Question 1

What is the difference between pre-qualification and pre-approval?

Accepted Answer

Pre-qualification is a quick, informal estimate based on figures you tell a loan officer — income, debts, and credit range. It gives you a ballpark loan amount but carries little weight with sellers. Pre-approval is a formal underwriting review: we pull your credit, verify income and assets with actual documentation (pay stubs, W-2s, tax returns, bank statements), and issue a written approval letter for a specific loan amount and program. In Florida’s competitive market, listing agents typically require a full pre-approval letter — not a pre-qualification — before presenting an offer to a seller.

Question 2

How much can I afford to borrow?

Accepted Answer

Most lenders qualify you using a debt-to-income (DTI) ratio between 43% and 50%, depending on the loan program. That means your total monthly debts — including the new mortgage payment (principal, interest, taxes, insurance, HOA), plus car loans, student loans, and minimum credit-card payments — should not exceed roughly 43–50% of your gross monthly income. A practical rule: multiply your gross monthly income by 0.36 to get a conservative maximum housing payment, or 0.43 for an aggressive one. Your actual limit depends on credit score, down payment, and program — FHA and VA loans allow higher DTIs than conventional.

Question 3

What credit score do I need to buy a home?

Accepted Answer

Minimum credit scores vary by program: FHA loans allow scores as low as 580 with 3.5% down (or 500 with 10% down), VA loans generally require 580–620, USDA loans require 640, and conventional loans require 620 minimum (though 660+ is where pricing becomes competitive). Scores of 740 and above unlock the best conventional pricing. Non-QM programs — bank statement, DSCR, ITIN — often accept scores in the 620–680 range. Even if your score is below these thresholds today, targeted credit repair over 3–6 months can meaningfully improve pricing.

Question 4

How much down payment do I really need?

Accepted Answer

The 20% figure is a myth for most borrowers. Actual minimums are: VA loans 0%, USDA loans 0%, FHA loans 3.5%, conventional loans 3% (first-time buyers) or 5% (repeat buyers). Putting less than 20% down on a conventional loan means paying private mortgage insurance (PMI), but PMI is cancellable once you reach 20% equity. Florida also offers down-payment assistance (DPA) programs through Florida Housing that can cover part or all of the down payment for qualifying buyers.

Question 5

What are closing costs and how much should I budget?

Accepted Answer

Closing costs are the fees paid at settlement to finalize your loan and transfer the property. In Florida, plan for 2–5% of the purchase price. They include lender fees (origination, underwriting, appraisal, credit report), title fees (title insurance, title search, settlement fee), Florida-specific taxes (documentary stamp tax, intangible tax), recording fees, and prepaids (homeowners insurance, property tax escrow, per-diem interest). Sellers can contribute to your closing costs — up to 6% on FHA, 4% on VA, and 3–9% on conventional depending on down payment. Ask your loan officer about a lender credit that offsets some closing costs in exchange for a slightly higher rate.

Question 6

What is PMI and when can I remove it?

Accepted Answer

Private Mortgage Insurance (PMI) protects the lender if you default. It is required on most conventional loans when your down payment is less than 20%. PMI costs roughly 0.3%–1.5% of the loan amount annually, added to your monthly payment. You can remove PMI in three ways: (1) request cancellation once your loan balance drops to 80% of the original value based on your payment schedule, (2) reach 78% loan-to-value based on the original amortization — PMI drops automatically, or (3) get a new appraisal showing you have 20% equity from either principal paydown or property appreciation. FHA loans carry a similar charge called MIP, which behaves differently and often requires refinancing to remove.

Question 7

Fixed rate or adjustable rate — which is better?

Accepted Answer

A fixed-rate mortgage locks your interest rate for the life of the loan (typically 15 or 30 years) — payment stability, no surprises. An adjustable-rate mortgage (ARM) has a lower fixed rate for an initial period (5, 7, or 10 years), then adjusts annually based on an index plus margin. ARMs make sense if you know you will sell or refinance before the fixed period ends, or if rates are unusually high and expected to fall. Fixed rates are the right choice for buyers who plan to stay long-term or want budget certainty. In a rising-rate or uncertain-rate environment, fixed usually wins.

Question 8

Should I choose a 15-year or a 30-year mortgage?

Accepted Answer

A 30-year mortgage has a lower monthly payment and gives you flexibility — you can always make extra principal payments to pay off early. A 15-year loan has a materially lower interest rate (typically 0.5%–0.75% less) and builds equity fast, but the monthly payment is roughly 40–50% higher. Choose 15-year if you have strong, stable income, no high-interest debt, and are already funding retirement. Choose 30-year for lower required payments and more monthly flexibility — then add extra principal whenever cash flow allows.

Question 9

How long does the mortgage process take from application to closing?

Accepted Answer

For a purchase, expect 30–45 days from a fully executed contract to closing. Refinances typically run 30–45 days as well. The timeline breaks down roughly: 1–3 days for initial disclosures, 7–14 days for appraisal and title work, 5–10 days for underwriting review, and 3–5 days for the final Closing Disclosure hold period required by federal TRID rules. Delays usually come from missing income documentation, appraisal issues, or last-minute credit changes. Responding to underwriter requests within 24 hours keeps you on schedule.

Question 10

What documents will I need to apply?

Accepted Answer

Standard documentation: last 2 years of W-2s (or 1099s and business tax returns if self-employed), last 2 years of federal tax returns, most recent 30 days of pay stubs, most recent 2 months of bank and investment account statements (all pages), photo ID, and the fully executed purchase contract. Self-employed borrowers add profit-and-loss statements and business bank statements. VA borrowers provide a Certificate of Eligibility (COE). If you have received large deposits, expect to document the source. Our pre-approval checklist walks through every item.

Question 11

Should I get pre-approved before I start house-hunting?

Accepted Answer

Yes — always. A pre-approval letter tells you your exact price range, shows sellers you are a serious buyer, and prevents heartbreak from falling for a home outside your budget. In Florida’s competitive markets, offers without a pre-approval letter are frequently rejected outright, and cash-competing offers often require a fully underwritten pre-approval (sometimes called a TBD or credit-approved letter) that goes further than a standard pre-approval. Get pre-approved before your first showing.

Question 12

Will shopping for a mortgage hurt my credit score?

Accepted Answer

Not meaningfully, if you shop within a short window. Credit-scoring models (FICO and VantageScore) treat all mortgage inquiries within a 14- to 45-day window as a single inquiry. That means you can get quotes from multiple lenders without stacking hard inquiries on your report. The impact of a single mortgage inquiry is typically fewer than 5 points and rebounds within a few months. Not shopping — and paying an extra 0.25% on your rate — costs far more than any small credit hit.

Question 13

What is an escrow account and do I need one?

Accepted Answer

An escrow account is a lender-held account that collects 1/12 of your annual property taxes and homeowners insurance premium each month, then pays those bills on your behalf when due. Escrow is required on FHA, VA, and USDA loans, and on conventional loans with less than 20% down. Above 20% equity you can often waive escrow (Florida allows this) and pay taxes and insurance yourself, though most borrowers keep escrow for budgeting simplicity. Florida property taxes and hurricane-country insurance premiums make monthly escrow payments a significant portion of the mortgage payment — don’t underestimate them.

Question 14

What is a rate lock and when should I lock?

Accepted Answer

A rate lock is a written commitment from the lender to hold your interest rate for a set period — typically 30, 45, or 60 days. Lock once you have a fully executed purchase contract and a reasonable closing date. Locking too early risks the lock expiring before close (extensions cost money); locking too late risks a rate jump. Most locks are free within a standard window; longer locks (60–90 days) may carry a small pricing adjustment. Ask about a float-down option that lets you capture a lower rate if the market drops after you lock.

Question 15

What is an appraisal and what if the home appraises low?

Accepted Answer

An appraisal is an independent, licensed opinion of the property’s market value — required by the lender to confirm the home is worth the loan amount. If it comes in low you have four options: (1) renegotiate the price with the seller down to the appraised value, (2) bring additional cash to cover the gap, (3) request a Reconsideration of Value with new comparable sales, or (4) walk away if your contract includes an appraisal contingency. Low appraisals have become less common as markets have stabilized, but they do happen — always keep an appraisal contingency in your offer unless you’re prepared to cover a shortfall in cash.

Question 16

What is the difference between an appraisal and a home inspection?

Accepted Answer

An appraisal is for the lender — it establishes market value using comparable sales. A home inspection is for the buyer — it evaluates the physical condition of the property (roof, HVAC, plumbing, electrical, foundation, appliances). The appraiser will note obvious safety or livability issues, but they are not inspecting for defects. Never skip a home inspection to win a bidding war — a $500 inspection can prevent a $30,000 surprise. Both are typically ordered in the first 10 days of the contract.

Question 17

Can I buy a home if I have student loans or credit card debt?

Accepted Answer

Yes. What matters is your debt-to-income ratio, not the presence of debt. Lenders count the minimum monthly payment on each debt against your qualifying income. For student loans in deferment, Fannie Mae and FHA use 1% of the balance (or the actual IDR payment, if documented) as the qualifying payment. Paying down high-balance credit cards to under 30% of their limit before applying can boost your credit score meaningfully and lower your DTI. If your DTI is tight, a smaller loan amount, a co-borrower, or an FHA loan (which allows higher DTIs) may still make the deal work.

Question 18

What happens if I have had a bankruptcy, foreclosure, or short sale?

Accepted Answer

Waiting periods after a major credit event depend on the program. Conventional loans require 4 years after Chapter 7 bankruptcy (2 with documented extenuating circumstances), 2 years after Chapter 13 discharge, 7 years after foreclosure, and 4 years after short sale. FHA requires 2 years after bankruptcy and 3 years after foreclosure or short sale. VA and USDA follow similar guidelines. Non-QM programs can finance borrowers as soon as 1 day after a credit event with strong down payments. Time and consistent on-time payments heal credit — most borrowers with a past event become fully bankable again.

Question 19

How does self-employment income get calculated?

Accepted Answer

For self-employed borrowers, lenders use a 2-year average of net income from your personal and business tax returns — after deductions and depreciation. This is why aggressive tax deductions can hurt loan qualification: lower reported income means lower qualifying income. Alternatives include bank statement loans (which qualify you on 12–24 months of deposits rather than tax returns), profit-and-loss loans, and DSCR loans for investment properties (which qualify on rental income, not personal income). Self-employed borrowers should plan tax strategy with a mortgage purchase in mind — ideally 2 years ahead.

Question 20

What is a jumbo loan?

Accepted Answer

A jumbo loan is any mortgage above the conforming loan limit set annually by the Federal Housing Finance Agency. For 2026 most Florida counties have a conforming limit around $806,500 for a single-family home; loans above that are jumbo. Jumbo loans typically require higher credit scores (700+), larger down payments (10–20%), lower DTIs, and more reserves — but pricing is often competitive with conforming rates. High-cost Florida markets (Monroe County, parts of South Florida) may have higher conforming limits.

Question 21

When does it make sense to refinance?

Accepted Answer

The traditional rule was to refinance when you could drop your rate by at least 1%. Today the math is more nuanced: calculate the break-even by dividing total closing costs by your monthly savings. If you will keep the loan longer than the break-even (often 24–36 months), refinancing pays off. Other reasons to refinance: switching from an ARM to a fixed rate, dropping PMI once you have 20% equity, shortening the term (30-year to 15-year), or pulling equity out for home improvements or debt consolidation. If you have an FHA loan and 20% equity, refinancing to conventional to drop MIP is almost always worth it.

Question 22

What is a cash-out refinance and how much can I take?

Accepted Answer

A cash-out refinance replaces your existing mortgage with a larger loan and gives you the difference in cash at closing. Conventional loans allow up to 80% loan-to-value cash-out on a primary residence (75% on second homes, 75% on investment properties). VA allows up to 100% cash-out for eligible veterans in certain scenarios. Cash-out is often used for home improvements, debt consolidation, tuition, or investment. Because the entire balance is refinanced, rates are slightly higher than a rate-and-term refi — run the numbers against a HELOC before deciding.

Question 23

How is a condo mortgage different from a single-family mortgage?

Accepted Answer

Condos require the entire building (or association) to meet lender guidelines — not just the individual unit. Fannie Mae, Freddie Mac, FHA, and VA each publish condo-approval requirements covering owner-occupancy ratios, HOA financial reserves, insurance coverage, delinquency rates, and litigation status. A condo that fails these tests is called “non-warrantable” and requires a portfolio or non-QM loan. Before falling in love with a condo, ask your loan officer to run the project through the applicable approval database — a “warrantable” condo dramatically expands your program and rate options.

Question 24

What is a USDA loan and does my property qualify?

Accepted Answer

A USDA Rural Development loan is a 100% financing program for buyers in USDA-designated rural and suburban areas — which, surprisingly, includes many parts of Florida outside the largest metros. It requires no down payment, has competitive rates, and allows credit scores as low as 640. The property must be in an eligible area (check the USDA property eligibility map), and household income must be under program limits for the county. USDA loans carry a small upfront guarantee fee and monthly guarantee fee similar to PMI but usually cheaper.

Question 25

How do I get started with 1st Florida Lending?

Accepted Answer

Three easy paths: (1) Start our online application — takes about 10 minutes and gives us what we need to issue a same-day or next-day pre-approval. (2) Call us directly and speak with a licensed Florida loan officer, no obligation, no credit pull required for the initial conversation. (3) Use our online tools first — the mortgage calculator and pre-approval checklist — then reach out when you’re ready. Every application is reviewed by a real Florida-licensed loan officer, not a call center. We serve buyers, refinancers, self-employed borrowers, veterans, and investors across all 67 Florida counties.

25 Mortgage Questions — Answered

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25 Mortgage Questions — Answered

01.What is the difference between pre-qualification and pre-approval?

02.How much can I afford to borrow?

03.What credit score do I need to buy a home?

04.How much down payment do I really need?

05.What are closing costs and how much should I budget?

06.What is PMI and when can I remove it?

07.Fixed rate or adjustable rate — which is better?

08.Should I choose a 15-year or a 30-year mortgage?

09.How long does the mortgage process take from application to closing?

10.What documents will I need to apply?

11.Should I get pre-approved before I start house-hunting?

12.Will shopping for a mortgage hurt my credit score?

13.What is an escrow account and do I need one?

14.What is a rate lock and when should I lock?

15.What is an appraisal and what if the home appraises low?

16.What is the difference between an appraisal and a home inspection?

17.Can I buy a home if I have student loans or credit card debt?

18.What happens if I have had a bankruptcy, foreclosure, or short sale?

19.How does self-employment income get calculated?

20.What is a jumbo loan?

21.When does it make sense to refinance?

22.What is a cash-out refinance and how much can I take?

23.How is a condo mortgage different from a single-family mortgage?

24.What is a USDA loan and does my property qualify?

25.How do I get started with 1st Florida Lending?

Get Your Personalized Mortgage Quote

Tell us about the property

Share basic income & credit

Pick a time to talk