Questions to Ask a Mortgage Lender as a First-Time Home Buyer
Questions to ask a mortgage lender or a mortgage broker as a first-time home buyer, for the first meeting and the weeks that follow it. The 61 questions open with seven for anyone you sit down with, then follow the loan: whether you are dealing with a broker or a direct lender and how they are paid, first-time buyer programs and the down payment, how your income, debts and credit become a payment you can afford, rate and fees, and the stretch from application to closing. The Loan Estimate and the loan types named are United States terms, so in another country ask the broker or lender for the local equivalent.
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The questions
Each question, and why to ask it
Start here
What would I qualify for, and what would you actually recommend I borrow?
Why ask it
These are two different numbers and the gap is the whole point. A lender who only quotes the maximum is answering an underwriting question rather than a budgeting one, so ask what payment they would be comfortable with in your position.
Are you a mortgage broker or a direct lender, and how does that change what you can offer a first-time buyer?
Why ask it
A mortgage broker takes your application to several lenders, while a bank or direct lender offers only its own loans, so the answer tells you whose rates you are hearing. Neither route is cheaper by default. What counts is which of them can reach the loan types and first-time buyer programs you may need.
Is this a pre-qualification or a pre-approval, and what have you actually checked?
Why ask it
Lenders use the two words loosely, so what matters is what stands behind the letter: whether your credit was pulled, whether pay stubs and bank statements were reviewed, and whether an underwriter has seen the file. A seller's agent may ask the same thing the day your offer arrives.
Which first-time buyer programs do you work with, and what are the conditions?
Why ask it
State and city programs usually work through their own approved lists of lenders and brokers, so the person in front of you may be able to offer some and not others. The conditions to pin down are the income and price limits, and whether the help has to be repaid if you sell or refinance within a set number of years.
What's the full monthly payment, including taxes, insurance, and any association dues?
Why ask it
A quote of principal and interest leaves out property tax, homeowners insurance, mortgage insurance and any dues. Ask for the one figure that will leave your account each month, and hold it up against the rent you pay now.
Beyond the down payment, how much cash should I have ready between the offer and the keys?
Why ask it
A first purchase also takes a deposit with the offer, an inspection, an appraisal, closing costs and the first insurance premium, and some of those are paid weeks before closing. Have them list each one with a rough amount and a date, then look at what would be left in savings afterwards.
I have never bought a home before. Can you walk me through each step from today to closing day?
Why ask it
How they answer shows whether they are used to first-time buyers or expect you to know the vocabulary already. Write the steps down in order, and next to each one put who does it, you included.
Broker or lender
If you are a broker, how many lenders do you work with, and where do most of your loans actually go?
Why ask it
Some brokers work with a long list of lenders and still send most files to the same two or three. That can be for a good reason, such as a lender that turns first-time buyer files around quickly, but you should hear the reason from them.
How are you paid on this loan?
Why ask it
A broker may be paid by the lender, by you, or through the rate, and a bank loan officer is often paid on the loans that close. It is a fair thing to ask. A vague or defensive reply is a reason to collect another quote before going further.
Does your pay change depending on which lender or loan type I end up with?
Why ask it
If one option pays them more, you should know that before you hear the recommendation. The rules on this differ by country and state, so ask how it works where you are buying and where it appears on your paperwork.
Can I see the other loans you priced for me, including the ones you did not recommend?
Why ask it
The runners-up show what the recommendation was chosen over: a lower rate with higher fees, say, or a smaller down payment with more insurance. Someone who really compared several options can pull them up in a few minutes.
Once I apply, who decides whether the loan is approved, and who do I call with a question?
Why ask it
With a broker the decision sits with the lender they place you with, and with a bank it sits with an underwriter you will probably never meet. Get the name of the person who will chase your file, and how quickly they tend to reply.
How many first-time buyers have you worked with this year, and where do they usually get stuck?
Why ask it
Someone who does this often can name the sticking points without thinking: gift money, a short credit file, a course certificate that arrives late. A general answer suggests your questions will be new to them as well.
Where can I check your license or registration before I send you my documents?
Why ask it
You are about to hand over tax returns, bank statements and an identity number. In the United States, loan officers and mortgage brokers can be looked up in a public registry, NMLS Consumer Access. Elsewhere, find out which regulator lists them and look them up yourself.
Are there loans or programs you can't offer that I should look for somewhere else, like a credit union or the state housing agency?
Why ask it
No single broker or lender has access to everything, and some first-time buyer loans are sold only through particular institutions. A candid answer points you to the second quote worth getting.
Programs and down payment
Do I count as a first-time buyer under each program, and does the person buying with me?
Why ask it
Programs write their own definitions. Some include people who owned a home years ago. Others look at every name on the loan, so a co-buyer who has owned before can change the answer.
Which loan types am I eligible for, and which would you pick in my position?
Why ask it
In the United States the usual choices are conventional, FHA, VA and USDA loans, each with its own down payment and insurance rules. Have them say why they would pick one for you, and what would have to change for a different one to win.
What's the smallest down payment available to me, and how does the payment change at 5, 10, and 20 percent?
Why ask it
Each step changes three things at once: the size of the loan, the mortgage insurance and sometimes the rate. Seeing the three payments side by side, with the cash each one takes, shows which step actually buys you something.
Is the down payment help a grant, a second loan, or money I repay when I sell?
Why ask it
Assistance comes in several forms: money that is never repaid, a loan forgiven after you have lived in the home for some years, or a second loan due when you sell or refinance. The brochure does not always say which, so ask what you would owe in year three and in year ten.
Does using an assistance program change my rate, my fees, or how long closing takes?
Why ask it
Help with the down payment sometimes comes attached to a slightly higher rate or an extra approval step at the agency. Compare the assisted loan with a plain one on the same day, and tell your agent about any added time before you agree to a closing date.
Do I have to take a homebuyer education course, and does it need to be finished before I make an offer?
Why ask it
Many first-time buyer programs ask for a course certificate, often from an approved provider and sometimes for a small fee. Learning the deadline now avoids a closing held up by a class you could have taken on a free weekend.
Part of my down payment is a gift from family. What do you need from them, and when should the money move?
Why ask it
Lenders usually want a signed letter saying the money is a gift and not a loan, and may want to see the giver's account. Raise it before anything is transferred, because a large unexplained deposit prompts questions that take days to answer.
If I put down less than 20 percent, what does the mortgage insurance cost and when does it come off?
Why ask it
It can be charged monthly, upfront, or built into the rate, and the rules for ending it differ by loan type: on some loans it stops at a set level of equity, on others it stays unless you refinance. Get the cost as a monthly figure and the exact condition for removing it.
Does this loan or program limit the kind of home I can buy, such as a condo or a house that needs repairs?
Why ask it
Certain loans require a condo building to be approved, or the home to meet a condition standard at appraisal, which can rule out a fixer-upper. Knowing the limits before you tour saves falling for a house your financing cannot buy.
What you can afford
How do you calculate my debt-to-income ratio, and where am I against your limit?
Why ask it
That ratio is one of the main things an approval rests on. Once you know which debts are counted and how much room is left under the limit, you can see what a car loan or a card balance would cost you in borrowing power.
How do you count my student loans if they are deferred or on an income-based plan?
Why ask it
A loan with no payment due today can still be counted at an assumed monthly amount, and the assumption differs between loan types. For a buyer with student debt that one line can decide how much they can borrow, so get the figure being used and the rule behind it.
How will you count my income if I changed jobs recently, or if part of it is overtime, bonuses or self-employment?
Why ask it
Lenders generally want a history behind any income they count, so a new salary may be used in full while a year of overtime or freelance work is averaged or left out. Bring it up at the first meeting, pay stubs and tax returns in hand, since every later number is built on this one.
My credit history is short. How does that affect what you can offer, and can rent or utility payments count?
Why ask it
Lenders handle a thin credit file differently: some can consider a record of rent, phone and utility payments, and some cannot. Find out which score they pulled, too, and whether a few more months of history would move you into better pricing.
If I am buying with a partner, should we both be on the loan, or would one of us alone get a better rate?
Why ask it
Two incomes raise what you qualify for, but a joint loan is commonly priced on the weaker of the two credit scores. Have it run both ways. What leaving a name off the loan means for who owns the home is a separate matter, and one for an attorney where you live.
Could a parent co-sign or be added to the loan, and what would that commit them to?
Why ask it
A co-signer's income can help an application, but the debt then appears on their credit report and they are responsible if payments stop. Whether they must also be on the title, and whether it affects your first-time buyer status, depends on the loan, so have them hear the answer directly.
Would I get a better loan by paying down a debt first, or by keeping that money for the down payment?
Why ask it
The same cash can lower your debt ratio, lift your credit score or enlarge the down payment, and each of those moves the pricing differently. A loan officer can run all three on your real numbers, which beats guessing.
What would the payment be on a house priced 10 percent below my maximum?
Why ask it
Hearing the two payments together turns a price range into a monthly choice, and gives you a number to search on if the top of the approval looks tight against the rest of your budget.
What property tax figure did you use in this estimate, and where did it come from?
Why ask it
An estimate built on the current owner's bill can be out of date the day the house changes hands, because some places reassess at sale. Ask how reassessment works in the county you are buying in and what the bill might be at your purchase price.
What homeowners insurance do you require, and would this area need flood or other extra cover?
Why ask it
The lender sets a minimum level of cover and wants proof of it before closing, and some locations need a separate flood, wind or earthquake policy. Get a real quote from an insurer early, since the premium is part of the payment you are being approved for.
Will taxes and insurance be escrowed, and how will the payment change after year one?
Why ask it
Escrowed payments move when the tax assessment or the insurance premium moves, and a first-year estimate can run low, especially on a new build where the land was taxed before the house stood on it. A realistic second-year figure is the one to budget on.
How much do you need to see left in my accounts after closing?
Why ask it
Some loans require reserves, meaning a few months of payments still in the bank once the purchase is done. Even where none are required, the question is a prompt to decide what cushion you want for the first repair.
Rate and fees
What's the rate today, and what would it take to lock it?
Why ask it
A quoted rate is not a commitment, and rates can move from one day to the next. Two things to pin down: what the quote assumes about points, credit score and down payment, and whether you can lock before you have a house under contract.
How long does the lock last, and what does it cost to extend if closing runs late?
Why ask it
A lock covers a set number of days and closings do run late. Get the length, the price of an extension and who pays it when the delay was on the lender's side, and find out whether you could move to a lower rate if rates fall after you lock.
Can you give me a Loan Estimate so I can compare you with another lender?
Why ask it
In the United States the Loan Estimate is a standard form, so a broker's quote and a bank's can be read line against line. Before you have a property address some lenders hand over an informal worksheet instead, so check which of the two you are holding.
What is the APR on this quote, and why is it higher than the rate?
Why ask it
The APR folds certain fees into the yearly cost, so the distance between the two numbers is a rough measure of what the loan costs up front. Which fees are counted in it is worth a follow-up, since two lenders quoting one rate can show different APRs.
Which of these fees are yours, and which are third-party charges you don't control?
Why ask it
Origination and underwriting charges are the lender's own, and those are the ones it can reduce. Appraisal, title and recording charges go to other parties, and in the United States the Loan Estimate separates the services you may shop for yourself from the ones you may not.
Are you charging points, and what's the rate without them?
Why ask it
Points are interest paid in advance to buy the rate down, so a quote with points and a quote without are not the same loan. With both rates in front of you, work out how many months of the lower payment it takes to earn the points back, and set that against how long you expect to stay.
Could you cover some of my closing costs in exchange for a higher rate, and what would that trade cost me each month?
Why ask it
This is called a lender credit, and it can help a first-time buyer whose savings went into the down payment. The price is a higher payment for as long as you keep the loan, so see both versions on paper before deciding.
Can the seller pay part of my closing costs, and does this loan cap how much?
Why ask it
Seller contributions are negotiated in the offer, but loan programs commonly cap them, and the cap can depend on the size of your down payment. Your agent needs that ceiling before writing the offer, as an amount at your price range and not as a percentage.
Would you put me in a fixed rate or an adjustable one, and what is the highest the adjustable payment could go?
Why ask it
A fixed rate keeps principal and interest the same for the whole term. An adjustable one holds for an opening period and can rise after it. Before considering the second, get the date of the first adjustment and the payment at the cap.
How much higher is the payment on a 15 or 20 year term, and how much interest would it save?
Why ask it
In the United States thirty years tends to be the default quote because it gives the lowest payment. A shorter term beside it shows what that lower payment costs over the life of the loan, even if you still choose the longer one.
Is there a prepayment penalty, and can I pay extra toward principal?
Why ask it
Whether paying early costs anything depends on the loan and the country: some mortgages carry no charge at all, and others charge for leaving a fixed period early. If you expect to overpay or refinance within a few years, have them show you the clause and explain how an extra payment is applied.
What do I pay you before closing, and what do I lose if I walk away or never find a house?
Why ask it
A first search can end without a purchase, or with a better quote from someone else. Some brokers and lenders charge nothing until closing and others keep an application or broker fee either way, while an appraisal is generally not refunded once it has been done. Get the answer in writing before you hand over documents.
Will getting quotes from two or three lenders this month hurt my credit score?
Why ask it
Scoring models generally count several mortgage inquiries inside a short window as one, though the length of the window depends on the model, so find out the day each lender or broker will pull your credit and keep the checks close together.
To closing
What documents will you need from me, and how should I send them?
Why ask it
Expect tax returns, pay stubs, bank statements, a gift letter if there is one, and a written explanation of any large deposit. Those papers carry your identity and account numbers, so find out whether there is a secure upload portal before you email anything.
How long does the pre-approval letter last, and can you issue one for the exact amount of each offer?
Why ask it
Letters expire, and a long search means sending newer pay stubs and statements. A letter written to the offer price, not to your ceiling, also keeps the seller from seeing how much higher you could go.
Can I reach you on an evening or a weekend when I am writing an offer?
Why ask it
Offers are often written outside office hours, and the seller's agent may phone your lender or broker to check that the approval is solid. What you need is a name for Saturdays and a turnaround time for an updated letter.
How long is it taking you to get from application to closing at the moment?
Why ask it
Timelines shift with the season, and a broker depends on the turnaround of whichever lender takes the file, so measure the answer against the financing deadline your agent wants to write into the offer.
What should I avoid doing with my money or my job between pre-approval and closing?
Why ask it
Lenders commonly check credit and employment again shortly before closing. A financed car, a new card for furniture or a move to commission pay can reopen an approval that looked finished. Get their list, and agree to phone before doing anything on it, not after.
If the house appraises for less than my offer, what are my choices and how much cash would each take?
Why ask it
The loan is based on the appraised value, so a shortfall has to be met by a lower price, more of your own money, or walking away if the contract allows it. Go through the sums once before you bid over the asking price.
If my financing falls through, what happens to the deposit I paid with the offer?
Why ask it
That depends on the financing terms in your purchase contract and on local rules, which are your agent's or attorney's ground and not the lender's. The lender's part is telling you which dates they can meet, so the contract only sets deadlines your loan can keep.
When will I see the final figures, and how do I check them against your first estimate?
Why ask it
In the United States a Closing Disclosure arrives a few days before signing and is laid out to be read against the Loan Estimate. Some costs are allowed to rise between the two and some are not, so learn which, and who to call the same day if a figure has moved.
How will I be told where to send my closing money, and how do I confirm the instructions are real?
Why ask it
Emails carrying fake wiring instructions are a known fraud aimed at buyers in the days before closing. Settle now who will send the real ones and by what route. Keep a phone number, taken from this meeting and not from an email, to call before any money moves.
When is my first payment due, and how do I set it up?
Why ask it
There is often a gap of a month or more between closing and the first payment, which surprises people used to paying rent in advance. Sort out where it goes and when automatic payments can begin, so the first one is not missed in the middle of a move.
Will you keep this loan or sell it, and who would I be making payments to?
Why ask it
Servicing is often transferred after closing whether you used a broker or a bank, and the terms of the loan do not change when it is. What changes is who takes your payments and answers the phone, so ask how you would be told.
What's the most common reason a loan like mine falls apart before closing?
Why ask it
Their answer comes from files they have watched fail, so it tends to be specific: a debt that was not disclosed, a building the lender would not approve, a document that arrived after the deadline. Whichever one they name, ask what you could do about it this week.
Shopping for a first mortgage
Practical guidance for the conversation itself
Mortgage broker or lender for a first purchase
What a mortgage broker does
A broker does not lend the money. They take one application and place it with a lender from the list they work with, which can spare a first-time home buyer several separate applications. The two things to press on are how many lenders were compared and how the broker is paid.
What a bank or direct lender does
A bank, credit union or direct lender offers its own loans and makes its own approval decision. The range is narrower than a broker's list, though some first-time buyer programs are sold only through particular institutions, so press on which programs it is approved to offer.
Why one of each is a useful comparison
A quote from a mortgage broker and a quote from a bank or credit union, taken in the same week on the same price and down payment, show whether the broker's reach is finding you anything. How brokers are regulated and paid differs by country and state, so ask how it works where you are buying.
How to compare lenders
Collect Loan Estimates within the same few days
The form is standardized, and rates move, so quotes gathered weeks apart cannot be compared. Mortgage credit checks made inside a short window are generally treated as a single inquiry.
Compare the total cost, not the headline rate
A lower rate bought with points, or offset by a larger origination fee, can cost more over the years you actually intend to keep the loan. Work out the break-even point before choosing.
Test the payment against your own budget
Take the full monthly figure, subtract it from your take-home pay, and live on the remainder for a month before you commit. It is a better check than any ratio an underwriter uses.
Keep your finances still until closing
New credit, a large transfer, a job change, or a card opened for furniture can undo an approval. Lenders commonly check again shortly before closing, so nothing should move until the keys do.
Where first-time buyers get hurt
Borrowing to the top of the approval
The maximum comes from ratios, not from your life. Repairs, utilities on a larger space, and a longer commute all cost money that no underwriter models.
Forgetting the cash beyond the down payment
Closing costs, inspections, the first insurance premium, moving, and immediate repairs come out of the same savings. Ask for the total cash needed at closing and add a reserve on top.
Treating the quoted payment as permanent
Escrowed taxes and insurance premiums can rise, and in some places the assessment is reset after a sale. Budget on the chance that the payment in year three is higher than the one on the estimate.
Waiving contingencies to win a house
Inspection and appraisal contingencies are the protection you are giving up, and your deposit is what stands behind that. Before agreeing to waive one, have the lender say what happens if the appraisal lands under the agreed price, and have your agent or attorney say what the contract then lets you do.
Cash to account for before closing
- Down payment
- Lender fees and third-party closing costs
- General inspection, plus any specialist inspections
- First homeowners insurance premium and any prepaid taxes
- Moving costs and what you need on the first day
- A reserve for repairs found in the first months