22 Mortgage Questions To Ask Your Lender

15 Min Read
Updated March 8, 2024
Written By
Miranda Crace
Two African-American women discussing paperwork over coffee.

Doing your research and asking questions is important when looking for a mortgage lender because all lenders are not the same. It’s important to understand as much as possible before you move forward in the home loan process.

Whether you’re purchasing a home or refinancing, having a list of mortgage questions to ask before making a decision should be your first step. Here are the most important factors to understand and questions to ask your mortgage lender.

22 Questions To Ask Your Mortgage Lender Or Broker

You’ve set up your first appointment with a lender – but you aren’t sure where to start.

Knowing the right questions to ask will help you choose the right lender. It’s a great idea to head to your first meeting with a list of questions that will help you get all the information you need. While our list isn’t exhaustive, you should see it as a solid starting point for your conversations.

1. How Does A Mortgage Work?

A mortgage is a loan for a house. Home buyers use a mortgage to purchase a home. And when homeowners refinance, they replace their original mortgage with a new one, using the proceeds from the new loan to repay the original loan in full.

When you buy a home with a mortgage loan, you agree to repay the loan according to the loan’s terms. Your home becomes the security, or collateral, for the loan. If you default on your loan or fail to meet a term or condition of the loan, your lender may foreclose on the home.

2. What Types Of Loans Are There?

Mortgage loans come in many varieties. The primary component you’ll need to confirm about the loan you’re considering is whether the rate is fixed or adjustable. If it’s adjustable, your interest rate may periodically change.

Loans also come in a variety of term lengths. The longer the term, the cheaper your monthly mortgage payment. But you’ll pay more interest than you would with a shorter-term loan.

Conventional Loans

Another consideration is the investor in your mortgage loan. Conventional loans, which meet the requirements of Fannie Mae and Freddie Mac, require a slightly higher credit score than other loan options. If you make a down payment of 20% or more on a conventional loan, you can avoid paying private mortgage insurance (PMI).

FHA Loans

An FHA loan is a government-backed loan that is guaranteed by the Federal Housing Administration (FHA). You can qualify for an FHA loan with a slightly lower credit score than many other loan options.

USDA Loans

U.S. Department of Agriculture (USDA) loans (and Department of Veterans Affairs (VA) loans) offer borrowers the option to purchase a home with no down payment.

USDA loans encourage development and home buying in rural areas and the outskirts of suburbia.

VA Loans

VA loans are a benefit for qualifying active-duty service members, reservists, veterans and eligible surviving spouses. For borrowers who qualify, the VA loan also offers some of the best interest rates available under any loan option. VA borrowers can also roll their closing costs into their loans. There’s usually no required down payment.

Find out if an FHA loan is right for you.

See rates, requirements and benefits.

3. What Types Of Home Loans Do You Offer?

Now that you understand what types of loans are available, it’s time to find a lender that can match you with the right loan. To jump-start the process, you need to ask the lender what kind of loans they offer.

Most lenders offer fixed-rate and adjustable-rate mortgages (ARMs) – but knowing what type of rate a loan offers is just the beginning. As they say, the devil is in the details. And you’ll need to dive into every detail of a loan before choosing a mortgage loan and mortgage lender.

If you’re looking for an FHA, USDA or VA loan, does the lender offer them? Does the lender have special financing options for condos? The more options a lender offers, the more likely you are to find the mortgage loan that matches your needs.

You can also get a conventional fixed loan that is anywhere from 8 to 30 years long. Ask whether the lender offers these terms.

4. Which Type Of Mortgage Is Best For Me?

Make sure to give the lender plenty of detail on your situation and answer any questions they have.

If they recommend a specific loan option for you, have them put that option or several options in writing so you can consider their differences and weigh the strengths and weaknesses of each loan. This would also be a good time to ask about loan alternatives.

Don’t be afraid to ask questions. If you don’t understand a fee or don’t understand the need for a fee, make them explain it. If you think the lender knows what they’re talking about and has your best interest in mind, keep the conversation going. Otherwise, feel free to move on to the next lender.

5. How Do I Qualify For A Mortgage?

When it comes to qualifying for a loan, mortgage lenders will look at several factors, including your credit, income, debt-to-income ratio (DTI) and accumulated assets.

Credit Score

Your lender will look at your credit report and credit score. Lenders look at your credit score (or the lowest median or average median credit score of all the borrowers on a loan – depending on loan type) to help determine whether you qualify for the loan.

  • For an FHA loan, you’ll need a credit score of at least 580 to purchase a home or refinance to a lower mortgage rate or change your loan term with 3.5% down You can technically purchase a home with a VA loan with a 500 qualifying score if you have 10% down, but few lenders do these loans.
  • The minimum qualifying credit score for most conventional loans is 620.
  • Lenders determine the qualifying credit score for VA loans.

Debt-To-Income Ratio

Your credit score and credit history are important – but so is your income. Lenders compare your pretax income to your existing debts to get your debt-to-income ratio (DTI). To qualify for better pricing on most loans, your DTI shouldn’t be higher than 40%, and that includes your monthly mortgage payments.


Finally, the lender will look at your assets to make sure you have enough money to cover your down payment and to verify that you have reserve funds in case of job loss or other financial setbacks. Your lender may require that you have enough saved in your cash reserves to cover a certain number of months’ worth of mortgage payments.

6. What’s The Difference Between Being Prequalified And Preapproved?

Home buyers and lenders are prone to using the terms “prequalified” and “preapproved” interchangeably. But technically, they mean very different things. You should know the differences between the two.


Prequalification means you’ve submitted financial information to a lender, and based on the information you provided, they’ll estimate a loan amount they believe you can afford. You may receive a prequalification letter from the lender, but it likely won’t impress real estate agents or home sellers because the information you submitted wasn’t verified by the lender.

If you’re in the earliest stages of planning, prequalification is still a useful tool. It can help you figure out how much house you can afford. But as you get closer to actively searching for a home, you’ll likely need a preapproval letter to show agents that you’re serious about buying a home.


Preapproval is your initial application for mortgage approval. A lender will take a closer look at the financial paperwork you provide, reviewing and verifying your documentation and pulling your credit report. Sellers will likely pay more attention to your purchase offer if they know your financial information has been verified.

The documents you’ll need for a mortgage preapproval may include bank statements, pay stubs and W-2s.

7. How Much House Can I Comfortably Afford?

While being prequalified or preapproved may help you ballpark the top end of your home buying budget, it doesn’t mean you should start shopping for homes at the upper end of what you can afford.

You don’t want to end up spending so much on your mortgage payment every month that you can’t save for unforeseen expenses or emergencies. And besides managing unexpected expenses, you should leave room in your budget for whatever sparks joy in your life. That may be money to take the occasional trip or have dinner out with friends once a week.

You can use your mortgage preapproval amount as your budget starting point – but don’t stop there. Before you hit the pavement to look at homes, take a hard look at your homeowner’s budget to help determine a monthly mortgage payment you can comfortably afford.

You should also keep in mind that there’s more to your mortgage payment than your loan balance (we’ll break down the components of a mortgage payment later on).

you should also save 1% – 2% per year of the home’s purchase price for maintenance costs. It’s generally a good idea to spend no more than 33% of your monthly budget on housing costs. Any more than that, and you might end up overextending yourself.

8. How Much Do I Need For A Down Payment?

There are two parts to this: what you’re required to save and the best down payment for your situation.

  • If you qualify for a USDA or VA loan, no down payment is typically required.
  • If you qualify for an FHA loan, the minimum down payment is 3.5%.
  • If you qualify for a conventional loan, down payments start at 3%.

But there are plenty of reasons to make a bigger down payment if you can afford it.

If you put 20% down on a conventional loan, you can avoid paying private mortgage insurance (PMI). If you do end up paying PMI, you can request to have it canceled once you reach 20% equity in your home.

On an FHA loan, you’ll pay mortgage insurance premiums (MIPs) for the life of the loan if you put down less than 10%. If you make a 10% down payment or higher, you can have MIP removed after 11 years.

The interest rate you’re offered on your mortgage will be determined, in part, by a combination of your median FICO® Score and the size of your down payment, so a larger down payment should result in a lower rate.

Understanding the impact of your down payment on your mortgage interest rate, you should try to put down as much as you can comfortably afford without compromising other financial goals. And another benefit of a larger down payment is that you’ll have more equity in your home after the purchase.

Ready to refinance?

See recommended refinance options and customize them to fit your budget.

9. Is There Help Available For Home Buyers?

Buying a home is expensive. Fortunately, there are programs available to help first-time and low- to moderate-income home buyers achieve homeownership. The Department of Housing and Urban Development (HUD) maintains a list of state and local home buying programs you may find useful. The programs typically offer first-time home buyer assistance or down payment assistance.

If you qualify for down payment assistance, ask the lender if they work with that assistance program. If the assistance is a second mortgage, you’ll need to work with a lender that accepts this type of home buying assistance.

10. What Will My Interest And Annual Percentage Rate Be?

When lenders advertise interest rates, you’ll see two rates. The first rate is the base interest rate they charge for the mortgage, and the second rate is the annual percentage rate (APR).

Mortgage lenders structure the charges included with a mortgage loan in different ways. Some charges are upfront fees. And other charges are rolled into the base interest rate. If you want to compare two loan offers on an apples-to-apples basis, you’ll need to compare their APRs because it takes interest and associated mortgage fees into account. APR is generally higher than the interest rate because it factors in the base interest rate and the closing costs associated with the loan.

11. How Much Will The Loan Cost Me?

One of the outcomes of the 2008 financial crisis was a requirement that borrowers receive full disclosure of all the costs included in a consumer loan.

Loan Estimate

A Loan Estimate is a complete breakdown of the costs associated with your loan, including the closing costs. Your Loan Estimate will also include the basic terms of the mortgage.

Lenders are legally required to give you this estimate within 3 business days of your completed mortgage application. If there’s a change that will materially affect your mortgage costs, they must send you a new Loan Estimate.

Closing Disclosure

You’ll also receive a Closing Disclosure at least 3 business days before you close on your mortgage. This is a full and final accounting of all the costs you’ll pay at closing. Home buyers used to receive their Closing Disclosure at closing, leaving little opportunity to review, understand or dispute any charges. Today, your lender must allow you 3 business days to review the charges and get any last-minute questions answered.

Don’t hesitate to ask your lender questions if there’s anything you don’t understand.

12. What Happens After My Offer Is Accepted?

Underwriting is the process of verifying all the financial information you provided and making sure you qualify for the loan. Additionally, the underwriter will look at the home’s appraisal. They want to be sure the home’s value aligns closely with the home’s purchase price so they aren’t lending more money than the house is worth, and the buyer isn’t paying more than the home’s appraised value.

Ask the lender about the best method of communication during the underwriting process. Ask them what’s the best way to send any required paperwork or responses and how soon you should expect updates after submitting everything.

13. What Should I Know About the Appraisal Process?

Once the seller accepts your purchase offer, you and the house you hope to own must both be vetted. You’re being vetted to determine whether you can afford the loan. And the house is appraised to make sure you’re not paying more for the home than you should.

If you choose a government-backed loan, you should know that guidelines similar to FHA appraisal standards are also used for VA and USDA loans, including a health and safety component that may result in a more thorough appraisal process.

14. What Happens If My Appraisal Comes In Low?

It’s important to understand what your mortgage lender may do if the appraisal comes back too low.

A low appraisal can affect how much a lender will lend and how much you’ll pay out of pocket.

For example, if the home you want is $200,000 but appraised at $170,000, your mortgage lender will only lend the appraised amount. You’ll have to come up with the extra $30,000 on top of your down payment.

Your other option is to try to renegotiate the purchase price with the seller or walk away. If you have an appraisal contingency, you can get your earnest money deposit back.

15. What Is Your Average Loan Processing Time?

Ask the lender what their average loan processing time is.

Refinances may close a little quicker because an appraisal may not be required, and there’s no home inspection.

Processing time can be a crucial factor when buying a home because sellers will likely be on the lookout for a buyer who can get their financing squared away fast so they can move on to the next chapter of their lives.

16. What Happens At Closing?

At closing, you’ll sign two crucial documents.

The first is the promissory note, sometimes called the mortgage note. It’s your written promise to pay back the loan. The promissory note details the repayment process, specifying your monthly mortgage payment and the length of the loan’s term.

You also sign the mortgage agreement. Although we use the term “mortgage” to refer to the home loan, legally, the term “mortgage” refers to the security instrument that places a mortgage lien on the home.

The mortgage agreement also includes the options your lender can exercise if you default on your loan. Typically, a lender can reclaim the house if you default on your mortgage payments. However, once your mortgage is paid off, the lender will no longer be able to take possession of your home.

17. How Will I Pay My Closing Costs?

You’ll receive several communications from your lender, real estate agent and attorney in the days leading up to closing. The Closing Disclosure will itemize and total how much money you’ll need to pay in closing costs.

Be very careful about transferring money before closing. Many mortgage scammers know you’ve got a lot of cash sitting in your checking account, and you’re anxiously awaiting instructions on what to do next. They’ll send you legitimate-looking instructions that direct you to send your money to their account. If you’re not careful, you could fall victim to wire fraud.

18. What Do I Need To Bring To The Closing Table?

Being prepared and having everything you need for closing is important. Ask your lender about what you’ll need to bring to the closing table.

19. What Will My Monthly Mortgage Payment Include?

You can remember the components of a mortgage payment with the acronym PITI: principal, interest, taxes and homeowners insurance.

The makeup of a monthly mortgage payment will differ among borrowers depending on whether they have an escrow account for their property taxes and homeowners insurance. Most lenders require escrow, especially if you made a down payment that’s less than 20%. You’ll also need to pay mortgage insurance if your down payment is less than 20%.

At a minimum, every mortgage payment includes principal – the amount you borrowed and pay down every month – and interest.

If you have an escrow account, your mortgage payment will also include your property taxes and homeowners insurance, each divided over 12 months. If you have to pay mortgage insurance, your payments will be handled the same way.

If the home is located within a homeowners association (HOA), you will either pay your dues annually or every month. While your HOA dues are paid separately from your mortgage, your lender will factor your dues into your debt-to-income ratio to help confirm your ability to comfortably afford your mortgage and your other bills.

20. Will You Sell My Loan?

The answer to this question is probably “yes.” The vast majority of mortgages are bought by major mortgage investors, like Fannie Mae, Freddie Mac, FHA, etc.

However, this doesn’t always mean the relationship with your lender is over.

If you ever think you might have trouble making a payment, your loan servicer is the one to call. They can go over preforeclosure options, like forbearance, for potential relief and help you look for ways to stay in your home or gracefully exit.

21. What Will I Get Charged For Loan Servicing?

Servicing is the process of collecting and processing your payments and handling your escrow account after your loan closes. It’s important to ask your mortgage lender about loan servicing fees. Ask if there is a mortgage prepayment penalty. Ask if you’ll be charged if you change your payment method or its frequency. And ask if you should anticipate late charges if you miss a payment deadline.

22. How Often Will You Communicate After I Close?

Having effective communication with your lender throughout the mortgage process is important, but does your prospective mortgage lender communicate after the loan has closed?

This may not seem important, but asking if your lender communicates after closing can benefit you in the long run.

See What You Qualify For

The Bottom Line: Ask Questions Until You Completely Understand Your Loan’s Terms

Taking on a mortgage is a big financial decision. We encourage you to talk to a financial advisor or an ender before moving forward.

See What You Qualify For

You can get a real, customizable mortgage solution based on your unique financial situation.


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