Frequently Asked
Questions
Mortgages can be complex, but understanding them does not have to be. We have compiled answers to the questions we hear most often from buyers, homeowners, and those considering refinancing.
Last updated: March 2026
Beginning Your
Mortgage Journey
Pre-qualification is a quick, informal estimate of how much you might be able to borrow. It is based on self-reported information and does not involve a credit check. Pre-approval is a more rigorous process where a lender verifies your income, assets, credit history, and employment to issue a conditional commitment for a specific loan amount. A pre-approval letter carries far more weight with sellers and real estate agents because it demonstrates you are a serious, financially vetted buyer.
The minimum credit score depends on the loan type. Conventional loans typically require a minimum score of 620, though the best rates are reserved for scores of 740 and above. FHA loans can be obtained with scores as low as 580 with a 3.5 percent down payment, or 500 with a 10 percent down payment. VA loans do not have a government-mandated minimum score, but most lenders look for at least 620. The higher your score, the better your rate and terms will be.
A common guideline is the 28/36 rule: your monthly housing costs should not exceed 28 percent of your gross monthly income, and your total monthly debt payments should not exceed 36 percent. However, every borrower's situation is unique. Factors like your down payment, existing debts, local property taxes, and insurance costs all influence how much home you can comfortably afford. We recommend getting pre-approved to see your actual numbers based on current rates and your specific financial profile.
Down payment requirements vary by loan type. Conventional loans can require as little as 3 percent down for first-time buyers, though 5 to 20 percent is more typical. FHA loans require a minimum of 3.5 percent. VA loans and USDA loans offer zero-down-payment options for eligible borrowers. While a larger down payment reduces your monthly payment and can help you avoid PMI, there are many programs designed to help buyers with limited savings get into a home.
Understanding Your
Loan Options
Conventional loans are not backed by the government and typically require higher credit scores and larger down payments. They offer flexibility in terms and do not require upfront mortgage insurance premiums. FHA loans are insured by the Federal Housing Administration and are designed for borrowers with lower credit scores or smaller down payments. They require both upfront and annual mortgage insurance premiums. VA loans are guaranteed by the Department of Veterans Affairs and available to active-duty service members, veterans, and eligible surviving spouses. VA loans offer zero down payment, no PMI, and competitive rates — they are often the best loan product available for those who qualify.
Private Mortgage Insurance (PMI) is required on conventional loans when your down payment is less than 20 percent. It protects the lender in case you default on the loan. PMI typically costs between 0.5 and 1.5 percent of your loan amount annually, added to your monthly payment. You can request PMI removal once your loan balance reaches 80 percent of the home's original appraised value. It is automatically terminated at 78 percent. You can also refinance to eliminate PMI if your home has appreciated enough to give you 20 percent equity.
A jumbo loan exceeds the conforming loan limits set by the Federal Housing Finance Agency (FHFA). In most areas, the 2026 conforming limit for a single-family home is above $750,000, though higher limits apply in designated high-cost areas like parts of Los Angeles County. Jumbo loans typically require higher credit scores (700+), larger down payments (10 to 20 percent), and more documentation. Rates on jumbo loans can be competitive with or even lower than conforming rates for well-qualified borrowers.
A fixed-rate mortgage locks in your interest rate for the entire loan term, providing predictable payments and protection against rising rates. A adjustable-rate mortgage (ARM) offers a lower initial rate for a set period (typically 5, 7, or 10 years), after which the rate adjusts periodically based on market conditions. ARMs make sense if you plan to sell or refinance before the adjustment period begins, or if you expect rates to decrease. For most borrowers planning to stay long-term, a fixed rate offers peace of mind.
Navigating the
Mortgage Process
The typical mortgage process takes 30 to 45 days from application to closing. However, timelines can vary based on the complexity of the transaction, the lender's workload, and how quickly you provide required documentation. At Theós Financial, our technology-driven approach and proactive communication can significantly reduce this timeline — many of our clients close in as few as 14 to 21 days.
Most lenders require: two recent pay stubs, W-2s or 1099s from the past two years, federal tax returns from the past two years, bank and investment account statements from the past two months, a government-issued photo ID, and information about your current debts. Self-employed borrowers will also need profit-and-loss statements and business tax returns. Having these documents organized and ready before you apply can speed up the process significantly.
At closing, you will review and sign the final loan documents, including the promissory note (your promise to repay the loan), the deed of trust (which secures the loan against the property), and the Closing Disclosure (which details all costs and terms). You will wire your down payment and closing costs to the escrow company. The title company records the new deed with the county, and the loan is funded. For purchase transactions, you receive the keys once the loan funds and recording is confirmed — typically the same day as signing.
Yes. A rate lock guarantees your interest rate for a specified period, typically 30 to 60 days. This protects you from rate increases while your loan is being processed. Some lenders offer longer lock periods (up to 90 or 120 days) for an additional fee. If rates drop significantly after you lock, some programs offer a one-time "float down" option. Your mortgage broker can advise on the optimal lock strategy based on current market conditions.
Understanding Rates
& Closing Costs
Your interest rate is determined by a combination of personal and market factors. Personal factors include your credit score, down payment amount, debt-to-income ratio, loan type, and loan term. Market factors include Federal Reserve policy, inflation expectations, and bond market yields. Your credit score and down payment are the two factors you have the most control over and the biggest impact on your rate.
Closing costs are the fees and expenses associated with finalizing your mortgage. They typically range from two to five percent of the loan amount. Common closing costs include: loan origination fees, appraisal fee, title search and title insurance, escrow fees, recording fees, prepaid property taxes and insurance, and credit report fee. Your Loan Estimate, provided within three business days of application, will itemize all expected costs. The Closing Disclosure you receive before closing will confirm final numbers.
Mortgage points (also called discount points) are an upfront fee you pay to reduce your interest rate. One point equals one percent of the loan amount and typically lowers your rate by about 0.25 percent. Whether buying points makes sense depends on how long you plan to keep the loan. If you will stay in the home for many years, the cumulative monthly savings can far exceed the upfront cost. If you plan to sell or refinance within a few years, the upfront cost may not be worthwhile.
The interest rate is the cost of borrowing expressed as a percentage. The Annual Percentage Rate (APR) includes the interest rate plus other costs of the loan, such as origination fees, discount points, and certain closing costs, expressed as an annualized rate. The APR is always equal to or higher than the interest rate and provides a more comprehensive picture of the loan's true cost. When comparing loan offers, the APR is often a better basis for comparison than the rate alone.
Life After
Your Mortgage Closes
An escrow account is a special account managed by your loan servicer that holds funds for property taxes and homeowner's insurance. Each month, a portion of your mortgage payment goes into this account. When tax and insurance bills come due, the servicer pays them on your behalf. This ensures these critical expenses are always paid on time. Your escrow payment may be adjusted annually based on changes in your property tax assessment or insurance premiums.
Your first mortgage payment is typically due on the first of the month following a full month after closing. For example, if you close on March 15, your first payment would be due May 1. This is because at closing you prepay the interest from the closing date through the end of that month (in this case, March 15 through March 31). The first payment then covers the full month of April.
Yes, it is very common for mortgage loans to be sold on the secondary market. You will receive written notice from both the old and new servicer if this happens. Your loan terms — rate, balance, and payment amount — cannot change when the loan is sold. The only thing that changes is where you send your payment. Many borrowers experience a servicing transfer at some point during the life of their loan, and it is a routine part of the mortgage industry.
Absolutely. Many homeowners refinance at some point during their mortgage. Common reasons include taking advantage of lower rates, switching from an adjustable to a fixed rate, shortening the loan term, removing PMI, or tapping home equity through a cash-out refinance. There is no set waiting period for most refinances, though some loan programs have specific seasoning requirements. Your mortgage broker can advise you on timing and whether refinancing makes sense given the costs involved.
If you experience financial hardship, contact your loan servicer immediately. Most servicers have loss mitigation departments that can offer options such as forbearance (temporary payment pause), loan modification (permanent change to your loan terms), or repayment plans. The sooner you reach out, the more options you will have. Ignoring the problem only makes it worse. Your mortgage broker can also help you explore refinancing options or connect you with housing counseling resources.
We Are Here
to Help
Every situation is unique, and we are happy to answer any questions that were not covered here. Reach out to our team directly or start your application online — our technology will guide you through the process with clarity and confidence.