Mortgage Questions, Answered by an Anchorage Broker

topic 1 of 8 · 11 questions

how much money you need

Down payment, closing costs, reserves and proving the funds. Here's what it really takes to get the keys.

How much money do I need to buy a house?

If you're going to live in it, plan on about 5% of the price as a safe starting number. That works for a single-family home or a duplex. Best case on a house hack is 3.5% down plus about 2% for closing costs, so 3.5% to 5.5% all in. If you won't live there, it's a different game: usually 15% to 25% down, depending on the property and program.

How much are closing costs, and can the seller pay them?

Budget about 2% of the price for closing costs. That's on the high side on purpose, so you're safe. A big chunk of it is escrow, your upfront share of insurance and property taxes. The down payment is a separate thing. The seller can cover costs with a seller credit. How much depends on your loan type and your down payment, and we'll tell you your exact cap. Always ask for seller credit, not "points," so you decide how to use it. Credit used to buy down your rate often does more for you than the same money taken off the price.

Does the down payment include closing costs?

No. The down payment goes into the house. Closing costs are third-party fees plus escrow. My rule of thumb for closing costs is about 2% of the price, on top of the down payment.

Do I need a down payment if I'm pre-approved?

Usually, yes, and it's simpler than people think. The zero-down options are VA, if you're eligible through military service, and USDA, for homes in eligible rural areas when your household qualifies. Either way, we make the money plan together before you house hunt, so you shop with confidence.

Does putting more down lower my payment much?

Not much. A bigger down payment lowers the monthly payment less than most people expect. The real value of putting more down is peace of mind, not the monthly savings. I'll run both versions so you can see the difference in real dollars.

How do I prove I have the funds?

Your bank statements need to show the money. Checking and savings can be added together. If you need proof right now, ask your bank for a transaction statement that runs from your last statement to today. Then keep the funds in place all the way through closing.

How far back do lenders look at my bank statements?

Usually your last couple months of statements. If there's a big recent deposit, we just note where it came from. Money that's been sitting there a while counts as "seasoned."

Can rent-to-own credits count toward my down payment?

It can. When the lease spells it out and you paid above market rent, the part above market can count toward your down payment. Send me the lease and I'll check it against your loan program.

What are reserves, and do I need them?

Reserves are savings left over after your down payment and closing costs. You don't spend them, but underwriting wants to see them. They come up most on 2 to 4 unit purchases and investor loans. Investor DSCR loans typically ask for about six months of payments. Whether you need them depends on the loan program and the property.

Can I use my 401k for a down payment?

Retirement accounts can have useful options. Put a ballpark balance on the application and I'll lay them out.

How do I save for a down payment faster?

It's easier to make $10,000 than to save $10,000. Pick up a side gig, get the family on board for a tight stretch, and plan around your PFDs and your tax refund.

topic 2 of 8 · 8 questions

pre-approval and the process

What a pre-approval takes, how long it lasts, and what happens between the contract and closing day.

How fast can I get pre-approved, and what does it take?

The application takes 5 to 10 minutes. Ballpark numbers are fine, we verify everything after. Once your documents are in (pay stubs, W-2s, bank statements), pre-approval can happen the same day, sometimes in a couple of hours.

Does a pre-approval pull my credit?

Usually, yes. A real pre-approval uses a hard pull, because that's where the real data is. Some places prequalify you with a soft pull, but it can miss things that show up later. We pre-underwrite up front so there are no surprises down the road.

How long is a pre-approval good for?

There's no fixed expiration date, but parts of it do time out. Credit reports and documents go stale, so we refresh them every few months while you shop. If a few months go by, you send new pay stubs and statements, and we check that nothing big changed. You'll always know when something needs an update.

Should I look at houses before I'm pre-approved?

Go see a few, even ones you won't buy, to learn what you like. A pre-approval is for the numbers, not one specific house.

What happens after I go under contract?

You sign the disclosures, then we package your file and send it to underwriting, usually within a week or two. Then come small items like homeowners insurance and updated documents. Your job is to watch your email. Contract to close is about 30 days, maybe 45. Answer quick when we ask for something and we keep it moving.

Do I need homeowners insurance before closing?

Yes. Get a quote or binder from any insurance agent and give them our email. Don't pay anything up front. It gets paid at closing.

Can I buy a home without a realtor?

Yes. Get a purchase agreement from a title company and send it to us before anyone signs. We'll walk you through every step.

What is the $5,000 Closing Guarantee?

We underwrite your file up front, so we can back your offer with a $5,000 Closing Guarantee you can show the listing agent or builder. It makes your offer stronger.

topic 3 of 8 · 10 questions

loans, credit and rates

Which loan fits, what score you need, and how to tell a low rate from a good deal.

FHA or conventional: which loan should I use?

I pre-approve you for a price, not a program. The best loan depends on the property and your cash. FHA is 3.5% down, more open to lower credit scores, and often has the lowest monthly payment, even for people with great credit. Conventional is usually around 5% down, and its mortgage insurance comes off once you reach 20% equity. FHA mortgage insurance runs on its own schedule, and I'll show you exactly how it plays out for you. My question for you: what matters more right now, the lowest payment or the least cash out of pocket?

What credit score do I need to buy a house?

FHA is the program most open to lower scores. If your score is on the lower side, we have options, and I'll show you the path that works. Exact minimums depend on the loan program. A score in the 700s is usually good enough. Free credit apps aren't exact, but they're close enough to tell you if you're in range. Before you pay a card down to zero, we can run a credit simulation on your real report to see which payoff helps your score the most.

How is mortgage insurance priced, and when does it go away?

It's priced off risk. The higher your credit score, the less you pay, and the lower your score, the more you pay. On a conventional loan it comes off once you reach 20% equity. FHA runs on its own schedule, and I'll show you exactly how it plays out for you.

Is the lowest rate the best deal? Should I get a second opinion?

The rate is only half the question. The other half is what that rate costs you. A low rate can mean you're paying points without knowing it. As a broker I don't have my own rates, I shop lenders for you. Send me your Loan Estimate and I'll tell you if you're in a good spot or if there's money left on the table. If you're happy where you are, I'll tell you to stay. Sometimes I'm just your cheerleader.

Mortgage broker vs bank or credit union: what's the difference?

A bank or credit union lends its own money with its own rules. A broker shops many lenders for you. Neither one is always better. I've told people to take a credit union's offer when it was a fantastic deal.

What are discount points?

One point costs 1% of the loan amount, and it lowers your rate a bit, not by a full percentage point. Buying points yourself often isn't worth it, unless the seller is paying for them.

What does "seller will consider a rate buydown" mean?

It's an incentive on your offer, and it's legit. My usual advice: ask for it as seller credit, so you decide whether it buys down your rate or covers closing costs. How much credit you can use depends on your loan type and down payment.

What should I check on a Loan Estimate?

Look at the rate, the cash to close, and the prepaids. Make sure the property taxes in the prepaids aren't lowballed, because that makes a quote look cheaper than it really is. Real third-party fees like the appraisal are normal. If you can't tell what a fee is for, ask. Or send it to me and I'll go through it line by line.

Can a shorter loan term help me get approved?

Sometimes. A 20-year term is less risk for the lender, and it has gotten approvals that a 30-year didn't. The payment is higher, so I only suggest it when your income is about to go up.

Will another lender approve me if I was denied?

The math is the same at every lender. The difference is how deep the review goes. Some places give you an automated no. I review your file the way an underwriter would and give you straight feedback on what it takes.

topic 4 of 8 · 10 questions

income and debt

How lenders count your pay, side income and debts, including when your income isn't simple.

I'm self-employed, or my pay changes. Can I get a mortgage?

Yes, but lenders count what you showed the IRS, not what hits your bank account. The more you write off, the less you can buy. Plan on two years of tax returns for business, side gig, or Airbnb income, and anything seasonal needs a two-year history. For hourly, overtime, or shift pay, you sign a form so we can get the full breakdown straight from your employer and count every dollar we can. If you haven't filed your taxes yet, let me look before you file.

Does Airbnb or side income count?

Airbnb is a self-employment business, so it needs two years of tax returns. What counts is what's on your tax return, not your booking spreadsheet. Side income like commissions or car rentals counts if it's on your taxes.

Does seasonal or union work count as income?

Yes. Seasonal and union income counts once there's a two-year history. If you're newer to it, I'll map out exactly when it starts counting.

How do teachers paid on a 9 or 10 month schedule qualify?

Same as anybody else. We follow the guidelines and average your income, so a summer without paychecks doesn't count against you.

How does a gap in employment affect approval?

A short gap with a quick explanation is usually no problem. Longer gaps just need a little more context. I'll ask for a short written note and we go from there.

Can I get a mortgage if I owe back taxes?

Yes, it depends on the situation. Usually it means having a payment plan in place and staying current on it. Bring me the details and I'll tell you exactly where you stand.

What is debt-to-income, and why does it matter?

It's your monthly debts compared to what you bring in each month. It's how lenders size your payment, so we keep the price inside your pre-approval. What's the limit? There's a range, it depends on the loan program, and we'll show you where you land. I don't like pre-approving right at the line, because property taxes can come in higher than expected.

How do I lower my debt-to-income?

A bigger down payment is the least effective way. Better levers: pay off a car loan or small balances at closing, add every co-borrower's income, count PFD income, or count rent from the home you're leaving. Don't pay anything off yet without talking to us. There's a process.

Does a car payment count if it's almost paid off?

Sometimes it doesn't. A car loan with about 10 or fewer payments left can sometimes be left out of your debts, depending on the loan program. When it works, it can change everything. Ask me before you pay it off.

Do condo HOA dues change what I qualify for?

Yes. HOA dues count in your monthly numbers, so give us the exact address and the real dues and your numbers stay accurate. Condos also have their own approval rules, so send me the address early.

topic 5 of 8 · 7 questions

buying with family or a partner

Gift money, co-borrowers, titles, divorce and helping a parent. How it works when it's more than just you.

Can family gift me the down payment?

Yes, gifts are totally on the table. Plan who's giving it and how much up front. Move it by bank transfer or deposit, not through a payment app. The person giving the gift doesn't go on the application and their credit isn't pulled. The paperwork depends on the loan program, and we walk you and the giver through it.

Can my partner be on the title but not the loan?

Yes. Title and the loan are two separate things. Title is ownership, the loan is the debt. You can't quitclaim someone onto a mortgage later, though. Adding a borrower means a new loan.

Should I add my partner as a co-borrower?

If there's even a 50/50 chance they'll join, put them on the application now. Removing someone is easy. Adding someone later takes a lot longer.

Can I qualify on my own after a divorce?

Yes. We'll need your final decree, and any support you pay or receive gets counted the right way. Plenty of people buy their next home solo.

Can I take someone off my mortgage?

That's usually done with a refinance into your name. With good equity, a refinance close to your current payment may be possible. I'll run it and tell you.

Can I take over a family member's mortgage?

You can't just swap your name onto someone else's loan. Some loans are assumable, mainly FHA, VA, and USDA, which means you can take one over if the lender approves you. Most conventional loans can't be assumed. If assuming isn't an option, you'd usually get a new loan in your name, and a relative can co-sign. Bring me the details and I'll tell you which path fits.

Can I buy a home for my elderly parent?

Yes. A conventional program called the Family Opportunity Mortgage lets you buy a home for an elderly parent or a disabled child and treat it like a home you live in, so you get owner-occupied pricing and a lower down payment. You'll qualify to carry both mortgages, and I'll run that for you. The exact terms depend on the loan program, so we'll check yours.

topic 6 of 8 · 12 questions

house hacking and investing

Duplexes, fourplexes, rentals and DSCR loans. How to buy a place that helps pay for itself.

Can I buy a duplex, triplex, or fourplex and live in one unit?

Yes. That's house hacking. You live in one unit and get the low down payment of a home you live in, usually 3% to 5%. The rent from the other units counts as income, so it helps you qualify. Sometimes people who can't qualify for a house can qualify for a fourplex. One thing to know on FHA: with 3 or 4 units, 75% of the rents has to cover the full mortgage payment, and that test can make a triplex or fourplex harder to qualify for than a duplex. The rule is you have to actually live there for a year. That's the trade for the low down payment. After that, you can rent your unit out and move to the next one.

How does the "75% of rent" rule work on a 3 to 4 unit property?

On FHA, 75% of the gross rents from all units should cover the full mortgage payment. It's a self-sufficiency test, and it's why some triplexes and fourplexes pencil out and others don't. I run it for you before you make an offer.

Duplex or fourplex for my first one?

A fourplex brings in more rent that counts toward qualifying. But on FHA, the self-sufficiency test on 3 to 4 units can make it harder to qualify for than a duplex, so we run both. A duplex is an easier first bite: a built-in neighbor who pays part of your mortgage. The other side usually won't cover the whole payment, but you'll pay less than you would for a house.

Should I buy a house first or a fourplex first?

Fourplex first. Once you own a big house, an underwriter will ask why you need to move into a smaller unit, and the low-down house hack gets harder. Climb the ladder: fourplex, then triplex or duplex, then the house. With an investor-size down payment you can buy anything at any time.

How much do I need down for a rental I won't live in?

Occupancy is the first question, because it changes everything. As an investor, plan on usually 15% to 25% down, depending on the property and program. Investor loans also price a bit higher than a home you live in.

What is a DSCR loan?

It's a loan for investment property that doesn't use your personal income, and it's not like 2008. The number one rule: the appraiser's opinion of rent has to be higher than the mortgage payment. Plan on about 15% down to get in, with better pricing at 20%, plus about six months of reserves, though it varies by program. There's no debt-to-income check, so it's a capital game.

Do investment loans have mortgage insurance?

On investor products like DSCR, no. Pricing gets better the more you put down. Other investment loans with a smaller down payment can have it, depending on the loan program.

Can I keep my current home as a rental when I buy the next one?

Often yes, and I'd lean that way. Selling is a one-way door. You can always sell later. A signed lease on the old home can help offset its mortgage when we qualify you. The rules for the home you're leaving depend on the loan program, so we check yours before you decide.

I'm nervous about being a landlord. Is that normal?

Yes. I still get butterflies. The late-night toilet stories aren't real life for most small buildings. Work with a team that has done it themselves.

Is Fairbanks or Anchorage better for a rental?

This is my opinion from my own loan files: Fairbanks tends to have lower prices and stronger returns. It's harder to manage from out of state, and building costs are higher because of the cold. Military bases in both cities keep rental demand steady.

Should my rental go in an LLC?

With one or two buildings, I keep mine in my own name with good insurance and an umbrella policy. The LLC shield breaks the moment you sign personally. That's my approach.

Is house hacking advice online accurate for Alaska?

Not always. A lot of national advice isn't regional, and many places barely have fourplexes. Alaska has lots of them.

topic 7 of 8 · 11 questions

equity, HELOCs and refinancing

How much you can borrow against your home, HELOC versus cash-out, and when a refinance makes sense.

How much equity can I borrow?

Take your home's value times 80%, then subtract what you owe. That's roughly what you can borrow. Some lenders go to 90%, priced a little higher because of the extra risk. Limits depend on the lender and the program.

HELOC or cash-out refinance?

If your first mortgage rate is low, keep it and use a HELOC. A cash-out refinance is off the table when it would replace a great rate. If your current rate is already high, a big enough HELOC can even pay off the first mortgage and become your mortgage.

What does a HELOC payment look like?

It depends on how much you borrow, the rate, and the product. HELOC rates run a bit above a regular mortgage and way below credit cards. I'll show you the exact payment before you sign anything.

Is a HELOC easier to get because I have equity?

Equity helps a lot. Because a HELOC sits behind your mortgage, lenders also look at your credit and income, and I'll check both up front so you know where you stand.

Do I pay interest on a HELOC I haven't used?

A traditional line of credit charges interest only on what you draw. Some digital HELOCs fund the full amount up front, so you pay interest on all of it. Ask which one you're getting.

How fast can I get a HELOC?

Some digital HELOCs can fund in about 10 days for qualified borrowers. Bigger or custom ones take a full application. Tell me your timeline and I'll match you to the right one.

Can I use a HELOC for a down payment on a rental?

100 percent, and it's a very common move. One application can check both the HELOC and the purchase.

Should I use a HELOC to pay off credit cards?

Not when the balances are manageable. A HELOC is a loan with a payment, not free cash. Pay the highest-rate card first, roll that payment into the next one, and be careful with debt consolidation companies.

When does refinancing make sense?

When the savings are real after you count what the refinance costs. If it's not worth the squeeze yet, I put you on my watch list and call you when rates move. Published rate averages assume a perfect single-family file, so watch for movement, not the exact number.

Should I refinance before I move out and rent my house?

Yes, if you can. Once it's a rental, your refinance will never look the same. Call me about 30 days before you move.

How much does an FHA refinance cost out of pocket?

Expect to bring some money, roughly about two payments' worth. Because of how mortgage interest is paid, you'll usually also go a month or two without a payment due. That's just timing, not free money.

topic 8 of 8 · 8 questions

alaska questions

AHFC programs, the PFD, North Slope schedules, dry cabins and the other questions that only come up in Alaska.

What Alaska first-time buyer programs are there (AHFC), and who are they for?

AHFC programs are fantastic and they're good for almost everybody, not just first-timers. They come with some limitations, like income limits on certain programs and property rules (for example, condos have to be on AHFC's approved list). I'll show you an AHFC option side by side with conventional and FHA so you can see which wins.

Can I get pre-approved before I move to Alaska?

For a home you'll live in, you need Alaska income lined up. A job offer with a start date and pay solves most of it, and the exact rules depend on the loan program. Low-down loans are for the home you're moving into. If you want to buy before you move, you can buy as an investor from out of state, usually with 15% to 25% down.

Can North Slope rotation workers get a mortgage?

Yes. The schedule isn't the problem. The pay structure is unique to Alaska, so some lenders will work with it and some won't. As a broker I shop it to the ones that will.

Does the PFD count as income?

Yes, the PFD is real income. It's small per person but adds up across a household, and sometimes it gives you more room in your debt-to-income. Lenders usually want to see a history of receiving it, and the amount changes every year.

Should I buy in winter or wait for spring?

Buy when it's right for you and when you need to. The season doesn't decide your timeline, your life does. Winter can mean fewer buyers to compete with, and I plan around snow for inspections and appraisals so it doesn't slow you down.

Can I finance a dry cabin?

Probably not with a regular mortgage. Most people go to a local bank or credit union for a recreational-style loan instead. If you're looking at a cabin, call me first and I'll point you to the right place.

How do Alaska property taxes work?

They vary a lot by borough and city. Very remote areas can be lower or have none, but most rentals are in taxed areas. Senior exemptions exist too, and the details depend on where the home is. I use the real numbers for your address when we run your payment.

Will lenders finance an unusual property, like a garage apartment or acreage?

Under standard rules, if it's anchored to the ground it's probably something we can lend on. In rural Alaska we line up comparable sales early so the appraisal goes smoothly.

the questions people ask me most