Mortgage answers, minus the jargon

Lenders look at two ratios. Your housing payment compared with your gross monthly income, and all of your monthly debts (housing plus car, student loans and cards) compared with that same income. Each loan program sets its own limits.

Those limits tell you the most you can borrow. They don't tell you what's comfortable. The better question is the monthly payment you'd be fine with in a slow month, after savings and the rest of your life.

A quick way to find your number

• Start with what you pay in rent today, plus what you're saving each month.
• Decide how much of that you want going to a house.
• Put that payment into the calculator and adjust the price until it matches.

In Greater Cincinnati, property taxes vary a lot by school district. Two homes at the same price can carry very different payments, so we always check the actual tax bill before you offer.

Plan for three buckets, not one.

• Down payment. Depends on the loan. Some programs allow a low down payment for eligible buyers; others ask for more.
• Closing costs. Lender, title, appraisal, recording, plus prepaid taxes, insurance and interest. Many buyers plan for a few percent of the price. Your Loan Estimate shows the real figures.
• Reserves. Money left over after closing. Some loans require it; every homeowner needs it.

Ways to bring less to closing

• Gift funds from family, documented with a gift letter.
• Seller credits negotiated in your offer.
• The $1,500 Bearcat Mortgage credit for eligible UC alumni, faculty, staff, UC Health employees and supporters. See terms.

It depends mostly on your credit score and how long you'll keep the loan.

• FHA is more forgiving on credit and debt ratios, and its rate can be lower for buyers with mid-range scores.
• FHA mortgage insurance has an upfront premium and a monthly premium that often lasts as long as the loan, unless you refinance.
• Conventional mortgage insurance is priced by credit score and can be removed once you reach enough equity.

For a buyer with strong credit, conventional usually wins over time. For a buyer still building credit, FHA can be the better start, with a plan to refinance later. We'll price both so you can see the difference in dollars.

On a 30-year loan, most of your early payments go to interest, so small rate changes move the payment more than people expect. Open the calculator and change the rate by half a point to see it on your own numbers.

Three ways to lower the rate you pay

• Improve the inputs. A higher credit score or larger down payment can improve pricing.
• Buy it down. Pay discount points, or ask the seller or builder to fund a temporary or permanent buydown.
• Refinance later. If rates fall meaningfully, a refinance can reset the rate. Weigh the cost against how long you'll stay.

A pre-approval is a lender's written statement that, based on verified information, you're likely to be approved for a certain loan. It's what sellers and agents want to see with your offer.

• You complete an application and authorize a credit check.
• You upload pay stubs, W-2s or tax returns, and bank statements.
• We review everything up front and issue a letter tied to your price range and loan type.

Final approval still depends on the property (appraisal and title) and on nothing major changing before closing. Keep your job, credit and savings steady until you have the keys.

At least three business days before closing you'll get a Closing Disclosure showing your final rate, payment and cash to close. Compare it with your Loan Estimate and call us with any questions.

• Wire your funds only after confirming instructions by phone with your title company, using a number you looked up yourself. Wire fraud targets homebuyers.
• Bring a government photo ID.
• Expect to sign for about an hour. Then you get the keys.