Paperwork, a calculator and a pen on a kitchen table

Financing Basics

Understand your true monthly payment, and buy with confidence in the East Bay.

6 sections33 steps~8 min read

Tick a step when it is done. Progress is remembered on this device only (it is not saved to an account), nothing is sent anywhere, and the whole guide reads perfectly without ticking a thing.

Prefer to just ask?

Send the two or three questions you actually have. It replaces the twenty back-and-forth emails that usually come first.

Get in touch

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Pre-qualification vs pre-approval

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Know the difference: pre-qualification is a quick estimate based on information you share.
A pre-approval is based on verified documents and carries more weight with sellers.
In competitive areas, get pre-approved before you seriously tour homes.

What lenders look at

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Income and employment, your ability to repay.
Credit and history, your risk profile.
Assets and down payment, the cash to close plus reserves.
Avoid big new debt before closing: cars, furniture financing, large card balances.
Keep cash and paperwork organised, it speeds underwriting.

Your real monthly payment

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Calculate PITI: principal, interest, property tax and homeowners insurance.
Add HOA dues, if the home has them.
Add MIP if you are using an FHA loan.
Add PMI if you put less than 20% down on a conventional loan.
Budget for utilities and maintenance.
Plan a “homeownership buffer”, money set aside each month so repairs are not a surprise.
Stress-test the payment: if it rose by a few hundred dollars, would you still be comfortable?

Common loan options

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Conventional: a popular choice, where PMI may apply under 20% down and is often cancellable later.
FHA: often used with lower down payments, as low as 3.5% in many cases, and includes mortgage insurance premiums.
VA: for eligible veterans, active-duty members and some surviving spouses, with no down payment and no PMI, though other VA fees may apply.
Jumbo: common in the Bay Area for higher loan amounts, with tighter underwriting and stronger reserves.
Ask your loan officer to compare 2–3 programmes you qualify for, including cash to close, total monthly payment and PMI/MIP details.

Loan Estimate & Closing Disclosure

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Use the Loan Estimate as your shopping tool for comparing lenders.
Expect the Closing Disclosure at least 3 business days before closing.
Check the “big 3” first: loan amount, interest rate and monthly payment.
Confirm whether that monthly payment includes taxes and insurance.
Compare the Loan Estimate against the Closing Disclosure, and use the 3-day review period to fix anything that does not match.

Cash to close

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Down payment.
Closing costs: loan fees, escrow and title fees, prepaid taxes and insurance.
Inspection and appraisal costs, where they are not rolled in.
Reserves, since lenders often like to see money left over.
Ask your lender for a “Cash-to-Close Estimate” early, shown side by side across loan options.
Keep a cushion after closing for moving costs, initial repairs and surprises.
Ask about seller or lender credits and buy-downs that could reduce closing costs.
Budget moving and setup costs: truck, furniture, appliances, locks, internet.

Keep reading

Get in touch

A checklist cannot tell you about the house

It can tell you what to do next. It cannot tell you what the comparable three doors down closed at. That part is a conversation.

All content is provided for informational and educational purposes only. Nothing here constitutes legal, tax, financial, or real estate advice, nor does it create an agency relationship. For advice specific to your circumstances, consult appropriate licensed professionals.