Question 1

How much house can I afford?

Accepted Answer

A comfortable budget usually keeps your total housing payment (principal, interest, taxes, insurance, HOA, and PMI) under 28–33% of gross monthly income, with total debt payments under 43–45%. In Texas the tax-and-insurance load is higher than most of the country, so the price you can afford is usually 10–15% lower than a national calculator suggests. The real answer comes from a full pre-approval — we look at income, credit, debts, and reserves together and give you a range you can shop confidently.

Question 2

What credit score do I need for a mortgage?

Accepted Answer

Program minimums: FHA 580 (500 with 10% down), VA 580 typically, Conventional 620, Jumbo 680–700+, DSCR 660+, Bank Statement 660+. The best pricing tiers show up at 720, 740, and 760+. Below 720 you'll usually save money by delaying 60–90 days and cleaning up one or two items rather than closing at a rougher tier.

Question 3

How long does pre-approval take?

Accepted Answer

A same-day soft pre-approval is normal after you send income and asset documents. An underwriter-reviewed pre-approval — the one that beats other offers — usually takes 24–72 hours.

Question 4

What documents do I need to apply?

Accepted Answer

Two years W-2s or 1099s, most recent 30 days of pay stubs, two months of bank statements (all pages), photo ID, and for self-employed borrowers, two years of tax returns or 12–24 months of bank statements depending on program.

Question 5

Can I buy a home with only 3% down?

Accepted Answer

Yes. Conventional 97 allows 3% down for first-time or income-eligible buyers; HomeReady and Home Possible also permit 3% down with flexible mortgage insurance. FHA allows 3.5% down with a 580 score. VA and USDA allow 0% down for eligible borrowers.

Question 6

Can I use gift funds for the down payment?

Accepted Answer

Yes. FHA allows 100% gift funds. Conventional allows 100% gift funds for primary residence. VA and USDA also permit gift funds. A signed gift letter and paper trail (donor's bank statement + wire/check + your deposit) is required.

Question 7

How much are closing costs in Texas?

Accepted Answer

Roughly 2–4% of the loan amount on a purchase — title, escrow, appraisal, lender, taxes, and insurance prepaids. Texas title insurance is state-regulated and predictable. Seller-paid closing cost credits are common and completely negotiable inside your offer.

Question 8

Can the seller pay my closing costs?

Accepted Answer

Yes — up to 3% on Conventional owner-occupied under 90% LTV, up to 6% on FHA and VA, and up to 9% on Conventional at higher LTV. Structuring an offer around a seller credit is often smarter than a lower price when rates are elevated.

Question 9

How does a Bank Statement Loan work?

Accepted Answer

We qualify you on 12 or 24 months of business or personal bank deposits instead of tax returns. An expense factor (often 50%, or a CPA-provided figure) is applied to your gross deposits to arrive at qualifying income. Rates run modestly above Conventional; credit typically 660+.

Question 10

How does a DSCR loan work?

Accepted Answer

DSCR (Debt Service Coverage Ratio) qualifies on the rental income of the subject property, not your personal tax returns. Gross rent ÷ PITIA = your ratio. Most programs like 1.0+, and there are sub-1.0 programs for the right file. No personal income documentation, close in an LLC, no cap on financed properties.

Question 11

Can I buy an investment property in an LLC?

Accepted Answer

Yes — DSCR and portfolio programs allow closing in a Texas LLC. Conventional financing requires the loan to be in personal names, though you can transfer to an LLC after closing (with lender-notification and title considerations).

Question 12

Can I buy a home after bankruptcy or foreclosure?

Accepted Answer

Yes. Waiting periods: Chapter 7 — 2 years FHA/VA, 4 years Conventional. Chapter 13 — 1 year of on-time payments FHA/VA with trustee approval. Foreclosure — 3 years FHA, 2 years VA, 7 years Conventional. Non-QM programs can finance as soon as 1 day out of the seasoning window with a larger down payment.

Question 13

How are mortgage rates set?

Accepted Answer

Rates are driven primarily by the Mortgage-Backed Securities (MBS) market, not the Fed Funds Rate directly. When bonds rally, rates fall. Your specific rate then adjusts for credit score, LTV, occupancy, property type, loan amount, and loan program.

Question 14

Should I buy discount points?

Accepted Answer

Points make sense when your break-even period (points cost ÷ monthly savings) is well under how long you'll keep the loan. On a 30-year mortgage you'll refinance or sell inside 5–7 years on average — if your break-even is longer than that, skip the points.

Question 15

ARM or fixed-rate — which should I pick?

Accepted Answer

Fixed-rate is default for most buyers. ARMs (5/6, 7/6, 10/6) make sense when you'll definitely move or refinance before the fixed period ends AND the rate difference is meaningful (typically 0.5%+).

Question 16

When does PMI drop off?

Accepted Answer

On Conventional loans, PMI drops automatically at 78% LTV based on original value, and you can request cancellation at 80% LTV. FHA MIP stays for the life of the loan on most files placed today — a reason we always compare FHA to a low-down Conventional.

Question 17

What is an escrow account?

Accepted Answer

An escrow account holds your property tax and insurance premiums as part of your monthly payment. The servicer pays them when due. Escrow is required on FHA, VA, USDA, and Conventional loans above 80% LTV. Below 80% you can waive escrow (Texas allows this) for a small pricing adjustment.

Question 18

How long does a mortgage take to close?

Accepted Answer

21–30 days is standard on a purchase, 30–35 on a refinance. We regularly close in 15–17 days when the file is clean. The single biggest driver is how fast we get documents in and how quickly the appraisal comes back.

Question 19

Should I choose Conventional or FHA?

Accepted Answer

Above 680 credit and with 5%+ down, Conventional usually wins on total cost because PMI drops off. Below 680, or with heavier debts, FHA usually wins on qualifying flexibility even though MIP stays. We run the head-to-head on your file before you decide.

Question 20

Am I eligible for a USDA loan?

Accepted Answer

USDA requires the property to be in an eligible zip code (large parts of suburban and rural Texas qualify) and your household income to be at or below the county limit. Zero down, competitive rates, low guarantee fee.

Question 21

What is the VA funding fee?

Accepted Answer

A one-time fee (1.25%–3.3% depending on down payment and prior VA use) that funds the program. It can be financed into the loan and is waived for veterans with a service-connected disability rating.

Question 22

When is refinancing worth it?

Accepted Answer

Break-even (closing costs ÷ monthly savings) under 24–30 months is the rule of thumb — assuming you'll stay in the home longer than break-even. Cash-out and term-change refinances follow different math.

Question 23

How does a Texas cash-out refinance work?

Accepted Answer

Texas has unique home equity rules under Section 50(a)(6): max 80% LTV combined, 12-day cooling-off period, and specific disclosure requirements. Once refinanced as a home equity loan, the property is 'once a home equity, always a home equity' — an important consideration we walk through before signing.

Question 24

Why are Texas property taxes so high?

Accepted Answer

Texas has no state income tax, so property taxes carry a larger share of local funding — commonly 2.0–3.0% of assessed value depending on ISD and MUD. It has a direct effect on how much home you can afford, so we quote payment with a real Texas tax number, not a national default.

Question 25

What is a Texas homestead exemption?

Accepted Answer

The homestead exemption reduces the taxable value of your primary residence for school district taxes (currently $100,000). File after closing with your county appraisal district — it's free and saves meaningful money every year.

Question 26

What is a MUD tax and does it matter?

Accepted Answer

Municipal Utility Districts fund water, sewer, and drainage infrastructure in newer Texas suburbs. MUD taxes can add 0.3–1.0% to your effective property tax rate — critical to include when we quote your monthly payment.

Question 27

Do I need flood insurance in Texas?

Accepted Answer

Required only if the property is in a FEMA Special Flood Hazard Area (A or V zones). Even outside those zones, many Texas buyers add flood coverage voluntarily — it's often affordable and post-Harvey lending experience proved its value.

Question 28

What first-time buyer programs exist in Texas?

Accepted Answer

TSAHC (Texas State Affordable Housing Corp), TDHCA My First Texas Home, SETH 5 Star, and city-specific programs (Houston HomeBuyer Assistance, Dallas HAP, etc.) offer grants, forgivable seconds, or below-market bond rates layered on top of FHA, VA, USDA, or Conventional.

Question 29

Do I need 2 years of self-employment history?

Accepted Answer

Conventional and FHA generally require 2 years of self-employment income. Some programs allow 1 year if you were in the same line of work as a W-2 employee previously. Bank Statement and DSCR programs work with 12–24 months of business history in most cases.

Question 30

Can I qualify with only 1099 income?

Accepted Answer

Yes — 1099-only loan programs use your 1099 gross minus a program-specific expense factor as qualifying income. Common for real estate agents, insurance producers, and consultants who write off heavily on Schedule C.

Question 31

How can I quickly improve my credit score?

Accepted Answer

The fastest gains: pay balances below 30% of the credit limit (ideally under 10%), avoid opening new accounts, dispute genuine errors, and don't close old cards. A rapid rescore through the lender can post the change in 3–7 days when it materially helps pricing.

Question 32

Does a co-signer help me qualify?

Accepted Answer

A non-occupant co-borrower can add income for qualifying on Conventional and FHA loans. Credit is treated as the lower-middle of the two borrowers. It's a real tool but shifts liability to the co-signer — worth planning around.

Question 33

How much cash reserves do I need after closing?

Accepted Answer

Conventional primary residence: typically none required. Second home: 2 months PITI. Investment property: 6 months PITI plus 2 months on other financed properties. Jumbo often requires 6–12 months. Bank Statement programs can require 6+ months.

Question 34

What happens if the appraisal comes in low?

Accepted Answer

You renegotiate, dispute with additional comps, bring extra cash to bridge the gap, or walk away with your appraisal contingency intact. In multiple-offer situations we structure appraisal-gap language up front so a low appraisal doesn't kill the deal.

Question 35

What's the difference between a second home and investment property?

Accepted Answer

Second home = you occupy it part of the year, not rented to others, priced like primary residence with a small adjustment. Investment property = rented out, priced with a larger LTV-based rate adjustment. Occupancy misrepresentation is loan fraud — we structure the correct product for how you'll actually use it.

Question 36

What is the jumbo loan threshold in Texas?

Accepted Answer

For 2026 the conforming loan limit is $806,500 in most Texas counties. Loans above that threshold price as Jumbo — a different market with its own credit, reserve, and pricing structure.

Question 37

Does HOA affect how much I can qualify for?

Accepted Answer

Yes — HOA dues are included in your housing payment for debt-to-income calculation. A $200/month HOA can reduce qualifying purchase price by roughly $30–40k depending on rate.

Question 38

Should I buy first or sell first?

Accepted Answer

Depends on your equity, cash reserves, and market. Bridge loans, delayed financing, contingent offers, and rent-back agreements each solve different pieces. We map the sequence before you list or write an offer.

Question 39

When should I lock my rate?

Accepted Answer

Typically once you're under contract with a defined closing date. Longer locks cost more. Float-down options can be structured on some programs if rates drop meaningfully after lock.

Question 40

How do student loans affect my mortgage qualifying?

Accepted Answer

Fannie Mae and Freddie Mac use the actual payment on your credit report; if $0 IBR shows, they may use 0.5–1% of balance. FHA uses 0.5% of the outstanding balance. VA is similar. Restructuring student loan payments before applying can materially change qualifying.

Question 41

Do condos need special approval?

Accepted Answer

Yes. Conventional requires warrantable-project approval; FHA requires FHA-approved project status. Non-warrantable condos finance through Non-QM at slightly higher rates. We check project status before you write an offer.

Question 42

Can I finance a manufactured home in Texas?

Accepted Answer

Yes — real-property manufactured homes (permanently affixed, on land you own) can qualify for Conventional, FHA, VA, and USDA financing subject to age and foundation requirements. Personal-property (chattel) mobile homes are a different market.

Question 43

How much can the seller pay on a VA loan?

Accepted Answer

VA allows up to 4% in seller concessions (funding fee, prepaids, escrows) plus unlimited closing cost credits. It's one of VA's biggest advantages in a buyer's market.

Question 44

What makes a loan commercial vs residential?

Accepted Answer

1–4 units is residential (Fannie/Freddie/FHA/VA/Non-QM/DSCR eligible). 5+ units, mixed-use, retail, office, and pure business real estate are commercial — different underwriting, different documentation, non-recourse options on qualifying deals.

Question 45

What is a reverse mortgage?

Accepted Answer

A HECM (Home Equity Conversion Mortgage) lets homeowners 62+ convert equity into cash or a line of credit without a monthly principal-and-interest payment. It's a specialized product; if it fits your situation we can refer you to a trusted specialist.

Question 46

How does an asset depletion loan work?

Accepted Answer

Certain Non-QM programs let qualified assets (liquid + retirement, after haircut) be divided over 60–360 months to create qualifying income — useful for asset-rich, income-optimized borrowers who don't want to unwind investments.

Question 47

Will shopping for a mortgage hurt my credit?

Accepted Answer

All mortgage inquiries within a 45-day window count as one for scoring purposes. Shopping is expected and doesn't materially hurt your score.

Question 48

Do mortgages have prepayment penalties?

Accepted Answer

Conventional, FHA, VA, and USDA loans have no prepayment penalty. Some DSCR programs have prepayment penalties (2/1/0, 3/2/1, etc.) — we always disclose and offer a no-prepay option for a slight price adjustment.

Question 49

What happens to my escrow when I refinance?

Accepted Answer

The old lender refunds your escrow balance 15–30 days after payoff. Your new loan collects a fresh escrow at closing — plan cash flow around a temporary 'double payment' month.

Question 50

Can only one spouse be on the mortgage?

Accepted Answer

Yes. In Texas — a community property state — the non-borrowing spouse still has to sign certain documents at closing and their debts may be considered. Structuring one-spouse loans requires attention; we walk through it before we quote.

Answers, in plain English.