Common questions for W-2 employeesFor borrowers paid by an employer: salary, hourly, overtime, bonus, or commission on a W-2. Twenty-five of the questions people search and ask AI most often, answered in plain English for Texas. |
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All FAQs W-2 employees Self-employed Investors HELOC Reverse mortgages Down payment help
1. What is a mortgage?
2. How much house can I afford on my W-2 income?
3. What salary do I need for a $400,000 mortgage?
4. How is hourly pay counted versus salary?
5. Does overtime, bonus, or commission count?
6. Do I really need 20% down?
7. What credit score do I need?
8. What documents do W-2 employees need?
9. What is the difference between pre-qualification and pre-approval?
10. Does getting pre-approved hurt my credit?
11. What is the difference between conventional, FHA, VA, and USDA?
12. What is PMI, and how do I get rid of it?
13. What are closing costs?
14. How long does it take to close?
15. Should I get a 15-year or 30-year mortgage?
16. Can I change jobs while I am applying?
17. Can I use gift funds for my down payment?
18. Can the seller pay my closing costs?
19. How does the Texas homestead exemption work?
20. What should I avoid before closing?
21. What if the appraisal comes in low?
22. What is the difference between interest rate and APR?
23. Should I wait for mortgage rates to drop?
24. Are there first-time buyer programs in Texas?
25. Why use a mortgage broker instead of my bank?
What is a mortgage?
A mortgage is a loan to buy or refinance a home, with the property as collateral. Your monthly payment usually covers principal, interest, property taxes, and homeowners insurance (PITI). Mortgage insurance or HOA dues can be in there too.
How much house can I afford on my W-2 income?
A lender looks at your gross income from paystubs and W-2s, your monthly debts, credit, down payment, and Texas property taxes and insurance. A common starting point is keeping housing near 28% of gross income and all debts near 36%, though many programs allow higher. The number that matters is the payment you can live with, not the maximum you might qualify for.
What salary do I need for a $400,000 mortgage?
Most W-2 borrowers need roughly $100,000 to $130,000 a year if other debts are modest. Texas taxes and insurance make the payment higher than in many states. Rate, down payment, overtime, and your other loans matter as much as base salary. Ask us for an affordability letter instead of a national calculator.
How is hourly pay counted versus salary?
Hourly pay is fine. Lenders usually use your hourly rate times expected hours, then look at YTD and last year’s W-2 to confirm it is stable. If hours bounce around, we average a longer history. Tell us your typical schedule, not just this week’s stub.
Does overtime, bonus, or commission count?
Often, if it has a history and looks likely to continue. Many programs want one to two years of that extra pay. A brand-new bonus may be left out until it seasons. We will show you the number with and without variable pay so you are not surprised.
Do I really need 20% down?
No. Conventional can go as low as 3% down. FHA is 3.5% with a 580+ score. VA and USDA can be 0% if you qualify. Putting 20% down on a conventional loan mainly avoids PMI.
What credit score do I need?
FHA can go to 580 with 3.5% down, or as low as 500 with 10% down. VA and USDA have no official score floor. Conventional often lands around 620, though automated underwriting can go lower. Lenders add their own overlays. Higher scores usually mean a better rate.
What documents do W-2 employees need?
Plan on a government ID, about 30 days of paystubs with year-to-date earnings, one or two years of W-2s, and recent bank statements. Hourly and overtime-heavy files sometimes need extra stubs. You often do not need tax returns unless you have other income. We will send a short list for your file.
What is the difference between pre-qualification and pre-approval?
Pre-qualification is a rough estimate from numbers you provide. Pre-approval is stronger because it usually includes a credit check and documented paystubs and assets. Austin-area sellers take a verified pre-approval much more seriously.
Does getting pre-approved hurt my credit?
A mortgage inquiry can move your score a few points, usually for a short time. Shopping several lenders in a short window typically counts as one inquiry. Do not open new cards or car loans while you shop.
What is the difference between conventional, FHA, VA, and USDA?
Conventional is not government-insured and often prices best with stronger credit. FHA is more flexible on credit and down payment, with mortgage insurance. VA is for eligible veterans, often 0% down and no monthly PMI. USDA is 0% down in eligible areas, with household income limits.
What is PMI, and how do I get rid of it?
Private mortgage insurance protects the lender on a conventional loan when you put less than 20% down. It is built into the payment. You can request removal at 20% equity, and it typically drops automatically at 78% of the original value. FHA uses MIP, which is a different product.
What are closing costs?
Fees to originate the loan and finish the purchase: lender charges, appraisal, title, recording, and prepaid taxes and insurance. On most Texas purchases, plan on about 2% to 5% of the price, not counting your down payment. Your Loan Estimate shows the real number.
How long does it take to close?
Many W-2 purchase loans close in about 21 to 30 days when stubs and VOE come in quickly. Tight contract dates are doable when we are involved early. Appraisal, title, and your employer’s verification speed are usually the pace-setters.
Should I get a 15-year or 30-year mortgage?
A 30-year loan has a lower payment and more wiggle room. A 15-year loan costs more each month but far less interest, and the rate is usually lower. A middle path is a 30-year with extra principal when overtime hits.
Can I change jobs while I am applying?
Sometimes, but tell us before you do it. Same line of work with a start letter can be fine. Switching from W-2 to 1099, taking a big unpaid gap, or going from salary to a brand-new commission plan can delay or stop the loan.
Can I use gift funds for my down payment?
Often yes. FHA, VA, conventional, and USDA all allow gifts on many files if the money is documented and does not have to be repaid. We need a gift letter and proof of the transfer.
Can the seller pay my closing costs?
Often yes, up to program limits, if it is in the contract. FHA, VA, USDA, and conventional each cap seller credits differently. We will tell you the max your loan type allows before you write the offer.
How does the Texas homestead exemption work?
If this will be your primary home, apply with your county appraisal district after you close. School districts must exempt $140,000 of value. Age 65 or disabled homeowners get another $60,000 from the school district. Filing is free.
What should I avoid before closing?
Do not open new credit, buy a car, change jobs without telling us, move large unexplained deposits, or max out cards. Anything that changes income, debt, or assets can stall underwriting. Call us first.
What if the appraisal comes in low?
You can try to renegotiate the price, bring more cash, ask for a reconsideration of value, switch loan programs, or walk away if you have an appraisal contingency. We will walk through which of those actually work on your contract.
What is the difference between interest rate and APR?
The interest rate is what you are charged on the balance. APR folds in certain upfront fees so you can compare offers. Always look at rate, APR, points, and cash to close together.
Should I wait for mortgage rates to drop?
Nobody can time the market. If the payment fits and the house is right, buying now and refinancing later is often smarter than waiting while prices and rent keep moving. We can run both scenarios.
Are there first-time buyer programs in Texas?
Yes. Low down-payment conventional and FHA loans, down payment assistance such as Home Sweet Texas and Homes for Texas Heroes, and Texas VLB options for eligible veterans. “First-time” often still includes buyers who have not owned in the last three years. See the down payment assistance FAQs for the programs we actually offer.
Why use a mortgage broker instead of my bank?
A bank can only offer its own products. As a broker, we shop multiple wholesale lenders for your W-2 file. That is how we often beat a single bank’s rate and still close on time. You still work with one local loan officer in Leander.
Have Questions?
Online answers get you oriented. A quick conversation gets you numbers for your file. Call 512-784-4391, ask a professional, or apply now.
This page is for general education. It is not a commitment to lend or a guarantee of approval. Eligibility, rates, costs, and terms depend on credit, income, property, occupancy, loan program, and underwriting. Equal Housing Opportunity. Licensed by the Texas Department of Savings and Mortgage Lending.
Common questions for W-2 employeesFor borrowers paid by an employer: salary, hourly, overtime, bonus, or commission on a W-2. Twenty-five of the questions people search and ask AI most often, answered in plain English for Texas. |
|
All FAQs
W-2 employees
Self-employed
Investors
HELOC
Reverse mortgages
Down payment help
1. What is a mortgage?
2. How much house can I afford on my W-2 income?
3. What salary do I need for a $400,000 mortgage?
4. How is hourly pay counted versus salary?
5. Does overtime, bonus, or commission count?
6. Do I really need 20% down?
7. What credit score do I need?
8. What documents do W-2 employees need?
9. What is the difference between pre-qualification and pre-approval?
10. Does getting pre-approved hurt my credit?
11. What is the difference between conventional, FHA, VA, and USDA?
12. What is PMI, and how do I get rid of it?
13. What are closing costs?
14. How long does it take to close?
15. Should I get a 15-year or 30-year mortgage?
16. Can I change jobs while I am applying?
17. Can I use gift funds for my down payment?
18. Can the seller pay my closing costs?
19. How does the Texas homestead exemption work?
20. What should I avoid before closing?
21. What if the appraisal comes in low?
22. What is the difference between interest rate and APR?
23. Should I wait for mortgage rates to drop?
24. Are there first-time buyer programs in Texas?
25. Why use a mortgage broker instead of my bank?
What is a mortgage?
A mortgage is a loan to buy or refinance a home, with the property as collateral. Your monthly payment usually covers principal, interest, property taxes, and homeowners insurance (PITI). Mortgage insurance or HOA dues can be in there too.
How much house can I afford on my W-2 income?
A lender looks at your gross income from paystubs and W-2s, your monthly debts, credit, down payment, and Texas property taxes and insurance. A common starting point is keeping housing near 28% of gross income and all debts near 36%, though many programs allow higher. The number that matters is the payment you can live with, not the maximum you might qualify for.
What salary do I need for a $400,000 mortgage?
Most W-2 borrowers need roughly $100,000 to $130,000 a year if other debts are modest. Texas taxes and insurance make the payment higher than in many states. Rate, down payment, overtime, and your other loans matter as much as base salary. Ask us for an affordability letter instead of a national calculator.
How is hourly pay counted versus salary?
Hourly pay is fine. Lenders usually use your hourly rate times expected hours, then look at YTD and last year’s W-2 to confirm it is stable. If hours bounce around, we average a longer history. Tell us your typical schedule, not just this week’s stub.
Does overtime, bonus, or commission count?
Often, if it has a history and looks likely to continue. Many programs want one to two years of that extra pay. A brand-new bonus may be left out until it seasons. We will show you the number with and without variable pay so you are not surprised.
Do I really need 20% down?
No. Conventional can go as low as 3% down. FHA is 3.5% with a 580+ score. VA and USDA can be 0% if you qualify. Putting 20% down on a conventional loan mainly avoids PMI.
What credit score do I need?
FHA can go to 580 with 3.5% down, or as low as 500 with 10% down. VA and USDA have no official score floor. Conventional often lands around 620, though automated underwriting can go lower. Lenders add their own overlays. Higher scores usually mean a better rate.
What documents do W-2 employees need?
Plan on a government ID, about 30 days of paystubs with year-to-date earnings, one or two years of W-2s, and recent bank statements. Hourly and overtime-heavy files sometimes need extra stubs. You often do not need tax returns unless you have other income. We will send a short list for your file.
What is the difference between pre-qualification and pre-approval?
Pre-qualification is a rough estimate from numbers you provide. Pre-approval is stronger because it usually includes a credit check and documented paystubs and assets. Austin-area sellers take a verified pre-approval much more seriously.
Does getting pre-approved hurt my credit?
A mortgage inquiry can move your score a few points, usually for a short time. Shopping several lenders in a short window typically counts as one inquiry. Do not open new cards or car loans while you shop.
What is the difference between conventional, FHA, VA, and USDA?
Conventional is not government-insured and often prices best with stronger credit. FHA is more flexible on credit and down payment, with mortgage insurance. VA is for eligible veterans, often 0% down and no monthly PMI. USDA is 0% down in eligible areas, with household income limits.
What is PMI, and how do I get rid of it?
Private mortgage insurance protects the lender on a conventional loan when you put less than 20% down. It is built into the payment. You can request removal at 20% equity, and it typically drops automatically at 78% of the original value. FHA uses MIP, which is a different product.
What are closing costs?
Fees to originate the loan and finish the purchase: lender charges, appraisal, title, recording, and prepaid taxes and insurance. On most Texas purchases, plan on about 2% to 5% of the price, not counting your down payment. Your Loan Estimate shows the real number.
How long does it take to close?
Many W-2 purchase loans close in about 21 to 30 days when stubs and VOE come in quickly. Tight contract dates are doable when we are involved early. Appraisal, title, and your employer’s verification speed are usually the pace-setters.
Should I get a 15-year or 30-year mortgage?
A 30-year loan has a lower payment and more wiggle room. A 15-year loan costs more each month but far less interest, and the rate is usually lower. A middle path is a 30-year with extra principal when overtime hits.
Can I change jobs while I am applying?
Sometimes, but tell us before you do it. Same line of work with a start letter can be fine. Switching from W-2 to 1099, taking a big unpaid gap, or going from salary to a brand-new commission plan can delay or stop the loan.
Can I use gift funds for my down payment?
Often yes. FHA, VA, conventional, and USDA all allow gifts on many files if the money is documented and does not have to be repaid. We need a gift letter and proof of the transfer.
Can the seller pay my closing costs?
Often yes, up to program limits, if it is in the contract. FHA, VA, USDA, and conventional each cap seller credits differently. We will tell you the max your loan type allows before you write the offer.
How does the Texas homestead exemption work?
If this will be your primary home, apply with your county appraisal district after you close. School districts must exempt $140,000 of value. Age 65 or disabled homeowners get another $60,000 from the school district. Filing is free.
What should I avoid before closing?
Do not open new credit, buy a car, change jobs without telling us, move large unexplained deposits, or max out cards. Anything that changes income, debt, or assets can stall underwriting. Call us first.
What if the appraisal comes in low?
You can try to renegotiate the price, bring more cash, ask for a reconsideration of value, switch loan programs, or walk away if you have an appraisal contingency. We will walk through which of those actually work on your contract.
What is the difference between interest rate and APR?
The interest rate is what you are charged on the balance. APR folds in certain upfront fees so you can compare offers. Always look at rate, APR, points, and cash to close together.
Should I wait for mortgage rates to drop?
Nobody can time the market. If the payment fits and the house is right, buying now and refinancing later is often smarter than waiting while prices and rent keep moving. We can run both scenarios.
Are there first-time buyer programs in Texas?
Yes. Low down-payment conventional and FHA loans, down payment assistance such as Home Sweet Texas and Homes for Texas Heroes, and Texas VLB options for eligible veterans. “First-time” often still includes buyers who have not owned in the last three years. See the down payment assistance FAQs for the programs we actually offer.
Why use a mortgage broker instead of my bank?
A bank can only offer its own products. As a broker, we shop multiple wholesale lenders for your W-2 file. That is how we often beat a single bank’s rate and still close on time. You still work with one local loan officer in Leander.
Have Questions?
Online answers get you oriented. A quick conversation gets you numbers for your file. Call 512-784-4391, ask a professional, or apply now.
This page is for general education. It is not a commitment to lend or a guarantee of approval. Eligibility, rates, costs, and terms depend on credit, income, property, occupancy, loan program, and underwriting. Equal Housing Opportunity. Licensed by the Texas Department of Savings and Mortgage Lending.
