For many aspiring homeowners, coming up with a down payment is a significant obstacle standing in the way of homeownership. While having a 20% down payment isn’t required to buy a home, it can be challenging to gather enough funds to start the home buying process. Read on to learn about different ways to come up with a down payment.

Increase Savings

Saving money is perhaps the obvious first choice when it comes to collecting a down payment. The process of putting away extra money usually happens gradually, so it’s best to start a dedicated savings account as soon as possible. Increase your savings potential by creating and maintaining a household budget. You might also consider starting a side hustle or asking your employer for a raise to increase your cash flow. Growing your savings will be beneficial when you’re ready to begin your home buying journey, even if you find you won’t need much for your down payment. 

Down Payment Assistance 

Down payment assistance (DPA) programs are an underrated way to partially or fully subsidize your down payment. There are many DPA programs offered to homebuyers at the federal and state level, from both public and private institutions. DPA programs are often tailored to first-time or low-income buyers, but repeat homebuyers may be eligible for certain programs. The DPA funds can come in the form of a grant or a low interest second mortgage that may be repayable or forgiven after a set amount of time. If you’re part of a particular profession, such as teaching or law enforcement, there are DPA programs designed to help you become a homeowner. Taking advantage of DPA allows you to secure your dream home and save for other expenses. Make sure to ask your loan originator if you qualify for any down payment assistance programs.

Gift Funds

Your down payment doesn’t have to come entirely from you; all or part of it can come from family and friends in the form of gift funds. In order to use gift funds in your down payment, have your benefactor send your lender a gift letter detailing the amount given, their relationship to you, withdrawal dates, and a statement that repayment is not expected. Your lender may also need to see accompanying withdrawal and deposit slips to source the money. It’s important to know that if your contributor expects you to repay the gifted money, it will be considered a loan and will be factored into your debt-to-income (DTI) ratio. 

Leverage Your 401(k)

401(k)s are meant to be accessed upon reaching age 59 ½ , but tapping into it earlier can boost your down payment amount if needed. You can either use a 401(k) loan (if offered by your employer), or withdraw funds. Both methods allow you to access cash on hand without going through a lender or credit check. A 401(k) loan lets you borrow against your retirement savings and must be restored within five years with interest. Your employer may pause 401(k) contributions until the loan is paid back. Withdrawing money from your account will lead to a 10% penalty fee, and any amount you remove will be subject to an income tax. You will also forfeit any tax-free retirement earnings that you have accrued. For these reasons, this option is best used only as a last resort. It’s essential to consult with a financial advisor so you fully understand what’s involved. 

Getting a down payment ready doesn’t have to be the thing that stops you from achieving homeownership! If owning a home is something you want to accomplish, it’s ever too early to start saving and preparing for one of the most important purchases of your life.

NFM Lending is not a financial or tax advisor. You should consult a financial advisor to assist with your financial goals.

Declaring bankruptcy is financially and emotionally stressful—it’s a situation no one wants to be in. Filing for bankruptcy is a tough decision, but you can bounce back from it and even become a homeowner. 

Bankruptcy Types

Individuals can either file for Chapter 7 or Chapter 13 bankruptcy, and they have different implications for your finances and when you can start the mortgage process. After the initial filing, a bankruptcy court can declare it as discharged (eligible debts are removed) or dismissed (the court is not proceeding with bankruptcy filings because of unmet requirements). Your bankruptcy status plays a large role in your timeline for mortgage application.

Chapter 7 Bankruptcy

When you file for Chapter 7 bankruptcy, certain assets are sold to repay creditors, and any leftover debt is discharged. This is the more severe of the two, and the bankruptcy will remain on your credit report for 7 years. You’ll need to wait a minimum of two years before applying for a mortgage, but it can be more depending on the loan program. The wait is two years for FHA and VA loans, three years for USDA loans, and four years for conventional loans. Individual lenders may set their own waiting periods, as well. The waiting period starts after your bankruptcy is dismissed or discharged.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is not as extreme as Chapter 7; you can keep your assets and must adhere to a court-ordered debt repayment plan. As long as you continue making payments, your assets won’t be seized. It stays on your credit report for 7 years, but the waiting period to get a mortgage can be as little as 1-2 years depending on the loan program, the status of your bankruptcy (dismissed or discharged), and lender requirements. For FHA, VA, and USDA loans, you have to be at least one year into your repayment plan before trying to get a mortgage. For conventional loans, you must wait two years after your bankruptcy was discharged, and 4 years after a dismissal. Generally, you’ll need the court’s approval before applying for a mortgage if you’re still in Chapter 13 bankruptcy.

Improving your Finances 

No matter what type of bankruptcy is on your record, it’s crucial to take measures to rebuild your finances and make smart financial choices. The mandatory waiting period is a prime time to improve your credit profile and show lenders that you’re responsible and financially secure enough to handle a mortgage. First, create and stick to a budget that covers your basic needs and any recurring bills. Gradually, you should ideally see more money in your pocket. Put some of that extra cash into savings so it can be used for a down payment or other housing costs. Strengthen your credit score by always making on-time payments, paying in full whenever possible. Don’t max out your credit cards or apply for new ones to keep spending. Avoid taking on unnecessary debt, and lower your debt-to-income ratio (DTI) by paying down existing debts. Repairing your finances won’t happen overnight—it takes time and consistent work.

Things to Consider

When you’re in a better position to start the homebuying process, government-sponsored loans are an excellent choice to consider, as the waiting periods are shorter and have more flexible requirements than conventional loans. Bankruptcy can be caused by a number of issues, both within and outside of your control. Some loan programs may reduce the waiting period if your bankruptcy was caused by a one-time, extenuating circumstance that is well-documented (such as a medical emergency). You might need to provide your lender with a letter of explanation if an extenuating event caused your bankruptcy. Regardless of what type of bankruptcy is on your record, speak with a loan originator to see what options are available for your situation.

Bankruptcy may feel like a death sentence, but it doesn’t have to be. The speed bump that bankruptcy puts in front of homeownership can be used to your advantage by taking steps to restore your finances. When you’re financially, mentally, and emotionally prepared for homeownership, you’ll be set up for success. 

If you have any questions about the home buying process, contact one of our licensed Mortgage Loan Originators. If you are ready to buy a home, click here to get started!

NFM Lending is not a debt settlement company or credit repair agency. Speak with a licensed financial advisor regarding your unique financial situation.

LTV’s can be as high as 96.5% for FHA loans. FHA minimum FICO score required. Fixed rate loans only. W2 transcript option not permitted. Veterans Affairs loans require a funding fee, which is based on various loan characteristics. For USDA loans, 100% financing, no down payment is required. The loan amount may not exceed 100% of the appraised value, plus the guarantee fee may be included. Loan is limited to the appraised value without the pool, if applicable. Qualifying credit score needed for conventional loans.

Every homebuyer wants a great mortgage rate, but what exactly goes into how the rates are set? No, it’s not astrological movements or cloud formations; it’s a variety of financial and economic elements. Learn how these factors impact how mortgage rates are determined.  

Your Finances

Credit Score

You don’t need a “perfect” credit score to buy a home, but having a strong score gives you access to more competitive interest rates and programs. Your credit score is a significant metric in predicting how likely you’ll be able to pay back the mortgage. Even if you’re not thinking of buying a home in the near future, build up your credit score now so it’s primed for when you’re ready.

Debt-to-Income Ratio (DTI)

Having a high debt-to-income ratio (DTI) means you have little money left after paying your current bills, and it can lead to paying higher interest rates. Take steps to pay off debts, especially high interest ones like credit cards. 

Loan-to-Value Ratio (LTV)

The loan-to-value ratio (LTV) also factors into your rate. If you’re seeking a mortgage that covers over 80% of the home’s price, it’s considered a high LTV and is considered riskier. You’re more likely to be offered a lower rate if your LTV is 80% or under, and you won’t need to pay private mortgage insurance (PMI). 

Down Payment

Though having a 20% down payment is not necessary for all home buying programs, the amount you’re able to contribute to a down payment can affect your mortgage interest rate. Lenders view borrowers who can put down more money upfront to be less risky, and can offer lower rates. The down payment amount can also lower your LTV.

Mortgage Points 

Though it is entirely optional, paying mortgage points at closing (aka, buying down the rate) is another way to lower your interest rate. One point equals 1% of your mortgage, and buying additional points will minimize your rate even further. The discounted rate stays with the loan until you refinance or pay it off.

Federal Reserve Actions

The Federal Reserve is always a hot topic whenever mortgage rates shift, but they don’t actually set mortgage rates. Instead, they determine the federal funds rate, which is how much interest banks are charged for borrowing from the Fed and when exchanging money with other depository institutions. The Fed considers various market indicators when they decide to change the federal funds rate. These factors include: economic growth, inflation, unemployment, the housing market, and the overall health of the economy.

The funds rate has a direct effect on rates for adjustable-rate mortgages (ARMs), home equity lines of credit (HELOCs), and home equity loans, all of which are based on an index. When it comes to fixed-rate mortgages, the funds rate has a more indirect impact as it can spur demand in the bond market. For example, a lower funds rate boosts bond prices and investor demand, leading to lower mortgage rates. Conversely, increasing the funds rate can lessen bond prices and demand, resulting in higher mortgage rates. 

The Bond Market

Mortgages are largely based in the mortgage-backed securities market (investors buy groups of mortgages), which is influenced by U.S. Treasury securities (government bonds). Bond prices and rates have an inverse relationship, and shifts in the bond rate often cause similar movements for fixed-mortgage rates. Mortgage lenders use bond market activity as a guideline to set their lending rates.

Your Lender and Loan Programs

Another thing that makes mortgage rates hard to pin down is that lenders have different criteria for eligibility and don’t all offer the same programs and incentives. Rates and requirements are not uniform across all loan programs. Mortgages with shorter repayment terms tend to have lower rates than those with longer terms, but the monthly payment is usually higher. When deciding which lender and mortgage program to work with, be aware that the advertised rate may reflect a best-case-scenario and can differ from what you may be eligible for. Be sure to work with a loan originator to see what options are available for your unique situation.

There’s no such thing as a universal mortgage rate; rates differ depending on individual circumstances, economic conditions, lenders, and loan programs. Even though you can’t control every aspect that affects interest rates, it’s important to manage the ones you can. Working with a reliable lender and improving your finances will give you an edge when you’re ready to buy a home.

If you have any questions about using mortgage points, contact one of our licensed Mortgage Loan Originators. If you are ready to begin the home buying process, click here to get started!

Paying property taxes each year is part of the reality of being a homeowner, but there’s a way you could minimize this expense. A homestead exemption can save you money on your property taxes, and you don’t need to be a farmer to take advantage of it! Learn what the homestead exemption is and how it can give you a break on your taxes.

What is the Homestead Tax Exemption?

The homestead exemption benefits homeowners by offering two things: protection from certain creditors in case of bankruptcy or the death of a spouse, and a reduced property tax. We’ll be discussing the latter here. Property tax is determined by your home’s assessed value, which your local government determines based on several factors. The homestead exemption reduces how much of your assessed value gets taxed, potentially saving you hundreds of dollars in taxes. 

For example, if your home’s assessed value is $250,000 and your property tax totals 1%, you would pay $2,500 in property taxes. However, if you have a homestead exemption of $20,000, only $230,000 of your home would be taxed, lowering your property tax to $2,300 and saving you $200.

The deduction amount varies widely by state and county; sometimes it’s a flat amount or a percentage of your assessed value or acreage. Having a homestead exemption in effect is beneficial outside of the upcoming tax season—it gives you a cushion against rising property values since you won’t have to pay the full amount. 


Each participating state and county will have their own specifications, but a general requirement for eligibility is that you own your home and live in it as your primary residence. You can’t receive an exemption on a second home or investment property, and you’re limited to one per household. If you’re also part of a special population, such as being a senior citizen, a Veteran or surviving spouse, or disabled, you may qualify for additional property tax exemptions. Applying for the homestead exemption usually involves sending proof that you live in and own your home. Some local jurisdictions may require you to refile for an exemption each year, but some may not. If you move, you’ll have to file a new application. Similarly, if you bought a home within the past year, apply for a homestead exemption as soon as possible to reap the tax benefits. Be sure to consult a tax advisor for your area’s terms and eligibility requirements.

Few people like paying property taxes, but having a homestead exemption can ease your tax burden. It’s simple to find out whether you qualify, and any tax savings will truly add up when all is said and done.

If you have any questions about the home buying process, contact one of our licensed Mortgage Loan Originators. If you are ready to buy a home, click here to get started!

Terms and requirements vary by location, programs may not be available in all areas. NFM Lending is not a tax advisor. You should refer to a licensed tax advisor and your local area’s department of assessment and taxation regarding your unique financial situation.

The Veterans Affairs (VA) loan is just one benefit military members can use as a reward for their service. Its generous terms and flexible requirements have helped numerous families achieve homeownership, but there are still things many people get wrong about the VA loan. Here are some of the most common myths about the VA loan, debunked. 

Myth: The VA loan is Only for Active-Duty Military and Veterans

You wouldn’t be wrong if you thought active-duty service members and veterans were the most prominent beneficiaries of the VA loan, but they aren’t the only populations that can use it. National Guard and Reserve members may be eligible for a VA loan if they have served six or more years or have at least 90 consecutive days of active duty, as well as an acceptable type of discharge as determined by the VA. Surviving spouses may also be able to use a VA loan if they can obtain a certificate of eligibility (COE) and meet certain conditions, like remaining unmarried at the time of application and if the Veteran died while serving or due to a service-related disability.

Myth: The VA Loan is Bad for Sellers

The VA loan has made homeownership possible for millions of military families since 1944, but there are still sellers who are wary of it. Some believe that because VA loans don’t require a down payment or private mortgage insurance (PMI), military buyers are riskier. This couldn’t be further from the truth. VA financing can fully cover the mortgage prices in many cases, and it will guarantee up to 25% of the loan in case of default. VA buyers also have more money to put towards the offer.

Another misconception is that sellers have to pay all of the buyer’s fees at closing. To maintain affordability, the VA limits homebuyers from paying certain unallowable fees. The VA states sellers have to pay for a termite inspection, real estate agent fees, brokerage fees, and buyer broker fees. There are more closing costs that VA buyers can’t pay, but that doesn’t mean the seller is obligated to pick up the tab for all of them. Lenders and agents may cover some of the unallowable fees, and buyers can negotiate with sellers to pay them. It’s important to note that sellers can’t pay more than 4% in seller’s concessions for a VA loan.

Myth: VA Loans Have No Closing Costs

Even with the cost-saving features of the VA loan, it’s not entirely a free ride. There are still closing costs, including a funding fee unique to the VA loan. The funding fee is a one-time payment that helps reduce taxpayer expense to fund the loan. The fee ranges from 1.4-3.6% of the loan amount depending on the down payment amount. Though a down payment isn’t required, the more you can contribute, the lower your fee. You can pay it upfront at closing, roll it into your mortgage, or ask the seller to pay it. For any subsequent uses of your VA loan, the funding fee can be higher if you have a down payment less than 5%. There are a few situations in which the fee may be waived, like in cases of a service-related disability or for an eligible surviving spouse. If you’re concerned about closing costs, consider asking your lender for a lender credit or negotiate with the sellers for a contribution. Again, sellers can pay up to 4% in closing costs.  

Myth: The VA Appraisal is Too Strict

The mandatory VA appraisal is another thing that makes the VA loan distinct from other loans, and many people are intimidated by it. Properties need to have an appraisal done to assess fair market value and the home’s safety and sanitary conditions. The appraisal is not the same as a home inspection, as a true inspection is more thorough. An independent appraiser will review the home against the VA’s list of minimum property requirements (MPRs). Issues appraisers will look for include exposed wiring, termite damage, and adequate drainage. If the home doesn’t meet the MRPs, the problems will need to be fixed before proceeding. Sellers and buyers should negotiate expenses. An appraisal also uses housing market data to see whether the proposed loan amount is comparable to that of similarly valued homes. Though the VA appraisal may seem tedious, it’s not much different than a standard appraisal. Homeowners who have maintained their home shouldn’t be too worried about major issues appearing.

Myth: VA Loans Can Only be Used Once

Luckily, the VA loan can be taken out multiple times as long as you have entitlement to use. Entitlement is how much the VA will guarantee the lender if you default. When you first use a VA loan, you have full entitlement. This means you can buy a home at any given price with no down payment, so long as your lender approves you for a mortgage. If you’ve fully paid off and sold your VA-financed home, your full entitlement is restored for your next purchase. It’s even possible to have more than one loan out at once if you use any remaining entitlement to buy another home. Be aware that if you’re buying with reduced entitlement, you’ll likely need a down payment.

The VA loan isn’t just a lucrative loan program, it’s a benefit you’ve earned through service. The intricacies of the loan have led to misunderstandings among military homebuyers and home sellers alike, which is why it’s crucial to work with a lender and real estate agent with a strong track record of working with VA homebuyers. 

If you have any questions about the home buying process, contact one of our licensed Mortgage Loan Originators. If you are ready to buy a home, click here to get started!

For informational purposes only. You should refer to the VA for specific guidelines regarding your eligibility.

“Amortization” might sound complex and confusing, but it’s easy to understand once you know how it works. 

What is Loan Amortization? 

Amortization is when a loan’s balance is gradually reduced through routine payments. With an amortized loan (such as a mortgage), most of the initial loan payments will go towards the interest but will increasingly go towards the principal over time until the balance is zero. An amortized repayment structure makes becoming a homeowner more accessible and beneficial. Instead of having to pay back all the money you borrowed to buy a home in one large payment, amortization lets you pay off your mortgage in manageable chunks. Another perk is that with every principal payment, you’re increasing home equity and paying down your home faster. Making extra principal payments can help you pay off your mortgage early and save money in the long run; check that doing so will not result in prepayment penalties. 

Mortgage Amortization: A Closer Look

If you were to get a 30-year fixed-rate mortgage of $290,000 at 5% interest, your monthly payment would be $1,556.78. In the first month, $1208.33 of that payment goes towards the interest, while only $348.45 is distributed to the principal. Each month afterward, a little bit more of the payment contributes to the principal. 

Source: NFM Lending, for illustrative purposes only

At 196 months, the portion that goes to your principal becomes greater than the interest portion, $783.92 versus $772.86, respectively. This shift continues for the rest of the 30-year loan term until the loan is paid off.

Source: NFM Lending, for illustrative purposes only

Most adjustable-rate mortgages (ARM) are amortizing, too. For hybrid ARMs where there’s an initial fixed-rate period, the loan follows a normal amortization schedule. Once the adjustable period begins, the loan will re-amortize each time the rate and monthly payment adjust. When you’re reviewing mortgage options with your Loan Originator, they’ll give you an amortization schedule so you can see the payment breakdown. You can also use an amortization calculator to get an estimate for a rough calculation.   

Maintaining a mortgage is a massive financial responsibility, and it takes time to pay it off. When you understand how mortgage repayment is structured, you can make better financial decisions and feel confident that you’re breaking down your loan, one payment at a time.

If you want to know more about how to pay off your mortgage faster, contact one of our licensed Mortgage Loan Originators. If you are ready to begin the home buying process, click here to get started!

Just a few months ago, it was an intense seller’s market in many parts of the country. Now the pendulum is swinging the other way, and buyers have more ground to stand on. The market is still tight, but there’s a bright light for buyers: seller concessions are back.

What are Seller Concessions?

Seller concessions are costs that sellers offer to cover to help sell the home. Buyers can use seller concessions or seller credits as a negotiation tactic to save money, and it can be especially powerful in a populated buyer’s market. In return for receiving a concession, buyers can offer sellers incentives that ease their burden, such as offering a rent-back agreement or not asking for pricey repairs. It’s more common for sellers to offer concessions if they’re trying to sell the house quickly or are trying to get an edge over other sellers in the market. Although the goal of concessions is to make the sale more appealing to buyers, they should benefit both parties.

Types of Seller Concessions

Temporary Rate Buydowns

You can negotiate with the seller to get a lower initial interest rate through a temporary rate buydown, which allows you to save money for the first few years of your mortgage. In this scenario, the seller provides funds to be deposited in your escrow account to subsidize the loan’s interest for a limited time period. Some common types are the 2-1 and 1-0 buydown. With the 2-1 buydown, the interest rate is lowered by 2% for the first year and 1% for the second year. Afterwards, you’ll pay the full rate for the life of the loan or until you refinance. The 1-0 buydown has the same setup, but the discount period is shorter.

Closing Costs

Concessions that pay for a portion of the buyer’s closing costs are one of the most common types of seller concessions. The title search fee, origination fee, home inspection, application fee, and discount points are just some of the things that make up closing costs, which the buyer normally pays for. If conditions are favorable, it may be worth asking the seller to cover some of these expenses—closing costs are typically 3-5% of your mortgage!


After the home inspections results are released, some buyers may be unsure about closing on a house that needs significant repairs. To keep the sale moving forward, sellers may offer concessions that will subsidize improvements after the house is sold. This strategy can be a great way to reduce the buyer’s out-pf-pocket costs for any home repairs and lets them choose their own contractors. It also prevents closing from being delayed by contractors and gives buyers peace of mind that they can afford to fix up the home. Some sellers may offer home warranties as a buyer incentive, too.

Things to Consider

Limits on Concessions

If you’re thinking you can get the seller to pay all your buyer costs, think again. Sellers are limited in how much concessions they can pay, and these restrictions are meant to prevent housing market inflation. The allowable amount will depend on the type of loan you use and some individual factors:

Conventional: If you’re buying a primary or secondary home, sellers can offer up to 3% of the mortgage price in concessions if you have less than a 10% down payment. The percentage increases to 6% if you have at least a 10-20% down payment, and 9% with a down payment over 25%.

FHA: Sellers can only pay up to 6% in concessions.

VA: Concessions cannot exceed 4% for certain closing costs, including the VA funding fee.

USDA: 6% is the limit for seller contributions.

Don’t Be Greedy

Remember, seller concessions are part of the negotiation process, which means the terms should be mutually beneficial for you and the seller. If your requests are numerous, overly expensive, or ridiculous, it could jeopardize the sale and your relationship with the sellers. The sellers may reject or counter your request; they’re not obligated to accept your proposal. Don’t let the desire to save a buck blind you from what should be your ultimate goal: closing on a home.  

Ask Your Agent

Your real estate agent is your guide and liaison during the homebuying process, so it’s essential to consult with them if you’re interested in asking for concessions. Your agent will have a better understanding of the situation and can assess whether you’re in a good position to ask for seller credits. They can also help you determine whether your requests are reasonable and will create a detailed offer letter to present to the sellers.

Both buyers and sellers can use seller concessions as a bargaining tool to get something they want out of the sale. When used strategically in the right circumstances, they can make each party feel more comfortable about the deal.

If you have any questions about the home buying process, contact one of our licensed Mortgage Loan Originators. If you are ready to buy a home, click here to get started!

Everyone knows that computers can be hacked, but homes? It’s true—house hacking is a thing, but it has nothing to do with the internet or databases. More and more people are turning to house hacking to afford homeownership, but is it right for you? 

What is House Hacking?

House hacking is an investment strategy where you buy a property to serve as your primary residence, with the intention of renting out part of it to subsidize your mortgage. You can even become a house hacker if you already own your home. The concept of house hacking isn’t exactly new, but it has recently become more popular among aspiring homeowners due to increasing housing costs.

Traditionally, house hacking involves buying a multifamily home (like a duplex) and renting out the other unit, but that’s not the only way you can get into house hacking. You can put individual rooms, entire floors, or accessory dwelling units (ADU) up for rent—there can be a lot of flexibility! Additionally, you can decide whether you want to host short or long-term renters.

The “hack” in house hacking stems from the idea that you can buy a home and make passive income from it without going through the more complex steps of purchasing a home outright as an investment property. When you buy an investment property that you don’t plan on living in, you’ll have fewer mortgage options available and usually, a larger down payment. With house hacking, your investment property is your primary residence, so you can take advantage of a conventional, FHA, or VA loan to finance your house. This method can make buying a home more affordable, especially for new homeowners.

Financial Benefits

Perhaps the most enticing part of house hacking is being able to significantly lower or even eliminate your monthly mortgage payment. The passive income generated from renting out your home will reduce your financial burden, saving you money over time. As a homeowner, you can reap all the benefits of homeownership, including property appreciation, certain tax deductions, and building home equity. In fact, building home equity with this investment strategy may be quicker than if you were the sole party making payments.

Things to Consider

Landlord Responsibilities

Homeownership means you no longer have a landlord, but house hacking means you’ll become one yourself. This type of responsibility is not for everyone. As the owner, you’ll be responsible for fixing and maintaining the property, or at least paying for repairs. The tenants you choose can make or break a house hacking venture (and your sanity), so it’s essential to vet and find candidates who are responsible and reputable. Still, you may have to have uncomfortable rent conversations with your tenants. You can hire a property manager to help with daily operations, though it will affect your total gains.

Local Limitations

Before you create a rental listing, make sure you’re allowed to rent out your house. If your neighborhood has an HOA, they may have guidelines about how you can use the property. If you’re thinking of renting out an ADU, such as a furnished basement, you need to check with your local zoning authorities, as ADUs must meet certain requirements for safety and livability.


Just like having roommates in a rental, house hacking limits your privacy. Consider whether your lifestyle is compatible with sharing spaces with other people. Would having tenants cramp your style if you also live with a partner or have children? Of course, the amount of privacy also depends on how your home is set up; ADUs and multifamily properties will give you more privacy.

Cost Analysis

House hacking can be lucrative, but it isn’t a get-rich-quick scheme. Make sure to consider the financial impact of any investment. Location is always a key factor when buying a home, and if you’re hacking your house, it will affect rental demand and how much you can reasonably charge for rent. You can use rental listing sites to gauge how much to charge for rent in your area. If you’ve found a promising property, compare your estimated mortgage payments with the total estimated rent payments. Don’t forget to factor in cost of repairs! Understand that there may be periods of vacancy, so be sure you can still cover your mortgage if you’re not bringing in full rental income.

Be sure to get pre-approved and work with a lender and real estate agent who understand the concept of house hacking. Their knowledge will be invaluable when you’re considering properties and loan types. House hacking may not be for everyone, but it can be an accessible way to make homeownership possible.

If you have questions about home equity, contact one of our licensed Mortgage Loan Originators. If you’re ready to begin the home buying process, click here to get started!

You probably already know that credit score plays an important role when buying a home, but understanding how credit affects your ability to buy a home goes beyond a simple number. Let’s breakdown some of the most common credit questions from aspiring homeowners.

Will it help my credit score to close a credit card I’m not using?

You might think closing a seldom-used credit card will improve your credit score, but this is the last thing you should do. When you close your credit card, you’re reducing your available credit, which will drive down your score. Instead, use your card for small purchases every now and then and pay it off in full. Consider designating it for minor recurring payments, such as a subscription service. Doing this will prevent the bank from closing your account for inactivity and can benefit your score since you won’t carry a balance.

What’s the difference between a FICO score and the score I get from free credit score sites?

You’ve probably seen ads for sites that let you check your credit score for free, but they don’t always paint a full picture of your credit health. If you’ve relied on the information from one of these sites, it may come as a surprise if your lender reveals a credit score that’s very different. FICO is the primary model mortgage lenders use to review your credit, but some credit sites use a totally separate model called VantageScore. Since FICO scores and VantageScores are calculated differently, there can be a sizable disparity between the numbers. For home buying purposes, it’s better to refer to your FICO score. To get your free FICO credit score, visit the Experian site.

Will it hurt my credit score to apply with other lenders?

When you find a lender to get pre-approved, they’ll perform a hard credit inquiry to get a detailed look at your credit situation. A hard credit pull will slightly decrease your score because your credit report is being accessed for application approval, but soft credit pulls (like checking your credit score) won’t affect it. The drop is usually 5-10 points, and your score will rebound in a few months if there are no negative changes to your credit. If you still aren’t sure which lender to choose, you’ll have a 3 to 4-week window where any hard mortgage credit pulls will be counted as a single inquiry and won’t further reduce your score. If your credit goes through another hard inquiry after that timeframe, it will affect your score. 

What’s the quickest way to increase my credit score?

Increasing your credit score is like working out—you won’t see the results you want overnight. The best way to improve your credit score is to establish and maintain good credit habits.

Paying bills on time may not sound like a huge deal, but payment history accounts for a whopping 35% of your FICO score! Consistently making timely payments will increase your credit score and make you seem more reliable as a borrower. Keep in mind that making the minimum payment will prevent your score from falling if you’re tight on funds, while paying it in full will have a larger impact on your credit.

Just because you’re able to pay with credit doesn’t mean it’s a good idea to use all of it at once. The percentage of how much credit you’re using in relation to available credit is called your credit utilization ratio, and it accounts for 30% of your FICO score. When you’re close to your credit limit, it hurts your score and makes you appear financially risky. Aim to keep your utilization ratio low and use around 30% of your available credit. You can determine your ratio by dividing the total credit limit of your credit cards by your total balance and multiply that number by 100.

Paying down debt is another way to improve your score. It will also reduce your debt-to-income ratio (DTI), which will increase how much you can afford for a home.  Pay special attention to debt with high interest, as it will accumulate rapidly.

I’m not planning on buying a home right now, but how can I financially prepare when I’m ready?

Even if homeownership isn’t in your immediate future, it’s never too early to put yourself in a solid financial position for when the time is right! Improving your credit worthiness will play a significant factor in being able to buy a home, but there are other areas that are important, too.

The period where you’re gearing up to buy is an ideal time to start a home savings fund. If you can put a portion of your paycheck into savings each month, the amount will grow over time. You might also want to create a budget to manage your expenses and see where you can cut back. While the “requirement” of needing 20% down to buy a home is a misconception, it’s wise to have a solid level of savings when you apply for a mortgage. In addition to reducing existing debt, avoid taking out new, unnecessary debt. This doesn’t necessarily mean you need to be debt-free to buy a home, but having fewer debts means a lower DTI ratio and more purchasing power.

There are numerous myths about credit out in the wild, and it’s easy to believe them if you’re unfamiliar with how credit scores work. When you have a basic understanding of best credit practices, you can be better prepared when you apply for a mortgage.

If you have any questions or want more information about loan programs, contact one of our Licensed Mortgage Loan Originators. If you are ready to begin the homebuying process, click here to get started!

NFM Lending is not a credit repair agency, financial advisor, or debt settlement company.

Purchasing a home is one of the most significant decisions you’ll make in your life, and you shouldn’t entrust that task to just any lender. You want to be sure there are real, caring people working on your loan application who know what to do. With September being National Mortgage Professional Month, we’re taking a special inside look at a few of the amazing people who make mortgages happen at NFM Lending.

Danny Allbritton, Loan Originator, NMLS#1618459

Introduce yourself and what you do at NFM.

Hello! My name is Danny Allbritton, and I have been at NFM now for about six years now. I am a Mortgage Loan Originator located in Columbus, OH, and I am currently licensed to originate mortgage loans in Ohio and Maryland and am looking to expand to many other states soon! 

What does your average day look like?

My average day consists of prioritizing all of my tasks to fit in a day. I start my day about 4-5 times a week at 4:15 am to workout at 5:00 am. Doing this has really helped me mentally prepare for what each day will throw at me. Being in sales, you can only plan your day so much before multiple impromptu events happen. I make a to-do list each night so I know what my priorities are for the next day. When I get to the office, I review my list and prepare for any meetings I have for that day. I will call new clients in the morning, as well as touch base with all my real estate partners to provide them with updates on any communication I have had with their clients. My number one job is to help more families get into their homes while alleviating as much stress as possible. Whether that be a first-time homebuyer or a repeat buyer, it brings me joy to assist in the financing process for them. On a daily basis, communication is my number one priority for my clients and real estate partners. I average 3-4 hours per day on the phone to keep everyone updated and on the same page and to keep the ball rolling. 

Matt Beard, Processor

Introduce yourself and what you do at NFM.

My name is Matt Beard, but all my work colleagues call me Matty. I started with NFM in 2016, with no mortgage or office experience. I was hired as a Junior Processor, which is a great entry level position for anyone looking to start a career in the mortgage industry.

I was extremely fortunate I had the opportunity to learn from 2 of the smartest people I know in the mortgage industry, my branch’s Sales Team Lead and Operations Manager. They are both a wealth of knowledge, and truly great people. Having great mentors really help to expedite my career growth, and I was promoted to Processor about 8 months after joining the team. Each branch has a different workflow, but for my particular branch, all the processors are contract to close. So once the contract comes over and the application is executed, we manage the file all the way through closing.

What does your average day look like?

I start my day by reviewing my top 5 priorities list, which I write down the day prior. We work in a very fast-paced environment, so it’s important to manage your priorities because new issues are always popping up, and it’s very easy for the day to get away from you. I then clear my new emails/voicemails from the day prior, which is typically in the range of 40+ emails. Not all of those will require a return action, but it’s important to get them cleared early because we want to make sure we reply to clients in a timely manner. Not to mention there’s a whole lot of new emails on the way.

Next, I like to concentrate on my approved loans so I can work on getting them back in to my Underwriter for the clear-to-close (CTC). The Underwriter’s SLA (Service Level Agreement) turn times have a 4pm cut-off, so I really like to get all my resubmissions in prior to 4pm so I no they will be reviewed the following day for CTC. I spend the last couple hours of the day working on new submissions. It’s typically a bit quieter and there are fewer interruptions, so it’s easier for me to properly review new loan files. I cannot speak for any other lenders, but for the processing position at my branch, we take the time to pre-underwrite the loan file before we submit to our Underwriting department.

NFM truly cares about each and every client. We want to put you in the best financial position possible and get you into your dream home, perfect second home, or great investment property. We are going to answer the phone when you call, and we take pride in thoroughly explaining the process and the “why” behind our documentation requests. If something comes up during the loan process and we run into a guideline issue that we cannot find a workaround on, we will help you find another lender that has more flexibility and can get you approved! We never want to lose a deal, but the most important thing is to make sure the customer is happy and that we are providing a WOW service to our clients and referral partners.

Vanita Singh, Underwriter

Introduce yourself and what you do at NFM.

I am a Level 1 Conventional Underwriter working remotely for NFM for the past year. I was in the mortgage industry many years ago as a processor and underwriter assistant. I left the business after the market crash in 2007. I spent the next few years working in risk management for an online bank and then took some time off to be a stay-at-home mom to my two boys.

What does your average day look like?

My typical workday includes reviewing at least two new loans for conditional approval. The review includes evaluating credit history, income documents, and assets. In that review, I am looking to see that the loan applicant is financially responsible and has the ability to repay the mortgage loan. I look for discrepancies or possible misrepresentation of facts. I spend some time researching information and then requesting explanations from the borrowers via their mortgage processors.

Many cases involve reading and interpreting guidelines to ensure the final approval is allowable under the rules set in place. Some situations that fall into a gray area need to be brought to senior underwriters and managers to come up with an out-of-the-box solution.

During the course of the day, I also respond to emails from processors, closers, and team leads to make sure loans get closed and funded in a timely manner. The remainder of the time is spent reviewing conditions on approved loans such as property appraisals, title work, explanations for discrepancies, additional assets, and income.

Sarah Rogers, Closer II

Introduce yourself and what you do at NFM.

My name is Sarah Rogers, and I am a Closer with NFM Core. I have been in the finance industry for 14 years, of which the past six have been in the mortgage industry as a Closer.

What does your average day look like?

On an average day, I receive multiple communications on loans, inclusive of notification a loan is clear-to-close and ready to finalize. I review each file to ensure accuracy by reviewing data, conditions, and figures to insure we have all items needed before closing. I communicate with the title company to complete the final numbers and review that we are meeting program guidelines, as well as state and federal regulations. Once NFM balances with title and agrees on the final numbers, the closing disclosure is sent to the branch for their review and approval. Once this final step is complete, the closing package is prepared and sent to the title company.

These are just some of the passionate, friendly, and hard-working people who make up NFM Lending. Throughout our many branch locations and at our corporate headquarters, there are numerous people essential to the mortgage process who care about the needs of borrowers. We hope this glimpse into the daily life these mortgage professionals has demystified what happens behind the scenes and shown how NFM strives to create a personable mortgage experience.

If you have questions about becoming a homeowner, contact one of our licensed Mortgage Loan Originators. If you’re ready to begin the home buying process, click here to get started!