Mortgage FAQs: The 15 Most Asked Questions Answered (2026 Guide)

Buying a home is one of the biggest financial decisions most people will ever make, and securing a mortgage is at the heart of that process. Whether you’re a first-time homebuyer or refinancing an existing loan, the mortgage landscape can feel overwhelming. Questions about credit scores, down payments, interest rates, and hidden fees pop up constantly.

In this comprehensive guide, we’ll tackle the 15 most frequently asked questions about mortgages, based on common inquiries from borrowers. We’ll provide clear, up-to-date answers for 2025, including insights into current market conditions where rates hover in the mid-6% range for 30-year fixed loans. By the end, you’ll feel more confident navigating the mortgage process.

1. How Much House Can I Afford?

This is the top question for most buyers. Lenders use your debt-to-income (DTI) ratio—typically your total monthly debts divided by gross monthly income—to determine affordability. A common benchmark is a DTI under 43%, though many lenders prefer 36% or lower for comfort.

In 2025, with median home prices around $415,000 and average 30-year rates near 6.8-7%, experts recommend your housing payment (principal, interest, taxes, insurance—PITI) shouldn’t exceed 28-30% of your gross income. Use online calculators, but get preapproved for an accurate picture. Preapproval also strengthens your offers in a competitive market.

→ Use our mortgage affordability calculator

2. What Credit Score Do I Need to Get a Mortgage?

Credit scores heavily influence approval and rates. Minimums vary by loan type:

• Conventional loans: 620 (ideally 740+ for best rates)
• FHA loans: 580 (or 500 with 10% down)
• VA/USDA loans: No strict minimum, but often 620+

In 2025, a score above 760 can secure the lowest rates, potentially saving thousands over the loan’s life. Check your credit early—errors are common—and aim to improve it by paying down debt and avoiding new inquiries.

3. How Much Down Payment Do I Need?

The myth of needing a 20% down payment persists, but it’s not always true. Options in 2025 include:

• 3-5% down for conventional first-time buyer programs
• 3.5% for FHA loans
• 0% for VA or USDA loans (for eligible borrowers)

Putting down 20% avoids private mortgage insurance (PMI), which adds $100-300+ monthly on average loans. Gift funds from family are often allowed with proper documentation.

4. What Is the Difference Between Pre-Qualification and Pre-Approval?

Pre-qualification is a quick, informal estimate based on self-reported info—no credit check required. Pre-approval involves a full application, credit pull, and document verification, giving you a conditional commitment letter.

Sellers prefer pre-approval as it shows you’re serious. In hot markets, it’s essential—it can make your offer stand out like cash buyers.

5. What Types of Mortgages Are Available?

Common options:

• Fixed-rate (30-year most popular): Predictable payments; rates locked for the full term.
• Adjustable-rate (ARM): Lower initial rate (e.g., 5/1 ARM fixed for 5 years), then adjusts—risky if rates rise.
• FHA: Low down payment, forgiving credit.
• VA: No down payment for veterans/military.
• Jumbo: For loans over $832,750 (2026 conforming limit in most areas).

Choose based on how long you plan to stay and risk tolerance.

6. What’s the Difference Between Interest Rate and APR?

The interest rate is the cost of borrowing the principal. APR (Annual Percentage Rate) includes the rate plus fees (origination, points, etc.), giving a fuller cost picture.

Always compare APRs when shopping lenders, but remember it assumes you keep the loan full-term. For short-term stays, focus more on the rate and upfront fees.

7. How Do Mortgage Rates Work, and What Impacts Them?

Rates fluctuate daily based on economic factors, inflation, Fed policy, and bond markets. In late 2025, after Fed cuts, 30-year fixed rates are in the 6.5-7% range—down from 2024 peaks but higher than pre-2022 lows.

Your personal rate depends on credit, down payment, loan type, and points (prepaid interest to lower the rate). Lock your rate early to protect against rises.

8. Should I Buy Mortgage Points?

Points (1 point = 1% of loan amount) lower your rate by about 0.25% each. It makes sense if you plan to stay 5+ years—the “break-even” period is typically 3-5 years.

In a high-rate environment like 2025, buying points can save significantly long-term, but crunch the numbers with your lender.

9. What Is Private Mortgage Insurance (PMI), and How Do I Avoid It?

PMI protects the lender if you default, required on conventional loans with <20% down. It costs 0.5-1% of the loan annually (e.g., $100-200/month on a $300,000 loan).

Avoid it with 20% down, or choose FHA (has its own MIP) or government-backed loans. You can request PMI removal once you reach 20% equity.

10. What Closing Costs Should I Expect?

Typically closing costs are 1-2% of the home price ($6,000-15,000 on a $300,000 home). Includes appraisal ($400-600), title insurance, origination fees, and prepaid taxes/insurance.

Ask for a Loan Estimate form within 3 days of applying—it’s standardized for easy comparison. Some costs are negotiable; sellers may cover part in buyer’s markets.

11. How Long Does the Mortgage Process Take?

From application to closing: 30-45 days on average in 2025, though it can stretch to 60+ with appraisals or underwriting delays.

Pre-approval speeds things up. Stay responsive with documents to avoid holdups.

12. What Documents Will I Need?

Common document requirements:

• Pay stubs (2 months)
• W-2s/tax returns (2 years)
• Bank statements (2-3 months)
• ID, asset statements, gift letters if applicable

Self-employed? Expect profit/loss statements and 1099s. Organize early—lenders verify everything.

13. Can I Get a Mortgage with Bad Credit or Past Issues?

Yes! FHA allows scores as low as 580, and some lenders offer manual underwriting for unique situations (e.g., recent bankruptcy—wait periods apply: 2-4 years post-discharge).

Non-QM loans exist for self-employed or credit-challenged borrowers, though rates are higher.

14. Is Now a Good Time to Buy or Should I Wait for Lower Rates?

Timing the market is impossible—no one has a crystal ball. In 2025, rates have eased slightly, but waiting risks higher home prices.

Focus on affordability: If you can comfortably pay and plan to stay 5+ years, it’s often a good time. “Marry the house, date the rate”—refinance later if rates drop.

15. What Happens If I Can’t Make Payments?

Contact your lender immediately—options include forbearance, loan modification, or repayment plans. As a last resort, selling or deed-in-lieu avoids foreclosure’s severe credit hit.

Government programs like those from the CFPB can help struggling borrowers.

Final Thoughts: Empower Yourself in the Mortgage Process

Taking out a mortgage doesn’t have to be intimidating. Shop at least 1-3 lenders, ask these questions upfront, and work with a trusted loan officer. In 2025, with stabilizing rates and more buyer-friendly programs, opportunities abound—especially for first-timers.

Remember: The best mortgage fits your life, not just the lowest rate. Get preapproved today, and turn those homeownership dreams into reality. If rates fall further (many forecast mid-6% by year-end), refinancing is always an option.