How to Shop for a Mortgage: A Plain-English Guide

Eleven questions, answered in order

These pages are the argument from our consumer guide, rebuilt so each one stands on its own. Read them in order and they build; arrive at one from a search and it will still make sense without the others.

01How does a mortgage loan officer get paid?Salary, commission, or both — and why neither tells you whether your offer is good.02Broker, bank, credit union or direct lender — what is the difference?Who funds your loan, where their revenue comes from, and what to weigh in each case.03Start with a broker. Then vet the broker.The structural advantage is real. It is not automatic, and not every broker works it.04Every rate has a pricePar, discount points and lender credits — the trade between up-front and over time.05What “no closing cost” can meanNobody is working for free. The question is where the cost went.06An ARM is a bet on your own timelineWhy the rate starts lower, what happens when it stops, and who should take that trade.07Which mortgage fees are worth questioning?Some closing costs buy a service. Others are overhead with a name on it.08You should not be paying anyone yetThe law sets a floor. The standard worth holding is higher, and it costs you nothing.09The two ways to pay a brokerLender-paid or borrower-paid — where each appears, and which can cost less.10Licensed or federally registered?Both carry an NMLS number. The qualification paths are not the same.11Should you use the builder’s preferred lender?The one case where we tell people to go get the other offer.

VA loans

VA rules are federal, so these apply the same way in every state we are licensed in. The figures on these pages come from VA and from the regulation, and each page cites what it used.

01VA loans with a low credit scoreVA sets no minimum score. The number that stopped you came from a lender, not from VA.02VA entitlement and loan limitsWith full entitlement there is no loan limit. Here's what that does and doesn't mean.03The VA funding feeWhat it costs, why the second-use rate jumps, and who doesn't pay it at all.04What a VA borrower can and cannot be chargedA 1% cap on origination, a fixed list of allowable fees, and a flat prohibition.05The VA appraisal and Notice of ValueWhat the appraiser is doing, and what happens when the number comes in low.06The VA IRRRL, and the rule that governs itSeasoning, the 36-month recoupment test, and why it shapes how the loan is structured.07The VA cash-out refinanceUp to 100% of value — and why so many people believe the number is 90%.

FHA loans

FHA rules are federal too, and unusually well published — the score tiers, the premium rates and the loan limits are all written down. Which makes it easy to check whether the number you were quoted came from HUD or from the lender. Every figure on these pages cites the mortgagee letter or handbook section it came from.

01FHA mortgage insuranceTwo premiums, not one — and whether the second one ever ends is settled on the day you close.02FHA credit scores and down paymentThree tiers, set by HUD. The fourth number you will be quoted is not HUD's.03FHA pricing below 580Part of the price is the market pricing risk. Part of it is a decision somebody made about you.04FHA or conventional?Neither one always wins. The mortgage insurance rules decide most of it.05The FHA Streamline refinanceNo appraisal, no income documentation, and on most files no credit qualifying.

Conventional loans

Fannie Mae and Freddie Mac publish their rules in the same detail HUD does: the down payment each program allows, when mortgage insurance has to come off, and what an investment property costs extra. Every figure on these pages cites the guide, matrix or FHFA release it came from.

01Conventional mortgage insurance, and how it endsUnlike FHA's, it is built to come off. There are three ways, and one kind that never does.02Three percent down on a conventional loanNot only FHA. Who qualifies, the income limits, and the pricing waiver most buyers never hear about.03Conforming, high-balance and jumboThe 2026 limits, and what actually changes as the loan gets bigger.04Investment properties and second homesWhat separates the two, the down payment each needs, and why both cost more than a home you live in.

Non-QM loans

For borrowers the agency boxes do not fit: the self-employed, investors, non-citizens, thin or bruised credit. What these loans are, what they are not, and how to tell whether you actually need one. Program limits vary by lender and change often, so these pages describe the programs and leave the numbers to your quote.

01Non-QM: what it is, and what it is notNot a subprime loan and not a no-documentation loan. A different way of proving the same thing.02Self-employed: bank statements, P&L or 1099When your tax returns tell the IRS one story and the lender needs to hear another.03DSCR loans: qualifying on the rentYour tax returns stay in the drawer. The question is whether the property pays for itself.04ITIN, DACA and non-permanent residentsOwning a home here does not require a green card. What changes is which loan fits.05Prepayment penalties on non-QM and DSCR loansYour home loan almost certainly cannot have one. Your investor loan almost certainly does.

Down payment assistance

Three different arrangements go by one name, and they do not cost the same. What the 3.5 percent can legitimately be covered by, the difference between a grant, a forgivable lien and a loan with a payment, and the mortgage insurance consequence that comes with all of them. Program terms are set by the lender providing the assistance and change without notice.

01How down payment assistance worksThree different things go by one name, and they do not cost the same.02Forgivable, deferred, or repayableTwo structures, two very different monthly payments, and the choice turns on one question about your life.03Qualifying for assistanceLower bars than most people assume, and two beliefs that keep the right people from asking.04What assistance actually costsIt is not free money, and the largest cost is the one nobody mentions.

Mortgages below a 580 score

The band where most of the bad information lives. What the agencies actually allow, what is a lender’s own rule rather than an agency’s, why a low score does not by itself decide how your file is underwritten, and how long you actually have to wait after a bankruptcy or a foreclosure.

01What a 500–579 score costsIt changes the down payment and it shortens the list of lenders. It does not end the conversation.02Automated approval, manual underwritingA low score does not automatically mean manual underwriting. Plenty come back approved.03After a bankruptcy or foreclosureThe waits are shorter than most people think, and two of the clocks do not start where people assume.04Low score: FHA or VAOne program publishes score tiers. The other does not have any.

What to take to every lender

The CFPB recommends requesting Loan Estimates from at least three different lenders, and comparing the same loan type and assumptions.¹ These are the questions worth asking each of them.

Who are you in this transaction?

Broker, bank, credit union, retail lender or correspondent? Who funds the loan?

How are you and your company paid?

Salary, commission or another arrangement? Is broker compensation lender-paid or borrower-paid, and where will I see it?

Which options did you actually compare?

Which alternatives fit my file? If you show only one option, why? Explain the choices and the tradeoffs.

Can you explain alternative pricing?

If available, show comparable lender-paid and borrower-paid structures and explain the upfront-cost tradeoff.

Are we comparing the same assumptions?

Same borrower information, property, program, lock period and pricing date?

What costs remain my responsibility?

Which charges are included, which can change, and what exactly does any lender credit cover?

What happens if the lock expires?

Who pays an extension, how is a new rate determined, and what if the delay is yours? Please put the policy in writing.

Who owns the file through closing?

Who handles conditions and problems? What could delay approval or funding?

Are you licensed or federally registered?

What is your NMLS ID, and does the public record match your employer and role?

What will I be asked to pay, and when?

Before I hold a Loan Estimate, the only charge should be a bona fide credit report fee. When is the appraisal collected?

Is a builder incentive changing the comparison?

What is the same home’s full package with outside financing, and which incentives would I lose?

Keep the Loan Estimates and written explanations together. The lowest visible fee is only one part of the comparison.²

Sources

These references support the factual explanations above. Where this page states a preference rather than a fact, it says so — those are our editorial judgement, not a claim that any one channel always costs less.

1CFPB · Your home loan toolkit, page 10Request written Loan Estimates from at least three different lenders.

2CFPB · Choosing a loan offerObtain, compare and negotiate written Loan Estimates.

The whole argument, in one place

How Your Loan Officer Gets Paid

Eighteen pages, including the printable checklist to take to every lender you talk to. Nothing to fill in, no email required.

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How to shop for a mortgage