A conventional mortgage is a home loan that isn’t insured or guaranteed by a government program like FHA, VA, or USDA. Instead, it follows guidelines set by Fannie Mae and Freddie Mac, which are the two major agencies that help standardize mortgage lending.

Conventional loans are popular because they offer flexibility with down payments (as little as 3% for qualifying buyers), competitive interest rates, and options for fixed or adjustable terms. However, if your down payment is less than 20%, most lenders will require private mortgage insurance (PMI) until you reach enough equity in the home.

In short: a conventional mortgage is the most common type of home loan, designed to give buyers solid options and competitive pricing.

Yes — subject to qualification, you may be able to purchase a home with as little as 3%–5% down. Loan options vary based on your credit, income, and overall profile, but even first-time buyers often qualify with a low down payment.

If your down payment is less than 20%, most lenders will require mortgage insurance. Premiums depend on your loan type, credit profile, and the size of your down payment.

With the right guidance, qualifying for a mortgage may be more achievable than you think.

Most lenders allow down payment funds to come from a gift provided by a family member. To use gift funds, a gift letter is typically required, signed by the donor, confirming that the money is a true gift and does not need to be repaid.

Using gift funds can make it easier to qualify and move forward with your home purchase without having to rely solely on personal savings.

Change the question to “What is a prequalified mortgage?”

A prequalified mortgage is an initial estimate from a lender of how much you may be able to borrow based on basic information you provide — such as your income, debts, and assets. Unlike a pre-approval, it usually doesn’t involve a full credit check or detailed verification of your financial documents.

Prequalification gives you a general idea of your potential price range and helps you start the home search with a clearer budget in mind. However, it is not a commitment to lend and is subject to change once your full application, credit history, and supporting documentation are reviewed.

In summary, prequalification is a useful first step to understand your buying power, but the stronger next step is getting preapproved before making offers on a home.

Financing a Home and Improvements Together

Subject to qualification, buyers may be able to purchase a home with as little as 5% down and include funds for improvements in the same loan. This type of financing allows you to roll the purchase price and the cost of approved renovations or repairs into a single mortgage, eliminating the need for separate financing.

Some conditions apply. Generally, improvements considered cosmetic (such as flooring, paint, or appliances) do not affect the standard mortgage insurance premium. Improvements considered structural (such as additions, major system replacements, or foundation work) may increase the required mortgage insurance premium slightly.

This option is designed to help buyers move into a home that may need immediate updates, while keeping financing streamlined and affordable under one loan.

How can I use my SSI to Qualify for a Home Loan?

If you receive Social Security income, it can often be counted toward your qualifying income
when applying for a mortgage. Lenders will typically accept this income as long as it is properly
documented.

How Social Security Income Is Counted
● Retirement benefits, disability income, or survivor benefits may all be used if they are expected to continue.
● If your benefits are non-taxable, lenders may apply an income “gross-up” (commonly 15–25%) to reflect the pre-tax equivalent, giving you more qualifying income.
● You’ll usually need to provide an award letter or recent bank statements showing regular deposits.

Key Points to Know
● Social Security income can help you meet debt-to-income (DTI) requirements for a home loan.
● Non-borrowing spouses’ Social Security income may sometimes be considered depending on the loan program.
● Proper documentation is essential, and each loan program (FHA, VA, Conventional, USDA) has its own guidelines.

Tip: If you rely on Social Security as your main source of income, working with a knowledgeable
loan officer ensures the income is calculated correctly to maximize your buying power.

When you buy a home, there are a few types of costs to plan for beyond just the down payment:

● Down Payment: The upfront portion you contribute toward the purchase price (as little as 0%–5% down depending on the loan program).
● Closing Costs: Fees and expenses required to finalize the loan, usually 2%–5% of the purchase price. These may include appraisal, title insurance, lender fees, recording fees, and prepaid taxes/insurance.
● Escrow/Reserves: Many lenders require funds set aside at closing to cover property taxes and homeowners insurance.
● Home Inspection: Optional but highly recommended to check the condition of the home before purchase.
● Moving & Immediate Expenses: Utility setup, repairs, or updates you may want to make right away.

Planning ahead for these costs ensures there are no surprises and helps make your transition to homeownership smooth.

The most common mortgage terms are 15 years and 30 years, though 10-, 20-, and adjustable-rate options are also available. As a general rule, shorter terms (like 10 or 15 years) usually come with lower interest rates, while longer terms (like 30 years) typically have higher rates but lower monthly payments.

Choosing the right term depends on your goals and comfort level. Consider these questions:
1. Do you plan to sell your home soon?
If you expect to move in the near future, a shorter term or even an adjustable-rate mortgage could make sense.
2. Do you believe interest rates are likely to rise or fall?
If you think rates have already bottomed out, locking in a longer term may provide security. If you expect rates to drop, you might consider a shorter term with plans to refinance later.
3. Are you a first-time homebuyer who values stability?
A longer-term fixed-rate mortgage (like 30 years) offers predictable monthly payments and peace of mind for budgeting.
4. Are you comfortable with higher payments to save money long term?
A shorter term (like 15 years) will cost more each month but can save you significant interest over the life of the loan.

In short: shorter terms save money on interest but require higher payments, while longer terms lower your monthly payment but cost more over time. The best choice depends on your financial goals and how long you plan to stay in the home.

As a homeowner, you’ll have ongoing financial responsibilities beyond just your mortgage. Some expenses may not be billed monthly, but it’s a good idea to break them down into monthly amounts so you can budget accurately. Common costs include:

Mortgage Payment
For most buyers, this is the largest monthly expense. Your payment depends on the loan amount, interest rate, and term, and usually includes principal, interest, taxes, and insurance (often called PITI).

Property Taxes
These are set by your local tax authority. They may be paid directly by you or collected as part of your monthly mortgage payment through an escrow account.

Homeowners Insurance (and possibly Mortgage Insurance)
Insurance protects your property against risks such as fire, theft, or liability. If your down payment was less than 20%, you may also have a separate monthly charge for mortgage insurance.

Utilities
You’ll be responsible for utilities such as electricity, water, gas, internet, and trash collection. Costs vary based on the size of the home and your usage.

Maintenance and Upkeep
Regular expenses like lawn care, pest control, or small repairs add up. Larger, less frequent costs may include roof repairs, plumbing or electrical work, and appliance replacement. A good rule of thumb is to budget 1% of your home’s value per year for maintenance.

HOA or Condo Fees (if applicable)
If your home is in a community with a homeowners association or a condo building, monthly fees may cover amenities, exterior maintenance, or other shared services.

A fixed-rate mortgage is a home loan where the interest rate stays the same for the entire term of the loan. That means your monthly principal and interest payments will never change, giving you stability and peace of mind when budgeting for your home. Terms are typically available in 10-, 15-, 20-, or 30-year options.

A variable-rate mortgage is a home loan where the interest rate can adjust over time based on market conditions. One of the biggest advantages is that these loans typically start with a lower interest rate than fixed-rate mortgages, which can mean lower monthly payments and extra savings right now.