Frequently Asked Questions
Get answers to common mortgage questions. Whether you're a first-time homebuyer or looking to refinance, we're here to help you understand the process.
General Mortgage Questions
What is a mortgage?
A mortgage is a loan used to purchase real estate, secured by the property itself. The borrower agrees to repay the loan over a set period, typically 15 or 30 years, with interest. If the borrower fails to make payments, the lender has the right to take possession of the property through foreclosure.
How much house can I afford?
As a general rule, your total housing costs (including mortgage payment, property taxes, and insurance) should stay under 28% of your gross monthly income, and your total debt payments should stay under 36%. However, your specific situation may vary based on other financial obligations, savings, and lifestyle preferences.
What credit score do I need to buy a home?
The minimum credit score varies by loan type. FHA loans require a minimum score of 580 for a 3.5% down payment (or 500 with 10% down). Conventional loans typically require a 620 or higher. VA loans have no official minimum, but most lenders look for at least 620. A higher credit score generally qualifies you for better interest rates.
How long does the mortgage process take?
The mortgage process typically takes 30 to 45 days from application to closing. This timeline can vary depending on factors such as the complexity of your financial situation, the type of loan, the property appraisal, and how quickly you provide required documentation.
What is a mortgage pre-approval?
A mortgage pre-approval is when a lender evaluates your finances — including your income, assets, debts, and credit history — and provides a conditional commitment for a specific loan amount. It shows sellers you are a serious, qualified buyer and helps you understand your budget before house hunting. Learn more in our Pre-Approval Guide.
Down Payment & Costs
How much do I need for a down payment?
Down payment requirements vary by loan type. VA and USDA loans offer 0% down payment options. Conventional loans can go as low as 3% down, and FHA loans require a minimum of 3.5%. A larger down payment can help you secure a lower interest rate and avoid private mortgage insurance (PMI).
What are closing costs?
Closing costs are fees paid at the time of closing, typically ranging from 2% to 5% of the loan amount. They include lender fees (origination, underwriting), title insurance, appraisal fees, credit report fees, prepaid taxes and insurance, and recording fees. Your lender will provide a Loan Estimate detailing these costs early in the process.
Are there down payment assistance programs in Texas?
Yes, Texas offers several down payment assistance programs for eligible homebuyers. These include programs through the Texas Department of Housing and Community Affairs (TDHCA), the Texas State Affordable Housing Corporation (TSAHC), and various city-specific programs. These can provide grants or low-interest loans to help cover your down payment and closing costs. Learn more about available options in our Down Payment Assistance guide.
What is PMI and how do I avoid it?
Private mortgage insurance (PMI) is required on conventional loans when your down payment is less than 20% of the home's purchase price. PMI protects the lender in case of default. You can avoid PMI by making a 20% or larger down payment, or you can request its removal once your equity reaches 20% of the home's value. VA loans do not require PMI regardless of down payment.
Loan Types
What is the difference between FHA and conventional loans?
FHA loans are government-backed and designed for borrowers with lower credit scores or smaller down payments, requiring as little as 3.5% down with a 580 credit score. Conventional loans are not government-backed and typically offer better interest rates for borrowers with good credit (620+) and larger down payments. FHA loans require mortgage insurance for the life of the loan, while conventional loan PMI can be removed at 20% equity.
Who qualifies for a VA loan?
VA loans are available to veterans, active-duty service members, National Guard and Reserve members with qualifying service, and eligible surviving spouses. Eligibility is based on length and type of military service. VA loans offer significant benefits including no down payment, no PMI, and competitive interest rates.
What is a USDA loan?
A USDA loan is a zero down payment mortgage backed by the United States Department of Agriculture. It is designed to help low- to moderate-income borrowers purchase homes in eligible rural and suburban areas. USDA loans offer competitive interest rates and reduced mortgage insurance costs compared to other low-down-payment options.
What is a jumbo loan?
A jumbo loan is a mortgage that exceeds the conforming loan limits set by the Federal Housing Finance Agency. In most Texas counties, the conforming loan limit is $766,550. Jumbo loans typically require higher credit scores, larger down payments, and more substantial financial reserves than conforming loans.
Refinancing
When should I refinance my mortgage?
Refinancing is generally worth considering when interest rates drop 0.5% to 0.75% below your current rate and you plan to stay in your home long enough to recoup the closing costs. Other good reasons to refinance include switching from an adjustable-rate to a fixed-rate mortgage, shortening your loan term, or eliminating PMI. Visit our Refinancing page to learn more.
What is a cash-out refinance?
A cash-out refinance replaces your existing mortgage with a new, larger loan, and you receive the difference in cash. For example, if you owe $200,000 on a home worth $350,000, you could refinance for $280,000 and receive $80,000 in cash. This can be used for home improvements, debt consolidation, or other financial needs.
How much does refinancing cost?
Refinancing typically costs 2% to 5% of the loan amount in closing costs. These costs include application fees, appraisal fees, title insurance, and lender fees. Some lenders offer no-closing-cost refinancing options, but these usually come with a slightly higher interest rate.
Texas-Specific
Is Texas a good state to buy a home?
Yes, Texas is an excellent state for homebuyers. It has no state income tax, which increases your take-home pay and borrowing power. Texas also offers diverse housing markets from urban centers to suburban communities, strong job growth across multiple industries, and a relatively affordable cost of living compared to other major states.
What are Texas property taxes like?
Texas property taxes are higher than the national average at approximately 1.8% of a home's assessed value. However, the absence of a state income tax helps offset this cost. Texas also offers various property tax exemptions, including homestead exemptions that can reduce your taxable property value.
Does Raider Mortgage serve all of Texas?
Yes, Raider Mortgage Co. serves homebuyers and homeowners across the entire state of Texas. Whether you are purchasing your first home, upgrading, or refinancing, our team is here to help you find the right mortgage solution no matter where in Texas you are located.