Welcome to the official First-Time Homebuyer Mortgage FAQ page from The Loan Nerd! Buying your first home can be exciting but also overwhelming. Our expert Nerds are here to break down the basics and make the mortgage process as simple and stress-free as possible.

General Mortgage Questions

A mortgage is a loan you take out to buy a home. You borrow money from a lender and agree to pay it back over time, typically with interest. Your home serves as collateral.

This depends on your income, credit score, debt, and other financial factors. Our Nerds can help you calculate your home affordability based on your unique situation.

Pre-qualification gives a rough idea of what you can afford, while pre-approval is a more formal process that involves verifying your financial information and can strengthen your offer.

It varies. Some loans allow as little as 3% down. Our Nerds can help you find the right option based on your budget.

  • Fixed-rate: Same interest rate for the life of the loan.
  • Adjustable-rate (ARM): Rate may change after an initial period.
  • FHA loans: Great for first-time buyers with lower credit scores.
  • VA loans: For veterans, active military, and eligible spouses.
  • USDA loans: For rural or suburban buyers who meet income limits.
  • Conventional loans: Not backed by the government.

Rates and Payments

Interest rates are based on market conditions, your credit score, loan type, and down payment. Our Nerds will help you lock in the best rate possible.

Typically, it includes:

  • Principal (loan amount)
  • Interest
  • Property taxes
  • Homeowners insurance
  • Possibly PMI (Private Mortgage Insurance)

The interest rate is the cost of borrowing the principal. APR includes the interest rate plus other loan-related fees, giving you a more complete cost picture.

Your Nerd will work with you to lock in your rate once you’ve found the right loan program and are ready to move forward.

Loan Terms and Conditions

A 30-year loan offers lower monthly payments; a 15-year loan saves money on interest over time. We’ll help you weigh up your options.

Points are upfront fees you can pay to reduce your interest rate. Depending on how long you plan to stay in home, paying points may be a smart move.

Yes! Most mortgages allow additional payments toward the principal. Always check with your Nerd first to confirm there are no penalties.

Some loans include prepayment penalties. We’ll help you understand your specific loan terms before you sign.

Eligibility and Credit

Minimum scores vary by loan type, but generally a score of 620 or higher is preferred. FHA loans may accept lower scores.

Higher credit scores can qualify you for better rates and terms. Don’t worry, our Nerds will help you understand your credit report.

Yes! If your overall debt-to-income ratio is within acceptable limits, student loans don’t have to hold you back.

Common documents include: pay stubs, tax returns, bank statements, and photo ID. Your Nerd will give you a complete checklist.

Programs and Assistance

Yes! There are federal, state, and local programs that aid with down payments, closing costs, and more. Ask a Nerd about your options.

PMI is usually required when your down payment is less than 20%. It protects the lender in case of default but can often be removed later.

Absolutely! Many loan programs allow gift funds from family or other approved sources. Just be sure to document it properly.

Process and Closing

The main steps include: pre-approval, home shopping, loan application, underwriting, and closing. Your Nerd will guide you at every stage.

Typically 30 to 45 days from accepted offer to closing, though timelines can vary.

Closing costs usually range from 2% to 5% of the home’s purchase price. They include fees for the lender, title, appraisal, and more.

Yes, and you should! Comparing offers helps ensure you get the best rate and terms. Of course, we think The Loan Nerd is the smartest choice.

Don’t open new credit accounts, make large purchases, or change jobs without checking with your Nerd first. These moves can impact your approval.

Still have questions? Contact a Nerd today and let us help you take the smart step toward homeownership!