

Loan limits vary by county and by number of units.

You can look up current limits here:
2026 FHA and Conventional Maximum Loan Limits

How do loan limits work?

Loan limits determine the maximum loan amount allowed under certain programs.

They vary by:

• County

• Loan program (FHA vs Conventional)

• Number of units (1–4)

Higher-cost areas may have higher limits.

You can search current FHA and Conventional limits by county here:
2026 FHA and Conventional Maximum Loan Limits

Are second homes treated differently than primary residences?

Yes.

Second (vacation) homes typically have:

• Higher down payment requirements

• Slightly different interest rate structures

• Specific occupancy rules

• Documentation confirming the property is not an investment or rental property

Understanding the occupancy classification is important, as it affects both qualification and pricing.

Can I buy a vacation home in another state?

Yes.

Many buyers purchase second homes in a different state from where they currently live. There are no geographic restrictions on where you may purchase a second home, provided the property meets occupancy guidelines and is not intended as an investment rental.

Underwriters evaluate each scenario separately, but they do not restrict vacation home purchases based on distance.

Process & Expectations

How long does the mortgage process take?

The standard mortgage process takes 30 days or less, though timelines can vary based on each transaction.

Lenders adapt and do their best to finalize loans in time for scheduled closing dates on a purchase contract.

In some cases, transactions can close in three weeks or less, depending on documentation readiness and appraisal timelines.

Being proactive with documentation and communication helps keep the process on track.

What can delay a loan approval?

Common causes of delay include:

• Missing or incomplete documentation. The single best thing a borrower can do to expedite the loan process is to respond quickly providing requested documentation. Documentation requests may feel extensive, but lenders must adhere to underwriting guidelines and regulatory requirements.

• Large or unexplained bank deposits

• Employment changes or verification issues

• Appraisal issues

• Property condition concerns

Many delays can be avoided by addressing potential concerns early in the process.

Should I shop multiple lenders?

Choosing the right lender matters — not just for rates, but for guidance, structure, and execution.

When comparing, be sure to compare the following:

• Full cost structure, not just rate. Points are often quoted for marketing purposes.

• Loan programs

• Service level and responsiveness, particularly when contractual deadlines are involved.

• Responsiveness and clarity

Be careful not to base your decision on a quoted rate or APR without understanding the full cost structure and service considerations.