Home Buy Sell Military Relocation Financing

An annual percentage rate (APR) is the effective percentage you pay for your mortgage each year when certain costs and fees are included.  That means the APR is usually higher than your regular interest rate because, in addition to interest, it includes lender or broker fees, points paid, closing costs, and other fees. In other words, APR is the cost to borrow money as a yearly percentage.

Different lenders may offer the same interest rate but the APR could differ because of varying fees and costs. It’s important to compare both rates.

An interest rate is the cost you will pay a lender to borrow money, expressed as a percentage. An annual percentage rate (APR) is the effective percentage you pay for your mortgage each year when certain costs and fees are included. Your APR is usually higher than your regular interest rate because, in addition to interest, it includes costs like lender or broker fees, points paid, closing costs, and other fees.

Private mortgage insurance (PMI or MI) is mortgage insurance that’s usually required with a conventional loan if your down payment is less than 20% of the home’s purchase price. PMI is also usually required for refinancing a conventional loan when your equity is less than 20% of the home’s value. PMI covers the increased risk when a borrower makes a smaller down payment or has less equity. It protects the lender — not you, the borrower — if you stop making loan payments.

Generally, PMI can be removed from your monthly payments once you pay down your loan balance to below 80% of your home’s purchase price or when you achieve 20% equity in your home.

Most government loans, such as FHA loans, also require mortgage insurance, typically for the entire life of the loan.

PMI is calculated as a percentage of your loan amount, typically from 0.2% to 2% annually. The cost of PMI depends on several factors, including your down payment amount, your credit score, your loan amount, and the type of mortgage loan.

Generally, PMI can be removed from your monthly payments once you pay down your loan balance to below 80% of your home’s purchase price or when you achieve 20% equity in your home.

Mortgage insurance protects the lender against losses if a homeowner defaults on a mortgage loan. Government mortgage insurance is required on government loans (such as FHA and USDA loans), and private mortgage insurance (PMI) is required on conventional loans if a homeowner’s down payment is less than 20% of the purchase price.

Mortgage insurance premiums are paid by a homeowner at closing or with each monthly payment. Premiums are paid to FHA for government loans and to private mortgage insurers for conventional loans.

Mortgage insurance protects the lender against losses if a homeowner defaults on a mortgage loan.

Mortgage insurance costs depend on several factors. For a conventional loan, private mortgage insurance (PMI) costs typically range from 0.2% to 2% of the loan amount per year. PMI costs are based on factors like the type of loan you get, your credit score, your down payment or amount of equity, and loan term. For an FHA loan, the up-front portion of the mortgage insurance premium is usually 1.75% of the loan amount, and the monthly payments are based on an annual premium of 0.50% to 0.55% of the loan amount.

A conventional mortgage loan  is a home loan that is not insured or guaranteed by a government agency such as FHA, USDA, or the VA. Conventional loans can be either fixed rate or adjustable rate. Conventional loans are best for borrowers with good credit and an adequate down payment, which could be as little as 3% of the purchase price.

A conforming mortgage loan is a type of home loan that satisfies the terms and conditions set forth by Fannie Mae, Freddie Mac, and their regulator, the Federal Housing Finance Agency. These loans are best for borrowers with good credit and an adequate down payment, which could be as little as 3% of the purchase price.

Mortgage loan interest rates are the cost you will pay each year to borrow money for the home. These rates may vary from loan to loan and from lender to lender. Many factors may affect the interest rate offered for your specific loan, including your credit score, the property’s location, the purchase price, the loan amount, the loan term, and the loan type. It’s important to shop around, as you may find lenders who offer a lower interest rate.
How are mortgage payments calculated?
What is amortization?
How is an amortization schedule calculated?
How are closing costs calculated?
How much are closing costs?
What is included in closing costs?
What is a lender credit?
What is an appraisal?
How long does an appraisal take?
Who pays for appraisal?
How do I qualify as a first-time homebuyer?
What is an escrow account?
How do I buy a home that is in foreclosure?
Financial Basics FAQ
Renter FAQ
Homebuyer FAQ
Homeowner FAQ

A VA loan is a mortgage backed by the Department of Veterans Affairs that helps eligible service members, Veterans, and some surviving spouses buy (or refinance) a home with flexible terms — often 0% down and no monthly mortgage insurance.

Your lender will pull your Certificate of Eligibility (COE) through the VA portal, or you can request it through VA resources. The COE confirms you have VA entitlement available. 

Not always. Many VA buyers can do 0% down (depending on entitlement and loan amount)

Nope — VA loans don’t require monthly PMI, even with 0% down. Instead, there’s typically a one-time VA funding fee (unless exempt).

Mortgage insurance protects the lender against losses if a homeowner defaults on a mortgage loan. Government mortgage insurance is required on government loans (such as FHA and USDA loans), and private mortgage insurance (PMI) is required on conventional loans if a homeowner’s down payment is less than 20% of the purchase price.

The funding fee is a one-time charge that helps keep the VA program running. It can be financed into the loan. It may be waived for Veterans receiving VA disability compensation (and some other qualifying cases).

Yes — as long as you have entitlement available (either restored after selling/paying off, or remaining entitlement if you still own a VA-financed home).

Sometimes, yes. This happens when you have remaining entitlement and you qualify for the new payment. It’s very scenario-specific — loan amount, county limits, and entitlement all matter.

The VA doesn’t set a minimum credit score — but lenders do (called “lender overlays”). In the real world, many lenders like to see something in the high 500s to 600s+, depending on the full file (DTI, reserves, payment history).

Pre-qualification = quick estimate based on what you tell the lender (useful, but not a weapon in a bidding war).

Pre-approval = lender reviews documents, runs credit, and issues a stronger approval letter (this is what sellers respect).

Yes — but expect more paperwork. Lenders usually want 2 years of tax returns, and they average/adjust income. The key is documenting stable income and explaining write-offs.

Often yes — especially if you stayed in the same line of work or moved to a stronger/related role. Big jumps (W-2 to self-employed) can require more history.

Possibly. VA underwriting is often more flexible than conventional, but waiting periods and approvals vary by lender and circumstances (and “the story” matters — re-established credit, stable income, etc.). This is where a lender who actually understands VA earns their paycheck.

They’re often very competitive because the VA guaranty reduces lender risk — but the “best” rate depends on credit, points, and market timing.

Typical buckets include:

Lender fees (origination/underwriting)
Appraisal
Title/attorney/escrow fees
Prepaids (homeowners insurance, taxes, etc.)

VA also limits what fees Veterans can be charged.

Yes — sellers can pay closing cost credits, and there’s no VA limit on normal closing cost credits (as long as it’s reasonable and allowed). 

Seller concessions are “extras” the seller pays beyond normal costs — like paying off debt, funding fee, prepaid items, etc. VA generally caps concessions at 4% of the home’s reasonable value (but that cap doesn’t include standard closing costs/discount points).

Yes — that’s done with discount points (prepaid interest). You can pay them, or sometimes negotiate for the seller to contribute. 

Many lenders set up an escrow account to pay taxes and insurance monthly so you don’t get hit with big bills later. VA doesn’t require escrow, but lenders often do.

VA appraisal = confirms value and checks basic safety/health/livability standards (MPRs).

Inspection = deeper evaluation of the home’s condition (roof, HVAC, plumbing, structure).
 They are not the same, and an appraisal is not a substitute for an inspection.