15 Mortgage Questions to Ask Lenders Before Buying a House

Home affordability

Figuring out how much home you can actually afford is one of the biggest steps in the mortgage process. Just because a lender says you qualify for a certain amount doesn’t always mean it actually fits your monthly budget or lifestyle. Asking the right questions about home affordability helps you set a realistic budget before you start looking at homes. Here are the questions you must ask:

How much home can I afford?

Home affordability is pretty self-explanatory. It’s an expression of how much house you can afford to buy and still live comfortably. However, the home a person can afford isn’t cut-and-dried. It varies from buyer to buyer, as everyone’s finances and circumstances are different.

To figure out how much house you can afford, you’re going to have to take a close look at a few different variables.

Income

Income matters when applying for a mortgage because it shows lenders how much money you’re actually bringing in each month. They’ll usually look at things like your salary or hourly pay, overtime, bonuses, self-employment income, rental income, and even investment or retirement income. If you’re applying with a spouse, their earnings are usually included as well since both incomes help shape what you can afford together.

Steady, reliable income can boost your chances of getting approved for a bigger loan, while irregular or hard-to-prove income can hold you back a bit. Lenders use this to get a sense of how stable your finances are and whether you can comfortably handle the payments. At the end of the day, it’s just about making sure the loan you get actually fits what you can afford to pay back.

Debt-to-income ratio

Debt-to-income (DTI) ratio is basically how lenders figure out how much of your monthly income is already going toward debt payments. It helps them see whether adding a mortgage payment on top would still leave you with enough breathing room each month.

If your debts are already taking up a big chunk of your income, it can limit how much you’re able to borrow. On the flip side, lower existing debt can make you look more comfortable financially in a lender’s eyes.

As a general guideline, buyers typically shouldn’t stretch their debt-to-income ratio beyond about 43% when figuring out how much home they can afford. This is the point where lenders usually start seeing risk, so it becomes harder to qualify comfortably. Staying at or below that level helps keep your monthly payments more manageable and within a realistic budget.

Typically, the lower your DTI, the more home you’ll be able to afford when you get a mortgage.

Savings

Most American households keep roughly $8,000 in their bank accounts. If you’re buying a home, you’ll need enough savings for a down payment, closing costs, and financial experts advise that you should also have enough money left over in your savings accounts to cover at least three months of expenses in case of an emergency.

Credit score

Your credit score helps determine whether you qualify for a mortgage and the interest rate you’re offered on your loan. Buyers with excellent credit are offered lower interest rates, which translates to lower mortgage payments each month, while buyers with lower credit scores pay higher rates and will pay more for their mortgages.

What credit score do I need to qualify for a mortgage?

Your credit score reflects how reliably you’ve paid back borrowed money over time, including whether you pay on time and in full. Lenders don’t calculate it themselves. Instead, they rely on data collected by three main credit bureaus: Equifax, Experian, and TransUnion. These bureaus gather your credit activity and compile it into a report that lenders use to assess your creditworthiness when you apply for loans or credit.

Lenders will typically look at your FICO score, which takes the credit information from the three credit bureaus and assigns you a numeric credit score from 300 to 850. The higher your score, the better chances you’ll have at being approved for a mortgage with lower interest rates.

The minimum credit score you need to be approved for a mortgage will depend on what kind of loan you are applying for. FHA loans allow credit scores as low as 580 (or even 500 if you’re putting down 10% or more), and conventional loans allow credit scores as low as 620. 

Los Angeles-based top-selling agent Alison Van Wig, who works with 72% more single-family homes in her area than average agents, strongly recommends that clients reach out to an agent up to an entire year before deciding to buy a house. 

“Sometimes, the longer you wait to call us, the harder it’s going to be to get you into a home when you are ready.” She advises that the sooner you contact an agent, the sooner they can connect you with a qualified loan officer who can review your financial situation. That loan officer can also guide you on steps to save for a down payment or address credit issues, which may take up to a year and a half to fix.

You’ll want to use the official site for requesting your credit reports from the bureaus. 

“Look for anything that looks suspicious or fraudulent. If you catch it early, it can be cleaned up quickly. Sometimes you can negotiate your debt and offer to pay a portion of it in exchange for a letter stating the debt has been paid in full,” Van Wig shares.

How much should I save for a down payment?

A common myth people believe is that you absolutely have to have a 20% down payment when buying a house. That’s a big amount of money, and for most people, it would take ages to save that much.

Fortunately, you don’t have to put down 20%. The National Association of Realtors Profile of Home Buyers and Sellers found that the median down payment among all buyers was 19% in 2025, with first-time buyers putting down about 10%. Repeat buyers typically have a larger down payment, around 23%.

If you’re having a difficult time saving for a down payment, there are quite a few down payment assistance programs worth looking into. Some down payment grants are matching programs, which means the grant will match the down payment amount you’ve already got saved.

»Learn more: Not sure how much you should be putting down on a home? Use the Down Payment Calculator to quickly estimate what makes sense for your budget and homebuying goals.

Mortgage basics

There’s more to a mortgage than just picking a loan and signing on the dotted line. Behind every option, there are different mortgage types and a mix of costs that can affect what you actually pay over time. This section breaks down the questions you need to ask about mortgage basics so you can understand what’s included in your home loan and how each piece fits together.

What type of mortgage should I apply for?

Mortgages generally fall into a few main categories, including conventional loans, government-backed loans, and jumbo loans. Each type comes with different requirements for credit, down payment, and eligibility, depending on your financial situation and the property you’re buying. Understanding these categories can help you narrow down which mortgage options you’re most likely to qualify for before you apply.

Conventional loan

To get a conventional loan, you’ll need to go to a private financial institution, which includes banks, credit unions, and mortgage companies. The loans offered by these institutions aren’t backed by a government agency. To qualify for a conventional loan, borrowers need to have a minimum credit score in the 620 to 640 range. 

Conforming loan

A conforming loan is a loan that cannot exceed a certain dollar limit, which is set by the Federal Housing Finance Agency (FHFA). This dollar limit is based on the FHFA’s house price index, which varies from county to county. You can learn what that limit is in your county by using the FHFA’s interactive map. 

Most counties in the U.S. have a conforming lending limit of $832,750, though it can be higher in some of the priciest housing markets. The upper limit is $1,249,125 for these more expensive markets.

To qualify for a conforming loan, the loan must be under the dollar limit set by the FHFA, but you will also need at least a 620 credit score, a DTI ratio below 50%, and at least a 3% down payment (for qualifying first-time buyers).

USDA loan

A government-backed USDA (United States Department of Agriculture) loan is specifically geared toward those interested in buying property in an eligible rural area. 

One of the largest draws about this type of loan is that qualifying buyers do not need a down payment. To qualify for a USDA loan, lenders typically require borrowers to have a 640 credit score, but the USDA itself doesn’t designate a minimum credit score. Borrowers must show they’ve been with the same employer or in the same industry for two years, and they cannot earn more than the income threshold for their region. 

A borrower going for a USDA loan must follow the USDA’s housing-to-income and DTI ratios to the T. Mortgage payments, which include homeowner’s insurance, taxes, loan interest, and loan principal, cannot exceed 29% of the household’s monthly income. Moreover, their total debt, which may include car payments, credit card debt, student loans, and medical debt, cannot exceed 41% of the household’s monthly income. 

Also, it’s important to know that although you may not need to put any money down for a USDA loan, you are expected to be able to pay closing costs. 

FHA loan

An FHA (Federal Housing Administration) loan is another government-backed loan that can offer access to more borrowers. To qualify for this program, you’ll need a 580 credit score and a down payment of at least 3.5%. However, if you have a credit score lower than 580, lenders will still consider lending to you if you have at least a 10% down payment. 

VA loan

A VA (Veteran Affairs) loan is a loan specifically for veterans that is guaranteed by the VA. The VA doesn’t have a designated minimum credit score, but the average lender will require, at minimum, a 620 credit score. Borrowers aren’t required to have a down payment, nor will they be required to have mortgage insurance on the loan. 

Jumbo loan

A jumbo mortgage is a mortgage designed for homes that cost more than the conforming loan limits set by the federal government. Because these loans involve larger borrowing amounts, lenders typically have stricter qualification requirements. Most lenders look for a credit score of at least 700, though some prefer scores of 720 or higher.

Borrowers also generally need a low debt-to-income ratio, substantial cash reserves, and a down payment that often ranges from 10% to 20% or more. Jumbo loans can be a good option for buyers shopping in high-cost markets or purchasing luxury properties, provided they have strong finances to support the larger loan.

What’s included in my monthly mortgage payment?

Your monthly mortgage payment isn’t just paying back the money that you borrowed. It’s made up of several different components, namely:

Will I need mortgage insurance?

With a conventional loan, you’ll usually have to pay for mortgage insurance if you put down less than 20% on the home. The good news is that this isn’t always unavoidable. Shopping around and comparing lenders may uncover options like lender-paid mortgage insurance, a piggyback second loan, or down payment assistance programs that can help reduce or even eliminate this extra cost if you qualify.

Fortunately, even if the best loan for you includes MI, you can remove the mortgage insurance from a conventional loan once you’ve accrued 20% equity in your house, meaning you have an 80% loan-to-value ratio.

»Learn more: PMI can have a bigger impact on your housing costs than you might expect. Try the PMI Calculator to see what you could pay and how different down payments affect the numbers.

What is a mortgage rate, and how does it affect my loan?

Your mortgage rate, also called your interest rate, is what your lender charges you for borrowing money to buy a home. It’s an extra cost on top of the amount you borrowed, so you’ll repay both the loan principal and the interest over the life of the mortgage.

Should I get a fixed-rate or adjustable-rate mortgage?

When mortgage rates are low, your best bet is to get a fixed-rate mortgage over an adjustable-rate mortgage. 

A fixed-rate mortgage has an interest rate that stays the same for the entire loan term. Because the rate doesn’t change, your principal and interest payments remain predictable from month to month. Keep in mind, though, that your total mortgage payment can still go up over time if property taxes or homeowners insurance premiums increase.

With an adjustable-rate mortgage (ARM), you get a lower introductory interest rate for the first few years of the loan. Once that introductory period ends, your interest rate can go up or down based on current market conditions. That means your monthly payment could become more expensive or cheaper, depending on where interest rates are when the adjustment kicks in.

Should I lock in my rate (if so, when)?

Yes, you should lock in your rate, and as soon as possible.

“If you have a good rate, don’t gamble,” Allison advises. 

If mortgage rates are already low, waiting around for them to drop even further can be risky. There’s no guarantee rates will fall before you’re ready to buy, and they could just as easily go up. If you’re worried about locking in too soon, ask your lender whether they offer a float-down option. This lets you lower your rate once if rates dip again after you’ve locked it in but before closing, although some lenders charge an extra fee for the feature.

When is the best time to get preapproved?

The best time to get preapproved for a mortgage is before you begin the house hunt. When you have that preapproval letter, you know what your budget is so you aren’t falling in love with houses that you cannot afford.

Should I consider getting points on my loan?

When a loan originator talks about “points on your loan,” they’re referring to discount points, which can reduce your loan interest rate. One discount point usually costs roughly 1% of the loan amount (the total amount of money you’re borrowing) and decreases your interest rate by about 0.25%.

“What this does is, you pay extra in closing costs to get a lower rate, which gives you a lower monthly payment,” Rittman explains.

“The average homeowner keeps their mortgage for about seven years. So if they pay $10,000 in points, their monthly savings might be $100. They will have to be in the house for 100 months to recoup that difference.”

What will I pay in closing costs?

Closing costs are fees paid at the end of the homebuying process to wrap up the purchase. They can range between 2% and 5% of the loan amount. As a buyer, you’ll be expected to pay:

• Lender and broker fees, which cover credit report fees, application fees, and loan origination fees. They’ll typically add up to no more than 3% of the loan amount.
• Third-party fees, which cover taxes, title, escrow, recording fees, and homeowners insurance.

You can estimate how much you may have to pay in closing costs by using our closing cost calculator.

How long will it take to close on a home?

From the time your offer is accepted, closing typically takes four weeks. During this time, there will be a number of tasks to complete, such as the home inspection, home appraisal, negotiations, and the final walkthrough.

Even when everything seems on track, closing doesn’t always happen on the original date. A home sale involves multiple people, documents, and approvals, so even one hiccup can slow things down. Here are some common reasons a closing may be delayed:

Loan management

Once you have a mortgage, it’s not just about making monthly payments. It’s about knowing how to better handle the loan over time. This section breaks down those loan management basics so you can make smarter decisions long after you’ve closed on your home.

Can I pay my mortgage off early?

Yes, you can. This lets you save a significant amount in interest over the life of the loan. It can also free up your monthly budget sooner, giving you more financial flexibility for other goals.

Moreover, many standard loans don’t come with prepayment penalties. Rittman explains under what circumstances there would be prepayment penalties: “A non-QM (qualified mortgage) loan is a little different because they are offered by private groups and investors who have different underwriting criteria.” These types of loans are often used in situations where borrowers don’t fit traditional lending requirements.

For example, he says, someone who is self-employed might not want to provide full income documentation, but a lender could still approve them if they have strong credit and a healthy savings account. In those cases, the tradeoff for more flexible approval terms can sometimes include restrictions like prepayment penalties.

When can I consider refinancing my mortgage?

If you’ve made six months’ worth of mortgage payments, you can start looking into refinancing. However, some lenders will require you to pay your mortgage for a year or more before they’ll consider refinancing your loan.

Ideally, you’ll want to refinance when interest rates are significantly lower than when you purchased your home. 

Let’s say you bought a house years ago with a 6% interest rate. However, if interest rates fall below 3%, that would be a great time to refinance.

You could also refinance if you need to access the equity in your home and use that money to pay for home improvements, pay off debt, or even expand your real estate empire with rental properties. 

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What if I want to buy my next home before I sell the current one?

Many homeowners look into a cash-out refinance so they can use their home equity to buy their next property. It can feel like a smart way to unlock funds, especially when you’re ready to move, but your current home still holds most of your equity. But what if you find your next home before your current one sells? This is where programs designed to help you buy before you sell, like HomeLight, come in. 

HomeLight’s Buy Before You Sell solution lets you access your equity upfront so you can make a non-contingent offer on your next home. First, you get approved based on your current home’s equity, then you use that equity to help secure and purchase your next property. Once you’ve moved into your new home, you list and sell your original property without the pressure of coordinating both closings at the same time. 

This gives you more flexibility to focus on getting the right price for your home instead of rushing the sale. Watch the video below to learn more about how it works:

Ask good questions, buy with confidence

Asking the right mortgage questions can make a huge difference in how confident you feel throughout the homebuying process. From understanding what you can afford to knowing how loan terms and costs work, these conversations help remove a lot of the guesswork. The more clarity you get upfront, the easier it is to make decisions that actually fit your financial situation. 

And while lenders can guide you through the financing side, having the right support on the real estate side is just as important. To move forward with more confidence, partner with a trusted agent through HomeLight and get expert help every step of the way.

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