Mortgage basics
Jump in and get an overview of common mortgage terms.
Application checklist
Signed purchase agreement, 30 days of pay stubs, two years of W-2s, two years of tax returns, two months of bank statements, photo ID, and details on any other real estate you own.
Loan-to-value (LTV)
The loan amount divided by the home's value. Lower LTV usually means better pricing and less or no mortgage insurance.
Debt-to-income (DTI)
Your monthly debt payments divided by gross monthly income. Most programs look for a total housing and debt load that leaves comfortable room in your budget.
Points and credits
One point equals 1% of the loan amount. Points buy the rate down; lender credits raise the rate to cover costs.
Escrow accounts
Your lender collects taxes and homeowners insurance monthly and pays them when due, so nothing catches you off guard.
Rate locks
Locking guarantees your rate for a set window — commonly 30 to 60 days — while your loan is processed.
Documents to have ready
Every file is unique, but these six items cover most applications.
- 2 years of W-2s
- 4 most recent pay stubs
- 2 years of tax returns
- 4 most recent bank statements
- Copy of photo ID
- Copy of driver's license