Home Loans
The loan you choose affects how much you need upfront, what you pay each month and how strong your offer looks to a seller. Here's how the main loan types compare and what to expect from the process.
Which loan types are there?
The main fourMost Amarillo buyers use one of these. Which one fits depends on your credit history, your debt-to-income ratio (DTI), how much you have saved, whether you've served in the military and where you're buying.
Conventional
The most common loan. Under 20% down adds private mortgage insurance (PMI), which comes off once you reach enough equity.
FHA
Government-backed, with more flexible credit requirements. Mortgage insurance is part of the loan, and on most FHA loans it stays unless you refinance.
VA
For eligible veterans, service members and some surviving spouses. No monthly mortgage insurance. Most borrowers pay a one-time funding fee.
USDA
For eligible rural areas, with household income limits. Some areas outside Amarillo's city limits may qualify. Eligibility is set by address.
If none of these fit, there are other programs and financing options out there. Your lender can tell you which ones you qualify for.
DTI is your monthly debt payments, including the new house payment, divided by your monthly income before taxes. Lenders use it to judge how much payment you can comfortably carry.
Lenders to confirm the mortgage insurance and USDA wording.
Mortgage myths that keep buyers waiting
What's actually true"You need 20% down."
Most buyers put down far less. 20% avoids mortgage insurance, but it isn't required to buy.
"You need perfect credit."
Many loan programs work with scores well below perfect. Your score affects your rate and options, not just a yes or no.
"All lenders offer the same rates."
Rates, lender fees and loan options vary from one lender to the next. Over the life of a loan, the difference can add up to tens of thousands of dollars.
"Shopping around will hurt your credit."
Several mortgage inquiries in a short window count as a single inquiry, so comparing lenders won't hurt your score.
What does pre-approval actually mean?
Before you shopTo make a loan, your lender has to approve two things: you and the home. A pre-approval takes care of the first one before you start shopping.
Buyer approval
Covered by your pre-approval
- Your credit report and score
- Your income and employment
- Your savings and where your down payment is coming from
- Your monthly debts, to figure your DTI
Property approval
Happens after you're under contract
- The home appraises for enough
- It meets the loan's requirements, including any repairs the lender requires
- It can be insured
Why it matters. It tells you your real price range and your likely monthly payment before you fall for a house. Most sellers expect a pre-approval letter with any financed offer, and having one ready means you can write an offer the day you find the right home.
Keep it good. Your lender confirms your finances again right before closing, so avoid big changes until you have the keys.
What not to do if you plan to buy
From pre-approval to closingYour lender checks your credit and finances when you apply and again right before closing. Changes in between can delay or derail the loan.
- Open new credit cards or loans
- Finance a car, furniture or appliances
- Change jobs or become self-employed
- Make large deposits you can't document
- Move large amounts of money between accounts
- Miss or pay late on any bills
Thinking about a big purchase or a job change? Talk to your lender first.
Two local lenders we trust
Talk to either oneBoth work closely with our team and the local title companies, and both know how deals here are timed.
Anything else to say about either lender? For example: years lending, the loan types each does most, how fast pre-approvals come back, a photo of each.
You're free to use any lender you choose.
Other questions buyers ask
Quick answersIs the down payment the only cash I need?
No. You'll also have Closing Costs, and your Earnest Money and Option Fee are due within days of an accepted offer. See what buyers typically pay at closing.
How do I compare lenders fairly?
Ask each one for a Loan Estimate. It's a standard form, so you can compare interest rates, lender fees and cash to close amounts side by side.
How long does a pre-approval last?
Usually a few months. If it expires before you find a home, your lender can update it.
Does the Appraisal affect my loan?
Yes. Your lender lends on the Sales Price or the appraised value, whichever is lower. How the Appraisal works.
Lenders to confirm the pre-approval timeframe. Any other questions they hear all the time?