Homebuyer FAQ

Do I need a 20% down payment?

A 20% down payment is not generally required to purchase a home.

While 20% down on a conventional loan may help avoid PMI, many programs offer lower down payment options, including:

Conventional loans starting as low as 3% down
FHA loans starting at 3.5% down
VA and USDA loans with 0% down for eligible borrowers*

Some buyers may also qualify for down payment assistance programs.

What is PMI (Private Mortgage Insurance)?

PMI is typically required on conventional loans when a borrower puts less than 20% down or has less than 20% equity during a refinance.

PMI protects the lender—not the borrower—in the event of default.

The cost of PMI varies based on factors like credit score, down payment, loan type, and occupancy. In many cases, PMI can later be removed once equity requirements are met.

Can I finance my closing costs?

Closing costs usually cannot be added directly into a purchase loan, but there are ways to reduce upfront expenses.

One common option is seller concessions (seller assist), where the seller contributes toward allowable closing costs and prepaid expenses.

Seller concessions:

Cannot exceed actual closing costs and prepaid items
Cannot be used toward the down payment
May help reduce upfront costs or buy down the interest rate

Some buyers may also qualify for lender credits or down payment assistance programs depending on the loan scenario.

What exactly is a mortgage recast?

A mortgage recast allows a borrower to make a large lump-sum payment toward the loan balance and have the monthly payment recalculated based on the lower balance.

The interest rate and loan term stay the same, but the monthly payment is reduced. Not all loan programs allow recasting, and guidelines vary by servicer.

What makes up my credit score?

Credit scores typically range from 300–850 and are based on five main factors:

Payment history (35%)
Paying bills on time is the biggest factor affecting your score.
Amounts owed (30%)
High credit card balances compared to limits can lower your score.
Length of credit history (15%)
Longer, positive credit history generally helps improve scores.
Credit mix (10%)
A healthy mix of installment loans and revolving accounts may help your score.
Recent credit activity (10%)
Multiple new accounts or credit inquiries in a short time can negatively impact your score.

How much seller assistance can we ask for?

Seller concessions cannot exceed the buyer’s actual closing costs and prepaid items.

Conventional Loans – Owner Occupied

Less than 10% down = 3% maximum
10%–24.99% down = 6% maximum
25% or more down = 9% maximum

Conventional Loans – Investment Property

2% maximum

Government Loans

FHA = 6% maximum
VA allows additional seller-paid costs and concessions subject to VA guidelines

Seller contribution limits may vary by loan program, occupancy type, and transaction details.

*Qualifications apply for no down payment VA loans. A down payment is required if the borrower does not have full VA entitlement or when the loan amount exceeds the VA county limits. VA loans subject to individual VA Entitlement amounts and eligibility, qualifying factors such as income and credit guidelines, and property limits. The interest on the portion of the loan that exceeds the value of the dwelling is not tax deductible and the consumer should consult their tax advisor. 100% financing may not include closing costs. This is not a commitment to lend. Qualifications apply. See representative for details. Stockton is not affiliated with any government agencies. Materials are provided by Stockton Mortgage and are not from HUD or FHA. This is not an offer to enter into an agreement. Credit subject to age, property and some limited debt qualifications. Program rates, fees, terms and conditions are not available in all states and subject to change. Other restrictions and limitations may apply.