Mortgage FAQ: Your Home Loan Questions Answered

Most loan programs require a minimum credit score of 580–620. FHA loans accept scores as low as 580 with 3.5% down, while conventional loans typically need 620 or higher. A higher score generally earns you a better interest rate and lower monthly payment.

Lenders typically recommend keeping your total monthly housing costs below 28–36% of your gross monthly income. Your purchase power depends on your income, debts, credit score, and down payment. Use a mortgage calculator to get a personalized estimate of what you can comfortably afford.

Pre-approval is a lender’s written commitment stating how much you can borrow, based on a review of your income, assets, and credit. It gives you a competitive edge when making offers because sellers know you’re a qualified buyer. Pre-approval is different from pre-qualification, which is only an informal estimate. Get pre-approved today.

From application to closing, the mortgage process typically takes 30–45 days. Timelines depend on the loan type, how quickly you submit documentation, and the appraisal and title process. Being responsive with your paperwork helps keep things on schedule.

FHA loans are government-insured, accept lower credit scores (580+), and require just 3.5% down, but they come with mandatory mortgage insurance for the life of the loan. Conventional loans typically require a 620+ credit score and 3–5% down, but let you drop PMI once you reach 20% equity.

VA loans are available to active-duty service members, veterans, and eligible surviving spouses. They offer zero down payment, no PMI, and competitive rates. You’ll need a Certificate of Eligibility (COE) to prove your service history.

USDA loans are zero-down mortgages for homes in eligible rural and suburban areas, backed by the U.S. Department of Agriculture. They’re designed for moderate-income borrowers and offer low interest rates. Many areas outside major Utah cities qualify for USDA financing.

A jumbo loan exceeds the conforming loan limit set by the FHFA—currently $766,550 in most U.S. counties. Jumbo loans are used for higher-priced properties and typically require stronger credit, larger reserves, and a bigger down payment than conforming loans.

Down payment requirements vary by loan type: FHA requires 3.5%, conventional loans start at 3%, and VA and USDA loans offer 0% down. Utah also has down payment assistance programs that can cover part or all of your down payment.

PMI is insurance your lender requires when your down payment is less than 20% on a conventional loan. It protects the lender—not you—if you default. PMI typically costs 0.3–1.5% of the loan amount per year and can be removed once you reach 20% equity in your home.

Closing costs include lender fees, appraisal, title insurance, escrow setup, and prepaid taxes and insurance. They typically run 2–5% of the loan amount. Your Loan Estimate will itemize every fee so there are no surprises at the closing table.

Yes. Utah Housing Corporation (UHC) offers down payment assistance through programs like FirstHome and HomeAgain, which provide a second mortgage to cover your down payment and closing costs. Income limits and purchase price caps apply, but many first-time and repeat buyers qualify.

Mortgage rates are influenced by the broader economy, the Federal Reserve’s policy, inflation, and bond market yields. Your individual rate also depends on your credit score, down payment, loan type, and loan term. Rates change daily, so locking in at the right time matters.

A fixed-rate mortgage keeps your interest rate and payment the same for the entire loan term, offering stability. An adjustable-rate mortgage (ARM) starts with a lower rate that can change after the initial fixed period. Fixed rates are best if you plan to stay long-term; ARMs can save money if you expect to move or refinance within a few years.

Yes. Discount points let you pay an upfront fee at closing to lower your interest rate. One point costs 1% of the loan amount and typically reduces your rate by about 0.25%. Buying points makes sense if you plan to keep the loan long enough for the monthly savings to exceed the upfront cost.

An escrow account is managed by your loan servicer to collect and pay property taxes and homeowner’s insurance on your behalf. A portion of each monthly mortgage payment goes into escrow so these bills are paid automatically. Most lenders require escrow, especially if your down payment is below 20%.

Refinancing generally makes sense when current rates are at least 0.5–1% lower than your existing rate, when you want to switch from an ARM to a fixed rate, or when you need to change your loan term. You’ll want to make sure the monthly savings outweigh the closing costs over the time you plan to stay in the home.

A cash-out refinance replaces your existing mortgage with a larger loan, letting you pocket the difference in cash. Homeowners commonly use it to fund renovations, consolidate debt, or cover major expenses. You’ll need sufficient equity—typically at least 20% remaining after the cash-out. Learn more about refinancing in Utah.

A streamline refinance is a simplified refinance available for FHA, VA, and USDA loans. It requires minimal documentation, often no appraisal, and closes faster than a standard refinance. The main requirement is that the refinance must result in a tangible benefit, such as a lower rate or payment.