Every Mortgage Question, Answered

Send a loan officer two recent pay stubs, two years of W-2s or tax returns, two months of bank statements and a photo ID. They pull your credit and verify income and assets, then issue a pre-approval letter — usually within one to three business days. There's no cost and no obligation.

A pre-qualification is an estimate based on numbers you tell the lender. A pre-approval means your credit, income and assets have actually been verified. Listing agents in competitive markets expect a pre-approval, and a pre-qualification alone can put your offer behind someone else's.

Typically 60 to 90 days. Credit reports and income documents go stale, so it can be refreshed with updated paperwork — usually a quick process. If your pre-approval expires mid-search, tell your loan officer before you write an offer.

A mortgage pre-approval involves a hard credit inquiry, which typically costs a few points temporarily. Rate shopping is protected: multiple mortgage inquiries within a 14 to 45 day window generally count as a single inquiry, so comparing lenders won't compound the damage.

Most programs allow total monthly debt around 43% to 50% of gross income, depending on the loan and the strength of your file. But qualifying for an amount and being comfortable at that amount are different questions. Build the number around the payment you actually want, then check that it qualifies.

Two most recent pay stubs, two years of W-2s (or two years of tax returns if self-employed), two months of all-pages bank and asset statements, photo ID, and for VA loans a DD-214 or Certificate of Eligibility. Expect to explain and document any large recent deposits.

Yes, and earlier than most people do. Pre-approval tells you your real budget, surfaces credit or documentation problems while there's still time to fix them, and lets you make an offer the day you find the right house instead of scrambling.

Yes, and comparing is reasonable. Inquiries inside the standard rate-shopping window count as one. Compare Loan Estimates side by side — total costs and the actual monthly payment, not just the headline rate.

Don't open new credit, finance a car, buy furniture on store credit, change jobs, move large sums between accounts without a paper trail, or make undocumented deposits. Underwriting re-verifies before closing, and any of these can derail an approved loan.

Not 20%. Conventional loans start at 3% down for many first-time buyers and 5% otherwise, FHA requires 3.5%, and VA and USDA loans require nothing down. On a $275,000 home that's roughly $8,250 to $9,625 for the low-down-payment options.

No. Twenty percent avoids mortgage insurance on a conventional loan, which is a real benefit, but it isn't a requirement. Plenty of buyers are better off putting less down, keeping cash in reserve, and dropping mortgage insurance later once they reach 20% equity.

Down payment assistance is a grant or second loan that covers some of your down payment and closing costs. In Iowa the main source is the Iowa Finance Authority, which offers a $2,500 grant or a second loan of up to 5% of the purchase price when paired with a FirstHome or Homes for Iowans mortgage. You access it through a participating lender, not by applying directly.

Yes. Most loan programs allow gifts from family members, and some allow gifts from employers, close friends or charitable organizations. The donor signs a gift letter confirming it's not a loan, and the transfer needs a clear paper trail from their account to yours. Deposit it well before closing, not the week of.

Yes, through two routes. VA loans require no down payment for eligible veterans, active-duty service members and some surviving spouses. USDA rural development loans require no down payment in eligible areas with income limits. Down payment assistance can also get a conventional or FHA buyer close to zero out of pocket.

Often less than you'd think. Most assistance programs can be applied to closing costs as well as the down payment, and seller concessions or a lender credit can cover the rest. Some buyers do close with almost nothing out of pocket, though you'll still need earnest money and an appraisal fee up front.

Earnest money is a deposit — often 1% to 2% of the price — showing the seller you're serious. It's held in escrow and credited toward your down payment or closing costs at closing. You generally get it back if you walk away for a reason protected by a contingency in your contract, and generally don't if you simply change your mind.

No. A larger down payment lowers your payment and may drop mortgage insurance, but cash in the house is cash you can't reach in an emergency. Draining your savings to hit 20% and then having no reserves is a worse position than putting 5% down and keeping a cushion.

FHA loans generally allow scores down to 580 with 3.5% down. Conventional typically starts around 620. VA and USDA commonly want 620 or better depending on the lender. Iowa Finance Authority programs require a 640 minimum. Higher scores lower both your rate and your mortgage insurance.

Often yes. FHA is designed for exactly this, and scores in the 500s can sometimes work with 10% down. What matters as much as the number is what's behind it — recent late payments and collections weigh more heavily than old ones. If you're not approvable today, a loan officer can usually tell you what would change that and roughly how long it'd take.

Pay down revolving balances — utilization moves scores faster than anything else and updates within a billing cycle. Don't close old accounts. Don't open new ones. Dispute genuine errors. If you pay something off mid-process, a rapid rescore can often reflect it in days rather than a full cycle.

Your DTI is total monthly debt payments divided by gross monthly income. Conventional loans often go to 45% or 50% with strong compensating factors, FHA can stretch further with an approve/eligible finding, and Iowa Finance Authority programs cap at 50% with automated approval or 45% manually underwritten. Student loans, car payments, credit card minimums and the new mortgage all count.

No, but they count toward your debt-to-income ratio. How the payment is calculated varies by program, and deferred or income-driven-repayment loans are handled differently across loan types — which means the same borrower can qualify for a larger loan under one program than another. Worth having a loan officer run more than one scenario.

It depends on the loan and the event. FHA generally requires two years after a Chapter 7 discharge and three years after a foreclosure. Conventional waiting periods are typically longer. VA is often more flexible. Extenuating circumstances can shorten some of these. If you're near the edge of a waiting period, get the exact date checked rather than assuming.

Most programs want a two-year history, but it doesn't have to be with one employer. Job changes within the same field are generally fine and sometimes helpful. Gaps, career changes and moves from salary to commission need explanation and sometimes more documentation.

Yes. Adding someone adds their income — but also their debts and their credit profile, and lenders often use the lower middle score of the borrowers. Some programs allow a non-occupant co-borrower, meaning a parent can help you qualify without living there. Whether it helps depends entirely on their file.

Not necessarily, but variable income usually needs a two-year history and gets averaged. A rising trend is used at the average; a declining trend is often used at the lower recent figure. If you've recently moved onto commission, timing your application matters.

FHA is more forgiving on credit — often down to 580 — and allows higher debt ratios, but carries mortgage insurance for the life of the loan in most cases. Conventional needs roughly 620 or better, but its mortgage insurance drops off at 20% equity. Strong credit usually favors conventional on total cost; rebuilding credit often favors FHA.

A VA loan is a zero-down, no-monthly-mortgage-insurance mortgage backed by the Department of Veterans Affairs, available to eligible veterans, active-duty service members, National Guard and Reserve members, and some surviving spouses. It's usually the best product on the market for anyone who qualifies. Eligibility is confirmed with a Certificate of Eligibility.

Not for veterans with full entitlement — you can borrow whatever a lender approves based on income, credit and appraised value, with no down payment. Loan limits only constrain borrowers with partial entitlement, typically those with an existing VA loan or a prior foreclosure. Knowing your entitlement status before you shop matters.

It's a one-time fee that replaces monthly mortgage insurance, usually financed into the loan rather than paid at closing. The percentage varies with down payment and whether it's your first use. It's waived entirely for veterans receiving VA compensation for a service-connected disability, and for certain surviving spouses.

A USDA rural development loan requires no down payment and is available in designated rural and small-town areas, subject to household income limits. Eligibility is set by the property's address — plenty of places that feel suburban still qualify. Always check a specific address rather than assuming.

A jumbo loan exceeds the conforming loan limit, which is $832,750 for a single-unit property in most counties in 2026. Jumbos typically require stronger credit, a larger down payment and more reserves. Limits change annually, so verify the current figure.

A DSCR loan qualifies on a rental property's income rather than your personal income — no tax returns, no debt-to-income review. Lenders compare the property's rent to its total payment; a ratio of 1.0 or higher means it covers itself. It's the standard tool for investors whose returns understate cash flow or who've hit conventional financing limits.

A bank statement loan qualifies you on 12 to 24 months of bank deposits instead of tax returns. It exists because business write-offs that legitimately lower your tax bill also lower your reported income — and therefore your buying power. Rates run higher than conventional, and many borrowers refinance out once tax returns support traditional qualifying.

A fixed rate never changes, which is the right default for most buyers. An ARM starts lower and adjusts after an initial period — worth considering if you're confident you'll sell or refinance before the adjustment, but it's a bet on your own timeline. Understand the caps and the adjustment schedule before choosing one.

A 30-year has the lower payment and more flexibility; a 15-year has a lower rate and dramatically less total interest but a much higher required payment. A reasonable middle path is taking the 30-year and paying extra voluntarily, which gets you much of the benefit while keeping the lower payment as a safety valve.

Yes. Renovation loans finance the purchase and the improvements in one mortgage based on the after-repair value. Construction loans fund a build in draws and then convert to permanent financing. Both need more lead time and planning than a standard purchase, so start those conversations early.

Generally anyone who hasn't owned a primary residence in the previous three years — which means plenty of former homeowners qualify again. Exceptions often exist for veterans and for buyers purchasing in designated targeted areas. If you owned a home years ago and have rented since, ask rather than assuming you're excluded.

The Iowa Finance Authority offers FirstHome for first-time buyers and Homes for Iowans for first-time and repeat buyers, both with below-market rates and reduced fees — and notably, your credit score doesn't affect your rate. Either can pair with a $2,500 grant or a second loan of up to 5% of the price. Income and purchase price limits apply, a 640 score is required, and funding is limited.

Yes, in addition to VA loans. The Iowa Finance Authority's Military Homeownership Assistance program offers a $5,000 grant toward down payment and closing costs for eligible service members, veterans and surviving spouses, usable alongside a FirstHome or Homes for Iowans mortgage. Iowa also has a Disabled Veteran Homestead Property Tax Credit and a separate Military Service Property Tax Exemption.

For most standard loans, no. For many down payment assistance programs, yes — at least one borrower typically has to complete an approved course. They're usually free, online, and take a few hours. Worth doing early so it isn't the thing holding up your closing.

It depends on how long you'll stay, what you'd pay in rent versus ownership, and what prices do while you wait. Buying generally wins over longer horizons because you're building equity instead of paying someone else's mortgage. It generally loses over short ones, because transaction costs on both ends are real. Under about three years, renting is often the better financial call.

That's a bet on two unknowns at once — rates and prices. Worth remembering that a rate is refinanceable and a purchase price isn't. That's not an argument for buying at any price; it's an argument for running the actual numbers on your situation rather than waiting on a headline.

Property taxes and homeowners insurance, usually collected monthly through escrow. Plus maintenance — a common rule of thumb is 1% to 2% of the home's value annually — utilities that are typically higher than an apartment's, and HOA dues if applicable. The mortgage payment is not the cost of owning the home.

You're not required to have one, but for a first purchase it's generally a good idea. A good agent handles comparable pricing, contract terms, inspection negotiation and deadline management. Ask your loan officer for referrals — they see which agents actually get transactions closed.

Yes. Self-employed borrowers qualify for conventional, FHA, VA and USDA loans using two years of tax returns. It's a documentation difference, not a disqualification — and specialty programs exist when returns don't reflect your real cash flow.

Two years is the standard. Some lenders accept one year when you have prior experience in the same field, relevant education, or a documented transition from W-2 work doing similar work. If you're approaching the two-year mark, timing your application can matter.

Net income from your tax returns, not gross revenue — typically averaged across two years, with certain deductions like depreciation added back. This is why aggressive write-offs reduce your buying power even though they're perfectly legitimate tax planning. If you're buying within two years, talk to your loan officer before your CPA finalizes your return.

You provide 12 or 24 months of personal or business bank statements. The lender averages qualifying deposits and uses that as your income, skipping tax returns entirely. Expect a higher rate than conventional and typically a larger down payment, and expect to refinance into conventional later once your returns support it.

Lenders generally qualify you on the lower, more recent year and will ask for an explanation of the decline. If that number is too low, a 12-month bank statement program capturing your recovery may work better than waiting for new returns. Which route is stronger depends on your specific numbers.

Yes. 1099 income is treated as self-employment income, so expect the two-year averaging approach. Some lenders offer 1099-specific programs that qualify from the 1099 totals rather than net tax return income, which can produce a materially higher qualifying figure.

Usually, if your business files separately — S-corp, partnership or corporation returns are typically required along with personal ones. Sole proprietors filing a Schedule C generally just need personal returns. A year-to-date profit and loss statement is commonly requested too.

Co-mingled personal and business accounts that make deposits impossible to verify, a declining income trend without explanation, write-offs that leave too little qualifying income, and starting the conversation after going under contract instead of months earlier. All four are avoidable with lead time.

Typically 2% to 5% of the purchase price — about $5,500 to $13,750 on a $275,000 home. Iowa buyers often pay less than the national average because there's no mortgage recording tax and title coverage runs through Iowa Title Guaranty rather than private title insurance.

Lender fees (origination, underwriting, credit report), the appraisal, title and closing fees, recording fees, and prepaid items — the first year of homeowners insurance plus several months of property taxes to fund your escrow account. Prepaids are often the largest single piece and surprise people.

Sometimes and often, respectively. Seller concessions negotiated into the purchase agreement are the most common route, subject to program limits. A lender credit — accepting a slightly higher rate in exchange for cash toward costs — is another. On a refinance, costs can generally be rolled into the new loan balance.

Private mortgage insurance protects the lender when you put less than 20% down on a conventional loan. You can request removal at 20% equity, and it terminates automatically at 22% based on the original amortization schedule. Rising home values can get you there faster than payments alone. FHA mortgage insurance works differently and usually lasts the life of the loan.

The interest rate determines your monthly payment. The APR folds in lender fees and certain costs to express the total cost of borrowing as a yearly rate. Comparing APRs across Loan Estimates is more informative than comparing rates — though the cleanest comparison is total costs and monthly payment side by side.

It depends on your break-even. A point costs 1% of the loan amount and lowers your rate; divide the cost by the monthly savings to find how many months until it pays off. If you'll likely sell or refinance before then, it's money lost. If you're staying long-term, it can be worth it.

A rate lock holds your quoted rate for a set period, commonly 15 to 60 days, protecting you if rates rise before closing. Ask whether there's a fee, what happens if your closing is delayed, and whether a float-down option exists in case rates fall.

Because your payment usually includes escrow — property taxes and homeowners insurance collected monthly — plus mortgage insurance if applicable, and HOA dues if any. Principal and interest is often only 70% to 80% of what you actually pay each month.

An escrow account is where your lender holds monthly collections for property taxes and insurance and pays those bills for you. Some loans allow you to waive escrow with sufficient equity, sometimes for a small fee, leaving you to pay taxes and insurance directly. Most borrowers find escrow easier.

Because your rate is fixed but your taxes and insurance aren't. When either rises, the escrow portion of your payment rises with it — and if the account came up short, you'll also repay that shortage over the following year. This is the single most common source of payment-increase surprise.

Most purchases require one, though some loans qualify for an appraisal waiver. If the appraisal comes in below the purchase price, options include renegotiating with the seller, covering the difference in cash, disputing the appraisal with better comparables, or walking away if you have an appraisal contingency.

When the monthly savings pay back your closing costs before you'd realistically sell or refinance again. If refinancing costs $4,000 and saves $150 a month, you break even in about 27 months — reasonable if you're staying, pointless if you're moving next year. The break-even is the test, not the size of the rate drop.

Generally 2% to 5% of the loan amount, similar to purchase closing costs. Costs can often be rolled into the new loan or offset with a lender credit, though both mean you're financing the cost rather than avoiding it.

You refinance for more than you owe and take the difference in cash, secured by your home. It typically makes sense for improvements that add value or for consolidating high-interest debt where the math clearly works. It makes less sense for anything that won't outlast the loan, since you're spreading the cost across up to 30 years.

For a standard rate-and-term refinance, generally around 20% to avoid mortgage insurance, though options exist with less. Cash-out refinances usually require keeping at least 20% after the new loan. FHA and VA streamline options have lighter requirements if your existing loan is already one of those.

An expedited refinance for existing FHA or VA borrowers with reduced documentation and often no appraisal. VA calls it an IRRRL. They're faster and cheaper than a standard refinance, but only available if your current loan is already FHA or VA.

Sometimes, if your home has appreciated enough that you now have 20% equity. But on a conventional loan you may be able to request PMI removal without refinancing at all, which is cheaper. On an FHA loan, refinancing to conventional is often the only way to shed the mortgage insurance.

Yes — this is one of the most common reasons people refinance. The remaining borrower has to qualify on their own income and credit, and a cash-out refinance is often used to buy out the other party's equity. The deed and the mortgage are separate documents, so both need to be addressed.

If you can comfortably handle the higher payment, it saves substantial interest and builds equity much faster. The trade-off is flexibility — a 15-year payment is mandatory, while paying extra on a 30-year is voluntary. If your income is variable, the 30-year with extra payments is often the safer structure.

Iowa doesn't use conventional private title insurance. The state-run Iowa Title Guaranty program issues title certificates instead, backing an attorney's opinion based on an abstract of title. Your lender requires a lender certificate; an owner's certificate is optional but protects your equity — and it's free at closing with an Iowa Finance Authority FirstHome or Homes for Iowans mortgage if you ask.

A running historical record of ownership and encumbrances on the property, physically maintained and passed from seller to buyer. The seller updates it before closing and an attorney reviews it. It's unusual outside Iowa and a common source of confusion for buyers relocating here — and abstract continuation is one of the two most frequent causes of closing delays.

In two installments, due September 30 and March 31, billed in arrears. Most mortgage payments include escrow, so your lender collects roughly a twelfth of the annual bill monthly and pays the county for you. Expect an escrow adjustment after your first full year, since the initial estimate is based on the seller's tax bill.

Iowa replaced the old homestead tax credit with a homestead exemption of 10% of your home's taxable value — minimum $5,500, maximum $20,000 of taxable value — under legislation signed in May 2026 and applied retroactively to the 2026 assessment year. Apply once with your city or county assessor by July 1; it renews automatically. Homeowners 65 and older get an additional $6,500 exemption. Anyone who held the credit before July 1, 2026 converts automatically.

Yes, two separate ones. The Military Service Property Tax Exemption reduces taxable value for qualifying veterans. The Disabled Veteran Homestead Property Tax Credit can cover the full property tax levy on a qualifying homestead for veterans meeting specific VA disability criteria. Both are claimed through your county assessor, generally by July 1.

All Iowa counties use the standard limits. For 2026 the conforming limit for a single-unit property is $832,750 and the FHA limit is $541,287. VA loans have no limit for veterans with full entitlement. These change annually, so verify the current figure before planning around it.

Meaningfully, yes. Property tax rates, transfer taxes, closing customs and buyer assistance programs all differ. Iowa uses Iowa Title Guaranty and offers Iowa Finance Authority programs; Illinois uses private title insurance and offers IHDA programs instead. Two similar houses across the river from each other can carry noticeably different monthly payments.

Most of the state outside the Des Moines, Cedar Rapids, Iowa City, Davenport and Council Bluffs urbanized cores. Many communities that feel suburban still qualify, including towns within commuting distance of Des Moines and the Quad Cities. Eligibility is determined by the specific property address plus household income limits.

Most purchase loans close in 30 to 45 days from accepted offer. Appraisal scheduling and abstract continuation are the two most common causes of delay. Refinances generally run a similar timeline.

Your loan goes to processing and underwriting while the appraisal is ordered, title work begins, and you complete your inspection. You'll likely be asked for additional documentation — that's normal, not a bad sign. Roughly three days before closing you receive a Closing Disclosure showing final numbers.

A Loan Estimate is a standardized three-page form you receive within three business days of applying, showing your rate, payment and estimated costs — designed so you can compare lenders directly. The Closing Disclosure arrives at least three business days before closing with the final figures. Compare them and ask about anything that moved.

It's not usually required by the lender, but skipping one on a resale home is a significant risk. An inspection is your window to discover problems while you still have leverage to negotiate repairs or walk away. It's separate from the appraisal, which measures value for the lender rather than condition for you.

A government-issued photo ID and your funds — typically a wire transfer or cashier's check, arranged in advance. Verify wire instructions by phone using a number you looked up independently, never one from an email. Wire fraud targeting closings is common and the money is rarely recoverable.

Title coverage protects against defects in the ownership history — undisclosed liens, boundary problems, errors in the chain of title. Lenders require coverage protecting their interest. An owner's policy protecting your equity is optional but generally worth it. In Iowa this runs through Iowa Title Guaranty rather than private title insurance.

Yes, though it's uncommon when nothing changes. The usual causes are changes you make — new credit, a job change, large undocumented deposits — or problems with the property, like a low appraisal or title issues. Underwriting re-verifies before closing, so keep your finances still until you have the keys.

Your loan may be sold or transferred to a different servicer, which is routine and doesn't change your rate or terms. You'll receive notice from both parties with the new payment address. Your loan officer remains available regardless of who services it.

Yes. Most modern mortgages have no prepayment penalty, so extra principal payments shorten the loan and cut total interest. Even one additional payment a year makes a substantial difference over a 30-year term. Confirm your loan has no prepayment penalty before assuming it.

File your homestead exemption with your county or city assessor by July 1 — it's a one-time filing that renews automatically. Veterans should also file for the Military Service Property Tax Exemption. Then keep your closing documents somewhere permanent; you'll want them at tax time and whenever you sell.