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I've been in this industry since I was 18 years old, and I still remember that overwhelmed feeling when I bought my first place. It seemed like the mortgage process was a huge, scary machine that was meant to confuse people. I've worked with thousands of borrowers at AmeriSave and learned that once you know the steps, it's not that hard.
The thing is, the mortgage market is always changing. Five years ago, what worked might not be the best way to do things now. With interest rates where they are in 2025 and new digital tools changing how we handle loans, I wanted to show you step by step what happens when you apply for a mortgage.
Not the cleaned-up version you get from those guides that are too polished—the real thing. The one who tells you what to do when your loan officer calls at 4PM and asks for bank statements from three months ago. The one who tells you why underwriters ask the questions they do. Knowledge is what makes the difference between a smooth closing and a nightmare that lasts for months, just between you and me.
This is where most first-time buyers get it wrong. They look at the mortgage payment calculator online, punch in some numbers, and think they're done. I'm gonna be straight with you-that number is only the starting point.
The Consumer Financial Protection Bureau says that your total monthly housing payment should not be more than 28% of your gross monthly income.
Principal and Interest: The obvious part. On a $300,000 loan at 6.5% for 30 years, you're looking at roughly $1,896 per month. Let me show you how that breaks down in the early years:
Not gonna lie, those numbers can be depressing when you see how little goes to principal at first. But that's how amortization works.
Property Taxes: This varies wildly by location. Here in the Dallas-Fort Worth area, we're looking at an average effective rate of around 1.81% according to the Texas Comptroller. On that same $300,000 home, that's roughly $450 per month. If you're in New Jersey? You might be paying double that.
Homeowners Insurance: According to the Insurance Information Institute, the average cost of homeowners insurance in the U.S. is $1,428 a year, or about $119 a month. But if you live in a flood zone or a place that gets a lot of hurricanes, get ready. I've seen premiums run $3,000-$5,000 annually in high-risk areas.
Private Mortgage Insurance (PMI): If you're putting down less than 20%, expect to pay PMI. According to Freddie Mac, PMI typically costs between 0.5% and 1.5% of the original loan amount annually. On our $300,000 example, that's $125-$375 per month.
HOA Fees: If applicable, these can range from $50 to $500+ monthly depending on amenities and location.
So our $1,896 mortgage payment? It actually becomes $2,690-$3,039 per month when you include everything. And here's where it gets interesting-that's before we talk about maintenance.
The rule of thumb is to set aside 1% to 2% of your home's value each year for repairs and maintenance. I don't like these rules, but this one works. That means you should be saving $250 to $500 a month for a $300,000 home. Water heaters break down. The roofs need to be replaced. The timing of HVAC systems is terrible.
We at AmeriSave want our borrowers to use our Affordability Calculator, which takes into account all of these costs, not just the mortgage payment. I don't want anyone to get into a house and then not be able to enjoy their life because every dollar goes to the mortgage.
Your DTI is basically the percentage of your monthly gross income that goes toward debt payments. According to the Federal Housing Finance Agency, the median DTI for conventional loans is around 38%. Most lenders will accept a DTI up to 43% for conventional loans, though some government-backed programs allow higher ratios.
Here's the calculation:
You're just under that 43% threshold. But wait-what if your income is $7,500 instead? Now your DTI is 45.2%, and you might not qualify for that loan amount. This is why I always tell people to calculate their DTI before they fall in love with a house.
Okay, real talk for a second. The number of people who confuse prequalification with preapproval drives me crazy. They sound similar, but they're completely different animals.
Prequalification is basically a lender saying, "Yeah, based on what you told me, you might qualify for a loan." It's informal. It's quick. And honestly? It doesn't mean much in a competitive market. No seller or real estate agent takes a prequalification letter seriously because it's just based on unverified information you provided.
According to the Mortgage Bankers Association, preapproved buyers close on homes 30% faster than non-preapproved buyers. And in today's market? That speed matters.
Let me paint you a picture of what I ask borrowers to gather when they want to get preapproved:
And here's where it gets interesting. At AmeriSave, we can provide a Certified Approval, which goes even further than traditional preapproval. An actual underwriter reviews your file before you even find a house. Imagine walking into negotiations knowing with certainty that your financing is solid.
In my experience? If you have all your documents organized, you can get preapproved within 24-48 hours. If you're scrambling to find three years of tax returns and explain that random $5,000 deposit from last April? Could take a week or more.
The preapproval itself is typically good for 60-90 days. After that, you'll need to update your financial information.
Once you're preapproved, you're ready to actually shop. This is the fun part-until it becomes the frustrating part when you lose out on three houses in a bidding war. But that's a story for another time.
Here's something nobody talks about enough. When you submit an offer with a preapproval letter, you're not just telling the seller you can afford their house. You're telling them:
According to the National Association of REALTORS®, sellers are 67% more likely to negotiate with preapproved buyers compared to non-preapproved buyers in competitive markets.
When your offer is accepted, you'll typically put down an earnest money deposit, usually 1-3% of the purchase price. This money shows you're serious and goes toward your down payment at closing. On a $300,000 home, we're talking $3,000-$9,000.
But wait, there's more. (I know, I know.) This deposit is held in escrow, and if the deal falls through because of a contingency you included (like a failed home inspection), you get it back. If you just change your mind? The seller keeps it.
Yesterday, I talked to a borrower who said she thought all mortgages were pretty much the same. I almost dropped my phone. The type of loan you choose can make a big difference in whether or not you qualify and how much you will pay over the life of the loan.
These are the standard, conforming loans that meet Fannie Mae and Freddie Mac guidelines. According to the Federal Housing Finance Agency, the conforming loan limit for 2025 is $806,500 in most areas (higher in expensive markets).
These loans are popular with first-time buyers because the Federal Housing Administration backs them. According to the U.S. Department of Housing and Urban Development, FHA loans make up about 14% of all home purchase loans.
For military personnel, veterans, and surviving spouses who meet the requirements. According to the Department of Veterans Affairs, VA loans are the least likely to go into foreclosure.
Made for people who want to buy a home in the country or suburbs. The U.S. Department of Agriculture says that USDA loans make up about 2% of the mortgage market.
For loan amounts exceeding conforming limits. These are portfolio loans that don't meet Fannie Mae or Freddie Mac standards.
At AmeriSave, we offer all these loan types and can help you figure out which one makes the most sense for your situation. Because honestly, it's not always obvious.
This is the part nobody talks about enough-the actual application process. It's... extensive. The Uniform Residential Loan Application (Form 1003) is six pages of questions about every aspect of your financial life.
Almost everyone gets confused by gift funds, so let me explain them to you. Lenders need a lot of proof that the money someone is giving you for your down payment is a gift and not a loan that you will have to pay back.
And this is where things get interesting: you can't just put $10,000 in cash that your grandmother gave you into the bank. The lender will want to know where grandma got the $10,000 in cash. You can't use it if she can't prove it. This is to stop fraud and money laundering.
Within three business days of your application, you'll receive a Loan Estimate. This is a standardized three-page form required by the Consumer Financial Protection Bureau that breaks down:
According to ClosingCorp, average closing costs in the United States are approximately $6,905 including taxes. Here's what that typically includes:
On a $300,000 home purchase with a $285,000 loan (5% down), you're typically looking at $8,000-$12,000 in closing costs. Some of these can be rolled into your loan or negotiated with the seller to pay, but you need to know they exist. And if you don’t put 20% down, an escrow account is required.
This is where it gets interesting. You found the house of your dreams, your offer was accepted, and you sent in your application. Now you need to check that the house is really worth what you're paying for it.
The lender asks for an appraisal to make sure the house is worth what they say it is. The National Association of REALTORS® says that about 9% of home sales have problems with appraisals.
If the appraisal comes in at or above your purchase price, great. If it comes in low? You have options:
I had a borrower last month whose appraisal came in $15,000 low on a $350,000 purchase. The seller agreed to meet them halfway at $7,500 below the original price. Not what anyone wanted, but better than walking away from the deal entirely.
The home inspection is separate from the appraisal and not required by your lender. But between you and me? Skip it at your own risk. According to the American Society of Home Inspectors, professional inspections identify an average of 3.7 significant issues per home.
Okay, real talk for a second. The underwriting process is where a lot of borrowers lose their minds. Your loan officer collects all your documents and sends them to an underwriter, essentially a financial detective whose job is to verify every single thing you've told us.
According to the Mortgage Bankers Association, the average underwriting timeline is 7-10 business days, though complex files can take longer.
After initial review, the underwriter typically issues conditions, additional documentation or explanations needed. This is completely normal. According to Fannie Mae, the average loan file receives 6-8 conditions during underwriting.
Some people take this personally. Don't. The underwriter isn't questioning your integrity, they're following guidelines and investor requirements. At AmeriSave, our loan officers work closely with underwriters to get you through this process as smoothly as possible.
This is the part nobody talks about enough, but it's critical. According to the Consumer Financial Protection Bureau, approximately 7% of loans are denied or delayed due to last-minute financial changes. Here's what will derail your loan:
I once had a borrower who bought $8,000 worth of furniture on a store credit card three days before closing. The new monthly payment pushed his DTI over the limit. We had to delay closing while he returned everything and waited for the credit inquiry to update. Not fun for anyone.
When you receive "clear to close" status, that's your underwriter saying all conditions are satisfied and you're approved. According to the National Association of REALTORS®, 87% of purchase transactions close on or before the scheduled closing date once clear to close is issued.
At least three business days before closing, you'll receive your Closing Disclosure. This is similar to your Loan Estimate but with final, accurate numbers. The Consumer Financial Protection Bureau requires this three-day waiting period to give you time to review and compare.
If something seems off, speak up immediately. I'd rather delay closing by a day or two than have someone sign documents they don't understand.
The day before or morning of closing, do a final walkthrough of the property. This isn't another inspection, it's a chance to verify:
So, that's pretty much it. On closing day, you sign about 50 pages of paperwork and become the official owner of the house. The closing itself takes 1 to 2 hours and usually takes place at a title company, an attorney's office, or even online.
You'll meet with a closing agent who will review and have you sign:
Send your closing funds at least 24 hours before your closing appointment. According to the FBI's Internet Crime Complaint Center, wire fraud in real estate transactions resulted in $396 million in losses. Always call your title company to confirm wiring instructions; never trust instructions sent by email without checking them first.
The deed is then recorded with the county, making you the official owner of record. According to the Consumer Financial Protection Bureau, the average time from closing to deed recording is 1-3 business days, depending on your county recorder's office.
Let's talk real timelines, because "30-45 days" doesn't tell you the whole story. According to Ellie Mae's Origination Insight Report, the average time to close a purchase loan is 47 days. But here's how that typically breaks down:
Bottom line: It's a lot, but you're not the only one.
I see what you mean. This is hard work. Even though I've been doing mortgages for most of my adult life, there are still days when the rules and regulations make my head spin. But here's my challenge to you: don't let how hard it is to buy a home scare you away.
It feels like a lot because it's meant to keep you safe and make sure you're making a good choice. Yes, it seems like the paperwork requirements are too much. Yes, underwriters ask questions about your finances that seem random. But in the end, every requirement is there because someone got hurt at some point when proper verification didn't happen.
We've made this process as simple as possible at AmeriSave while still keeping all the safety measures in place. You can upload documents from your phone, see how your loan is doing in real time, and talk to your loan officer whenever you have questions with our digital tools. We're not here to get you the biggest loan you can get; we're here to help you find a way to own a home that fits your life.
In 2025, the mortgage process is easier to understand than ever. You have more protections, more things you need to tell people about, and more ways to look at your options than people did in the past. Take advantage of those things. Don't forget to ask questions. Don't sign anything you don't understand. Also, remember that buying a house should make your life better, not cause you money problems that keep you up at night.
At the end of the day (ugh, I hate that phrase, but it works here), you're making one of the most important financial decisions of your life. Take your time, do it right, and get help from people who care about you.
Are you ready to start the process of buying a house? Call an AmeriSave loan officer to talk about your choices and get preapproved right away.
Your loan type will determine the minimum credit score, but let me break it down for you. For a regular loan, you usually need a credit score of at least 620. However, if your score is 740 or higher, you'll get much better rates. The Federal Housing Finance Agency says that the average credit score for people who take out conventional loans is 753. FHA loans will accept scores as low as 580 with a 3.5% down payment or 500-579 with a 10% down payment. However, many lenders have their own rules that require higher scores. There are no official minimums for VA and USDA loans, but most lenders want to see at least 580 to 620. But here's the thing: your credit score affects more than just whether you can get the loan. If you have a 640 score instead of a 740 score, your interest rate could be a full percentage point different. That's about $180 a month or $65,000 over the life of the loan for a $300,000 loan. If you're on the edge, it might be worth it to spend a few months working on your score before you apply. Don't close old credit card accounts, pay off your balances, and don't apply for new credit right before you apply for a mortgage.
Most people probably make mistakes when they buy a house at this point. Many people believe you need to put down 20%, but that's not the case for most loan programs. The National Association of REALTORS® says that first-time buyers only put down 8% of the price, while repeat buyers put down 19%. For first-time buyers who meet certain requirements, conventional loans can go as low as 3% down. FHA loans only need 3.5% down.VA and USDA loans don't need any money down, and many borrowers can put down 5% on a conventional loan. But there are trade-offs, which is important to remember. If you put less than 20% down on a regular loan, you'll have to pay PMI until you reach 20% equity. That's $295,000 financed on a $300,000 loan with 5% down. PMI could cost you $150 to $200 a month, which is $1,800 to $2,400 a year. Some people should save up for a bigger down payment, while others should buy sooner with less down and build equity as home values go up. We can run scenarios at AmeriSave that show you the real cost difference between different down payment amounts so you can make an informed choice. Don't forget that you'll need money for closing costs, which are usually 2–5% of the loan amount, as well as emergency savings in case something breaks right after you move in.
Yes, but you still need to fill out more forms. According to the Mortgage Bankers Association, about 13% of people who get a mortgage are self-employed. If you own a corporation or partnership, you'll need to give two years of personal tax returns and two years of business tax returns. You might also need to give a balance sheet for your business. To figure out your qualifying income, lenders look at your net income from the last two years of tax returns and average it. And here's where it gets interesting: if you write off a lot of business expenses to lower your tax bill, that lowers your qualifying income for a mortgage. I see this all the time with self-employed people who make a lot of money but don't show much on their tax returns. Some things that might help are waiting until you have two years of steady income history, lowering your deductions the year before you apply for a mortgage, or looking into a bank statement loan program that qualifies you based on deposits instead of tax returns. These loans with alternative documentation usually have slightly higher rates, but they can help people whose tax returns don't show their true income. The most important thing is to find a lender who knows how to handle self-employed income and can set up your file correctly from the start.
I have to admit that this drives me crazy because even some real estate agents get these mixed up. In short, prequalification means that someone trusts what you say about how much you make, how much you owe, and how much you have saved. No confirmation. No check of credit. The lender isn't really committed. It's basically "based on what you told me, you might be able to get a loan for this much." When you get preapproval, you fill out a mortgage application, have your credit checked and reviewed, show proof of income and assets, have your job verified, and get a conditional promise from the lender that you will find a property and appraisal that meets their standards. Sellers see these things in a very different way. In a competitive market, a seller won't even look at an offer that only has a prequalification letter. The National Association of REALTORS® says that buyers who are preapproved are 40% more likely to get what they want in negotiations than buyers who are prequalified. Their offers are accepted more often, even when they are the same as other offers. With our Certified Approval option, we go even further. It lets a real underwriter look over your whole file before you even start looking for a house. This gives you peace of mind that your financing is solid and won't fall through while you're in escrow. Don't worry about getting prequalified if you're really going to buy a house. Just go straight to preapproval. It's the difference between seeing something in a store and having the money to buy it.
Most purchases take 30 to 45 days, but this can vary a lot depending on a number of things. The Origination Insight Report from Ellie Mae says that the average time to close on a purchase loan is 47 days across the country. But this is what really affects that timeline. The type of loan matters: conventional loans take an average of 44 days to close, FHA loans take an average of 48 days, VA loans take an average of 52 days because they have extra appraisal requirements, and cash purchases can close in as little as two weeks. The level of complexity in the documentation is very important. If you work for someone else and have simple finances, simple retirement accounts, and a normal property purchase, you will probably close faster. If you work for yourself and have more than one source of income, have complicated asset documentation, or are buying a one-of-a-kind property, the process will take longer. The terms of the contract you agree on are also important. If your purchase contract says you have to close in 45 days but your lender usually closes in 30, you have some extra time. If you agreed to 21 days and are now applying for a VA loan, you're going to be stressed out. Things can take longer if there are problems with the title. For example, if the title search finds liens, ownership disputes, or other problems, it can take weeks to fix them. Our digital workflow and streamlined processes at AmeriSave mean that we often close faster than other lenders. However, we'd rather give you a realistic timeline than make promises we can't keep. If you can, give yourself some extra time, because the last thing you want is to lose your dream home because your financing didn't close on time.
This is one of the most terrifying things that can happen in mortgage lending, and it happens more often than you might think, especially when job markets change quickly. You need to know this. The first thing your lender will do is check your job again right before closing. This is a requirement, so you can't choose to do it or not. They'll find out if you quit your job or were fired. The Consumer Financial Protection Bureau says that the second most common reason loans fall through at the last minute is because people change jobs, after credit problems. If you lose your job before closing, you have to tell your lender right away. If you try to hide it, you could be committing mortgage fraud, which is a crime that can get you jail time and fines. Most of the time, if you lose your job, your loan will be denied, at least for a while. But there are some situations where it might not mess up everything. Some lenders may be able to work with you if you've already accepted a new job with a salary that is the same or better and can give them a written job offer and start date. Another option is to add your spouse, who doesn't work, to the loan and use their income to qualify for the mortgage. Some portfolio lenders might think about it if you have a lot of reserves that show you can make payments for a long time. It's not a good idea to try to hide the fact that you lost your job and hope they don't find out. Banks check to see if you have a job days or even hours before closing. We'd rather work with you to find a solution or put off your purchase than have your loan denied at the closing table after you've moved out of your rental, loaded a moving truck, and agreed to buy it.
Closing costs are the fees you have to pay to finish your mortgage and give the house to someone else. They are usually between 2% and 5% of the loan amount. ClosingCorp says that the average closing costs in the US, including taxes, are $6,905. But this number changes a lot depending on where you live and how much money you borrow. Let me explain what the list really is, because most people who are buying for the first time are shocked when they see it. Lenders charge fees for things like starting a loan, applying for one, underwriting it, and locking in a rate. Third-party fees include appraisal ($400–$600), credit report ($25–$50), title search and insurance ($1,000–$3,000), survey ($350–$500), home inspection if you get one ($300–$500), and attorney fees if your state requires them ($500–$1,500). Some examples of prepaid items are homeowners insurance (the first year's premium), property taxes (usually 2–6 months), prepaid interest from the closing date to the end of the month, and HOA dues, if they apply. The government charges fees for things like recording, transferring, and other local fees. Now, this is where things get interesting: there is some disagreement about who should pay these costs. Buyers usually pay closing costs, but you can ask the seller to pay some or all of them through seller concessions or credits. When the market is good for buyers, sellers are often willing to lower closing costs by 3% to 6%. Don't worry about it if it's a seller's market. You can also get some lender credits to lower your interest rate and add some of your closing costs to the amount you borrow. At AmeriSave, we give you detailed Loan Estimates that show you exactly how much you'll owe at closing. We can also show you the pros and cons of paying costs up front versus adding them to your rate by running scenarios. The important thing is to know that these costs are real and to plan for them along with your down payment. You don't want to get a $10,000 bill three days before closing.
Yes, and you're not alone. The Federal Reserve says that about 43% of first-time home buyers have student loan debt, with an average balance of $30,000. It's not a question of whether you can buy with student loans; it's a question of how those loans affect your ability to borrow money. Your debt-to-income ratio, which is the most important thing to think about when buying a house, is affected by student loans. Let me show you the math with a real-life example. If you make $75,000 a year, that means you make $6,250 a month before taxes. You owe $35,000 in student loans, which you pay off in $350 a month. You also have a $400 car payment and $100 in minimum credit card payments. Before we add a mortgage payment, that's $850 in debt. Most lenders want your total DTI to be less than 43%. That means that your total debt, including your new mortgage payment, can't be more than $2,688. You can afford $1,838 for your mortgage payment, which includes the principal, interest, taxes, insurance, and HOA fees. With a 10% down payment and a 30-year loan at 7%, you can afford to buy a house for about $270,000. What if you didn't have those student loans? You might be able to get closer to $320,000. This is where things get tricky: how lenders figure out your student loan payment depends on the program and your payment status. Most lenders still count a payment of either the actual payment that will be due when forbearance ends or 0.5–1% of the outstanding balance if your loans are in forbearance or deferment. That could be $175 to $350 a month on $35,000 in loans, even if you're not making payments right now. If you can show that you can make a lower payment, income-driven repayment plans can really help. The most important thing is to know how your student loans affect your eligibility calculations and to work with a lender who can help you get the best loan structure for your needs.
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