A purchase loan is a mortgage used to buy a home, paying the part of the price that your down payment does not cover. You apply, we review your income, savings, credit and the home, and the loan is final when you sign at closing. Here is how it works, which programs fit first-time and move-up buyers, and what to gather.
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Pick the one closest to you. A few short questions follow, and a licensed loan officer reviews your answers and follows up with you, usually within one business day.
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Fidelity Residential · NMLS #103098 · Equal Housing Lender
Most purchase loans follow the same four steps, whatever the program.
A loan officer asks about your price range, your savings for the down payment and closing costs, your income and your credit, and explains which programs fit.
You complete the application and allow a credit report. The file is run through the agency’s automated underwriting system, which lists the documents your loan needs.
Once you are under contract, an appraiser values the home. Some programs also check the home against safety standards, and a condominium needs a project review.
An underwriter checks your documents against the program rules. When the conditions are met, you review your closing disclosure and sign at closing.
Each program has its own rules for the down payment, mortgage insurance and the kind of home. A loan officer can compare them for your situation.
A loan that follows Fannie Mae or Freddie Mac rules and is not insured by the government. It can buy a main home, a second home or a rental, with a fixed or an adjustable rate. Some programs for first-time and lower-income buyers allow a smaller down payment. With a smaller down payment the loan usually carries private mortgage insurance.
Fixed rate loansMade by a private lender and insured by the Federal Housing Administration. FHA loans accept smaller down payments and lower credit scores than most conventional loans, and a documented gift, or a down payment assistance program from a government agency that FHA allows, can cover the down payment and, in some programs, closing costs; the assistance is usually a second loan with its own terms. The home must be your main residence. You pay an upfront mortgage insurance premium, usually added to the loan, and an annual premium paid monthly.
FHA loansFor eligible veterans, service members, Reserve and National Guard members and certain surviving spouses. VA, not the lender, decides eligibility. The loan is made by the lender and partly guaranteed by the Department of Veterans Affairs. There is no down payment in most cases, though a veteran who has used part of the benefit before may need one on a larger loan, and no monthly mortgage insurance. Most borrowers pay a one-time VA funding fee; veterans receiving compensation for a service-connected disability, and some others, are exempt.
VA loansGuaranteed by the U.S. Department of Agriculture to help low- and moderate-income households buy a modest home in an area USDA maps as rural, which includes many small towns and outer suburbs. USDA sets the eligible areas and the household income limits, counting every adult who will live in the home, and we check both. The loan can cover the full appraised value. There is a one-time upfront guarantee fee that can be financed, and an annual fee paid monthly.
USDA loansFor a loan larger than the conforming limit set each year for the county. Each program sets its own rules for the down payment, credit and the savings you keep after closing, and the rules tighten as the loan grows. Most programs ask for full income documents, and larger loans may need two appraisals.
Jumbo loansIf your tax returns do not show your real income, there are programs that look at bank statements or assets instead. They have their own rules; ask a loan officer whether one fits.
Alternative documentation loansThe automated underwriting findings list exactly what your loan needs. Most buyers can start with these.
It depends on the program, the home and your file. VA and USDA loans can need no down payment in many cases. FHA loans and some conventional programs for first-time buyers allow a smaller down payment. Jumbo loans usually need more. A loan officer can show you the options side by side.
On a conventional loan, usually yes when the down payment is small. FHA loans have an upfront premium and an annual premium. VA loans have no monthly mortgage insurance; most borrowers pay a one-time funding fee instead. USDA loans have an upfront guarantee fee and an annual fee that take the place of mortgage insurance.
Often, yes. FHA loans let a documented gift, or a government down payment assistance program that FHA allows, cover the down payment. Other programs have their own gift rules, so tell your loan officer early.
It depends on the program, the appraisal and how quickly documents come in. A USDA loan has an extra review by USDA after our own underwriting review, so it usually takes longer than an FHA or conventional loan.
Yes. A conversation and a credit review before you shop show you a realistic price range and the documents to gather, before you are working against contract deadlines.
Fidelity Residential is licensed in many states. The full, current list is on NMLS Consumer Access (opens in a new tab), or call us at 732-686-9999.
Sources: Consumer Financial Protection Bureau, Buying a house: tools and resources for homebuyers (opens in a new tab); Understand the different kinds of loans available (opens in a new tab); What is a Closing Disclosure? (opens in a new tab). Facts are stated in our own words.
Get a quote, apply online, or talk it through with a licensed loan officer.
This page is general information, not a commitment to lend. Programs, terms and eligibility depend on credit, income, property and underwriting review and are subject to change without notice.
Reviewed by Robert Shamie, CEO, NMLS #241428 · Last reviewed:
Fidelity Residential (PFN Lending Group, Inc., NMLS #103098) is a direct mortgage lender licensed in 40 states and the District of Columbia, with 26 years in business.