1First, some quick definitions
Four ideas come up in almost every conversation about a mortgage.
Mortgage insurance
Protects the lender if you stop paying. Conventional loans have PMI under 20% down. FHA loans have their own premiums. VA loans have no monthly mortgage insurance.
Credit score
The number lenders use to judge how reliably you repay debt. Higher scores usually earn better pricing. Check yours early and avoid opening new accounts.
Income
Lenders want stable, documented income: wages, self-employment, bonus and commission, retirement income and, in some cases, rental income. Self-employed income is usually averaged over two years.
Closing costs
Lender fees, title and settlement charges, recording and transfer taxes, and prepaid taxes and insurance. On a Virginia purchase they often run around 2% to 5% of the price.
2The main loan program options
The right program depends on your credit, savings, income and plans. Duane compares them for you.
VA loan
For eligible veterans, service members and some surviving spouses. No down payment, no monthly mortgage insurance and competitive rates. Most borrowers pay a one-time funding fee, and some are exempt.
FHA loan
Flexible on credit and a smaller down payment. It carries an upfront and an annual mortgage insurance premium. A good fit for many first-time buyers.
Conventional loan
Not backed by a government agency. Often the best pricing for stronger credit, and PMI can come off once you reach 20% equity.
Jumbo and bank statement loans
Jumbo loans cover amounts above the county conforming limit. Bank statement loans qualify self-employed borrowers using deposits instead of tax returns.
3What does a lender look at?
Three things drive almost every decision.
- Credit. Your score, your payment history and any recent late payments or collections.
- Debt-to-income ratio. Your monthly debts, including the new payment, compared with gross income. Many programs allow roughly the low 40s to about 50%, depending on the program and your other strengths.
- Work history. Lenders like to see about two years of steady work in the same field. Gaps and changes can usually be explained in writing.
4Documents to gather
Having these ready before you apply speeds everything up. The documents checklist on this site builds a list for your exact loan.
- Photo ID and Social Security number
- Pay stubs from the last 30 days
- W-2s or tax returns for two years
- Two months of bank and investment statements
- Signed purchase contract
- VA Certificate of Eligibility, if using a VA loan
- Profit and loss statement, if self-employed
- Gift letter, if family is helping with the down payment
5Bank, retail lender or broker?
Where you borrow decides how many options you see.
Bank
Offers its own products at its own rates. Familiar, but you see one lender's menu.
Retail lender
Works similarly, with its own programs and pricing, often through a national call center or local branch.
Mortgage broker
Shops many wholesale lenders at once and matches your file to the best fit. Duane Buziak works this way, through Coast2Coast Mortgage.
6You found a home. Now what?
A few decisions in the offer shape the loan.
- Seller-paid closing costs. Many sellers will contribute. Each program caps how much, so ask before you write the offer.
- Earnest money. A good-faith deposit that is credited at closing. Know the deadlines that protect it.
- Inspections. A home inspection is for your benefit. Many Virginia buyers also order a wood-destroying insect inspection, and rural homes often need septic and well testing.
- Virginia disclosures. Sellers provide a residential property disclosure or disclaimer statement. If the home is in an HOA, the seller provides a resale disclosure packet. Ask your agent about your rights and deadlines.
7The loan process in four stages
A purchase commonly takes about 30 to 45 days from contract to closing.
- DisclosuresYou receive your Loan Estimate within three business days of applying, then lock your rate and approve the terms.
- AppraisalAn appraiser confirms the home supports the price. If it comes in low, you can renegotiate, bring cash or walk away depending on your contract.
- UnderwritingThe underwriter reviews your file and asks for anything missing. Quick answers keep it moving. The end goal is clear to close.
- ClosingYou get your Closing Disclosure at least three business days before closing, review it, then sign.
8Six things that can kill your loan
Between pre-approval and closing, avoid these unless your loan officer says it is fine.
- Opening new credit. A car loan or card changes your debt-to-income ratio.
- Changing jobs. Even a good move can pause approval while income is re-verified.
- Large unexplained deposits. Anything that is not regular pay needs a paper trail.
- Undocumented gifts. Gift funds need a signed gift letter and a transfer record.
- Missing payments. Lenders often re-check credit right before closing.
- Co-signing for someone. It can add their payment to your debts.
9At the closing table in Virginia
Closings are run by a settlement agent, usually a title company or attorney's office.
- Bring. A government photo ID and any remaining funds, sent by wire or cashier's check as the settlement agent instructs.
- Sign. The promissory note for the loan and the deed of trust that secures it, along with the closing paperwork.
- Recording. The settlement agent records the deed and deed of trust with the local circuit court, then releases funds. You receive the keys after funding.
10After you close
A few things to expect in the first months.
- Your first payment. Usually due about a month and a half after closing, and often to a servicer that may change.
- Taxes and insurance. If your loan has an escrow account, the servicer pays property taxes and homeowners insurance from it.
- Flood risk. Parts of Virginia, including coastal areas, sit in flood zones. Ask about flood insurance before you close.
- Keep your records. Save your closing documents. They matter for taxes and for any future refinance.
11Quick answers
How long does a Virginia mortgage take?
About 30 to 45 days from contract to closing is typical. Pre-approval and quick document turnaround shorten it.
Should I get pre-qualified or pre-approved?
Pre-approval. It involves a real review of your credit, income and assets, and sellers take it more seriously.
Can the seller pay my closing costs?
Often yes, within each program's limits. Ask before writing your offer.
What if the appraisal comes in low?
You can ask the seller to lower the price, cover the gap yourself, challenge the appraisal or, depending on your contract, cancel.
When should I lock my rate?
Most buyers lock once they have a signed contract. Ask about lock length and extension fees.
What does a broker charge?
A broker is paid through the loan, and every cost appears on your Loan Estimate so you can compare it with any other lender.