Mortgage FAQ

It depends on the loan type. Conventional loans typically require a 620 minimum. FHA loans go as low as 580, and in some cases 550 with a larger down payment. VA loans have no official minimum credit score. Non-QM programs can accommodate scores in the 500s depending on other compensating factors. The short answer: lower than you probably think.

You do not need 20%. VA and USDA loans require zero down payment. FHA loans require 3.5%. Conventional loans can go as low as 3–5% depending on the program. The 20% figure simply avoids private mortgage insurance on conventional loans — but putting less down is often the right financial decision depending on your cash position and rate environment.

A hard credit pull does create a small, temporary dip in your score — typically 5 points or less. Importantly, multiple mortgage inquiries within a 14 to 45-day window are treated as a single inquiry by credit bureaus, so shopping around does not multiply the impact. The benefit of knowing exactly where you stand almost always outweighs the minor credit impact.

For most standard loans: two years of W-2s and tax returns, 30 days of recent pay stubs, two months of bank statements, a valid government ID, and information on any existing debts. Self-employed borrowers typically replace pay stubs and W-2s with business tax returns, bank statements, or a P&L statement. Non-QM programs require significantly less documentation by design.

Pre-qualification is an informal estimate based on self-reported information — useful as a ballpark but carries little weight with sellers. Pre-approval is a formal review of your credit, income, and assets that results in a conditional commitment letter. In a competitive Illinois market, a strong pre-approval letter is a meaningful advantage when submitting an offer.

Non-QM (Non-Qualified Mortgage) loans are designed for borrowers whose income or financial situation does not fit the standard documentation requirements of conventional lending. This includes self-employed borrowers, real estate investors, foreign nationals, and those with recent credit events. They are not "bad" loans — they are simply structured differently to accommodate non-traditional borrower profiles.

Absolutely — and you have more options than most people realize. Bank statement loans, 1099 loans, P&L only loans, and asset qualifier programs are all designed specifically for self-employed borrowers. The key is matching your specific income documentation to the right program. This is exactly what the Mortgage Club Fit process is built for.

DSCR stands for Debt Service Coverage Ratio. A DSCR loan qualifies a real estate investor based on the rental income the property generates — not the investor's personal income. If the property's rental income covers the mortgage payment, you can qualify. This makes it ideal for investors who write off significant expenses or have multiple properties that complicate standard income verification.

VA loans are available to eligible Veterans and active-duty service members. They require no down payment, no private mortgage insurance, and typically offer highly competitive interest rates. The VA guarantees a portion of the loan, reducing the lender's risk. There is a VA funding fee, which varies based on service history and loan type, but this can be rolled into the loan amount. It is one of the best benefits available to those who have served.

Your rate is shaped by: your credit score, loan-to-value ratio (how much you are borrowing vs. the home's value), loan type, loan term, property type, and market conditions at the time of rate lock. Higher credit scores, larger down payments, and shorter loan terms generally produce lower rates. Market rates change daily based on bond market activity and economic indicators.

Closing costs typically run between 2% and 5% of the loan amount and cover items like origination fees, appraisal, title insurance, prepaid taxes and insurance, and government recording fees. Some costs are fixed regardless of loan size; others scale with the amount. I provide a detailed Loan Estimate early in the process so you know exactly what to expect before you commit to anything.

Points are upfront fees paid to reduce your interest rate — one point equals 1% of the loan amount. Whether it makes sense depends on your break-even timeline. If you plan to stay in the home for five or more years, buying points often makes financial sense. If you might move or refinance sooner, paying points upfront rarely pays off. I run this math for every client before making a recommendation.