Question 1

What credit score do I need to buy a home?

Accepted Answer

It depends on the loan type. FHA accepts scores as low as 580 with 3.5% down (or 500 with 10% down). Conventional loans typically start at 620, though you'll get meaningfully better rates above 740. VA and USDA loans are more flexible. Don't assume your score disqualifies you without talking to someone first.

Question 2

Will getting pre-approved hurt my credit?

Accepted Answer

A hard credit pull for a mortgage typically drops your score by 5 to 10 points temporarily. If multiple mortgage lenders pull your credit within a 14 to 45-day window, the credit bureaus treat all those pulls as a single inquiry. Pre-approval is not something to avoid out of credit fear.

Question 3

I have some late payments in my history. Can I still get approved?

Accepted Answer

Possibly yes, depending on how recent they are and the overall pattern. A single late payment from two years ago is very different from three late payments in the last six months. Lenders look at the story your credit tells, not just the score. Let's look at your actual file and I'll tell you exactly where you stand.

Question 4

How long does it take to improve my credit enough to qualify?

Accepted Answer

It genuinely depends on what's dragging it down. Paying down a high credit card balance can move your score in 30 to 60 days. Clearing a collection or disputing an error can take 2 to 4 months. Building credit from a thin profile takes 6 to 12 months with the right moves.

Question 5

Does student loan debt prevent me from buying?

Accepted Answer

Not necessarily. Student loan debt factors into your debt-to-income ratio, but it doesn't automatically disqualify you. If your loans are in income-based repayment, we use the lower payment amount for FHA calculations. Many buyers with significant student loan balances still qualify, especially on a dual income.

Question 6

Do I really need 20% down?

Accepted Answer

No. This is one of the most persistent myths in real estate. FHA requires 3.5%. Conventional can be as low as 3%. VA and USDA are $0 down for eligible buyers. CalHFA can even cover your down payment entirely. The 20% figure eliminates mortgage insurance on a conventional loan, but it is not a requirement to buy a home.

Question 7

Can my down payment be a gift?

Accepted Answer

Yes, for most loan types. FHA allows 100% gift funds for the down payment from a family member. Conventional loans allow gift funds as well, though some programs require that a portion comes from your own savings. The key is proper documentation: a signed gift letter confirming the money doesn't need to be repaid.

Question 8

What is CalHFA and do I qualify?

Accepted Answer

CalHFA (California Housing Finance Agency) offers state-funded down payment assistance programs for California first-time buyers. Eligibility is based on income limits (which vary by county), whether you've owned a home in the last three years, and the purchase price of the home. Many Sacramento-area buyers earning $100K to $150K qualify. The only way to know is to run your specific numbers.

Question 9

How much should I have saved beyond the down payment?

Accepted Answer

Beyond the down payment, budget for closing costs (2 to 3% of the loan amount), inspection and appraisal fees ($1,000 to $1,400 typically), and 2 to 3 months of mortgage payments in reserves. Lenders want to see that closing doesn't completely drain your accounts.

Question 10

Can I use my 401k for a down payment?

Accepted Answer

Yes, though you need to understand the tax implications first. Many 401k plans allow hardship withdrawals for a first home purchase, and some allow loans against the balance. Withdrawals are taxed as income and may include a 10% early withdrawal penalty. A loan avoids the tax hit but must be repaid. Talk to a tax professional before making this decision.

Question 11

How long does it take to close on a home?

Accepted Answer

From accepted offer to closing, the standard timeline is 30 to 45 days. VA and CalHFA loans can sometimes take 45 to 60 days due to additional steps. If you're already pre-approved when you find a home, the process tends to move faster because your income and assets are already verified.

Question 12

What documents do I need to apply?

Accepted Answer

For most buyers: last 2 years of W-2s and tax returns, last 2 months of pay stubs, last 2 to 3 months of bank statements, a government-issued ID, and information about any current debts. Self-employed borrowers will also need 2 years of business tax returns and a year-to-date profit and loss statement.

Question 13

Can I buy and sell at the same time?

Accepted Answer

Yes, but it requires careful coordination. Some buyers use a bridge loan or the equity from their current home as the down payment on the next. If you're in this situation, let's map out the sequence early so you're not caught between two transactions without a plan.

Question 14

Do I need a real estate agent if I have you as my lender?

Accepted Answer

Yes, and they're on your side at no cost to you as a buyer. The seller's agent represents the seller. You want your own representation. I work with several strong buyer's agents in the Sacramento area and am happy to connect you with someone who fits your style if you don't already have one.

Question 15

FHA or conventional, which is better?

Accepted Answer

It depends on your credit score and down payment. If your score is below 680 or your down payment is under 5%, FHA often has a lower payment because the mortgage insurance is priced favorably at lower credit scores. Above 720 with 5% or more down, conventional usually wins because PMI is lower and goes away when you hit 20% equity. I run both side by side so you can choose with actual numbers in front of you.

Question 16

Can I use a VA loan more than once?

Accepted Answer

Yes. VA benefits are reusable as long as you have remaining entitlement. If you've paid off a prior VA loan or sold the home, your full entitlement is typically restored. You can even have two VA loans at the same time in certain circumstances.

Question 17

What's the difference between interest rate and APR?

Accepted Answer

The interest rate is the cost of borrowing the principal, expressed as a percentage. The APR is the interest rate plus lender fees, expressed as a yearly cost. APR is always equal to or higher than the rate. When comparing lenders, look at both. A lender with a slightly lower rate but higher fees may actually cost you more.

Question 18

Is now a good time to buy in Sacramento?

Accepted Answer

That depends entirely on your personal situation, not the market. If your income is stable, your credit is in shape, and you're planning to stay in Sacramento for at least 3 to 5 years, the right time to buy is when you're ready. Waiting for the perfect moment costs most people more than just getting into a home at a manageable payment.

Sacramento Mortgage FAQ: Credit, Down Payment, Process & Programs

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