KMG Navigation
Mortgage FAQs | Michael Durr Intelligence Hub
Expert Mortgage Intelligence

Michael Durr MORTGAGE FAQs

The ultimate guide for the US market. Precision answers for First-Time Buyers.

All Intel
First Time Buyers
Purchase
Refinance
VA Specialist

First-Time Buyer Intelligence

What is the first step I should take?
Get pre-approved. It determines your budget, proves your credibility to sellers, and is the absolute foundation of your search in the US market.
Are there special programs for first-time buyers in the US?
Yes! FHA loans (3.5% down) and Conventional programs like HomeReady or HomePossible (3% down) are designed specifically for you.
How do I know if I'm ready to buy?
You're ready if you have stable income, a DTI usually under 43%, some savings for a down payment, and a credit score at least in the high 500s.
What is the "Homestead Exemption"?
In many states, filing for this on your primary home reduces the taxable value of your property, lowering your annual property taxes significantly.
Should I pay off all my debts before buying?
Not always. While lower debt helps your "DTI" ratio, keeping cash in the bank for your down payment is often more important for your loan approval.
How does my student loan affect my mortgage?
We look at your monthly payment, not the total balance. Even if you're on a $0 IBR plan, we have specific ways to calculate that for your approval.
Can I buy a home with a recent job change?
Yes, as long as the new job is in the same field and has a similar pay structure. Changing from salary to commission can require a 2-year wait.
What is an "Escrow" account?
It's a holding account where the lender collects property taxes and insurance monthly, ensuring those large bills are paid for you when they are due.
What is a Home Inspection?
An inspector checks the home's condition. It's not required by lenders but is essential to protect you from major future repair costs.
What are Seller Concessions?
This is when a seller pays part of your closing costs. It's a great strategy for first-time buyers to save cash at the closing table.
What is an FHA loan?
FHA loans are insured by the government and allow for lower credit scores and smaller down payments, making them popular for first-time buyers.
What is a Conventional loan?
These are not insured by the government and typically require slightly higher credit scores but can have lower long-term costs.
What is the difference between a 15-year and 30-year mortgage?
A 30-year has lower monthly payments; a 15-year has higher payments but builds equity faster and saves thousands in interest over time.
Can I buy a home if I'm self-employed?
Absolutely! We look at your tax returns and sometimes use "Bank Statement" programs to verify your income and get you approved.
How long should I expect the buying process to take?
From pre-approval to closing, it usually takes 30-60 days once you've found the home you want to purchase.

Purchase Strategy

How much down payment do I need?
It depends on the loan program. Some buyers may qualify with as little as 0% to 3.5% down, while others choose to put more down to lower their payment.
What is earnest money?
Earnest money is a good-faith deposit you make when your offer is accepted. It is usually about 1% to 3% of the purchase price and is held in escrow until closing.
What is PMI?
PMI, or private mortgage insurance, is usually required on conventional loans when you put down less than 20%. It protects the lender, not the buyer.
Can I use gift funds?
Often yes. Many loan programs allow gift funds for down payment and sometimes closing costs, as long as they are properly documented.
What is a rate lock?
A rate lock holds your interest rate for a set period while your loan is being processed, ensuring market spikes don't affect your payment.
What are "Closing Costs" in the US?
These typically range from 2-5% of the purchase price. They include loan origination fees, title insurance, appraisal fees, and government recording fees.
What is a "Contingency"?
A condition that must be met for the sale to go through, such as a satisfactory home inspection or obtaining mortgage approval.
What is an Appraisal Gap?
If the home appraises for less than your offer, the "gap" is the difference. You may need to cover this in cash or negotiate with the seller.
What is "Title Insurance"?
It protects against past legal issues with the home's ownership. Lenders require a policy, and it's highly recommended for owners too.
Can I buy with a co-borrower?
Yes. A co-borrower's income and credit can help you qualify for more, but their debts will also be considered in your DTI.
What is a "Points" buy-down?
You pay a fee at closing to permanently lower your interest rate, which can save a lot of money over the life of the loan.
What is the "Clear to Close"?
The final approval stage where all documents are verified and you're ready to sign and get your keys.
What is an Appraisal?
An unbiased estimate of the home's market value, required by lenders to ensure the loan amount is justified by the property's worth.
What is a "Debt-to-Income" (DTI) ratio?
Your total monthly debt payments divided by your gross monthly income, used by lenders to determine affordability.
What Credit Score Do I Need to Buy a Home?

For many home buyers, FHA loans are one of the easiest ways to qualify for financing. Current FHA guidelines allow:

  1. 580+ FICO Score – Eligible for as little as 3.5% down payment.
  2. 500–579 FICO Score – May still qualify for an FHA loan, but typically requires a 10% down payment.
  3. Below 500 – Generally not eligible for FHA financing.
  4. 620 Fico score - Conventional Loans Minimum

Keep in mind, credit score is only one part of the approval process. Income, job history, down payment funds, and overall debt also matter. Even if you’ve had past credit challenges, there may still be options available.

Refinance Intelligence

When is it worth refinancing?
Usually when you can lower your rate, reduce your payment, shorten your loan term, or pull cash out for a smart financial reason.
What is a Cash-Out Refinance?
Replacing your current loan with a larger one and taking the difference in cash, typically used for debt consolidation or home improvements.
What is a Rate-and-Term Refinance?
Refinancing to change your interest rate or the length of your loan without taking cash out of your equity.
How long must I wait to refinance?
Most lenders require a "seasoning" period of 6 months after your original purchase before you can refinance.
Can I refinance to remove a co-signer?
Yes! If your income and credit now qualify you on your own, you can refinance to remove someone from the loan.
What is an IRRRL?
A VA streamline refinance that allows Veterans to drop their rate with minimal documentation and often no new appraisal.
How much equity do I need to refinance?
While 20% is ideal for avoiding PMI, many programs allow you to refinance with much less equity, especially with FHA or VA loans.
Will refinancing hurt my credit score?
There may be a small temporary dip due to the credit inquiry, but long-term savings often improve your financial health and score.
Can I refinance an FHA loan to a Conventional loan?
Yes! This is a common strategy to eliminate monthly mortgage insurance once you've reached 20% equity in your home.

VA Loan Intelligence

Is a VA loan really 0% down?
Yes! Qualified Veterans and Active Duty can buy with zero money down and no monthly mortgage insurance, making it the best loan in the US.
Who is eligible for a VA loan?
Active-duty members, Veterans, and surviving spouses who meet specific service requirements are generally eligible.
What are the occupancy requirements?
The VA requires you to intend to live in the home as your primary residence within 60 days of closing.
What is the COE?
The Certificate of Eligibility proves your eligibility to the lender. Michael can pull this for you directly from the VA.
What is the VA Funding Fee?
A one-time fee paid to the VA to sustain the program. Disabled Veterans are often exempt from this fee.
Can I have two VA loans at once?
Yes! Depending on your remaining entitlement, it is possible to have two VA loans active at the same time.
Kingwood Mortgage Guys Footer