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FAQ
Frequently Asked Questions
Do I need 20% down to buy a home?
While 20% down avoids private mortgage insurance (PMI), many loans allow less: 3.5% for FHA, 3% for some conventional, and 0% for VA/USDA loans. There are also Down Payment Assistance programs that can help with the down payment and closing costs to assist with putting little to zero down.
What are closing costs?
Closing costs are fees paid by the borrower separate from the down payment. These are fees for finalizing the loan, typically 2%–5% of the loan amount, covering appraisal, title insurance, and lender fees.
What is PITI?
Your total monthly payment usually includes Principal, Interest, Taxes, and Insurance (PITI).
What is Debt-to-Income (DTI) ratio?
This measures your monthly debt payments against your gross monthly income. Lenders typically prefer a DTI below 45%, though some allow higher.
What is LTV/CLTV?
LTV, or Loan-to-Value, is the percentage of a home’s value that you’re borrowing with your mortgage, helping lenders assess risk. CLTV, or Combined Loan-to-Value, includes all loans on the property—such as a first mortgage plus any second mortgages or lines of credit—divided by the home’s value, giving a complete picture of your total borrowing relative to the property.
What credit score do I need?
Credit score requirements vary by loan type, but many programs allow scores as low as the 500s. Higher scores typically result in better interest rates and loan terms. There are also programs for individuals with no credit score called non-traditional programs.
What is mortgage insurance?
Mortgage insurance is typically required for loans with lower down payments. It protects the lender in case of default and may be included in your monthly payment.
What is escrow?
There are two main types of escrow: lender escrow, where your lender holds funds for taxes and insurance, and transactional escrow, which holds money and documents during the home sale until all conditions are met.
Duane Vizinau
NMLS#1145158
925-765-9820
dvizinau@homeloanswithduane.com
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