Lending
Mortgage Questions and Answers
Every question we get asked about home loans, answered in plain words. Search for your topic, open any answer, and follow it to the full guide.
Talk to Maggie directly: cell (916) 549-3131 (text or call) · maggie@loveyoursurroundings.coMaggie B. Hopkins, NMLS #349517 · Surroundings NMLS #2528307
258 questions answered
Loans for buying a home
What is the 2026 conforming loan limit?
The FHFA announced on November 25, 2025 that the 2026 baseline limit for a one-unit home is $832,750 in most of the country. Some higher-cost counties have higher limits, so check the county your home is in.
Do I have to use your lending if you're my real estate agent?
No. You can use any lender you like. We'd like the chance to quote your loan so you can compare it, and the choice is always yours.
What is an FHA loan?
An FHA loan is a mortgage insured by the Federal Housing Administration. The CFPB says its qualifying standards are generally more flexible than for conventional loans, and the borrower pays for the mortgage insurance.
How long does a purchase loan take to close?
It depends on the loan type, the appraisal and how fast documents come in. We set the closing date in your offer to match what your loan needs and keep everyone on that schedule.
Can I compare your Loan Estimate with another lender's?
Yes, and we encourage it. Every lender uses the same Loan Estimate form, so you can line up the rate, closing costs and cash to close for the same loan amount.
What if the appraisal comes in below the price?
You have choices. You can renegotiate the price, cover the difference with cash, change the loan structure or use your contract rights. We look at the contract and the loan together so you see each option in dollars.
Does California have down payment help for first-time buyers?
Yes. CalHFA runs statewide programs, including the MyHome Assistance Program. CalHFA's page describes it as a deferred-payment junior loan of up to 3.5% with FHA or 3% with conventional. Income limits, price limits and funding apply.
Do I need a homebuyer course for CalHFA?
Yes. CalHFA accepts the eHome eight-hour online course, or live in-person or virtual education through NeighborWorks America or a HUD-approved housing counseling agency.
Is an FHA loan the only option for a first home?
No. First-time buyers can also use conventional and VA loans. CalHFA lists FHA, VA, USDA and conventional first mortgage programs. The right fit depends on your cash, your credit and the home.
What costs should I plan for besides the down payment?
Plan for closing costs, prepaid property tax and insurance, moving costs and a cushion for early repairs. In California, a supplemental property tax bill can also arrive after a purchase.
Can I use any lender I want?
Yes. You're always free to choose your own lender. We'd like the chance to quote your loan so you can compare it against anyone.
When should I talk to a mortgage broker?
Talk to one before you start touring homes. An early review shows what you can afford, catches credit or document issues while there's time and makes your offers stronger.
What is a conventional loan?
A mortgage that isn't part of a government program, so it isn't insured by FHA or backed by VA or USDA. Most follow Fannie Mae and Freddie Mac rules and are called conforming loans.
Can I put less than 20% down on a conventional loan?
Yes. Fannie Mae's HomeReady loan allows as little as 3% down for borrowers who meet its income rules. With less than 20% down you'll typically pay private mortgage insurance.
When does PMI come off?
The CFPB says you can ask to cancel it when your balance is scheduled to reach 80% of the home's original value. It ends automatically at 78% if you're current on payments.
What is the 2026 conforming loan limit?
The FHFA set the 2026 baseline for a one-unit home at $832,750 in most of the country. Some higher-cost counties have higher limits, so we check the county your home is in.
Is a conventional loan cheaper than an FHA loan?
Often, but not always. The CFPB says conventional loans typically cost less than FHA loans but can be harder to get. With lower credit or a small down payment, FHA can cost less, so we price both.
What is the minimum credit score for an FHA loan?
HUD's rules say a score of 580 or higher is eligible for maximum financing. Scores from 500 to 579 are limited to 90% of the home's value. Below 500 isn't eligible. Lenders may set their own higher minimums.
How much do I need to put down on an FHA loan?
As little as 3.5% with a credit score of 580 or higher, according to the CFPB and HUD. With a score from 500 to 579, you'd need at least 10% down.
Does FHA mortgage insurance ever go away?
It depends on your down payment. Under HUD's rule for most loans, the annual premium lasts 11 years if you put 10% or more down. With less than 10% down, it lasts for the life of the loan unless you refinance.
What is the FHA loan limit in 2026?
It's set by county. HUD's 2026 range for a one-unit home runs from $541,287 in lower-cost areas to $1,249,125 in high-cost areas. We check the current limit for your county.
Can I buy a duplex with an FHA loan?
Yes, if you'll live in one of the units. FHA has loan limits for two- to four-unit homes, and at least one borrower must move in within 60 days and plan to stay at least a year.
Is FHA better than conventional?
Neither is better for everyone. The CFPB says FHA is often less expensive with lower credit or a small down payment, and conventional often costs less with good credit and 10% to 15% down. We price both for you.
Do VA loans require a down payment?
No, not always. VA.gov says a VA-backed purchase loan can have no down payment as long as the sales price isn't higher than the home's appraised value. A lender may require one if your entitlement doesn't cover enough of the loan.
Do VA loans have PMI?
No. VA.gov lists no private mortgage insurance or mortgage insurance premiums as a feature of VA-backed purchase loans. Most VA loans do have a one-time funding fee unless you're exempt.
Who doesn't have to pay the VA funding fee?
VA.gov lists several exemptions, including borrowers receiving VA compensation for a service-connected disability and active-duty members with evidence of a Purple Heart on or before closing. Check VA's page for the full list.
Is there a VA loan limit?
No, not for borrowers with full entitlement, according to VA.gov. Your lender still decides how much to approve. With remaining entitlement, the county loan limit affects how much you can borrow with no down payment.
Does the VA appraisal replace a home inspection?
No. VA.gov says an appraisal isn't the same as an inspection and strongly recommends getting an inspection before you buy.
Can a seller pay my closing costs on a VA loan?
Yes, within limits. VA.gov says sellers or builders can offer credits toward closing costs, and seller concessions are capped at 4% of the home's reasonable value.
Can I get a VA loan through a mortgage broker?
Yes. VA loans come from private lenders, and a broker can compare VA offers from several of them for you.
Can I get a USDA loan in Sacramento?
It depends on the exact address. USDA eligibility goes by the property's location. Many core urban areas aren't eligible and some outlying areas may be, so we check each address on USDA's eligibility map.
Do USDA loans require a down payment?
No, not for those who qualify. USDA says its guaranteed loan offers 100% financing in eligible rural areas.
What is the income limit for a USDA loan?
USDA caps household income at 115% of the area's median household income. The dollar limit differs by county and household size, so we check the current figure for your county.
Is there a minimum credit score for USDA?
USDA itself has no credit score requirement, but you must show you can handle and manage debt. Lenders often set their own minimums, which is a good reason to compare lenders.
Can I buy a condo or manufactured home with a USDA loan?
Yes, if it's in an eligible area. USDA lists condos, planned developments, modular and manufactured homes as eligible. The home must be your primary residence and can't produce income.
What is the 2026 conforming loan limit in Sacramento County?
FHFA's 2026 county list shows $832,750 for a one-unit home in Sacramento County. Placer, El Dorado and Yolo counties have the same limit. A one-unit loan above that amount is a jumbo loan.
Is Sacramento a high-cost area for loan limits in 2026?
No. FHFA's 2026 county list shows Sacramento, Placer, El Dorado and Yolo counties at the national baseline of $832,750 for one unit, not at a higher high-cost limit.
Do I need a jumbo loan if the house costs more than $832,750?
Not always. The limit applies to the loan amount, not the price. If your down payment brings the loan to $832,750 or less on a one-unit home, it can be a conforming loan.
How much do I need to put down on a jumbo loan?
It depends on the lender and the size of the loan. Jumbo rules aren't standard, so we compare what several approved lenders require for your situation and show you the cash needed for each.
Can retirement accounts count toward jumbo reserves?
Often in part, depending on the lender. Lenders differ on how much of a retirement or investment account they count, so tell us where your savings are held and we'll match you with lenders that fit.
What is a bridge loan?
A bridge loan is a short-term loan secured by your current home. It covers the down payment on your next home until your current home sells, and it's paid off from the sale.
Can I use a HELOC to buy my next home before I sell?
Many owners do. It usually works best when the line is opened before your home is listed, since lenders differ on opening a line on a home that's for sale. You'll also need to qualify for the payments.
Is a contingent offer a bad idea?
Not always. It protects you from owning two homes, but many sellers see it as weaker. It tends to work better when your home is priced right and likely to sell quickly.
What is a rent-back?
A rent-back lets you sell your home and stay in it for a short time after closing. You rent from the new owner until you move. The terms need to be written into the contract.
Can I use a reverse mortgage to buy a smaller home?
Yes, if you're 62 or older. The CFPB explains that a HECM for Purchase lets you buy a new principal residence. You pay the rest of the price and closing costs in cash, often from selling your current home.
Refinancing and your equity
How do I figure out my refinance break-even point?
Divide the total cost of the new loan by your monthly savings. The result is how many months it takes to earn the costs back. If you'll keep the loan longer than that, the refinance may be worth it.
Is a no-closing-cost refinance free?
No. According to the CFPB, the lender either charges a higher rate and gives you a credit, or adds the costs to your loan amount. The costs still exist. You pay them over time instead of at closing.
Can I refinance a VA loan?
Yes. VA.gov describes an Interest Rate Reduction Refinance Loan that replaces an existing VA-backed loan, and VA also offers a cash-out refinance. A VA funding fee may apply unless you're exempt.
Do I need an appraisal to refinance?
Often, yes. Whether yours needs one depends on the program and the lender. We tell you which applies once we know your loan.
Should I take cash out or open a home equity line?
It depends on your current rate and how you'll use the money. A cash-out refinance replaces your whole first mortgage, while a home equity line leaves it in place. We compare both with your real figures.
Can you tell me whether rates will drop?
No one can promise that. We can show you what refinancing looks like today and what rate would need to be available for it to make sense, so you know what to watch for.
What is the difference between a HELOC and a home equity loan?
A HELOC is a line you can draw on, repay and draw again during the draw period. A home equity loan gives you one lump sum up front. Both use your home as collateral.
Does a HELOC replace my current mortgage?
No. A HELOC is usually a separate loan behind your first mortgage, so your current loan and its rate stay in place.
Can my HELOC payment go up?
Yes, in most cases. HELOCs usually have variable rates tied to an index, so payments can change. Payments can also rise when the repayment period starts, or a balloon payment can come due.
Can a lender freeze my HELOC?
Yes. The CFPB says a lender might stop additional borrowing if your home's worth drops significantly, or freeze the line if your finances change and it doubts you can repay.
Can I use a HELOC to buy my next home before I sell?
Some owners do, and it carries timing risk. We look at the sale, the purchase and the loans together so you can see the cost of each path before you choose.
What fees come with a HELOC?
It varies by lender. The CFPB notes lenders can charge certain fees, so ask about fees and minimum draw amounts on every offer. We list them side by side when we compare options.
What is the difference between a Standard and a Limited 203(k)?
Under HUD's Mortgagee Letter 2024-13, the Limited 203(k) covers minor, nonstructural work up to $75,000 with no required consultant. The Standard 203(k) covers major and structural work and requires an FHA-approved consultant.
Can I use a renovation loan on a second home or rental?
With a conventional program, often yes. Fannie Mae HomeStyle and Freddie Mac CHOICERenovation both list one-unit second homes and one-unit investment properties as eligible.
How much of the loan can go to repairs?
It depends on the program. Fannie Mae HomeStyle and Freddie Mac CHOICERenovation cap renovation costs at 75% of the lesser of the price plus repairs or the as-completed value on a purchase. The Limited 203(k) caps rehab costs at $75,000.
Do I get the repair money at closing?
Usually not all of it. The money goes into an account and is paid out in draws as work is finished and inspected. Some programs allow part of it up front, such as up to 50% of planned costs on Fannie Mae HomeStyle.
Can I do the work myself?
Only in a limited way. Fannie Mae, for example, caps do-it-yourself work at 10% of the as-completed value on a one-unit home, needs the lender's approval first and doesn't pay for your own labor.
Reverse mortgages, in depth
How old do you have to be for a HECM?
You must be at least 62. HUD's Programs of HUD 2025 says all HECM borrowers must be at least 62 years old, live in the home as their principal residence and complete counseling with a HUD-certified HECM counselor.
Am I giving up my home if I get a reverse mortgage?
No. HUD says the borrower keeps ownership and may sell and move at any time. You must keep paying property taxes and insurance, keep up the home and live there as your main residence.
Can my heirs end up owing more than the home is worth?
Generally, they cannot with a HECM. The CFPB explains that if the loan balance is more than the home is worth, you or your heirs may not have to pay the difference, because the loan is non-recourse.
Is reverse mortgage counseling required?
Yes. Counseling with an independent HUD-certified HECM counselor is required before the loan. Non-borrowing spouses also take part where they apply.
Can I buy a home with a reverse mortgage?
Yes. HUD's HECM for Purchase program lets a qualifying borrower buy a new principal residence with a reverse mortgage. The HECM covers part of the price, and the borrower brings the rest.
When does a reverse mortgage have to be repaid?
It generally must be repaid when the borrower sells or no longer lives in the home, according to the CFPB. It can come due sooner if property taxes or insurance go unpaid or the home is not kept in good repair.
Is this page advice for my situation?
No. This page is general information about how HECMs work. Your own choice depends on your age, equity, budget and goals. Talk it through with your counselor and your trusted advisors.
What is the first step to get a reverse mortgage?
A conversation about your goals, then counseling with an independent HUD-approved HECM counselor. The lender can't charge fees or process your application until it has your signed counseling certificate.
How long is the HECM counseling certificate good for?
HUD Handbook 4000.1 says the Certificate of HECM Counseling stays valid for 180 days from the date counseling was completed.
Can my family join the counseling session?
Yes, if you want them there. A non-borrowing spouse may be required to attend. The counselor works for you, not the lender.
What is the financial assessment?
It's the lender's review of your credit, your history of paying property taxes and insurance, your income and your expenses, to see whether the HECM will work for you over time. It can lead to a set-aside for taxes and insurance.
Is there a right to cancel a reverse mortgage?
When it's on the home you already live in, federal rules generally give you three days to cancel, and HUD says funds can't be paid out until that period ends. It may not apply when you use a HECM to buy a home, so ask your lender to confirm.
What do I have to do every year after closing?
Certify that the home is still your principal residence when your servicer asks, pay property taxes and insurance (unless a set-aside covers them) and keep the home in good repair.
How long does the whole process take?
It depends on counseling, the appraisal, repairs and title. There's no fixed number of days. We give you a calendar at the start and keep it updated.
Is this page advice for my situation?
No. It's general information about how the HECM process works. Talk it through with your counselor, your family and your own legal or tax advisor.
How soon do I have to move in with HECM for Purchase?
Within 60 days of closing. Federal rules (24 CFR 206.39, checked October 22, 2026) say each borrower, and any eligible non-borrowing spouse, must occupy the new home within 60 days.
Where can my down payment come from?
Federal rules (24 CFR 206.44) allow cash on hand, cash from selling or cashing out your assets, HECM proceeds as the rule allows, and other sources HUD approves. Most people use the sale of their current home.
Can the seller pay my closing costs on a HECM for Purchase?
Only in limited ways. The allowed seller contributions are fees the seller must pay by law, fees sellers customarily pay in that area, and a home warranty. Check current rules with the lender before you negotiate.
Can I buy a condo with a HECM for Purchase?
Sometimes. The condo project itself must be acceptable to FHA under 24 CFR 206.51. Many projects are not, so check the project before you make an offer.
Will I have a monthly mortgage payment?
No monthly principal and interest payment is required while you meet the loan terms. You still pay property taxes, homeowners insurance, HOA dues and upkeep, and the loan balance grows over time.
Do I need counseling for HECM for Purchase?
Yes. Counseling with an independent HUD-approved HECM counselor is required before any HECM, including HECM for Purchase.
Can I get a lump sum with an adjustable-rate HECM?
The single lump sum option is available only on a fixed-rate HECM under 24 CFR 206.19(e). Adjustable-rate HECMs offer monthly payments, a line of credit or a combination.
Does the unused line of credit really grow?
Yes. Under federal rules the unused line of credit grows at the same rate as the principal limit, which is the loan's interest rate plus the annual mortgage insurance rate. It is added borrowing room, not interest paid to you.
How much can I take in the first year?
For an adjustable-rate HECM, HUD's Mortgagee Letter 2013-27 limits first-year payouts to the greater of 60% of the principal limit, or your mandatory obligations plus 10% of the principal limit.
Can I change my payout option later?
With an adjustable-rate HECM, after the first 12 months you can ask to change options as long as your balance is below the principal limit. A fee may apply. With a fixed-rate HECM you cannot change.
Do tenure payments stop at a certain age?
No. The payment is calculated as if it would run to about age 100, but tenure payments continue as long as the loan is in good standing and the home is your principal residence.
Which payout option costs the least?
The CFPB notes that a line of credit or monthly payments generally cost less than a lump sum, because interest and fees apply only to money you have received. Your actual costs depend on the loan offer.
What is the HECM mortgage insurance premium?
HUD's Mortgagee Letter 2017-12 set it at an upfront 2% of the maximum claim amount and an annual 0.50% of the outstanding balance, for case numbers from October 2, 2017. Confirm current rates on your Loan Estimate.
What is the maximum origination fee on a HECM?
Under 24 CFR 206.31, the greater of $2,500 or 2% of the first $200,000 of the maximum claim amount plus 1% above that, with a $6,000 ceiling HUD may adjust for inflation. Lenders may charge less.
What is the 2026 HECM limit?
HUD set the 2026 maximum claim amount at $1,249,125 for case numbers assigned January 1 through December 31, 2026, in all areas (HUD news release 25-145, December 11, 2025).
Why does my spouse's age matter?
The principal limit is based on the age of the youngest borrower or eligible non-borrowing spouse. A younger spouse generally means a lower principal limit, but it also protects that spouse's right to stay.
Can I pay down a reverse mortgage?
Yes. A HECM may be prepaid in full or in part under federal rules. Voluntary payments can slow the growth of the balance.
Can the closing costs be paid from the loan?
Most can. The origination fee may be fully financed under 24 CFR 206.31, and other costs are usually paid from the loan at closing. That reduces what's left for you, so compare costs carefully.
How long do heirs have after a reverse mortgage comes due?
The due-and-payable notice gives 30 days to choose a path. The CFPB says the timeline may be extended up to six months to allow a sale or arrange financing. Extensions are not automatic.
What is the 95% rule for reverse mortgages?
If the loan balance is more than the home is worth, heirs can satisfy the loan by selling the home for at least 95% of its appraised value. The FHA mortgage insurance covers the shortfall (CFPB, last reviewed August 28, 2026).
Will my kids have to pay if the loan is more than the house is worth?
No. A HECM is non-recourse. The lender can collect only through the sale of the home, not from you or your heirs personally.
Can my spouse stay in the home if they're not on the loan?
If they qualify as an eligible non-borrowing spouse under 24 CFR 206.55, the loan is deferred and they can stay while meeting the rules. No more money is paid out during the deferral.
What if we got married after the reverse mortgage closed?
A spouse must have been married to the borrower at closing to be an eligible non-borrowing spouse. A spouse who was ineligible at closing can't become eligible later.
Can heirs keep the house?
Yes, by paying off the loan, often with their own financing or cash. If the balance is higher than the home's value, ask the servicer in writing what payoff HUD's rules allow.
Who should heirs talk to?
The servicer first, in writing. The CFPB suggests a HUD-approved housing counselor or an attorney. If a sale makes sense, a real estate broker who knows estate sales can help with timing.
What happens if I fall behind on property taxes with a reverse mortgage?
Unpaid property taxes can make the loan come due under 24 CFR 206.27. Contact your servicer and a HUD-approved housing counselor right away if you get a notice.
What is a LESA?
A Life Expectancy Set-Aside holds back part of your principal limit to pay property taxes and homeowners insurance over time. The lender may require one after the financial assessment, or you can choose one.
Does a LESA pay my HOA dues?
No. Under 24 CFR 206.205, HOA and condo fees are the borrower's responsibility. A LESA covers property taxes and hazard and flood insurance.
Are reverse mortgage payments taxable income?
Generally not. IRS Publication 554 (2025) says reverse mortgages are loan advances, not income. Ask your tax advisor about your own situation and about interest.
Can a reverse mortgage affect Medi-Cal or SSI?
It can. Loan proceeds are not income, but money you keep past the month you receive it can count as a resource for SSI. Medi-Cal asset rules have changed in recent years, so get current advice first.
How long can I be away from home?
Per the CFPB, with no co-borrower at home: tell your servicer if you'll be away 2 to 6 months; more than 6 months for non-medical reasons, or more than 12 months in a row in a care facility, ends principal residence.
What is a jumbo reverse mortgage?
It's a common name for a proprietary reverse mortgage. The CFPB describes proprietary loans as not federally insured and typically designed for borrowers with higher home values.
When would a jumbo reverse mortgage make sense?
Most often when a home is worth well above the HECM limit, which HUD set at $1,249,125 for 2026, or when a condo isn't FHA-approved. Compare it with a HECM and with other options first.
Is a proprietary reverse mortgage non-recourse?
Terms vary by lender. HECM non-recourse protection comes from federal rules. Ask each proprietary lender, and get the answer in writing.
Does a proprietary reverse mortgage have FHA mortgage insurance?
No. It's not FHA-insured, so there's no FHA premium. The lender sets its own rate and fees, so compare the full cost.
Can I get a proprietary reverse mortgage before 62?
It depends on the lender and state law. A HECM requires the youngest borrower to be 62. Ask each lender what applies in California.
Does the lender take my house with a reverse mortgage?
No. The title stays in your name, according to the CFPB. You can sell and move at any time. The loan comes due when you sell, move out or pass away, or if you don't meet the loan terms.
Do my children have to pay off my reverse mortgage?
Not personally. A HECM is non-recourse. Heirs can sell the home, pay off the loan to keep it, or, if it's worth less than the balance, sell for at least 95% of the appraised value.
Can I get a reverse mortgage if I still owe on my home?
Often, yes. Existing liens must be paid off at settlement, usually with the reverse mortgage itself. You need enough equity for that to work.
Can I cancel a reverse mortgage after closing?
With most reverse mortgages, yes, within three business days after closing, per the CFPB. Notify the lender in writing, ideally by certified mail with a return receipt.
Does the VA offer reverse mortgages?
No. The CFPB says the VA does not offer reverse mortgages, and ads suggesting VA approval may be false.
When should I not get a reverse mortgage?
If you expect to move soon, can't afford taxes, insurance and upkeep, want to leave the home free and clear, or need a quick fix for a money crisis. Compare a HELOC, a refinance or downsizing.
Is a reverse mortgage better than downsizing?
Neither is better for everyone. It depends on whether the home still fits your life, your costs and your plans for heirs. We can lay out both in dollars so you can decide.
Self-employed borrowers and investors
What is the difference between a Qualified and a Non-Qualified Mortgage?
A Qualified Mortgage meets the CFPB's rules: no interest-only period, no negative amortization, no term over 30 years, limits on points and fees, and verified income or assets. A Non-Qualified Mortgage doesn't meet those rules, usually because it was built for income or a property that doesn't fit them.
Can I get a mortgage if I'm self-employed?
Often, yes. Many self-employed borrowers qualify for standard loans with tax returns. If your tax returns don't show your real cash flow, a bank statement or profit and loss loan may be worth comparing.
What is a DSCR loan?
It is a debt service loan for rental property. The lender looks mainly at whether the property's rent covers its payment, instead of your personal income.
Are Non-QM loans more expensive?
They usually cost more than a comparable standard loan, because the lender takes on more risk. We compare several approved lenders and show you the costs in dollars so you can decide if the trade-off is worth it.
What is a hard money loan used for?
It is short-term financing based mainly on the property, often for a fixer or a purchase that needs to close fast. Most borrowers plan to sell or refinance into a longer-term loan.
How many months of bank statements do I need?
Most programs use 12 or 24 months in a row. The exact number depends on the lender and the program, and some lenders treat 12 and 24 months differently.
Can I use personal bank statements instead of business statements?
Often, yes. Some programs use personal statements, some use business statements and some use both. Business statements usually have an expense factor applied, because part of those deposits pays for running the business.
What is an expense factor?
It is a percentage a lender takes off your business deposits to stand in for your business costs. Lenders set it differently, and some will use a figure from your CPA or tax preparer instead.
Do bank statement loans cost more?
Generally, yes. They usually cost more than a comparable Qualified Mortgage because the lender takes on more risk. We compare several approved lenders and show you the costs in dollars.
Can I refinance out of a bank statement loan later?
Many borrowers do once their tax returns show enough income. Ask about any prepayment penalty before you sign, and choose a loan you would be comfortable keeping if rates change.
Does a CPA have to prepare my profit and loss statement?
It depends on the lender. Many want it prepared or signed by a CPA, enrolled agent or other tax preparer. Ask each lender before you have one made.
How many months does the P&L need to cover?
Usually 12 or 24 months, depending on the program. Some lenders also ask for a few months of business bank statements to back it up.
Is a P&L loan the same as a bank statement loan?
No. A bank statement loan works out your income from deposits. A P&L loan uses the net profit on a profit and loss statement. Some programs use both together.
Do P&L loans cost more?
Generally, yes. They usually cost more than a comparable Qualified Mortgage because the lender takes on more risk. We show you the costs from several approved lenders in dollars.
What does DSCR stand for?
Debt service coverage ratio. It is the property's monthly rent divided by its full monthly payment, including principal, interest, taxes, insurance and any HOA dues.
Can I use a DSCR loan for a home I live in?
No. DSCR loans are business-purpose loans for rental property. Lenders usually ask you to confirm in writing that you won't live in the home.
Can I buy in an LLC with a DSCR loan?
Many lenders allow it. They usually want the LLC's formation documents and operating agreement, and they often ask the owners to personally guarantee the loan.
What ratio do I need to qualify?
Each lender sets its own minimum, and some allow a lower ratio with a larger down payment. We compare several approved lenders to see which ones fit your property.
Do DSCR loans have prepayment penalties?
Many do. Ask how the penalty works and how long it lasts, and match it to how long you plan to own the property.
What is the difference between hard money and private money?
The terms are often used the same way. Both describe short-term loans from private lenders or investors, based mainly on the property rather than your income.
Can I use a hard money loan to buy a home I'll live in?
Usually not. Most hard money lenders make business-purpose loans for investment property only. If you plan to live in the home, look at standard or bank statement loans instead.
How long does a hard money loan last?
They are short-term loans, often months to a few years. The exact term depends on the lender, so ask about the term and what an extension would cost before you sign.
Why are hard money loans more expensive?
The lender takes on more risk, lends on properties others won't and moves on a shorter timeline. Rates and up-front fees are generally higher than on bank and Non-QM loans.
What is an exit strategy?
It is your plan to pay off the loan, usually by selling the property or refinancing into a longer-term loan such as a DSCR loan. Plan it before you borrow.
Building, modular and manufactured homes
Are there USDA-eligible areas near Sacramento?
Some areas on the edges of the region may qualify. Eligibility is set by address and household income, and the maps change, so we check the specific home against the current USDA rules.
Read the full guide: USDA, construction and mobile home loans
How is a construction loan paid out?
It is usually paid out in stages as the work is done and checked, instead of all at once. When the home is finished, the loan is replaced with or turns into a regular mortgage, depending on the program.
Read the full guide: USDA, construction and mobile home loans
Is a modular home the same as a mobile home?
No. A modular home is built in sections in a factory and set on a permanent foundation, and many lenders treat it much like a site-built home. Mobile and manufactured homes follow different loan rules.
Read the full guide: USDA, construction and mobile home loans
Can I get an FHA loan on a manufactured home?
FHA insures loans for manufactured homes that meet its rules. Whether a home qualifies depends on the home, its foundation and the land, so we check before you make an offer.
Read the full guide: USDA, construction and mobile home loans
What is a construction-to-permanent loan?
It's financing that covers the build and then becomes, or is replaced by, a long-term mortgage when the home is finished. It can close once before construction or twice, once for the build and once for the permanent loan.
How long can construction take on a one-time close loan?
Fannie Mae's Selling Guide (topic B5-3.1-02, dated May 6, 2026) caps each construction period at 12 months and the total at 18 months for single-closing loans it buys. Other programs and lenders set their own limits.
Can I be my own builder?
It depends on the program. HUD's Handbook 4000.1 says an FHA construction-to-permanent borrower can act as general contractor only if they are a licensed general contractor. Other lenders have their own rules, so ask before you plan around it.
Do I need to own the lot first?
No. You can own it already or buy it as part of the loan. Fannie Mae and FHA both allow either. How long you've owned the land can affect how its value counts in your loan.
What happens if the home appraises for less once it's built?
Under Fannie Mae's single-closing rules (May 6, 2026), a lower value at completion means a new appraisal and qualifying again on the updated numbers. Checking the plans against nearby sales before you build lowers that risk.
Is a modular home the same as a manufactured home?
No. A modular home is built to state and local building codes and set on a permanent foundation. A manufactured home is built to HUD's federal code on a permanent chassis. Fannie Mae treats modular homes like site-built homes.
Can I get a conventional loan on a modular home?
Yes, when the home is complete and on a permanent foundation. Fannie Mae's Selling Guide (topic B2-3-02, February 4, 2026) treats modular homes the same as site-built homes.
Do I need a construction loan for a new modular home?
Usually, yes. A regular mortgage funds once the home is finished, so a construction loan covers the factory, delivery, set and site work until then.
Who inspects a modular home in California?
HCD approves factory-built housing at the factory and its insignia goes on before shipping. The local building department inspects the foundation and installation on your lot.
Will a modular home appraise like a site-built home?
Appraisers compare it with nearby sales, as with any home. That's why it helps to check what similar homes in the area have sold for before you choose a plan.
Can I get a loan on a mobile home built before 1976?
It's hard. FHA and Fannie Mae both require a home built to the HUD Code, which began June 15, 1976. Ask us about the specific home, and we'll tell you what options exist.
What is a chattel loan?
It's a loan on the home only, not the land, used when the home is titled as personal property. The CFPB found in 2021 that these borrowers pay higher interest rates than borrowers with a manufactured home mortgage.
Can I get a mortgage on a manufactured home in a park?
Usually not a standard one, because the home is personal property on rented land. Home-only loans are the common path, including FHA Title I loans that meet HUD's lease rules.
How do I know if my manufactured home is real property in California?
Look for a recorded form HCD 433A with the county recorder. HCD says a home installed on a permanent foundation is no longer registered with HCD. We can help check the records.
Can I buy a manufactured home as a second home or rental?
Fannie Mae allows a second home only in a multi-wide home, and it doesn't allow investment properties. Other programs set their own rules.
Does FHA finance mobile homes built before 1976?
No. HUD's Handbook 4000.1 says manufactured homes built before June 15, 1976 are not eligible for FHA-insured Title II financing. The home must be built to the HUD Code.
What's the difference between FHA Title I and Title II?
Title II is an FHA mortgage on the home and land together as real estate. Title I insures loans on the home only, a lot only, or both, and the home can be personal property.
What if the HUD label is missing from my home?
The lender must get a label verification letter from the Institute for Building Technology and Safety (IBTS), per HUD's Handbook 4000.1. Tell us early so it doesn't hold up closing.
Do I need an engineer for an FHA manufactured home loan?
For Title II, yes. The lender needs a licensed engineer or architect to certify the foundation meets HUD's Permanent Foundations Guide, unless a valid earlier FHA certification can be used.
Can I use an FHA loan for a home in a mobile home park?
Possibly, through FHA Title I, if the lender offers it and the lease meets HUD's rules. Title II requires the home and land to be real estate together.
Can a home that was moved from another site get an FHA loan?
Not under Title II. HUD's Handbook 4000.1 requires the home to have come directly from the maker or dealer to the site.
How mortgages work
Is a preapproval letter a guarantee that I'll get the loan?
No. The CFPB says neither a prequalification nor a preapproval letter is a loan offer. The loan still depends on the home, the appraisal, final documents and nothing changing in your finances.
Does getting preapproved hurt my credit?
A lender's credit check can have a small effect. The CFPB says multiple credit checks from mortgage lenders within a 45-day window are recorded as a single inquiry, so you can compare lenders without each one counting separately.
How long is a preapproval good for?
It depends on the lender and on how old your documents and credit report are. Pay stubs, bank statements and credit reports all age out over time. Ask your lender when they'll need fresh copies.
Can I get preapproved if I'm self-employed?
Yes. Most lenders document self-employed income with your recent tax returns. If write-offs lower your taxable income a lot, a bank statement loan may also be worth comparing.
Can I use Social Security or a pension to qualify?
Yes, in many cases you can. Fannie Mae's guidelines accept documents like an SSA award letter, an SSA-1099 or a pension benefit statement. The lender verifies the amount you receive now.
When will I get my Loan Estimate?
The CFPB says a lender must send it within three business days of your application. It shows the estimated rate, monthly payment and closing costs on a standard form you can compare.
When do I get my Closing Disclosure?
At least three business days before closing, the CFPB says. Compare it with your Loan Estimate and ask about anything that changed.
What does clear to close mean?
It means the underwriter has signed off on every condition. The lender can prepare final documents and the Closing Disclosure, and you move toward signing.
What is the difference between signing and funding?
Signing is when you sign the loan documents. Funding is when the lender sends the loan money to escrow after reviewing those documents. In California, the sale closes once the deed records with the county.
How do I avoid wire fraud at closing?
Before you send money, call escrow at a phone number you already know is real and confirm the wire instructions. Never trust new instructions that arrive by email, even if the email looks familiar.
Which credit score does a mortgage lender use?
For conventional loans, Fannie Mae's guide says the lender uses your middle score when it has three, or the lower score when it has two. With more than one borrower, the lowest of the borrowers' scores is used for the loan.
Can lenders use VantageScore 4.0 now?
Yes, for loans sold to Fannie Mae and Freddie Mac. FHFA says VantageScore 4.0 has been open to all approved lenders since September 9, 2026. Classic FICO is still approved too.
Is FICO 10T being used for mortgages yet?
Not yet for loans delivered to Fannie Mae and Freddie Mac. FHFA's credit score page, last updated October 2, 2026, says FICO 10T is not currently eligible for delivery.
Where can I get my credit reports for free?
At AnnualCreditReport.com or by calling 1-877-322-8228. The FTC says each bureau offers free weekly reports, and checking your own credit doesn't affect your scores.
How long does a credit report dispute take?
The CFPB says the company that reported the information generally must investigate and respond within 30 days of getting your dispute. Start early so it's settled before you're in contract.
Will paying off a collection raise my score right away?
It depends on the scoring model and the account. Ask before you pay anything off in the middle of a loan, so you know how the lender will treat it and whether a rescore makes sense.
How do I calculate my debt-to-income ratio?
Add up your monthly debt payments, including the new housing payment, and divide by your gross monthly income before taxes. For example only: $3,100 in payments divided by $8,000 in income is about 39%.
What is the maximum DTI for a conventional loan?
Fannie Mae's guide, dated April 2, 2025, sets a 50% maximum for loans run through its automated system, Desktop Underwriter. Manually underwritten loans start at 36% and can go up to 45% with stronger credit and reserves. Other loan types have their own limits.
Do utilities and phone bills count in my DTI?
Usually not. Lenders generally count debts that show on your credit report plus obligations like leases, support and the new housing payment. Your budget still has to cover everyday bills.
My student loans are deferred. Do they still count?
For conventional loans, yes. Fannie Mae's guide uses either 1% of the balance or a full payment based on your repayment terms. Other loan types have different rules, so compare them.
Does child support I pay count against me?
If it's required and will continue for more than ten months, it's counted as a monthly debt for conventional loans. Voluntary payments aren't counted.
What is the smallest down payment I can make?
It depends on the loan. Some conventional options allow 3% down, FHA allows as low as 3.5%, and VA loans for eligible borrowers can have no down payment when the price isn't above the appraised value.
Can my parents give me money for a down payment?
Yes, in most cases. Relatives are acceptable donors for conventional loans. They'll sign a gift letter saying no repayment is expected, and the lender will document the transfer.
Can a friend give me gift money?
Sometimes. Fannie Mae accepts gifts from someone with a long-standing family-like or mentoring relationship with you, as well as a fiancé or domestic partner. The lender will want to understand the relationship.
Why does my lender want a letter about a deposit?
The lender has to confirm your down payment isn't a hidden loan. For conventional loans, a single deposit above half your monthly qualifying income usually needs a short explanation and proof of where it came from.
Can I use my IRA for a down payment?
Often, yes. The IRS allows up to $10,000 from an IRA for a qualified first-time home purchase without the 10% additional tax, though regular income tax may apply. Ask your tax advisor before you withdraw.
Does CalHFA help with down payments?
Yes. CalHFA's MyHome Assistance Program is a deferred-payment junior loan of up to 3.5% with FHA or 3% with conventional. Income limits, price limits and education requirements apply.
What affects my mortgage rate the most?
The CFPB lists seven factors: credit scores, home location, home price and loan amount, down payment, loan term, rate type and loan type. Lenders may also price for how you'll use the home, the property type and the lock period, so ask each lender.
What is the difference between APR and interest rate?
The interest rate is the yearly cost of borrowing without fees. The APR adds points, broker fees and other loan charges, so it is usually higher. On a Loan Estimate the rate is on page 1 and the APR is on page 3.
Why is my quote higher than the rate I saw online?
Advertised rates often assume a high credit score, a large down payment, a home you'll live in and sometimes points paid at closing. They may also be from an earlier day. A real quote depends on your file and the home.
Can you tell me today's rate?
Not on a web page. Rates change daily and depend on your file, so we quote real options once we know your situation. The loan options form is the place to start.
Does shopping several lenders help?
Yes. The CFPB suggests getting offers from several lenders and comparing them. As a mortgage broker, Maggie compares a network of approved lenders for the same loan, and you can still compare her quote with anyone else's.
How long does a mortgage rate lock last?
The CFPB says locks are typically 30, 45 or 60 days, and sometimes longer. Policies vary by lender, and extending a lock can be expensive, so match the lock to your closing date.
What is one discount point?
One point equals 1% of your loan amount, paid at closing to lower your rate. For example only, not a quote: on a $100,000 loan, one point is $1,000.
What is a lender credit?
Money from the lender toward your closing costs in exchange for a higher interest rate. It lowers your cash at closing and raises your monthly payment.
How do I know if paying points is worth it?
Divide the cost of the points by the monthly savings. The result is your break-even in months. If you'll keep the loan longer than that, points may make sense.
Can my locked rate change before closing?
Yes, if your loan amount, loan type, down payment, credit, verified income or appraised value changes, or if the lock expires before you close.
Is a temporary buydown the same as a lower rate?
No. It lowers your payment for the first year or two, then the payment rises to the full rate. Plan your budget around the full payment.
What does 7/6 ARM mean?
The rate stays fixed for the first seven years, then can adjust every six months. Always confirm the schedule in the loan's own terms.
What is the margin on an ARM?
A fixed number of percentage points the lender adds to the index to set your new rate. The CFPB says it's set in your loan agreement and doesn't change after closing.
How much can an ARM rate go up?
Caps set the limit. The CFPB says initial caps are commonly 2 or 5 points, later caps 1 or 2 points, and lifetime caps usually 5 points above the starting rate. Check your loan's actual caps.
Is an ARM a bad idea?
Not always. It can fit if you expect to sell or pay down the loan before the fixed period ends and can handle the payment at the cap. It's riskier if a payment increase would strain your budget.
Can my payment change on a fixed-rate loan?
Your principal and interest stay the same. If your property tax and insurance are paid through an escrow account, that part of the payment can still change.
When does PMI go away?
Under the Homeowners Protection Act, as the CFPB explains, you can request cancellation at 80% of the original value. It ends automatically at 78% if you're current, and no later than the month after your loan's midpoint.
Can I remove FHA mortgage insurance?
It depends on your start. Per HUD Mortgagee Letter 2023-05, annual MIP lasts 11 years if your loan-to-value started at 90% or less, and the full term if it started above 90%. Refinancing into another loan is the usual way out sooner.
Do VA loans have PMI?
No. VA loans have no monthly mortgage insurance. Most borrowers pay a one-time funding fee instead, and VA.gov lists exemptions, including for Veterans receiving VA disability compensation.
Who does mortgage insurance protect?
The lender. The CFPB says PMI protects the lender, not you, if you stop making payments.
Is it worth waiting to buy until I have 20% down?
Not always. Mortgage insurance adds cost, and waiting has costs too, such as rent and home prices in the meantime. We can show you both paths in dollars.
What is the transfer tax in Sacramento County?
The Sacramento County Clerk-Recorder lists $0.55 per $500 of value, less loans assumed. Inside City of Sacramento limits, a separate City tax of .00275 of the price also applies. Who pays is set in your contract.
What is a supplemental tax bill?
A separate California property tax bill after a sale, based on the new assessed value. The Sacramento County Assessor says it can take up to two years to arrive and goes to you, not your mortgage servicer.
Can closing costs go up after my Loan Estimate?
Some can. The CFPB says lender and broker fees and transfer taxes generally can't rise without a change in circumstances. Some third-party fees can rise up to 10% in total. Prepaids and escrow deposits can change by any amount.
Do I need owner's title insurance?
It's usually optional. The CFPB toolkit says most lenders require a lender's policy, and an owner's policy protects your own investment in the home. Ask your escrow or title officer what it covers.
How do I avoid wire fraud at closing?
Confirm wire instructions by phone with a number you got in person or at the start. The CFPB says never follow wiring instructions in an email.
Can the seller pay my closing costs?
Often, through a seller credit written into the contract. Each loan program sets limits, so check yours before you write the offer.
How soon do I get a Loan Estimate?
The CFPB says a lender must provide one within three business days of receiving your application: your name, income, Social Security number, the home's address, its estimated value and the loan amount.
When do I get my Closing Disclosure?
At least three business days before closing, per the CFPB. Compare it with your Loan Estimate and ask about anything that changed.
What restarts the three-day waiting period?
Under federal rules, a new three-business-day wait applies if the APR becomes inaccurate, the loan product changes or a prepayment penalty is added.
Can a lender charge me before I get a Loan Estimate?
Only a small fee for your credit report, according to the CFPB toolkit. Other fees, such as the appraisal, wait until you tell the lender you want to proceed.
Am I committed once I get a Loan Estimate?
No. The CFPB toolkit says you aren't committed to any lender until you sign final closing documents.
What is the most useful number for comparing offers?
It depends on your plans. If you may move or refinance, the In 5 years figure on page 3 is often the clearest. Also compare Sections A and B on page 2 and the cash to close on page 1.
Is escrow the same thing as an impound account?
No, though both get called escrow. In California, escrow is the neutral company that handles your closing. An impound account is the account your servicer uses after closing to pay your property taxes and insurance.
Will my impound account pay the supplemental tax bill?
Maybe not. Sacramento County says supplemental bills aren't mailed to your lender and your lender may not pay them. Watch your mail after closing and call your servicer when one arrives.
Can I waive my impound account?
Sometimes. California law limits when a lender can require one on an owner-occupied single-family home, with exceptions such as government-backed loans and loans at 90% or more of the value. Lenders also set their own rules, so ask.
Why did my mortgage payment go up on a fixed-rate loan?
Usually because property taxes or insurance went up, which changes the impound part of your payment. Your annual escrow statement shows what changed.
What is the California FAIR Plan?
It's a source of property insurance for people who can't get a policy from a regular insurer. The Department of Insurance says its residential policy is currently limited to fire, with other coverage available through a separate Difference in Conditions policy.
Behind on payments, short sales and credit
What's the difference between forbearance and a loan modification?
Forbearance pauses or lowers payments for a while, and you still repay the full amount later. A modification changes the loan's terms to make the payment more affordable over the long run. The CFPB explains both.
How far behind do I have to be before foreclosure can start?
Federal rules under the CFPB's Regulation X generally bar a servicer from starting foreclosure until you're more than 120 days delinquent. Don't wait that long to call. Options are wider early.
Does California foreclosure go through court?
Usually not. Most California home loans use a deed of trust, and the required notice says the home may be sold without any court action. A notice of default comes first, then a notice of sale, then the trustee's sale.
Can I stop a foreclosure by paying what I owe?
Often you can reinstate. California Civil Code 2924c lets you cure a monetary default by paying past-due amounts and permitted costs until five business days before the sale date in the notice of sale.
Is a housing counselor really free?
HUD says it funds free or very low-cost housing counseling nationwide. Call HUD at (800) 569-4287 to find a HUD-approved counselor.
Someone offered to save my house for a fee. Is that legitimate?
Be very careful. The CFPB says relief companies can't collect fees until they give you a written offer from your lender that you decide to accept. Upfront fees, deed transfers and advice to stop paying are classic scam signs.
If I sell, do I need my lender's permission?
Not for a regular sale that pays off the loan. The CFPB says you don't need your servicer's approval but should let them know. A short sale does need lender approval.
Is this page legal advice?
No. It's general information. If you've received a notice of default or notice of sale, talk with an attorney about your own timeline.
What is a short sale?
It's a sale of your home for less than you owe on the mortgage, with your lender's written agreement to accept less. The CFPB calls it an alternative to foreclosure. You do move out, because it's a sale.
Can a lender come after me for the difference in California?
For most homeowners, no. California Code of Civil Procedure 580e bars a deficiency after a lender-approved short sale of a dwelling of up to four units, once the sale closes and the lender gets the agreed proceeds. It doesn't apply to fraud or waste, or to borrowers that are corporations, LLCs or limited partnerships. Ask an attorney about your own case.
Will I get a 1099-C after a short sale?
You may. The IRS says a creditor may send Form 1099-C showing the amount of debt canceled. Whether you owe tax depends on which exclusions apply to you. Talk with a tax advisor before you accept the approval.
How long does a short sale stay on my credit report?
The CFPB says most negative information can generally be reported for seven years. The late payments before a short sale count too. No one can predict the exact effect on your score.
How soon can I buy again after a short sale?
It depends on the loan. Fannie Mae's guide sets four years, or two with documented extenuating circumstances. FHA generally sets three years, with exceptions, including one for borrowers who stayed current in the 12 months before the sale. VA looks at the facts and may not require a wait in some cases.
Do I have to be behind on payments to do a short sale?
Not always. Each lender sets its own hardship rules. Call your servicer and ask what it requires. Staying current, if you can, may matter for a future FHA loan.
Does a lender have to approve a short sale?
Yes. Every lender with a loan on the home must agree in writing. Until then, an accepted offer is subject to that approval.
Is this page legal or tax advice?
No. It's general information about how short sales work. For your own case, talk with a real estate attorney and a tax advisor.
How long does a foreclosure stay on my credit report?
The CFPB says most negative information can generally be reported for seven years. Bankruptcies can stay for up to ten years.
Read the full guide: Credit after a short sale or foreclosure
Is a short sale better than a foreclosure for buying again?
For a conventional loan, the waits are shorter. Fannie Mae's guide sets four years after a short sale and seven after a foreclosure, before any extenuating-circumstance exceptions. FHA generally sets three years for both, with an exception for some borrowers who were current before the short sale.
Read the full guide: Credit after a short sale or foreclosure
How soon after Chapter 7 bankruptcy can I get an FHA loan?
HUD Handbook 4000.1 generally requires two years from discharge. Between 12 months and two years may be acceptable if the bankruptcy came from circumstances beyond your control and you've handled credit responsibly since.
Read the full guide: Credit after a short sale or foreclosure
Can I get a VA loan after a foreclosure?
Possibly. VA's Chapter 4 underwriting guidance says a foreclosure doesn't by itself disqualify you. One finalized more than two years before closing may be disregarded, and one within one to two years needs good new credit and a cause beyond your control.
Read the full guide: Credit after a short sale or foreclosure
Does divorce count as an extenuating circumstance?
Generally not for FHA, which says divorce alone is not an extenuating circumstance. FHA does allow an exception if your loan was current at the divorce, your ex-spouse got the home and it was later lost. Fannie Mae lists divorce decrees among possible supporting documents.
Read the full guide: Credit after a short sale or foreclosure
Will my credit score go back up?
No one can promise a score change or a timeline. What you can control is paying on time, keeping balances low and making sure your reports are accurate.
Read the full guide: Credit after a short sale or foreclosure
When does the waiting period start?
It depends on the event and the program. Fannie Mae counts from the completion date or the bankruptcy discharge or dismissal. FHA counts from the title transfer or discharge. Keep the documents that show the date.
Read the full guide: Credit after a short sale or foreclosure
Is this page legal or credit advice?
No. It's general information about program rules as of the dates shown. Your lender applies the rules to your own file.
Read the full guide: Credit after a short sale or foreclosure
General information, not legal or tax advice. Loans are arranged through Maggie B. Hopkins, NMLS #349517 · Surroundings NMLS #2528307. This is not a commitment to lend. All loans subject to credit approval and property qualification. Equal Housing Lender.
Talk to Maggie directly: cell (916) 549-3131 (text or call) · maggie@loveyoursurroundings.coMaggie B. Hopkins, NMLS #349517 · Surroundings NMLS #2528307
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