Aug. 22, 2023

What Exactly IS a Credit Score?


Credit scores may not be something they teach in school, but we're here for you! If you're curious about what they are, you're in the right place. Understanding how credit scores work doesn't have to be complicated!


We'll walk you through the various components that make up a credit score, so you can use that information to help boost your numbers, strengthen your purchasing power and improve your chances of borrowing money, getting a job, renting or buying a home, and purchasing insurance or utilities. Credit scores impact many things, so it's essential to understand them!


So what IS a credit score, anyway?


A credit score is a numerical representation of a borrower's creditworthiness. Lenders use credit scores to estimate lending risk. While the exact calculation models vary among credit bureaus and scoring systems, the following components are generally considered when calculating a credit score. Scores can range from 300-850.


Directly from the Equifax website, the scoring breakdowns are as follows:


  • 800 to 850: Excellent - Individuals in this range are considered low-risk borrowers. They may have an easier time securing a loan than borrowers with lower scores.
  • 740 to 799: Very Good - Individuals in this range have demonstrated a history of positive credit behavior and may have an easier time being approved for additional credit.
  • 670 to 739: Good - Lenders generally view those with credit scores of 670 and up as acceptable or lower-risk borrowers.
  • 580 to 669: Fair - Individuals in this category are often considered "subprime" borrowers. Lenders may consider them higher risk, and they may have trouble qualifying for new credit.
  • 300 to 579: Poor - Individuals in this range often have difficulty being approved for new credit. If you find yourself in the poor category, you'll need to take steps to improve your credit scores before you can secure any new credit.

There are three credit bureaus: TransUnion, Experian, and Equifax. As mentioned before, each bureau uses slightly different models for calculating your score, so there will be differences between the three. Lenders look at all three but often take the middle score when determining creditworthiness.


Payment History


Your payment history is the most significant factor in determining a credit score. It shows whether you have a history of making on-time payments on credit accounts, such as loans or credit cards.


Late payments, defaults, or bankruptcies can have a significant negative impact.


Key Takeaway? Make sure your payments are in full and on time.


Credit Utilization


This refers to the amount of credit you currently use compared to your total available credit limit. A lower credit utilization ratio is generally considered better, as it demonstrates responsible credit management.


Lenders like to see credit utilization under 30%. Higher usage will negatively affect your score.


Key Takeaway? Use your credit cards sparingly and only borrow what you need. It's best to pay credit cards off in full each month. If you carry balances, work to pay them down or off completely.


PS: But don't close them! Closed accounts affect your total purchasing power and the length of your credit history, which can impact your score negatively if it raises your credit utilization ratio or shortens your recorded credit history.


Length of Credit History


The length of time you have been using credit is also considered. A longer credit history provides more data for lenders to evaluate your creditworthiness. It considers factors like the age of your oldest credit account, the average age of your accounts, and the time since your last activity.


Key Takeaway? It's best to keep accounts open, even if they're paid off. The longer you show you've been borrowing money (responsibly), the better. It's also wise to periodically use your credit cards to show activity, such as for gas or groceries, and pay them off promptly.


Credit Mix


This considers the variety of accounts you have, such as credit cards, loans, mortgages, or retail accounts. A diverse credit mix can positively influence your score by showing you can manage multiple financial products responsibly. However, it is not a crucial factor.


Key Takeaway? The more variety, the better. Lenders like to see a mix of credit cards and personal, student, auto, or home loans on your credit history. This factor has less impact but does still affect your score.


New Credit


Opening multiple new credit accounts within a short period may suggest increased financial risk. Scoring models consider the number of recently opened accounts and credit inquiries made by lenders when calculating your score.


Key Takeaway? Take on a manageable amount of debt; only borrow what you need. Lenders like to see reasonably spaced accounts. Also, your score will likely drop a few points when you apply for any new type of credit.


PS: Some types of credit, like mortgages, don't negatively affect your score if you shop around within the same time frame (say, a few weeks). So if you're ready to shop for a home, don't hesitate to get quotes from multiple lenders to compare rates and terms. You won't be penalized for this!


Public Records and Negative Information


This includes bankruptcies, tax liens, civil judgments, and other derogatory public records. Negative information can significantly impact your credit score.


It's important to note that different credit bureaus and scoring models may weigh these factors differently and have their own algorithms for calculating credit scores.


"If there's information in your credit history that's correct, but negative — for example, if you've made late payments — the credit bureaus can put it in your credit report. But it doesn't stay there forever. As long as the information is correct, a credit bureau can report most negative information for seven years, and bankruptcy information for ten years."


You have the right to dispute mistakes on your credit report. For details on this process, visit the FTC's Consumer Advice Page on Disputing Errors on Your Credit Reports.


Key Takeaway? It's important to check your information regularly for fraudulent activity or incorrect reporting. You can obtain your credit report for free at


To Sum It All Up


Improving your credit score requires responsible financial habits and consistent effort over time. This isn't a "quick fix" situation - the key is showing that you can responsibly and consistently manage borrowed funds.


Making on-time payments, keeping your credit card utilization below 30%, and paying off debts can all help boost your score.


Per the FTC's website, "Through December 2023, everyone in the U.S. can get a free credit report each week from Equifax, Experian, and TransUnion at Also, anyone in the U.S. can get six free credit reports per year through 2026 by visiting the Equifax website or by calling 1-866-349-5191. That's in addition to the one free Equifax report (plus your Experian and TransUnion reports) you can get at"


Stay patient and committed to your credit journey. Check your reports regularly for fraudulent activity and dispute errors, and only borrow what you need. You've got this!


If you're ready to explore preapproval and see how much house you can afford, our in-house lender is ready to help!


Click the link below to get started.


May 15, 2023

How Does Real Estate Commission Work?



If you're considering buying or selling a home and curious about how much it will cost to hire an agent - look no further! We'll answer your burning questions and highlight how the commission process works, who gets paid what, and when.


How do Realtors get paid?


Generally, real estate agents are paid by commission when the transaction closes - typically a percentage of the sales price. They don't usually receive hourly or flat fees for their work. You won't need to worry about writing a check to your agent - their payment is disbursed by whatever entity handles escrow, usually a title company.


Who pays the commission?


In most real estate transactions, the listing agent negotiates commission with their seller clients as part of the listing agreement. There is no set percentage rate, but it's common to see 5-6% commissions on most residential home sales.


This commission gets split between the buyer's and seller's agents at closing unless the listing agent handles both sides of the sale. In Texas, this is an intermediary relationship and must be disclosed to both parties in writing.


What does commission cover?


An agent's commission compensates them for a wide range of services - everything from the time, mileage, and fuel for showings to writing and submitting offers. Your agent will negotiate the terms of your sale and manage transaction timelines and crucial deadlines by coordinating with various parties involved, including inspectors, vendors, appraisers, lenders, and the title company.


If you're a seller, this fee covers all marketing and advertising for your property. It includes print items, staging, professional photography, yard signs, open houses, and social media advertisements. Your agent will coordinate showings and get feedback from other agents. They will also handle complicated technical aspects like paperwork and field communication so you don't spend all day answering questions.


Agents are also invaluable when troubleshooting problems as they arise, mainly because a good, experienced agent can anticipate common issues and get ahead of them before they happen.


Bottom Line?


Buying or selling, it pays to hire an agent. According to the National Association of Realtors, "The typical FSBO home sold for $225,000 compared to $330,000 for agent-assisted home sales." That will definitely cover the commission check with plenty left over!


For buyers, you can't put a price on having a personal advocate and guide throughout the purchase process - but if you did, it'd be free! Buyer's agents are paid from the listing agent's commission but legally obligated to act in your best interest, so it's a win-win.


Ready to buy, sell, or invest in 2023? Central Texas has plenty to offer, and so do we here at Duck Brothers Real Estate! Our agents combine detailed local market knowledge with negotiating expertise and first-rate customer service to make your transaction convenient and stress-free. Call 254-613-6326 or visit our website at



Posted in Real Estate
May 24, 2019

5 Aspects of Life in Waco that Will Affect You

Considering a move to Waco, but just not sure if you will be happy here? Here are 5 aspects of life in Waco that could potentially affect you:

Chip & Joanna Gaines. (Need we say more?) But actually, this couple has made Waco famous, and the city is booming because of it. Having the amazingly popular Fixer Upper show linked to our city has brought in tons of visitors, tons of businesses, and tons of… increased property taxes. Granted, if you are moving here from California, then you are going to think Waco is a bargain, no matter what! But for others, it might come as a shock that the property taxes are what they are, and it seems like there’s no sign of things slowing down.

While Waco used to be a sleepier little town, it’s quite bustling now, and that is both a pro and a con. Locals might find themselves complaining about how traffic is suddenly an issue, or how it’s getting harder and harder to find cheap real estate deals if you’re wanting to flip a house and earn some extra cash. However, the constant influx of out-of-towners is great for the economy, which benefits the locals, too. Besides, how awesome would it be to potentially bump into Chip in the aisles of our local HEB? (That’s a Texas grocery store chain, by the way. If you’re unfamiliar, just wait. You’re going to love it!)

children at school

Schools. The greater Waco area has some amazing school districts. And then there are the others. While we could pull you aside and tell you which ones you’ll want to AVOID, it probably wouldn’t be good form, and who wants to talk poorly about teachers and administrators that are out there every day giving it their all, even if it’s an uphill battle?

That said, you’ll have plenty of schooling options in the Waco area and surrounding suburbs. And if you find the house of your dreams but in a school district that’s underperforming or that doesn’t offer the extracurricular options that you are wanting for your children, you may have the option of applying as a transfer student to the district of your choice. Make sure and do the research before you purchase a home, but know that some districts are open to transfers. Additionally, there are many private and charter schools to choose from.

Chamber of Commerce. If you’re not involved in the world of business, you may not be overly interested in activities of our local Chamber, but as a future Waco citizen, it affects you. You should know that the Greater Waco Chamber of Commerce is a motivated, thriving group of leaders who are continually pushing our city to reach its maximum potential. Whether that be through downtown revitalization, event planning, or by recruiting attractive enterprises that will be good for jobs and the local economy: Our Chamber is the greatest. It really is.

Location. Waco proper is home to an estimated 150,000 people, and when you include the surrounding communities, that number increases by 100,000. (Those numbers may have risen even more since the influx of newcomers we’ve had due to Chip & Joanna’s fame.) However, it’s not so big that it has a three-story shopping center, outlet malls, and big city traffic. If you’re wanting more shopping options or missing that stress of being late to work because you’re stuck on the highway, you only have to drive about an hour either north or south to get those big city amenities. (With the advantage of rolling back into town afterwards to recover!)

taco plate

Tacos. We have tons of them. Plenty of delicious options everywhere you turn!

As for what moving to Waco would be like, we can’t predict the future. But what we can assure you is that, in our city, there’s a lot to love. It’s not perfect (no city is), but the PRO’s far outweigh the CON’s. If you’re considering a move to Waco, reach out. We’re Waco-area experts, and it’s our joy to help families find their dream home in our dream city. 


Posted in Living in Waco
April 16, 2019

Investing: How to Determine Whether a Fixer-Upper is Cost Effective

TV shows make finding a profitable fixer-upper seem easy. But in the real world, there are real challenges and decisions to be made.  

Whether you’re buying an investment property or a starter home for your family, there are dozens of factors to consider. How much will it cost to renovate? Are home values rising or falling in the neighborhood? How in-demand is the area? 

Want to make sure your purchase isn’t a money pit? Ask yourself these four questions:

1. Does it have good bones?
We want to avoid expensive repairs that would eat into your bottom line. It’s vital to have structural elements like the roof, foundation, plumbing, electrical and HVAC system inspected. 

2. Is the price comparable to the area? 
The property may come at a fixer-upper price, but how does it compare to others in the area? Let’s also take a look at new developments or zoning laws that could influence future home values.

3. Does it need special inspections?
Fixer-uppers need to go beyond standard inspections. Things like sewer lines, septic systems and pools age with the property, so it’s important to have each evaluated. 

4. What does your contractor think?
Bringing a contractor on board early is essential when creating your renovation budget. We need to estimate the cost of any aesthetic changes or upgrades to avoid over-improving the home.

Remember, it’s not just the sticker price you want to consider when buying a fixer-upper, but the cost of the entire project. 

Do you need help finding the fixer-upper of your dreams? Together, we can evaluate the purchase price, factor in repair costs and determine the future resale value of the home. 

If you’ve already got your eye on a fixer-upper, or want help finding a contractor in our area, get in touch today.

Posted in Real Estate
March 18, 2019

Why Do You Need a Realtor? The Importance of Expertise

Do you really need a real estate agent to buy or sell your home? After all, the Internet is endless, and every penny counts, right?


True, and true. But there are some things you just shouldn’t do yourself.


Buying a home is typically the biggest financial decision you will make, and the process requires lots of time, resources, and even more paperwork. A Realtor® will streamline this experience and offer the peace of mind that comes from working with a professional.


Not all real estate agents are members of The National Association of Realtors®, but those who are must adhere to a strict code of ethics that puts client interests first, demands honesty in advertising, and expects full disclosure of a property’s existing issues or potential problems. Realtors® found in violation of Association policies can face fines, suspension or expulsion.

The Benefits of Using a Realtor

Exclusive Access

Google is great, but there are benefits to using a Realtor® to buy or sell your home. Realtors have access to listings you can’t find through a basic search. They are part of an extensive network and have intimate knowledge of neighborhoods and properties, even ones that are not publicly for sale. Are looking for something specific? A real estate agent can help you find it.

Market and Industry Expertise

Realtors® are gold mines of market and industry knowledge. They know the values of neighborhoods and how those values fluctuate. They have access to valuable local information ranging from school districts and utility pricing to shopping and entertainment.

A Network You Can Trust

Local regulations are frequently updated or amended, and a real estate agent can help you avoid properties needing expensive updates or repairs. Hiring a Realtor® provides you instant access to the network they have been building their entire career. If you need a contractor, inspector, home photographer, furniture rental, or cleaning and landscaping services, your agent can provide you with references to people they know and trust.

A Champion for Your Best Interests

Commission is negotiable, but typical fees can range from 3.5 – 8% depending on the local market. Your Realtor® can better explain your circumstances, but it will be money well spent. Buying or selling a home requires communication and lots of it. Your Realtor® will take and return phone calls, make and keep appointments, handle all of the paperwork related to your sale, and negotiate on your behalf.

Excellent Negotiation Skills

Negotiation is tedious, and it’s wise for buyers to distance themselves from the haggling. Realtors® are skilled in objective negotiation and will consider every option to create the best possible outcome for their clients. If a property needs repairs, agents are capable of advising their clients on reasonable requests and referring them to trusted inspectors and contractors.

Experienced Professionals

Real estate has its own lingo, and Realtors® understand the contracts and various conditions of home sales. They are an excellent resource for advice and industry insight. Your agent will also maintain detailed records of your transaction and can provide these items should any issues arise.

Trust a Realtor®

Home buying is a stressful, frustrating process without a consistent and knowledgeable support system. Don’t let it be a negative experience! Invest your time and money wisely, and hire Duck Brothers Real Estate to help you with one of life’s biggest milestones. We look forward to showing you what Waco Texas real estate has to offer!


If you enjoyed this article, please like us on Facebook for more great tips and tricks, as well as industry insight and Waco area events!


Tiffany Edgecomb is a freelance writer specializing in real estate and lifestyle content ranging from food to personal finance. She’s the founder of The Alphabet Soup Company and has been writing for almost a decade.



Posted in Real Estate
March 4, 2019

How To Save Time and Money with Mortgage Pre-Approval

mortgage pre-approval

Congratulations! You’ve decided to buy your first home! 

You already know real estate is an excellent investment and have an idea of what you want. You’ve been thinking about neighborhoods, number of bedrooms, and visiting furniture stores with stars in your eyes. You’re finally achieving your American Dream!

Buying your first home is incredibly exciting, but don’t get carried away just yet! Before starting your search for the perfect home, take the time to get pre-approved for a mortgage loan. Did you know that not every home will qualify for every mortgage? It’s better to know that sooner than later! 

Pre-Approval Definition

Getting pre-approved for a loan will provide your agent with information about what you can afford and your financing options. Pre-approval clarifies the buyer’s price range, guarantees that amount for a set period, and establishes specific criteria that will save time during your search. 

A mortgage pre-approval letter will take time and stress out of the home buying process, and prevent you from spending unnecessary money.

The Mortgage Pre Approval Process

Clean Up Your Credit!

The first step to getting pre-approved is checking your credit history and scores. Lenders use all three major credit-reporting agencies (Equifax, Experion, and TransUnion) to evaluate your creditworthiness. Resolve any outstanding accounts or collections promptly and get any payment agreements in writing. High credit card balances negatively affect a buyer’s debt-to-income ratio. Clean up your credit and pay down that debt!

What Documents Do You Need?

Once your debts are paid, and any negative reporting is resolved, it’s time to collect paperwork and proof. You will need proof of income, such as W2 forms, pay stubs, and two years of tax documents. Lenders will consider bank and investment account statements alongside evidence of cash savings for down payments. They will verify your employment history and salary, and you will also need to provide photo ID and your social security number.

Types of Home Loans

There are several types of loans, and each has conditions that must be met. Some offer fixed-rate financing; others have variable APRs. Some loans only finance certain types of properties, and others have varying requirements for insurance, down payments, and appraisals.

Loans are considered on a case-by-case basis, and your lender might require additional information or paperwork from you. Cooperating promptly and providing correct and current records will help the approval process go smoothly. Once you've collected all this information, it’s time to decide what type of loan best suits your needs!

Conventional Loans

Conventional loans are fixed-rate or adjustable-rate mortgages from private lenders that are not insured or guaranteed by the federal government. These loans have strict eligibility requirements regarding down payments, interest rates, and income but will finance the widest range of properties. Conventional loans can be used to purchase single-family homes, multiple unit properties, and primary, vacation or rental homes.

FHA Loans

FHA loans are insured by the federal government and offer more relaxed standards than conventional loans. These types of loans are easier to qualify for and require a smaller down payment, making them a great option for first-time homebuyers. The Federal Housing Administration offers a broad range of programs and down payment assistance options. FHA loans can be used to buy single-family homes, vacant property with intent to build, HUD approved townhomes or condos, and manufactured homes with a permanent foundation.

VA Loans

VA loans are guaranteed by the US Department of Veteran’s Affairs for our country’s service members. They offer better terms and low or no down payment but require an eligibility certificate from the VA to qualify. VA loans can be used to purchase existing single-family homes or those under construction, modular homes, or condos/townhomes on the VA’s approved list.

Your American Dream is Our Mission

Having that approval letter in hand will allow you to begin your home search confidently. Let Duck Brothers Real Estate guide you through your real estate journey in Waco, Texas. 

Our company combines a home turf advantage with industry expertise to help our friends find the perfect place to call their own.

Call 254-613-6326 or visit our website to start your home-buying adventure today!

Like us on Facebook for recipes, humor, real estate news, and local events!

Tiffany Edgecomb is a freelance writer specializing in real estate and lifestyle content ranging from food to personal finance. She’s the founder of The Alphabet Soup Company and has been writing for almost a decade.

Feb. 28, 2019

Are Home Warranties Worth It?

home warranty peace of mind

What is a Home Warranty?

A home warranty is a protection plan purchased during the sale of a house to provide coverage for major home systems such as heating, air conditioning, plumbing, electrical, and some appliances.


Home warranties should not be confused with homeowners insurance, nor should they be purchased in place of it. Warranties cover the repair or replacement of a home’s specific components should they fail, while insurance covers major events such as fire or water damage, crimes such as theft or property damage, and the owner’s possessions.

How Much Will it Cost?

These warranties usually cost between $300 - $500 for one year of coverage, plus an additional $50 - $125 service call fee each time the company sends a technician to the home.


Premiums are typically paid in full, but some companies offer payment plans for their products. Service call fees, however, are charged at the time of service.

Is a Home Warranty Worth It?

The Pros

The biggest advantage to purchasing a warranty is peace of mind. These products offer a discounted cushion against any problems that arise in the first year of owning a home.


This is particularly useful if the buyer is unaware of how the previous owner maintained their appliances or home systems. In the event that a costly repair is needed, the warranty will help absorb the majority of the expense and take the stress out of locating a contractor.

The Cons

Warranties restrict the owner’s ability to choose the service provider responding to their claim, and the service call fee must be paid even if the claim is denied and the item in question is left unrepaired.


Most policies have strict limits and terms for repairs or replacement and can deny coverage if the items have been improperly maintained. Unfortunately, premiums are non-refundable, even if you don’t experience any system or appliance failures throughout the year.

Know What Your Plan Covers!

Always carefully review the terms and conditions of any policy to make sure it fits your needs. Take note of payment limits for repairs, replacement terms for items that cannot be fixed, and understand exactly what is (and is not) covered under the policy.


Additional coverage can be purchased for items not included in the standard policy, such as refrigerators, laundry appliances, and spas or pools.

Duck Brothers Real Estate

If you’re interested in looking into home warranty options, Duck Brothers Real Estate can help you select the product that meets your needs and refer you to the companies best suited for providing that coverage. Just ask your Realtor® for more information!


If you’re ready to buy or sell a home, please visit our website for more information!


Like us on Facebook for real estate news, local events, awesome recipes, tools, and resources!

Feb. 15, 2019

Ten Signs of Foundation Problems

foundation problems

As you tour homes for sale in Waco and the surrounding areas, you'll have lots of choices to make. Bedrooms, bathrooms, neighborhoods and school districts are important decisions when searching for a forever home. Dining, shopping, and entertainment are also things to consider. Be sure to learn about the age and characteristics of potential neighborhoods and any problems common to the area.


An important step when buying a home in Central Texas is to carefully check the foundation for any warning signs. Foundation problems are expensive to repair and can seriously affect a home’s resale value. Unfortunately, they are also very common in Texas due to the nature of our climate and soils.

What Causes Foundation Problems?

Foundation issues occur when the soil beneath a home expands and contracts from moisture and drought. These fluctuations interfere with a home’s weight distribution, resulting in major structural issues ranging from sticky doors and windows to a cracked foundation.

It's wise for homeowners to invest in landscaping and irrigation to maintain the health of their property. This keeps soil moisture consistent and good drainage pulls excess water away from the foundation. Such maintenance is important because repairing a foundation is costly and only acts as a stopgap to further problems.

10 Signs of Foundation Problems

When touring a home, be sure to check it carefully for the signs listed below. Take a walk around the outside and carefully inspect the walls and floors as you tour the interior. These are good indicators of a foundation problem and can help determine if you need any further inspections.


  1. Stair-step cracks running through the mortar on a brick home

  2. Visible cracks in the foundation

  3. Sagging rooflines

  4. Doors or windows that don’t close properly

  5. Cracks in the fireplace

  6. Cracks in the tile

  7. Cracks in the walls, particularly around doors and windows or at corners

  8. Floors that feel soft and uneven

  9. Molding/trim pulling away from the walls and corners

  10. Nails pushing out of the drywall

If you see any of these signs, enlist the help of a structural engineer to determine the extent of the damage and which repair method to choose.

Duck Brothers Real Estate

Whether you’re new to Waco or already call Central Texas home, Duck Brothers Real Estate can make your American Dream of homeownership come true!

Our knowledgeable agents can help you choose the perfect property for your needs and guide you through the closing process with skill and ease.

If you’re ready to buy or sell a home, please visit our website for more information.

Like us on Facebook for real estate news, local events, awesome recipes, tools, and resources!

Feb. 6, 2019

Let's Talk Conventional Loans

Conventional Loan

The decision to buy a home seems incredibly overwhelming at first! There are so many parts and pieces in the process to become a homeowner.


Don’t let it get you down, though. Take a deep breath and start at the beginning. The first step is taking the time to get pre-approved for a loan. Pre-approval is important because it will let you know what types of homes match your mortgage and the price range you’re working with. Pre-approval will save you time, money, and stress as you start your home search.


Qualifying for a loan depends on several factors. Lenders will look through your credit history, proof of employment and assets, and examine your debt to income ratio. There are lots of affordable financing options available for almost every budget and situation.


Today, we’re going to talk about the specifics of Conventional Loans.

What is a Conventional Mortgage?

Conventional mortgages are not insured or guaranteed by the government through institutions like the FHA (Federal Housing Administration), VA (Veteran's Administration), or USDA (United States Department of Agriculture). They have strict requirements but also allow borrowers to finance the widest range of property types.


These mortgages are offered by private entities like banks, credit unions, and mortgage companies or government-sponsored enterprises like Fannie Mae and Freddie Mac.


Because conventional loans don’t come with any kind of government assurance in the event of borrower default, they are a higher risk investment for lenders. This can translate to higher interest rates and much stricter qualifying criteria.


Borrowers looking to take out a conventional loan will need to have cash for a down payment, good credit, and meet the debt to income ratio requirements. A 620 credit score will allow you to qualify, but a 740 or greater will help you get a good rate. The preferred debt-to-income ratio sits at 36% and cannot exceed 43%. This ratio includes all your current debts and payments, such as car notes, credit cards, and student loans.


Many people are under the impression that conventional loans are the same as conforming loans, but this is not the case. Conforming loans are simply financial instruments that meet criteria established by Fannie Mae and Freddie Mac, allowing them to be resold on the secondary market. Conventional loans typically meet these standards, but this is not always the case.

Conventional Mortgage Fundamentals

Fixed vs Variable Rates

Interest rates depend on the terms of the loan, including the length of the loan and amount being borrowed. Your credit and employment history will also be considered when calculating interest rates.


Fixed rate mortgages are set, established rates for the life of the loan. Your monthly payment amount will remain the same for the term of your loan.


Variable rate mortgages have fluctuating rates that depend on various market factors. The rate changes can affect your monthly payments, but they do have annual and lifetime caps on how high the rates can go.


Discount points are fees paid upfront to the lender in exchange for a reduced interest rate. One point is equal to 1% of the loan value and usually takes about a quarter of a percent off the interest rate.

Term Lengths & Loan Limits

Conventional loans can range in term length from 10 to 30 years. 15 and 30-year notes are the most common arrangements. A shorter term length will mean larger monthly payments, but will also save you a bundle on interest fees.


The current maximum loan limit for a single-family residence is $417,000. There are exceptions for areas with a higher cost of living that allow borrowers to finance up to $625,000.

Down Payment

Conventional loans require a substantial down payment. Most lenders require a 20% down payment, but some will allow amounts as low as 3%. If your down payment is less than 20%, you will be required to purchase private mortgage insurance.


Private mortgage insurance is a risk-based insurance that insulates the lender in the event of default. The better your credit and financial history, the lower your premiums will be.


A larger down payment translates to smaller monthly payments, helping make your financing more affordable in the long run.

Qualifying for a Conventional Mortgage

Proof of Income

You will need to provide at least one month of pay stubs showing monthly and year-to-date income, as well as two years of tax returns (if you own rental properties or have other non-salary income) and two years of W-2 statements.


In order to prove your financial stability, you’ll need to furnish at least three months of bank statements for checking, savings, and investment accounts.


For conventional loans, you’ll be asked to provide proof of cash for down payment. If the down payment is a gift, you’ll need a gift letters certifying that the money is yours free and clear, and not a loan.

Employment Verification

The lender will contact your current employer to verify your employment history and salary. If you have recently changed jobs, they might also contact your previous employers to verify the length of time you worked there and your salary.

Proof of Identity

You will need to provide a current driver’s license and your Social Security card to confirm your identity and authorize your lender to check your credit history.

Duck Brothers Real Estate

We are in the business of building relationships and giving our friends the best possible experience. We can help you find a reputable mortgage lender and guide you through the approval process with confidence.


Are you ready to reach your American Dream? Call 254-613-6326 or click to speak with a licensed Realtor.


Our experienced agents will make your home-buying experience convenient and stress-free! Our goal is to get you in your dream home as soon as possible! Let’s start today.


Like us on Facebook for local and industry news, useful tools, recipes, and humor.

Jan. 22, 2019

How FHA Loans Can Help You Achieve Homeownership

Finally ready to buy your first home? Congratulations! This is a big, exciting milestone. The journey from deciding to buy a home to closing on one is a long, complicated process. Take a deep breath and start at the beginning. The first step is taking the time to get pre-approved for a loan

Pre-approval is essential because it will let you know what types of homes match your mortgage and the price range you’re working with. Pre-approval will save you time, money, and stress as you start your home search.

Qualifying for a loan depends on several factors. Lenders will look through your credit history, require proof of employment and assets, and examine your debt to income ratio. There are lots of affordable financing options available for almost every budget and situation.

Today, we’re going to talk about the specifics of FHA Loans.

What is an FHA Loan?

The Federal Housing Administration (FHA) is part of the Department of Housing and Urban Development (HUD). The administration has been providing affordable financing since 1934, and they are the largest insurer of home loans in the world.

FHA loans are government-backed loans offered through FHA approved lenders. This insurance provides repayment security in the event of default, giving lenders the confidence to provide funding for a broader range of people and situations due to more flexible qualifying criteria and lower down payments.

Are FHA Loans Right for You?

Due to their relaxed criteria and low down payment options, FHA loans are excellent for both first-time homebuyers and homeowners looking to refinance. There are also loan options available to finance properties requiring construction or energy efficient updates.

Borrowers can purchase a home with as little as 3.5% down. This will affect your monthly payments and influence your interest rate, but it makes the dream of homeownership achievable.

Existing homeowners can refinance up to 97.75% of their existing home.

Buyers have the option of using gifts or grants for down payments and closing costs. You’ll just need to provide gift letters or documentation confirming the money doesn’t require repayment!

Sellers can pay up to 6% of the buyer’s closing costs, which is a great option, especially for first-time homebuyers on a budget.

FHA loans have no prepayment penalties and are assumable, which allows another borrower to take over your existing mortgage at its current rate without refinancing!

Buyers will be happy to note that it’s also easier to get approved for an FHA loan after a financial hardship and the waiting time is shorter than for conventional loans.

FHA Loan Requirements

If you’re curious about what paperwork and information you’ll need to provide during the approval process, our blog over Conventional Loans has a handy explainer. You can read it here!

Credit Scores

FHA loans will accept credit scores as low as 580, but the better your score, the better your interest rate will be.

Loan Terms

FHA loans come in 30, 25, 20, and 15-year terms. There is also a 5-year ARM available for qualified borrowers who are interested in a shorter loan length. Shorter loans will save you bundles on interest, but the tradeoff is larger monthly payments.

Income Requirements

There is no minimum income level! You’ll just need to make enough each month to cover the costs of your mortgage and other financial obligations. The preferred debt to income ratio in FHA lending is 31/43.

Simply put, this means your mortgage payment can't exceed 31% of your monthly income. The remaining 12% covers other types of debt, like credit card payments, student loans, and car loans.

Some borrowers can qualify for up to 55% DTI on a case by case basis.

Down Payment

While the standard down payment is typically 20% of the purchase price, FHA loans allow borrowers to put down as little as 3.5% up front! A lower down payment has drawbacks, however. It will increase your monthly payments and can affect the interest rate you receive.

Mortgage Insurance Premium

Mortgage Insurance Premiums (MIP) are fees used to fund the FHA’s insurance coverage of your mortgage. This insurance protects the lender’s investment if you default. The initial premium is equal to 1.75% of the loan amount, and the insurance is maintained by a small fee added to your payment each month.

Duck Brothers Real Estate

We are in the business of building relationships and giving our friends the best possible experience. We can help you find a reputable mortgage lender and guide you through the approval process with confidence.

Are you ready to reach your American Dream? Call 254-613-6326 or visit our website to speak with a licensed Realtor®

Our experienced agents will make your home-buying experience convenient and stress-free! Our goal is to get you in your dream home as soon as possible! Let’s start today.

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