Coltrain Mortgage
Mortgage Answer Center
Straight answers. No mortgage jargon.
Clear, practical answers to the mortgage questions homebuyers, homeowners and real estate investors ask most. Whether you're buying your first home on Long Island, selling and buying at the same time, refinancing a New York property, using home equity or financing an investment property, our Mortgage Answer Center is designed to help you understand your options before you make a decision.
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First-Time Homebuyers
Pre-approval, down payments, credit, closing costs and first-home programs.
Buying & Selling
Buying before you sell, equity, bridge strategies and seller concessions.
Mortgage Basics & Pre-Approval
Rates, underwriting, DTI, PMI, points, appraisals and documentation.
Real Estate Investors
DSCR, Non-QM, rental income, LLC ownership and investment property financing.
Refinancing & Home Equity
Refinance, cash-out, HELOCs, home equity loans and debt consolidation.
Long Island & New York
Property taxes, New York closing costs, condos, co-ops and local financing questions.
Credit & Qualification
600 credit scores, collections, late payments, bankruptcy and qualifying with a spouse.
Income & Employment
New jobs, commission, bonus, overtime, multiple jobs, RSUs and future employment.
Debt & DTI
Car loans, business-paid debts, student loans, 401(k) loans, credit cards and payoff strategies.
Self-Employed Borrowers
Tax returns, bank statements, P&Ls, business funds, depreciation and business debt.
Property & Approval Issues
Open permits, roofs, kitchens, oil tanks, flood zones, trusts, mixed-use and unusual properties.
VA & Government Loans
VA eligibility, funding fees, FHA mortgage insurance, 203(k) and USDA financing.
Reverse Mortgages
Eligibility, how proceeds work, ownership, and what happens to the loan over time.
Conventional & Conforming
Fannie Mae and Freddie Mac guidelines, HomeReady, Home Possible and HomeOne.
Renovation Loans
FHA 203(k) and Fannie Mae HomeStyle financing for homes that need work.
USDA Loans
$0 down financing in eligible rural and suburban areas.
Non-QM Programs
Bank statement, P&L, asset depletion and 1099 loans for non-traditional income.
Jumbo Loans
Financing above conforming loan limits for higher-value Long Island homes.
First-Time Homebuyer Questions
11 questionsBuying your first home in New York can feel complicated, but the mortgage process becomes much easier once you understand the basics. Here are answers to common questions about pre-approval, down payments, credit, student loans, closing costs and first-time homebuyer financing.
How much money do I need for a down payment on a house?
You may need much less than 20% down. Certain conventional mortgages can permit financing up to 97% of a home's value for eligible transactions, meaning as little as 3% down may be possible. FHA, VA and USDA programs have their own requirements. Your actual minimum depends on the loan program, occupancy, property type, credit profile and automated underwriting findings. Putting more money down may reduce your payment or mortgage insurance, but keeping adequate reserves after closing can also be important.
Do I have to put 20% down to buy a home?
No. The idea that every buyer needs 20% down is one of the most common mortgage misconceptions. Many qualified buyers purchase with significantly less. A 20% down payment can eliminate private mortgage insurance on many conventional loans, but it is not normally required simply to obtain a mortgage.
What credit score do I need to buy a house?
There is no single credit score that applies to every mortgage. Fannie Mae, Freddie Mac, FHA, VA and other programs use different eligibility and underwriting standards. Credit score can also affect pricing and mortgage insurance. A lower score does not automatically mean you cannot qualify, so it is often better to have your complete file reviewed before assuming homeownership is out of reach.
How do I get pre-approved for a mortgage?
A mortgage pre-approval generally begins with an application and review of your income, employment, assets, credit and monthly obligations. We can then run the loan through the applicable underwriting system and determine which mortgage programs may fit your situation. A strong pre-approval gives you a realistic purchase range and can make your offer more credible to a seller.
Does getting pre-approved hurt my credit?
A mortgage credit inquiry can affect your credit score, but typically the effect of a single inquiry is limited. Credit scoring models may also recognize that consumers shop among mortgage lenders during a defined shopping period. More importantly, obtaining an accurate pre-approval before making an offer can prevent far more expensive surprises later in the transaction.
What is the difference between pre-qualified and pre-approved?
A pre-qualification may be based largely on information you provide, while a meaningful pre-approval generally involves a deeper review of credit, income, assets and liabilities. Terminology varies among lenders, so the important question is how thoroughly the loan was actually reviewed. In a competitive Long Island market, a well-documented pre-approval can be much more valuable than a quick online estimate.
Can my family give me money for my down payment or closing costs?
Yes, qualifying gift funds can be used on many mortgage transactions. Under conventional agency guidelines, eligible gifts may be used toward down payment, closing costs and, in some cases, reserves on a principal residence or second home. The donor and transfer of funds must be documented according to the applicable guidelines. Personal gift funds are not an acceptable source of funds for a conventional investment-property purchase.
Can I buy a house if I have student loans?
Yes. Student loan debt does not automatically prevent you from qualifying. What matters is the monthly payment that must be included in your debt-to-income calculation. Fannie Mae and Freddie Mac have different rules for certain deferred, income-driven and zero-payment student loans, so the loan should be evaluated under the agency that produces the best valid result for your situation.
Should I pay off my credit cards before applying for a mortgage?
Not necessarily. Paying down debt can improve debt-to-income ratio and sometimes credit scores, but using too much cash to eliminate debt can leave you short of required funds or reserves. Before moving large amounts of money, ask your mortgage professional which debts are actually limiting your approval. Sometimes paying off one specific obligation produces a much greater benefit than broadly paying down every account.
How much are closing costs for a home in New York?
New York closing costs can include lender charges, attorney fees, appraisal, title-related charges, mortgage recording tax, homeowners insurance, prepaid interest, property-tax escrows and other transaction-specific expenses. The amount varies significantly by purchase price, loan amount, county and property type. This is one reason an early Loan Estimate and a property-specific cost analysis are more useful than relying on a generic percentage.
Are there first-time homebuyer mortgage programs in New York?
Yes. Depending on your income, property, location and other qualifications, you may have access to conventional low-down-payment programs, FHA financing, VA financing if eligible, and New York programs such as those offered through SONYMA. The best first-time buyer program is not automatically the one with the smallest down payment; rate, mortgage insurance, fees and long-term flexibility should be compared together.
Not sure where you stand?
A pre-approval can show you what you may qualify for, what your estimated payment could look like and how much cash you may need before you start seriously shopping.
Buying & Selling at the Same Time
9 questionsFor many Long Island homeowners, the challenge is not qualifying to buy another home — it is coordinating the equity, timing and financing between two transactions.
Can I buy a new house before I sell my current house?
Possibly. If you have enough income and assets to qualify while still carrying your current home, you may be able to purchase before selling. Other strategies can include a HELOC, home equity loan, bridge financing or structuring the purchase around the sale of your existing residence. The best option depends on your equity, debt-to-income ratio, available cash and timing.
Do I have to qualify with both mortgage payments?
Sometimes. Agency guidelines provide circumstances where the housing payment on a current residence that is pending sale may be excluded, but the transaction has to satisfy the applicable documentation requirements. If those requirements are not met, both housing obligations may need to be considered.
Can I use the equity in my current home for the down payment on my next house?
Yes. Homeowners commonly use sale proceeds as the down payment on their next property. If the current house has not sold yet, a properly structured HELOC, home equity loan or bridge loan may provide access to equity before the sale, subject to qualification and the rules of the new mortgage.
What is a bridge loan?
A bridge loan is short-term financing designed to bridge the gap between buying a new property and selling an existing one. It can sometimes help a buyer access equity before their current home closes. Bridge financing can carry higher rates or fees and the required monthly payment may affect mortgage qualification, so it should be compared carefully with HELOC and other strategies.
Can I use a HELOC to buy my next home?
A HELOC secured by your existing home may be an eligible source of funds when properly documented. However, the HELOC payment can also become a monthly liability when qualifying for the new mortgage. Because most HELOC rates are variable, borrowers should consider both qualification and future payment risk.
What is a seller concession?
A seller concession is an agreement for the seller to pay eligible buyer closing costs or financing expenses. Conventional agency guidelines limit financing concessions based on factors such as occupancy and loan-to-value ratio, and concessions cannot simply provide unrestricted cash to the buyer. Properly structured concessions can reduce a buyer's out-of-pocket closing costs.
Can the seller pay all of my closing costs?
Potentially, but only within the limits of the applicable mortgage program and the actual eligible costs. The allowable seller contribution varies by loan type and transaction structure. Any amount exceeding permitted closing costs or agency limits can create underwriting issues, so concessions should be structured before the contract is finalized whenever possible.
What is a gift of equity?
A gift of equity can occur when an eligible family member sells a property to a borrower for less than its market value and contributes some of that equity toward the transaction. When permitted by the loan program and properly documented, a gift of equity can help cover down payment and certain closing requirements.
Should I make my offer contingent on selling my house?
That is primarily a real estate and legal negotiation question rather than a mortgage rule. From a financing standpoint, removing a sale contingency can sometimes make an offer more attractive, but only if the financing is structured so you can safely close without relying on the sale. Your mortgage professional, real estate agent and attorney should coordinate before you waive important protections.
Mortgage Basics & Pre-Approval
12 questionsUnderstanding how lenders evaluate income, credit, assets and property can make the mortgage process far less stressful.
What determines my mortgage interest rate?
Mortgage pricing can be affected by market conditions as well as your credit profile, loan-to-value ratio, property type, occupancy, loan amount, loan program, rate-lock period and whether you choose to pay points. Mortgage rates can change throughout the day, so comparing rates without also comparing points, lender credits and total costs can be misleading.
Does the Federal Reserve set mortgage rates?
Not directly. The Federal Reserve controls short-term monetary policy rates, while fixed mortgage rates are influenced heavily by the bond market, mortgage-backed securities, inflation expectations and longer-term Treasury yields. Markets also often price in expected Federal Reserve actions before an official announcement occurs.
What is debt-to-income ratio?
Debt-to-income ratio, or DTI, compares qualifying monthly debt obligations with qualifying gross monthly income. There is not one universal DTI limit for every conventional loan. Desktop Underwriter and Loan Product Advisor evaluate the complete risk profile, and acceptable ratios can vary depending on the transaction and underwriting findings.
What documents do I need for a mortgage?
Typical documentation may include recent pay statements, W-2s, tax returns when required, bank or investment statements, identification and documentation for other income or assets. Some borrowers may qualify for automated income, employment or asset validation that reduces traditional paperwork. Self-employed borrowers and borrowers with variable income generally require additional analysis.
Can overtime, bonus or commission income be used to qualify?
Yes, when the income meets the applicable Fannie Mae or Freddie Mac history, documentation and continuance requirements. Variable income is generally analyzed over an appropriate history rather than simply using the most recent paycheck. If earnings are increasing or decreasing, the trend can affect the amount that may be used for qualification.
Can I get a conventional mortgage if I am self-employed?
Absolutely. Fannie Mae and Freddie Mac provide guidelines for qualifying self-employed borrowers. The analysis generally looks at the stability and history of the business and the income available to the borrower. Depending on the circumstances, personal and/or business tax returns and additional business documentation may be required.
What is PMI?
Private mortgage insurance, or PMI, protects the mortgage investor when a conventional borrower finances a higher percentage of the property's value. PMI is not the same for every borrower; cost depends on factors such as credit, loan-to-value ratio and coverage requirements. Federal law and investor rules provide circumstances in which PMI can later be cancelled or terminated.
What are mortgage points?
Discount points are upfront charges used to obtain a particular interest rate. One point equals 1% of the loan amount, but paying one point does not guarantee a specific rate reduction. The value of paying points depends on current pricing and how long you expect to keep the mortgage.
What is a mortgage rate lock?
A rate lock protects specified mortgage pricing for an agreed period while your loan is processed. Longer locks can cost more than shorter locks. If a transaction takes longer than expected, a lock extension may carry a cost depending on the lender's policy and the circumstances.
What happens during mortgage underwriting?
Underwriting verifies that the borrower, loan and property satisfy the requirements of the applicable mortgage program. The underwriter reviews documentation supporting income, employment, assets, liabilities, credit, appraisal or collateral findings and other conditions generated by the loan program and automated underwriting system.
Do all conventional mortgages require a full appraisal?
No. Fannie Mae Desktop Underwriter and Freddie Mac Loan Product Advisor may provide eligible transactions with collateral alternatives or appraisal waivers. When an agency system provides an eligible appraisal waiver and all requirements are met, a traditional appraisal may not be required.
Mortgage broker vs. bank: what is the difference?
A bank generally offers its own mortgage products and pricing. A mortgage broker can shop among multiple wholesale lenders and mortgage programs for a borrower's scenario. That can be especially useful when comparing agency, jumbo, investor, self-employed or more specialized financing options.
Real Estate Investor Questions
15 questionsReal estate investors often have more than one financing path. Conventional, DSCR and Non-QM financing can each make sense depending on the property and the investor's overall strategy.
What is a DSCR loan?
A Debt Service Coverage Ratio, or DSCR, mortgage is an investment-property loan that generally qualifies primarily from the property's rental cash flow rather than the borrower's traditional personal income. DSCR programs are Non-QM loans and are not Fannie Mae or Freddie Mac loans. Requirements vary considerably by lender.
Can rental income from the property I am buying help me qualify?
Yes, in many conventional investment-property transactions eligible rental income from the subject property can be used according to Fannie Mae or Freddie Mac documentation and calculation requirements. The amount that can be used depends on factors such as lease documentation, appraisal market rent, the borrower's rental-management history and the applicable agency rules.
How many financed investment properties can I own and still use Fannie Mae financing?
For a Fannie Mae loan on a second home or investment property, Desktop Underwriter currently permits up to 10 financed properties, subject to all other eligibility and reserve requirements. Additional financed properties can increase required reserves. Different rules apply to principal-residence transactions and certain specific programs.
Can I close a conventional investment-property mortgage in an LLC?
Standard Fannie Mae and Freddie Mac conventional mortgages are generally made to eligible individual borrowers rather than an LLC as the borrower at closing. Some Non-QM and DSCR programs allow vesting in an LLC. Ownership and vesting should be reviewed with the mortgage lender, title company and your attorney before changing title.
Can I use gift funds to buy an investment property?
Not for a standard Fannie Mae conventional investment-property transaction. Fannie Mae personal gift funds are eligible for qualifying principal-residence and second-home transactions but are not allowed on an investment-property purchase. Non-QM programs may have different requirements.
Can I finance a two-family, three-family or four-family property?
Yes. Fannie Mae and Freddie Mac finance eligible one- to four-unit residential properties. The required down payment, reserve requirements and rental-income treatment depend on whether the property will be your principal residence or an investment property and on the automated underwriting findings.
Can Airbnb or short-term rental income be used to qualify?
Potentially, but the documentation and eligible calculation can be different from a standard long-term lease. Conventional agency treatment depends on the property's history and acceptable documentation. DSCR and Non-QM lenders may have separate short-term rental programs. Local New York zoning, municipal and rental regulations also need to be considered separately from mortgage eligibility.
What is a bank statement mortgage?
A bank statement mortgage is a type of Non-QM financing commonly used by qualifying self-employed borrowers. Instead of calculating income solely from traditional tax-return income, the lender analyzes eligible deposits over a specified period and applies its program methodology. Bank statement loans are not Fannie Mae or Freddie Mac loans.
Can I cash-out refinance an investment property?
Yes, eligible investment properties can be cash-out refinanced using conventional or certain Non-QM programs. Maximum leverage, seasoning, credit, reserves and property requirements vary by program. Investors should compare the benefit of accessing equity with the effect of replacing an existing first mortgage at current market rates.
Is DSCR financing better than a conventional investment-property loan?
Neither is universally better. Conventional financing may offer attractive pricing when the borrower qualifies under agency income and asset rules. DSCR financing can be valuable when personal income documentation, number of properties, entity ownership or investment strategy makes conventional financing less practical. A side-by-side comparison is usually the best approach.
Can I get a HELOC on an investment property?
Yes, some lenders offer HELOCs secured by eligible investment properties. Investment-property HELOCs are less standardized than primary-residence HELOCs, and available combined loan-to-value ratios, minimum credit scores, line amounts, property types, documentation and pricing vary by lender. A mortgage broker can compare multiple wholesale options rather than assuming every HELOC program treats rentals the same way.
Can a first-time real estate investor get a DSCR loan?
Often, yes. Some DSCR lenders permit first-time investors, while others apply additional requirements or pricing adjustments. Qualification is generally driven by the property, credit, down payment, reserves and the lender's DSCR calculation rather than a requirement that the borrower already own multiple rentals.
Can I use a HELOC for the down payment on an investment property?
Potentially. Borrowed funds secured by an eligible asset can sometimes be used toward a purchase when the new debt is properly documented and included in qualification when required. The HELOC payment and the source property's equity should be reviewed before making an offer.
Can I refinance an investment property shortly after buying it?
Possibly, but cash-out seasoning and value rules can limit how quickly equity can be accessed. Rate-and-term and cash-out transactions are treated differently, and DSCR or Non-QM programs may use different seasoning standards from conventional loans.
Can I get cash out after buying an investment property with cash?
Potentially. Delayed financing or later cash-out financing may allow an investor to recover some of the cash used to purchase the property, subject to documentation of the original purchase, source of funds, ownership, liens and program-specific leverage limits.
Have an investment property in mind?
We can compare conventional, DSCR and Non-QM financing based on the actual property and your investment strategy.
Refinancing & Home Equity Questions
15 questionsRefinancing is not only about getting a lower rate. Homeowners may refinance to change the loan term, remove mortgage insurance, consolidate debt or access equity.
When does refinancing a mortgage make sense?
Refinancing can make sense when the financial benefit exceeds the cost and aligns with your goals. Reasons can include reducing the interest rate, lowering the monthly payment, shortening the loan term, changing loan type, eliminating certain mortgage insurance or accessing equity. The correct analysis is based on total cost and break-even period, not simply whether the new rate is lower.
Do I have to restart with a new 30-year mortgage when I refinance?
No. Refinances can be structured with different available loan terms. If you have already paid your current mortgage for many years, choosing a shorter term or making additional principal payments can help avoid unnecessarily extending your overall payoff timeline.
What is a cash-out refinance?
A cash-out refinance replaces the existing first mortgage with a larger new mortgage and allows eligible equity to be distributed or used for permitted purposes. Fannie Mae and Freddie Mac impose specific eligibility, loan-to-value, seasoning and documentation rules for cash-out refinances.
What is the difference between a HELOC and a home equity loan?
A HELOC is typically a revolving line of credit secured by your home and commonly has a variable interest rate. A closed-end home equity loan generally provides a lump sum with a defined repayment schedule and may offer a fixed rate. Both leave the existing first mortgage in place, which can be attractive when that first mortgage has a very low rate.
Cash-out refinance or HELOC: which is better?
It depends on your current first-mortgage rate, the amount of equity needed, how long you need the money and your tolerance for a variable rate. Replacing a very low-rate first mortgage can be expensive, even if a cash-out refinance carries a lower rate than a HELOC. The proper comparison should look at the combined monthly cost, total interest, fees and future rate risk.
Can I use home equity to pay off credit card debt?
Yes, homeowners sometimes use a cash-out refinance, HELOC or home equity loan to consolidate higher-interest debt. This may lower monthly payments or interest costs, but it converts unsecured debt into debt secured by your home. The long-term cost and the borrower's ability to avoid rebuilding revolving balances should be considered carefully.
Can refinancing remove PMI?
Potentially. If your current equity and the new mortgage structure meet applicable requirements, a refinance may eliminate the need for private mortgage insurance. However, refinancing solely to remove PMI should be compared with any rights you may have to cancel PMI on your existing mortgage without replacing the loan.
Can I refinance if my credit score has changed?
Possibly. A lower score may affect pricing or available programs, but it does not automatically prevent refinancing. Qualification is based on the complete loan profile, including equity, income, liabilities, payment history and automated underwriting results.
What is a CEMA and why does it matter in New York?
A Consolidation, Extension and Modification Agreement, commonly called a CEMA, may allow an eligible New York refinance or purchase transaction to reuse existing mortgage debt and reduce the amount of new mortgage debt subject to mortgage recording tax. A CEMA is not available or advantageous in every transaction and requires coordination among lenders, attorneys and the title company.
Can I get a HELOC without an appraisal?
Sometimes. Many HELOC lenders use automated valuation models, property-data reports or other valuation methods for eligible transactions instead of a traditional full appraisal. Whether an appraisal is required depends on the lender, property, requested line amount and available valuation confidence.
Can I get a HELOC without tax returns?
Potentially. Some HELOC programs verify income through traditional employment documentation, while others offer alternative documentation for self-employed borrowers. A no-tax-return HELOC is a specific product feature, not a universal HELOC rule.
Can self-employed borrowers get a HELOC?
Yes. Self-employed homeowners can qualify for HELOCs through traditional income documentation or, with certain lenders, alternative cash-flow documentation. The best program depends on credit, equity, business history and the documentation available.
Can I get a HELOC immediately after buying a house?
Possibly. Some lenders permit a new HELOC relatively soon after purchase, while others impose ownership or value-seasoning requirements. If the home was recently purchased, the lender may also limit the value used for the transaction.
Can I have a HELOC and another second mortgage at the same time?
Potentially, but the total liens, combined loan-to-value ratio and lien position have to be acceptable to each lender. A new lender may require an existing HELOC to be closed, subordinated or paid off depending on the transaction.
Can I get a HELOC with a high debt-to-income ratio?
Maybe. Traditional HELOC programs often use DTI limits, while some alternative programs evaluate cash flow differently. High equity alone does not guarantee approval because the lender still evaluates the borrower's ability to repay under its program rules.
Long Island & New York Mortgage Questions
16 questionsNew York real estate transactions have costs, taxes and property considerations that buyers moving from other states may not expect. Long Island also has unusually high property taxes and a large number of condos, co-ops and higher-priced homes.
How do Long Island property taxes affect mortgage qualification?
Property taxes are part of the monthly housing expense used when qualifying for a mortgage. Because taxes can vary dramatically among Suffolk and Nassau County properties, two homes with the same purchase price can produce very different qualifying payments. This is why a pre-approval should be tested using the actual taxes of a property before an offer is made.
What is New York mortgage recording tax?
New York imposes a tax when mortgage debt is recorded. The applicable rate and how the cost is allocated can vary by location and transaction. On a large Long Island mortgage this can be a meaningful closing expense, which is why New York closing-cost estimates can differ substantially from estimates for buyers in other states.
What is the New York mansion tax?
New York State imposes an additional transfer tax commonly called the mansion tax on qualifying residential real estate purchases of $1 million or more. The basic additional tax is 1% of the purchase price, generally paid by the buyer. Because many Long Island homes now reach this threshold, buyers approaching $1 million should include the tax in their cash-to-close planning.
Why can closing costs in New York be higher than in other states?
New York transactions can include mortgage recording tax, title charges, attorney fees, lender costs, property-tax escrows, prepaid interest, insurance and other state- or county-specific expenses. New construction and certain property types can create additional costs. Buyers should obtain a transaction-specific estimate rather than applying a generic national closing-cost percentage.
Are condos harder to finance than single-family homes?
They can be. In addition to approving the borrower and individual unit, conventional lenders may have to evaluate the condominium project itself. Fannie Mae and Freddie Mac project standards consider issues such as project eligibility, insurance, financial condition, legal characteristics and other project risks. Updated agency condo requirements became effective in August 2026, making an early project review especially valuable.
Does every small condo project need a full Fannie Mae project review?
No. Current Fannie Mae guidelines provide project-review waivers for certain eligible small condominium projects, including qualifying two- to four-unit projects and certain five- to ten-unit projects. The project must still satisfy the requirements that apply when project review is waived. Eligibility should be checked for the specific project and transaction rather than assumed from project size alone.
Are co-ops financed differently than condos?
Yes. With a condominium, the buyer owns real property. With a cooperative, the buyer generally owns shares in a cooperative corporation together with a proprietary lease. That difference affects collateral, project documentation, title structure and underwriting. Co-op financing therefore requires a lender experienced with the property type.
What is a jumbo mortgage on Long Island?
A jumbo mortgage is generally a mortgage amount above the applicable conforming loan limit for the property and location. Because conforming limits change over time and higher limits can apply in designated high-cost areas, the exact threshold should be checked for the year and county in which you are buying. Jumbo mortgages use investor-specific underwriting rather than standard Fannie Mae or Freddie Mac conforming guidelines.
Can a property-tax grievance help me qualify for a mortgage?
Potential future tax savings generally cannot simply be assumed for qualification before they are documented and effective. Mortgage underwriting generally uses the property taxes that can be verified for the transaction. If taxes are formally changed, the updated amount may be usable when supported by acceptable documentation.
Why use a local Long Island mortgage broker?
Long Island transactions frequently involve high property taxes, million-dollar purchase thresholds, condo and co-op projects, complex sell-and-buy timing and competitive contract deadlines. A local mortgage professional who understands Suffolk and Nassau County transactions can identify these issues early while also comparing financing among multiple wholesale lenders.
Can I buy a house with an open permit in Suffolk County?
Possibly. Suffolk County itself is not the only authority involved; the applicable town or village records and the nature of the open permit matter. Mortgage, appraisal, title and legal requirements can differ depending on whether the permit involves completed work, an accessory structure, an apartment, electrical work, a pool or another improvement.
Can I get a mortgage on a legal accessory apartment on Long Island?
Yes, potentially. The lender and appraiser need to determine the legal status and actual property type, and the municipality's records should support the use. Whether rental income from the apartment can be used to qualify is a separate underwriting question.
Can I get a mortgage on a house with a cesspool on Long Island?
Yes. Cesspools and septic systems are common on Long Island and do not automatically prevent financing. Problems can arise when there is a known failure, health or safety issue, local replacement requirement or property-condition concern identified during appraisal or inspection.
Do property taxes affect how much house I can afford on Long Island?
Very much. Long Island property taxes can add thousands of dollars per month to the qualifying housing payment. Two homes with identical prices and mortgage amounts can produce very different DTI ratios because of taxes, homeowners insurance, flood insurance or HOA charges.
Can I get a mortgage on a house in a Long Island flood zone?
Yes. Financing is commonly available in flood zones, but acceptable flood insurance may be required and its cost is included in the monthly housing expense for qualification. A property's proximity to the water alone does not determine the requirement; lenders use a formal flood-zone determination.
Can I finance a mother-daughter house on Long Island?
Potentially. The phrase “mother-daughter” is used locally for several different layouts, so the legal property classification matters more than the marketing description. The lender will rely on appraisal and municipal information to determine whether the home is a legal one-family residence, has an accessory apartment or should be treated as a multi-unit property.
Credit & Mortgage Qualification Questions
12 questionsCredit does not work like a single on/off switch. Mortgage approval considers score, payment history, debt, income, assets, loan program and automated underwriting together. These are some of the most searched credit questions borrowers ask.
Can I get a mortgage with a 600 credit score?
Possibly. A 600 credit score does not automatically prevent mortgage approval. FHA financing is often associated with more flexible credit standards, while conventional eligibility depends on the complete file and automated underwriting findings. Fannie Mae's Desktop Underwriter does not currently impose a single minimum credit score for every DU casefile, although individual loan products, mortgage insurers and lenders may have additional requirements. Income, debt-to-income ratio, down payment, reserves, recent payment history and the reason for the lower score all matter.
Can I get an FHA loan with bad credit?
Potentially. FHA financing is designed to provide flexible credit options, but approval is not based on score alone. The lender will review recent housing payments, collections, charge-offs, bankruptcies, disputed accounts, debt-to-income ratio and the overall credit pattern. A lower score may also affect the required down payment and available lender options.
Can I get a mortgage after a late mortgage payment?
Possibly. The answer depends on how recent the late payment was, how severe it was, the mortgage program and the rest of your credit profile. Recent mortgage delinquencies generally receive more scrutiny than an isolated older late payment. A complete credit review is usually needed before assuming you are ineligible.
How long after bankruptcy can I buy a house?
Waiting periods vary by mortgage program, bankruptcy chapter, discharge or dismissal date and whether documented extenuating circumstances apply. Conventional, FHA and VA financing do not all use the same rules. The correct date should be calculated from the actual bankruptcy documents before you begin shopping.
How long after foreclosure can I get a mortgage?
Foreclosure waiting periods vary by mortgage program and the circumstances surrounding the foreclosure. Conventional financing can have different requirements from FHA or VA financing. Short sales, deeds-in-lieu and mortgages included in bankruptcy can also be treated differently, so the actual credit and public-record history should be reviewed.
Can I get a mortgage with collections on my credit report?
Yes, in many situations. A collection account does not automatically have to be paid simply because it appears on your credit report. Treatment depends on the loan program, account type, balance, automated underwriting findings and whether the collection is connected to a judgment or other legal obligation.
Do medical collections affect mortgage approval?
They can, but medical collections are often treated differently from other derogatory credit depending on the mortgage program and underwriting system. The effect on your credit score and whether a balance must be addressed should be reviewed before you pay anything solely for mortgage qualification.
Should I pay off collections before applying for a mortgage?
Not automatically. Paying a collection can change available cash and may or may not improve your credit score in the way you expect. Some mortgage programs do not require every collection to be paid. Before paying an old account, have the mortgage file reviewed so the payoff actually helps the approval.
Will paying off credit cards increase how much mortgage I can qualify for?
It can. Reducing revolving debt can lower your monthly obligations and may improve your credit utilization, potentially helping both DTI and credit score. But using too much of your available cash can hurt reserves or cash-to-close. The best strategy is usually to identify which balances create the greatest qualification benefit.
What happens if my credit score drops before closing?
A material credit change before closing can affect pricing, eligibility or final approval. Lenders may refresh credit information or verify that no new debt has been opened. Avoid opening new accounts, financing large purchases or substantially increasing balances while your mortgage is in process.
Can a lender use my higher credit score instead of my spouse's lower score?
If both spouses are borrowers, the mortgage program determines how their credit information is evaluated. You generally cannot simply choose to ignore the lower-credit borrower's profile. In some cases, it may make sense to see whether one spouse can qualify alone, but income, assets, ownership, state law and the loan program all have to be considered.
Can I leave my spouse off the mortgage because of their credit?
Sometimes. A married borrower may be able to obtain a mortgage individually if they qualify on their own, although state law and certain government loan requirements can still require consideration of a non-borrowing spouse's obligations or documentation. Title ownership and mortgage liability are also separate issues that should be coordinated with the closing attorney.
Income & Employment Questions
10 questionsA borrower can earn plenty of money and still have questions about how much of it is usable for a mortgage. Salary, commission, bonus, overtime, multiple jobs, future employment and self-employment are all analyzed differently.
Can I get a mortgage if I just started a new job?
Often, yes. A new job does not automatically require a two-year history with the same employer. Underwriters look for stable and reasonably expected income, and may consider education, training and prior employment in the same or related field. Variable or self-employed income generally requires more history than straightforward salaried income.
Can I use commission income to qualify for a mortgage?
Yes, if the income has an acceptable history and is likely to continue. Commission income is generally averaged rather than based only on the latest paycheck. The lender will evaluate the length of receipt, year-to-date earnings, prior-year earnings and whether the trend is stable, increasing or declining.
How long do I need to receive bonus income before it can count?
Bonus income typically needs a documented history and a reasonable expectation of continuance. A longer history is generally stronger, but some agency scenarios may permit less than two full years when the income has been received for a sufficient period and the overall pattern supports its use. The exact calculation depends on the facts.
Can overtime income be used to qualify for a mortgage?
Yes, when the overtime has an acceptable history and is expected to continue. Underwriting generally compares current year-to-date overtime with prior years to determine a stable monthly amount. Declining overtime may need to be reduced or excluded.
Can I qualify for a mortgage with less than two years of self-employment?
Potentially. Fannie Mae guidelines can allow certain borrowers with less than two years of self-employment when the current business has at least a full 12 months of documented self-employment income and the file supports a prior history of similar or greater earnings in the same or a related field. Other programs may differ.
Can I qualify for a mortgage with two jobs?
Yes. Income from a primary and secondary job can sometimes be combined when each source meets the applicable history and continuance requirements. A second job that started very recently may not be usable even though the primary job income is acceptable.
Can I use income from a job I have not started yet?
Sometimes. Certain conventional transactions may allow qualifying with documented future employment income when specific requirements are met, such as a non-contingent employment offer, a defined start date and sufficient assets to cover obligations before the income begins. This should be reviewed before making an offer on a home.
Can RSUs or stock compensation count as mortgage income?
Potentially. Restricted stock units and other stock-based compensation can be considered under certain conventional guidelines when vesting, receipt history and continuance can be documented. The calculation is more complex than simply using the value shown on an employment offer.
Can I use rental income from the property I am buying to qualify?
Often, yes. Eligible rental income from a one- to four-unit property may be considered using the lease, appraisal market rent and the applicable agency calculation. The amount usable can depend on whether you have a history of managing rental property and whether the property will be owner-occupied or an investment.
Can declining income still be used for a mortgage?
Sometimes, but declining income is a warning sign that underwriters must evaluate. The lender may use a lower current level of earnings, require additional documentation or determine that the income is not sufficiently stable. This frequently comes up with commission, bonus, overtime, self-employment and seasonal income.
Debt & Debt-to-Income Ratio Questions
12 questionsDebt-to-income ratio is one of the most misunderstood parts of mortgage underwriting. Some debts must be counted, some can be excluded with the right documentation, and paying off the wrong debt can waste cash without meaningfully improving approval.
If my business pays my car loan, does the car payment count in my DTI?
It may be excluded in certain self-employed borrower situations, but the documentation matters. Under current Fannie Mae guidance, a debt in the borrower's name may be excluded when there is no delinquency, acceptable evidence shows the business paid the obligation from company funds, and the business cash-flow analysis accounts for the payment. Freddie Mac also provides a path for certain borrower debts paid by the business. This is not simply a matter of changing which bank account makes next month's payment; the payment history and business analysis must support the treatment.
If someone else pays my car loan, does it still count against me?
Possibly not, if the applicable mortgage guidelines allow the debt to be excluded and you can document that another party has made the required payments for the necessary period without your contribution. The rules differ depending on the type of debt and loan program, so payment history should be reviewed before relying on the exclusion.
If someone else pays my student loan, does it count in my DTI?
Student loans have program-specific rules and are not always treated exactly like other debts paid by another person. Even when someone else has been making the payment, the lender must apply the student-loan requirements of the selected mortgage program. Do not assume the payment can be excluded without a guideline review.
Do deferred student loans count when getting a mortgage?
Usually, yes. A student loan may need a qualifying monthly payment even when the credit report shows a zero payment or the loan is deferred. Fannie Mae, Freddie Mac, FHA and VA can use different calculation methods, so the same student loan can affect qualification differently depending on the mortgage program.
Does a 401(k) loan count in my debt-to-income ratio?
Often, a loan secured by your own financial asset may receive different treatment from ordinary installment debt under agency guidelines. However, the lender still needs to document the loan and consider whether repayment affects available assets or cash-to-close. The exact treatment depends on the program.
Do charge cards count in mortgage DTI?
They can. Charge cards and accounts that require payment in full may be treated differently from ordinary revolving credit. The lender may need to document available funds to pay the balance or determine an appropriate monthly obligation depending on the account and mortgage program.
Do I have to pay off credit cards before closing?
No. Credit cards do not generally have to be paid off simply because you are getting a mortgage. However, paying down or paying off selected balances can sometimes improve DTI or credit. If a payoff is required for qualification, the lender will document how the debt is being satisfied.
Can credit card debt be paid off at closing?
Yes, in many transactions. Debts can sometimes be paid at or prior to closing when the payoff is properly documented and the mortgage program permits the resulting payment to be excluded from DTI. The source of payoff funds and remaining required assets still have to be acceptable.
Can the seller pay off my debt at closing?
Seller concessions are generally limited to eligible closing costs and financing concessions and cannot simply be used as unrestricted cash to eliminate a buyer's personal debt. Certain transaction structures may permit credits for specific purposes, but a seller-paid personal debt strategy needs to be reviewed carefully before it is written into a contract.
How many payments can be left on a car loan before it may be excluded from DTI?
Under current Fannie Mae guidance, installment debt that is paid down to 10 or fewer remaining monthly payments generally does not need to be included in long-term debt, although a significant payment may still need to be considered if it affects the borrower's ability to meet obligations. Other programs can differ.
Does child support count as debt for a mortgage?
Court-ordered child support or similar recurring obligations generally must be considered when required by the mortgage program and documentation. Depending on the agency and circumstances, the obligation may be treated as a liability or as a reduction of income.
Does a business credit card count against me personally for a mortgage?
It depends on whether you are personally liable, whether the account appears on personal credit, who actually pays it and how the business expense is treated in the income analysis. A business account appearing on personal credit should be reviewed rather than automatically included or excluded.
Self-Employed Mortgage Questions
11 questionsSelf-employed borrowers are not automatically harder to finance, but their income and liabilities require a different analysis. These questions cover tax returns, business cash flow, bank statements, business assets and debts paid by the company.
Can I get a mortgage without showing tax returns?
Possibly. Some salaried borrowers can be verified through W-2s, pay statements and electronic verification without providing personal tax returns. Self-employed borrowers using conventional financing often require tax-return analysis, but bank statement, P&L and other Non-QM programs can provide alternatives when appropriate.
Can I qualify for a mortgage using business bank statements?
Yes, through certain Non-QM bank statement programs. These programs typically analyze eligible business deposits over a defined period and apply an expense factor or other methodology to estimate qualifying income. They are different from Fannie Mae and Freddie Mac conventional mortgages.
Can I use a profit-and-loss statement to qualify for a mortgage?
Potentially. Conventional underwriting may use a year-to-date profit-and-loss statement as part of a self-employed income analysis, and certain Non-QM programs may allow P&L-based qualification with specific documentation. A P&L is not automatically a substitute for tax returns under every program.
Does depreciation get added back to self-employed income for a mortgage?
Certain non-cash business expenses, including allowable depreciation, can often be added back when calculating self-employed income under agency guidelines. The treatment depends on where the expense appears on the tax return and whether the applicable guideline permits the adjustment.
Can I use money from my business for a down payment?
Potentially. Business assets may sometimes be used when the borrower has access to the funds and the withdrawal will not adversely affect the business. Conventional underwriting can require a business cash-flow or liquidity analysis before those funds are considered acceptable.
Does taking money out of my business hurt mortgage approval?
It can if the withdrawal reduces business liquidity or affects the company's ability to continue generating the income being used to qualify. The lender may need to determine that using business funds for closing will not negatively impact operations.
Can my business pay my personal mortgage?
A business can make payments in the ordinary accounting sense, but mortgage underwriting focuses on who is legally obligated and how those payments affect business cash flow and taxable income. Using business funds for personal expenses can also have tax and accounting implications, so this should be discussed with your CPA.
Can I qualify if my business income went down last year?
Possibly, but declining business income receives additional scrutiny. The lender must determine whether the income is stable and likely to continue. A material decline can lead to use of the lower current income or make the income unacceptable without strong supporting documentation.
Can I get a mortgage one year after starting my business?
Potentially. Some conventional scenarios can allow less than two years of self-employment when at least 12 months of current business income is documented and previous work history supports the likelihood of continued earnings. Non-QM programs may provide additional options.
Does business debt count against me personally for a mortgage?
Sometimes. If you are personally obligated on a business debt, it may appear on your personal credit and initially look like a personal monthly liability. Agency guidelines can allow exclusion in qualifying cases when the business has actually been paying the debt and the business cash-flow analysis properly accounts for it.
Can I get a mortgage if my tax returns show much less income than my business deposits?
Yes, but the available loan type may change. Conventional mortgages generally rely on agency self-employed income analysis using tax returns and allowable adjustments. A bank statement or other Non-QM loan may analyze cash flow differently and can be useful for borrowers whose taxable income is significantly lower than gross business receipts.
Property & Mortgage Approval Issues
15 questionsSometimes the borrower qualifies perfectly and the property creates the problem. Open permits, accessory apartments, condition issues, trusts, flood zones and unusual property types should be identified early so they do not become last-minute closing surprises.
Can I get a mortgage on a house with an unpermitted addition?
Possibly, but an unpermitted addition can affect appraisal, marketability, safety and municipal compliance. The lender, appraiser, title company and attorney may all have concerns depending on what was added and whether the local municipality recognizes the improvement. Addressing it early is much better than discovering it immediately before closing.
Can I buy a house with an open permit?
Sometimes. An open permit does not automatically make every property unfinanceable, but the nature of the work and local requirements matter. The lender may require permits to be closed when the open item affects safety, completion, legality or marketability. Your attorney should also review municipal records.
Can I get a mortgage if the house needs a new roof?
Potentially. A worn roof may be acceptable if the property remains safe, sound and structurally secure, but significant active leakage or an obviously failed roof can trigger appraisal repairs or insurance problems. Renovation financing may be an option when required work is substantial.
Can I finance a house with no kitchen?
Traditional mortgage financing generally expects a residential property to be complete and functional. A house without a working kitchen may not meet standard property-condition requirements. Renovation, construction or specialized financing may be needed depending on the condition and scope of work.
Can I get a mortgage on a house with a cesspool or septic system?
Yes, many homes with cesspools or septic systems are financeable. The system's condition, local requirements and any health or safety concerns can matter. On Long Island, where private sanitary systems are common, property-specific review is important rather than assuming the system itself is a financing problem.
Can I buy a house with an underground oil tank?
Potentially, but underground oil tanks can create environmental, insurance and legal concerns. Mortgage approval may depend on the tank's status, testing, documentation and whether there is evidence of a leak. Your attorney and environmental professionals should guide the legal and environmental review.
Can I get a mortgage on a house with knob-and-tube wiring?
Possibly, but the largest obstacle is often homeowners insurance rather than a blanket mortgage prohibition. If the property cannot obtain acceptable insurance or the appraiser identifies safety concerns, repairs may be required before closing.
Can I finance a house with foundation problems?
Minor conditions may be acceptable, while significant structural defects can prevent standard financing until they are repaired or professionally evaluated. The appraisal and any engineering reports will determine whether the property meets the applicable program's condition requirements.
Can I get a mortgage on a mixed-use property?
Yes, in certain circumstances. Conventional residential financing can be available for eligible properties with limited business or commercial use when the property remains primarily residential and meets agency requirements. Properties with substantial commercial use may require a commercial or specialized loan.
Can I get a mortgage if the house is in a trust?
Potentially. Trust ownership is common in estate planning, but eligibility depends on the type of trust, the borrowers, occupancy and mortgage program. The lender and closing attorney must review the trust documents and title structure before closing.
Can an LLC own the house I am financing?
Standard owner-occupied conventional mortgages are generally made to eligible individual borrowers rather than an LLC at closing. Investment-property DSCR and other Non-QM programs may allow LLC vesting. Do not transfer title to an LLC after closing without first reviewing your loan documents and legal advice.
Can I get a mortgage on a non-warrantable condo?
Possibly, but not through every conventional channel. If a condo project does not meet Fannie Mae or Freddie Mac project standards, specialized portfolio or Non-QM condo financing may still be available depending on the reason the project is non-warrantable.
Can I get a mortgage on a house in a flood zone?
Yes. Properties in designated special flood hazard areas can be financed, but flood insurance is generally required when the mortgage is federally regulated or backed and the improvements are in the applicable flood zone. The cost of flood insurance can also affect qualification.
Do I need flood insurance for a mortgage on Long Island?
It depends on the property's flood-zone determination and loan requirements. Homes near the water are not automatically required to carry flood insurance, and some inland properties can be in designated flood zones. The lender relies on an official flood determination for the specific property.
Can I finance a mother-daughter or accessory-apartment house on Long Island?
Potentially. The key issues are whether the property is legally configured, how the appraiser classifies it, whether there is a permitted accessory apartment and whether it functions as a one-family or multi-unit property. Municipal documentation can be critical on Long Island.
VA & Government Loan Questions
9 questionsVA, FHA and USDA loans each offer specific advantages for eligible borrowers, from no down payment options to flexible credit guidelines. Here are common questions about government-backed financing.
Who is eligible for a VA loan?
VA loans are available to eligible active-duty service members, veterans, and certain surviving spouses who meet the service requirements set by the Department of Veterans Affairs. Eligibility is documented through a Certificate of Eligibility, which confirms your entitlement and is required as part of the loan process.
Do I need a down payment for a VA loan?
Many eligible VA borrowers can finance up to 100% of the purchase price with no down payment required, which is one of the most well-known benefits of the program. Down payment, if any, along with rate and other terms still depend on your entitlement, credit profile and the specific transaction.
What is the VA funding fee?
The VA funding fee is a one-time fee paid on most VA loans that helps sustain the program for future borrowers, and it can typically be financed into the loan rather than paid in cash. The fee amount can vary based on factors such as down payment amount, whether it is a first or subsequent use of VA entitlement, and loan type. Certain veterans, such as those receiving VA disability compensation, may be exempt from the funding fee.
Can I use a VA loan more than once?
Yes, VA loan benefits can generally be used multiple times over your lifetime, and in many cases you can have more than one VA loan at a time if you have sufficient remaining entitlement. Exact availability depends on your entitlement usage, any prior VA loans, and whether previous entitlement has been restored.
Can I use a VA loan on Long Island?
Yes, VA financing is available for eligible properties on Long Island the same as anywhere else in the country, subject to loan limits and property eligibility requirements. Given Long Island's higher property values, VA jumbo-style scenarios can come up, and eligibility for zero-down financing above standard limits depends on your entitlement and the lender's guidelines.
What is FHA mortgage insurance and how long does it last?
FHA loans require both an upfront mortgage insurance premium, which can typically be financed into the loan, and an annual premium paid monthly. Depending on your down payment and loan term, FHA mortgage insurance may last for the life of the loan or may be eligible for removal after a set period, which is different from how conventional PMI typically works.
What is an FHA 203(k) loan?
An FHA 203(k) loan allows you to finance both the purchase (or refinance) of a home and the cost of renovations in a single mortgage, based on the property's value after the work is completed. This can be useful for buyers interested in a property that needs repairs or updates but who do not want to manage separate financing for the renovation.
Are USDA loans available on Long Island?
USDA loans are designed for eligible properties in USDA-designated rural areas, and eligibility is based on the specific property location and household income limits. Much of Long Island does not fall within USDA-eligible areas due to population density, though eligibility should always be confirmed for a specific address rather than assumed based on general location.
FHA vs. conventional: which is better?
Neither program is automatically better; the right choice depends on your credit profile, down payment, and how the ongoing mortgage insurance cost compares between the two options. FHA loans can offer more flexible credit and down payment requirements, while conventional loans may offer lower mortgage insurance costs for borrowers with stronger credit and more down payment. Comparing both scenarios side by side for your specific situation is the most reliable way to decide.
Reverse Mortgage Questions
8 questionsA reverse mortgage allows eligible homeowners age 62 and older to access their home equity without a required monthly mortgage payment. Here are common questions about how reverse mortgages work.
What is a reverse mortgage?
A reverse mortgage is a loan available to eligible homeowners, generally age 62 or older, that allows you to convert a portion of your home equity into funds without making required monthly mortgage payments, as long as you continue to live in the home, maintain it, and keep up with property taxes and insurance. The loan balance grows over time as interest accrues and is generally repaid when the home is sold, the borrower moves out permanently, or the borrower passes away.
Do I still own my home with a reverse mortgage?
Yes, you retain ownership and title to your home with a reverse mortgage, the same as with a traditional mortgage. The lender places a lien on the property, similar to a conventional loan, but you remain the owner as long as you continue meeting the loan obligations such as living in the home and maintaining taxes and insurance.
How much money can I get from a reverse mortgage?
The amount available depends on factors including your age, current interest rates, the appraised value of your home, and any existing mortgage balance that needs to be paid off. Generally, older borrowers and higher home values result in access to a greater percentage of equity, though every situation is calculated individually.
Do I have to pay back a reverse mortgage every month?
No, a reverse mortgage does not require monthly principal-and-interest payments as long as you continue to live in the home as your primary residence and meet the loan's ongoing requirements, including property taxes, homeowners insurance, and home maintenance. The loan becomes due when the last remaining borrower permanently leaves the home, sells it, or passes away.
What happens to a reverse mortgage when the homeowner passes away?
When the last borrower passes away, the loan typically becomes due, and heirs generally have options including paying off or refinancing the loan to keep the home, selling the home to satisfy the balance, or, if the home is worth less than the loan balance, satisfying the debt through the home's sale without owing the difference on FHA-insured reverse mortgages. Heirs are usually given a defined period of time to decide and act.
Can I get a reverse mortgage if I still owe money on my current mortgage?
Yes, an existing mortgage balance can typically be paid off using the reverse mortgage proceeds at closing, as long as the remaining equity is sufficient to satisfy that balance based on the amount you qualify for. This can eliminate your existing monthly mortgage payment while still accessing available equity.
Are reverse mortgage proceeds taxable?
Reverse mortgage proceeds are generally treated as loan advances rather than income, which is different from how many other forms of retirement funds are taxed, but individual tax situations vary. This is a question best confirmed with a qualified tax professional based on your specific circumstances.
Is a reverse mortgage available on Long Island?
Yes, reverse mortgages are available on eligible property types throughout Long Island and the rest of New York, subject to program guidelines, property eligibility, and required HUD-approved counseling. Higher Long Island home values can sometimes support greater available proceeds, though every scenario depends on the specific property and borrower details.
Conventional & Conforming Loan Questions (Fannie Mae & Freddie Mac)
9 questionsConventional loans that meet Fannie Mae and Freddie Mac guidelines make up the everyday standard in mortgage financing, including low-down-payment programs like HomeReady, Home Possible and HomeOne. Here are common questions about how conforming conventional financing works.
What is a conforming conventional loan?
A conforming conventional loan is a mortgage that meets the guidelines set by Fannie Mae and Freddie Mac, the two government-sponsored enterprises that establish underwriting standards and loan limits for most of the conventional mortgage market. Meeting these guidelines allows a loan to be eligible for sale to Fannie Mae or Freddie Mac, which generally supports more competitive pricing than loans that fall outside those standards.
What is HomeReady and who is it for?
HomeReady is a Fannie Mae conventional loan program designed to expand access to homeownership, including for buyers with moderate income. It allows down payments as low as 3% for eligible borrowers and offers flexibility in how qualifying income can be documented, including income from non-borrower household members in some cases. Eligibility depends on income limits that vary by property location.
What is Home Possible and how is it different from HomeReady?
Home Possible is Freddie Mac's equivalent low-down-payment program, similar in purpose to Fannie Mae's HomeReady. Both allow down payments as low as 3% for eligible borrowers and are designed to help moderate-income buyers qualify, but they are administered under separate agency guidelines with their own specific eligibility rules. Which one applies to a given loan generally depends on which agency the loan is underwritten to.
What is HomeOne?
HomeOne is a Freddie Mac program offering a 3% down payment option for eligible first-time homebuyers, without the income limits that apply to Home Possible. It is generally available for one-unit primary residences and can be a useful option for first-time buyers who do not meet the income restrictions of other low-down-payment programs.
What is the minimum down payment on a conventional loan?
Certain conventional programs, including HomeReady, Home Possible and HomeOne, allow down payments as low as 3% for eligible borrowers and eligible transactions. Standard conventional financing without these programs, and financing for second homes or investment properties, typically requires a larger down payment. The minimum that applies to your situation depends on occupancy, property type, credit profile and the specific program used.
Do conventional loans require mortgage insurance?
Conventional loans with a down payment of less than 20% generally require private mortgage insurance, commonly called PMI. Unlike FHA mortgage insurance, conventional PMI can typically be removed once you reach a sufficient equity position, either automatically under federal requirements or upon request once you meet the servicer's criteria.
What does "AUS-approved" mean?
AUS stands for automated underwriting system, such as Fannie Mae's Desktop Underwriter or Freddie Mac's Loan Product Advisor. These systems evaluate your credit, income, assets and the specific loan scenario against agency guidelines to produce an underwriting recommendation. An "AUS-approved" or "approve/eligible" finding is generally an important step toward final loan approval, though it does not replace full documentation review.
What is the difference between Fannie Mae and Freddie Mac?
Fannie Mae and Freddie Mac are both government-sponsored enterprises that purchase conforming mortgages from lenders, which helps keep mortgage money available and pricing competitive. While their overall purpose is similar, each has its own specific underwriting guidelines, automated underwriting system and program names, such as HomeReady versus Home Possible. A lender will typically evaluate your scenario against both to determine which produces the best outcome.
Are conventional loan limits the same in every county?
No, conforming loan limits are set annually and can vary by county based on local home values, with higher limits in certain designated high-cost areas. A loan amount above the applicable conforming limit for your county would generally need to be financed as a jumbo loan instead. Current limits for a specific property should be confirmed directly, since they are updated periodically.
Renovation Loan Questions (203(k) & HomeStyle)
6 questionsRenovation loans let you finance a purchase or refinance together with the cost of repairs or upgrades, based on the home's value after the work is complete. Here are common questions about FHA 203(k) and Fannie Mae HomeStyle renovation financing.
What is a renovation loan?
A renovation loan allows you to finance the purchase (or refinance) of a home together with the cost of repairs or improvements in a single mortgage, based on the property's value after the work is completed rather than its current as-is value. This can make it possible to buy a home that needs work without needing separate financing for the renovation itself.
What is the difference between an FHA 203(k) loan and a Fannie Mae HomeStyle loan?
Both allow you to combine purchase or refinance financing with renovation costs, but they follow different program guidelines. FHA 203(k) loans follow FHA requirements, including FHA mortgage insurance, while HomeStyle is a conventional Fannie Mae program with its own guidelines and mortgage insurance rules. Which one fits better generally depends on your credit profile, down payment, and the scope of the renovation planned.
Can I use a renovation loan on a home I already own?
Yes, renovation loans are available as both purchase and refinance transactions, so a refinance version can be used to fund improvements on a home you already own. The loan amount is generally based on the home's value after the planned renovation is complete, similar to a renovation purchase.
What kind of repairs can be financed with a renovation loan?
Eligible repairs can range from cosmetic updates to more significant structural, mechanical or safety-related work, depending on the specific program and version used. Some renovation loan programs have streamlined versions for smaller projects and standard versions for larger scopes of work. The specific list of eligible improvements should be confirmed for the program you are using.
How is the loan amount determined on a renovation loan?
The loan amount is generally based on an appraisal that considers the home's value after the proposed renovation is complete, rather than its current condition, subject to program limits. Renovation costs are typically verified through contractor bids or estimates, and funds are usually disbursed in draws as work is completed and inspected.
Do I need a licensed contractor for a renovation loan?
Most renovation loan programs require the work to be performed by a qualified, and often licensed, contractor, with some allowing limited self-performed work under certain conditions depending on the program. Contractor bids are typically reviewed as part of the loan process to confirm the scope and cost of the planned work.
USDA Loan Questions
5 questionsUSDA loans offer no-down-payment financing for eligible borrowers purchasing in USDA-designated areas. Here are common questions about USDA eligibility and how the program works.
What is a USDA loan?
A USDA loan is a mortgage program backed by the U.S. Department of Agriculture designed to support homeownership in eligible rural and certain suburban areas, offering financing with no down payment required for eligible borrowers and properties. Eligibility depends on both the specific property's location and the borrower's household income.
Do I have to buy in a rural area for a USDA loan?
The property must be located in a USDA-designated eligible area, which includes many rural communities but can also include some suburban areas outside of higher-density regions, depending on USDA's current area designations. Eligibility is determined address by address rather than by general geography, so a specific property should always be checked directly.
Is there a down payment required for a USDA loan?
No down payment is required for eligible USDA loans, which is one of the program's key benefits for qualifying borrowers. Closing costs and other loan requirements still apply, and overall eligibility depends on meeting both property and income requirements.
Are there income limits for USDA loans?
Yes, USDA loans have household income limits that vary by location and household size, since the program is intended to support moderate-income buyers. Income from all household members may be considered for these limits, even if not everyone is on the loan, so eligibility should be confirmed based on your specific household.
Does USDA charge mortgage insurance?
USDA loans include an upfront guarantee fee and an annual fee, which function similarly to mortgage insurance on other government loan programs. These fees help support the USDA guarantee program and can typically be financed into the loan rather than paid entirely in cash.
Non-QM Program Questions (Bank Statement, P&L, Asset Depletion & 1099)
6 questionsNon-QM and portfolio loan programs use expanded, alternative documentation to qualify borrowers who don't fit a conventional or government box, including self-employed owners, 1099 earners and high-asset clients. Here are common questions about how these specific programs work.
What is a bank statement loan and how does it work?
A bank statement loan allows self-employed borrowers to qualify using 12 to 24 months of personal or business bank deposits to demonstrate income, instead of relying solely on tax returns. This can be helpful when legitimate business write-offs make taxable income look lower than actual cash flow. Lenders typically apply an expense factor to deposits to arrive at a qualifying income figure, and specific requirements vary by program.
What is a P&L loan?
A P&L loan allows a self-employed borrower to qualify using a CPA-prepared profit and loss statement, often paired with supporting business bank activity, to document current income. This can be useful for business owners whose tax returns do not reflect rapid growth or recent, more accurate earnings. Specific documentation requirements, such as how far back the P&L must go, vary by lender.
What is an asset depletion loan?
An asset depletion loan converts a borrower's liquid assets, such as cash, investments, and certain retirement funds, into an equivalent monthly income figure for qualifying purposes, without requiring those assets to be pledged as collateral. This program is often used by retirees or high-net-worth borrowers who have significant assets but limited traditional monthly income.
What is a 1099 loan and who is it for?
A 1099 loan qualifies borrowers based on 1099 earnings, often averaged over 12 to 24 months, along with corresponding bank activity, rather than requiring full tax-return documentation. This can be a fit for independent contractors, commissioned sales representatives, and gig-economy workers whose income is reported on 1099 forms.
Can I combine income documentation types, like bank statements and 1099s?
Depending on the lender and program, some Non-QM options allow blending multiple forms of alternative documentation, though every program has its own rules about what can and cannot be combined. If your income comes from more than one source or type, it is worth having your full picture reviewed so the loan officer can identify which program, or combination of documentation, produces the best outcome.
Are Non-QM loan rates higher than conventional loans?
Non-QM loans often carry higher rates than conventional financing, reflecting the alternative documentation and expanded eligibility criteria involved. The tradeoff is access to financing for borrowers who may not otherwise qualify under conventional or government guidelines. Comparing the specific rate, terms and overall cost across available programs is the best way to evaluate whether a Non-QM option makes sense for your situation.
Jumbo Loan Questions
8 questionsHomes priced above the conforming loan limit require jumbo financing, which follows its own credit, reserve and documentation standards. Here are common questions about how jumbo loans work on Long Island and in the surrounding New York market.
What is a jumbo loan?
A jumbo loan is a mortgage that exceeds the conforming loan limit set each year by Fannie Mae and Freddie Mac. Because jumbo loans aren't eligible for purchase by these agencies, lenders generally apply their own, often stricter, credit, income and reserve requirements.
How much down payment do I need for a jumbo loan?
Down payment requirements for jumbo loans are typically higher than conforming loans, often in the 10% to 20% range depending on the lender, loan amount, property type and your credit profile. Some programs may allow less for highly qualified borrowers.
What credit score do I need for a jumbo loan?
Jumbo lenders generally look for stronger credit than conforming loans, often 700 or higher, though the exact requirement varies by lender and loan amount. A higher score can also help with pricing.
Do jumbo loans require cash reserves?
Yes. Most jumbo programs require you to show liquid reserves remaining after closing, often six to twelve months of your mortgage payment, though this varies by lender, loan size and overall file strength.
Is a jumbo loan common on Long Island?
Yes. Because home values in many Nassau and Suffolk communities exceed the conforming loan limit, jumbo financing is common here, especially for waterfront, luxury and larger properties.
Is the interest rate higher on a jumbo loan?
Not necessarily. Jumbo rates can be higher, lower or comparable to conforming rates depending on market conditions, the lender and your credit profile. Comparing multiple wholesale lenders can help you find competitive jumbo pricing.
Can I get a jumbo loan if I'm self-employed?
Yes, though documentation requirements are typically more detailed. Depending on the lender, options may include standard tax-return underwriting or, for qualified borrowers, bank-statement or asset-based programs.
What property types qualify for jumbo financing?
Jumbo loans are generally available for primary residences, second homes and, with some lenders, investment properties, though down payment and reserve requirements can vary by occupancy type.
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Every buyer, homeowner and property is different. Let us review your actual situation and explain the mortgage options that may be available to you.
This Mortgage Answer Center is provided for general educational purposes and is not a commitment to lend or a substitute for a complete mortgage application and underwriting review. Loan program requirements, agency guidelines, interest rates, loan limits and eligibility standards can change. Property, legal and tax questions should be reviewed with the appropriate real estate attorney, tax professional or other qualified advisor.