Mortgage basics for first-time buyers

7 min read · By Stacey Scantlin, REALTOR® · JBGoodwin REALTORS®

Getting a mortgage feels complicated mostly because of the vocabulary. Strip away the jargon and it's a clear, repeatable process. Here's the version every first-time buyer should start with.

Pre-qualification vs pre-approval (they're not the same)

Pre-qualification is a quick estimate based on numbers you tell a lender — useful for ballparking, but not verified. Pre-approval is the real thing: the lender checks your income, assets, and credit and issues a letter stating what they'll actually lend. Sellers take pre-approved buyers seriously and often won't consider offers without it. Get pre-approved before you start touring homes.

The main loan types

• Conventional — the most common; flexible terms, down payments from 3%, PMI if under 20% down.
• FHA — government-backed, more forgiving credit requirements, 3.5% down.
• VA — for eligible veterans and service members; 0% down, no PMI.
• USDA — 0% down in eligible rural and suburban areas.
• Jumbo — for loan amounts above conforming limits, with stricter requirements.

Fixed vs adjustable rate

A fixed-rate mortgage keeps the same interest rate for the life of the loan — predictable and the right call for most buyers planning to stay put. An adjustable-rate mortgage (ARM) starts with a lower rate for a set period, then adjusts with the market. ARMs can make sense if you expect to move or refinance before the rate adjusts, but you're taking on rate risk.

What actually affects your rate

Your interest rate isn't random. The biggest levers:

• Credit score — higher scores earn lower rates.
• Down payment — more equity often means a better rate.
• Loan type and term — 15-year loans usually carry lower rates than 30-year.
• Debt-to-income ratio — how much of your income goes to debt.
• The broader market — rates move with the economy, and timing isn't something you control.

Documents you'll need

Lenders verify everything, so gather these early:

• Recent pay stubs (and W-2s or 1099s)
• Last two years of tax returns
• Recent bank and asset statements
• Government-issued ID
• Records of any other income or large deposits

From pre-approval to keys

The path is more predictable than it feels:

1. Get pre-approved.
2. Shop with your agent and make an offer.
3. Go under contract; the lender begins underwriting.
4. The home is appraised and your loan is finalized.
5. You close, sign, and get the keys.

A great local agent keeps every party — lender, title, inspector — moving so nothing stalls.

This article is general educational information, not financial, lending, tax, or legal advice. Loan programs, rates, and requirements vary by lender, location, and your situation — always confirm details with a licensed mortgage professional. Stacey Scantlin is a REALTOR® with JBGoodwin who connects you with a vetted local agent; she does not originate loans.