Generally, most homeowners should aim for a mortgage payment at or below 30% of their gross household income. Use our mortgage calculator for an estimate of your total monthly payment. It'll include principal, interest, taxes, and insurance. Your monthly payment may also include Homeowners Association (HOA) fees. HOA fees vary from community to community.

Three main factors come into play when being approved for a mortgage:

• Credit score: Each loan program has a minimum credit score requirement to qualify. Higher credit scores can also make you eligible for lower interest rates.
• Down payment: Some loan programs mandate you to pay a specific amount down.
• Debt-to-income ratio (DTI): Your debts should only account for a certain percentage of your income because you're about to incur a significant and essential debt by purchasing a home.

These are the credit score ranges that may impact your terms and ability to get approved for a mortgage: 

300 to 579 - You may not be eligible for any mortgage option 

580 to 620 - This is generally the mortgage qualification starting point 

720 to 850 - You may qualify for the best rates and terms.

Also known as discount points, mortgage points work as a one-time fee you can pay if you'd like a reduced interest rate.

One mortgage point is equal to one percent of your total loan amount and may drop your interest rate between one-eighth to one-quarter percent lower.

Lenders usually charge their fees, which can vary greatly. For example, one lender may waive a fee but add another. Another lender might quote an interest rate before adding or subtracting discount loan points that can alter the total cost of a mortgage.

It's generally a good time to refinance when mortgage rates are 2% lower than the present rate on your loan. It may be viable even if the interest rate variation is only 1% or less. A reduction can lower your monthly mortgage payments. Example: Your payment, excluding taxes and insurance, would be around $770 on a $100,000 loan at 8.5%; if the rate were reduced to 7.5%, your payment would then be $700, and now you're saving $70 per month. Of course, your savings depend on your income, budget, loan amount, and varying interest rates. Your trusted lender can help you calculate your options.

One mistake that home buyers commonly make is not getting pre-approval. Unfortunately, many home buyers believe that a pre-qualification is the same as a pre-approval. This is the furthest from the truth.

A mortgage pre-qualification can easily be defined as estimating how much a buyer can borrow. However, in many cases, a pre-qualification is only as good as the paper written on it. It's relatively common practice that a mortgage lender who pre-qualifies a buyer asks them for information such as income, debts, and other assets without verifying the data. 

A mortgage pre-approval can be easily defined as a written commitment from a mortgage lender for a buyer. To obtain pre-approval, a buyer must provide the documents needed when formally applying for a mortgage, such as W-2s, pay stubs, and bank statements.

These are some common home loan programs that homebuyers can choose from. We offer all four of these, plus several more options. Let's take a quick look at what makes each unique. 

• Conventional - Lower rates and fees for borrowers making a down payment with good credit
• FHA - Popular with first-time homebuyers due to lower down payment requirements
• USDA - Zero-down options for rural borrowers in small towns
• VA - Competitive rates, zero-down options, and no private mortgage insurance (PMI) needed for veterans, active service members, and their surviving spouses.

Annual Percentage Rate (APR) is the cost of your total loan credit calculated into a yearly interest rate.

• The APR includes loan points and other prepaid finance charges to reflect the actual yield on the loan, which is why the APR is usually higher than a loan interest rate.
• You can compare the APRs on different loan programs to check that you're receiving the most competitive loan.

After applying for a home loan, you can expect a Loan Estimate (mentioned above) from your lender. If you used it for more than one type of loan, an LE would be broken down for each type. The APR for a loan will be listed in the comparison section on page 3 of the LE.

You'll usually immediately notice the dissimilarity between your APR and your loan interest rate. An APR is often higher than an interest rate because of added fees and is essentially a comparison tool. Interest rates, loan fees, and points may be all over the map. But, the APR can always be used to compare multiple loan products accurately. And in cases where an interest rate looks a little too attractive, the APR can tell you the real story.

Yes! Get in touch with your loan officer, and they can lock in the interest rate you were quoted.

• You'll be provided a written Rate and Price Determination Agreement detailing the interest rate, loan terms, and period for the rate lock.
• You could use a rate shield to lock your rate for up to 270 days, with the choice to float down to a lower rate if rates drop within 45 days of closing.

You can use a handy app to get pre-qualified for a mortgage and get a rate quote based on your individual financing needs and specific loan needs. This interest rate quote is customized. So, it's customized for your profile and financial situation. The rates reported in the media are source material. Often, those rates may expire by the time you read about them.

Once you're pre-qualified and receive your rate quote, make sure you get a full, written term sheet that shows the interest rate, loan term, total monthly payment (including insurance and taxes), total cash-to-close, and line item list of closing costs before you lock your rate with a lender.

• The costs paid at closing may include attorney fees, prepaid interest, insurance fees, documentation fees, and more.
• Depending on your mortgage loan type, property location, and the borrower's closing costs may vary.
• Your closing costs are broken down in your Closing Disclosure, provided by your loan officer at least three business days before your expected closing date.

Closing costs may range from 2 to 5 percent of your purchase price. The buyer and the seller are both responsible for paying different expenses at the closing.

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