Know your numbers before you shop

Pre-qualified usually means a lender gave you a quick estimate from what you told them about your income, debts and savings. It is a useful starting point, but nothing has been checked.

Pre-approved usually means the lender has pulled your credit and reviewed documents such as pay stubs, W-2s and bank statements, and has put in writing how much it is prepared to lend, subject to conditions like the appraisal. Sellers take an offer with a pre-approval letter more seriously.

Lenders don't all use these terms the same way, so ask what was actually verified. Neither one is a final commitment to lend.

Conventional

Not backed by the government. Some programs allow as little as 3% down for qualified buyers. With less than 20% down you usually pay private mortgage insurance, which can be removed later.

FHA

Insured by the Federal Housing Administration. Allows a 3.5% down payment with a credit score of 580 or higher and is more flexible on credit. Has an up-front and an annual mortgage insurance premium.

VA

For eligible veterans, service members and some surviving spouses. Often no down payment and no monthly mortgage insurance; most borrowers pay a one-time funding fee.

USDA

For homes in eligible rural and some suburban areas, with household income limits. Often no down payment; has an up-front and an annual guarantee fee.

Eligibility, limits and fees change and vary by lender. A lender can tell you which types you qualify for.

1. 1

   Offer and due diligence

   When your offer is accepted you usually pay a due diligence fee to the seller and earnest money into escrow. During the due diligence period you arrange inspections, the appraisal and your loan, and you can back out for any reason (the due diligence fee is generally not refunded).

2. 2

   Loan approval

   Your lender orders the appraisal, verifies your income and assets, and works toward final approval. Respond to document requests quickly.

3. 3

   The closing attorney

   North Carolina closings are handled by a licensed attorney. The attorney searches the title, arranges title insurance, prepares the settlement figures and conducts the closing. Buyers usually choose the attorney.

4. 4

   Closing Disclosure

   At least three business days before closing, your lender must give you a Closing Disclosure with the final loan terms and costs. Compare it with your Loan Estimate and ask about anything that changed.

5. 5

   Final walk-through and closing

   You see the home once more, then sign at the attorney's office (or by arrangement). Once the deed is recorded, the home is yours.

The North Carolina Housing Finance Agency offers home loan and down payment assistance programs for eligible buyers across the state. Income limits, price limits, credit requirements and program terms are set by the agency and change from time to time, so check the agency's own site for current details.

Its programs are offered through participating lenders, so ask any lender you talk to whether they participate.

Visit the NC Housing Finance Agency (nchfa.com)

Some cities and counties also run their own down payment help. Ask your agent or lender what applies to the town you're buying in.