Key takeaways
13 min read
- Get pre-approved, not just pre-qualified, before you tour seriously.
- Compare at least three lenders and line up their Loan Estimates by APR and fees.
- Ask for pre-approval letters at several price points so your max budget stays private.
- With TurboHome, you get the buyer's agent commission back, minus a low flat fee.
In this chapter
Get pre-approved before you shop
A pre-approval letter tells sellers you can actually close. In competitive markets, many listing agents won't look at an offer without one.
Unless you're paying cash, a lender has to agree to fund your purchase. A pre-approval confirms how much they'll lend and at roughly what rate, in a letter sellers take seriously.
Pre-qualification
- Quick estimate based on what you report
- Often no document review
- Useful early, weak in an offer
Pre-approval
- Lender verifies income, assets, and credit
- Comes with a letter for your offers
- Shows sellers you can close
What lenders usually ask for
- W-2s from the past two years and your most recent pay stubs
- Federal tax returns from the past two years (business returns if self-employed)
- Two to three months of bank, investment, and retirement statements
- Government ID and your Social Security number for the credit check
- Explanations for large deposits, gifts, or gaps in employment
Pre-approval letters usually expire after 60 to 90 days. If your search runs longer, your lender can refresh the letter with updated documents.
2Pick the right kind of loan
The loan you choose shapes your down payment, your monthly payment, and how competitive your offer looks. Here's how the main options compare.
Conventional
- Minimum down
- 3% for qualified buyers
- Best for
- Good credit, most buyers
- Watch for
- PMI under 20% down
FHA
- Minimum down
- 3.5%
- Best for
- Lower scores or smaller savings
- Watch for
- Upfront and annual mortgage insurance
VA
- Minimum down
- 0%
- Best for
- Eligible veterans and service members
- Watch for
- One-time funding fee in most cases
USDA
- Minimum down
- 0%
- Best for
- Eligible rural and suburban areas
- Watch for
- Income and location limits
Jumbo
- Minimum down
- Often 10% to 20%
- Best for
- Loans above the conforming limit
- Watch for
- Stricter credit and reserve requirements
The conforming limit is set each year by the FHFA and is higher in expensive counties, including much of coastal California.
Fixed rate or adjustable?
A fixed-rate loan keeps the same rate for the life of the loan, so your principal and interest never change. An adjustable-rate mortgage (ARM) starts with a fixed period, often 5, 7, or 10 years, then adjusts with the market.
How the rate behaves over 30 years
30-year fixed
7-year ARM
ARMs can make sense if you expect to sell or refinance before the fixed period ends.
15 years or 30?
A 15-year loan usually has a lower rate and costs far less interest overall, but the monthly payment is much higher. A 30-year loan keeps the payment lower and gives you flexibility to pay extra when you can.
The same $480,000 loan, two ways
30-year
$2,878
a month in principal and interest
- Payments
- 360
- Total interest
- about $556,000
15-year
$4,051
a month in principal and interest
- Payments
- 180
- Total interest
- about $249,000
Both use the same 6% rate for illustration. 15-year loans usually carry a lower rate, which widens the gap in total interest.
3Compare at least three lenders
Rates and fees vary from lender to lender, even on the same day for the same borrower. Getting multiple quotes is one of the easiest ways to save money on a home.
Types of lenders
Big banks
Relationship discounts for existing customers
Can be slower and less flexible
Credit unions
Competitive rates for members
Membership required; fewer loan types
Online lenders
Fast applications, sharp pricing
Less hands-on help
Mortgage brokers
Shop many lenders for you
Paid a commission; ask how
Questions to ask every lender
- What rate and APR can you offer me today, and with how many points?
- What are your lender fees, itemized?
- How long can I lock my rate, and what does an extension cost?
- How fast do you typically close?
- Who is my point of contact, and how quickly do you respond?
Want lenders you can trust? Ask about our lending partners.
4Read the Loan Estimate like a pro
Within three business days of your application, every lender must send a standardized Loan Estimate. Because the format is the same everywhere, it's the best way to compare offers side by side.
Page 1
The headline numbers
Loan amount, interest rate, monthly payment, and estimated cash to close.
Page 2
The fees
Itemized closing costs, including origination charges and points.
Page 3
The true cost
APR and the total you'll pay in the first five years.
Rate vs. APR
Interest rate
- The cost of borrowing the money
- Leaves out lender fees and points
APR
- The rate plus lender fees and points
- Shows the fuller cost of the loan
- Your best number for comparing offers
A low rate loaded with fees can cost more than a slightly higher rate with few fees. Discount points are upfront fees that lower your rate. One point costs 1% of the loan amount. Points can pay off if you keep the loan for many years, and rarely do if you plan to sell or refinance soon.
Compare APR to APR and fee to fee. The lowest advertised rate is rarely the cheapest loan.
5Ask for letters at several price points
Here's a move we recommend to every buyer: ask your lender for pre-approval letters at more than one price.
One approval, three letters
If you offer $1 million and attach a letter showing you're approved for $1.5 million, the seller knows you have room to go higher, and may counter more aggressively. A letter that matches your offer keeps your ceiling private.
- Full approval (keep private)$1,500,000
- If bidding goes up$1,100,000
- Offer near list price$1,000,000
What the seller sees: only the letter that matches your offer
Plan your offer strategy early
Your agent can tell you which price points to request based on the homes you're watching.
Choose an agent who works for you
Your agent finds and evaluates homes, writes and negotiates your offers, and keeps the deal on track. A good one also talks you out of a bad house.
Since 2024, buyers must sign a written agreement with their agent before touring, and that agreement spells out how the agent is paid. Commissions have always been negotiable, and you can choose an agent whose pay doesn't grow with your price.
What that looks like on a $1M home
$30,000
Buyer's agent commission at 3% of $1,000,000
$10,000
TurboHome flat fee
$20,000
Estimated back to you
Plug in your price to estimate your TurboHome rebate, then meet a licensed local agent.
Assumes 3% buyer's agent compensation and our $10,000 flat fee for homes from $500,001 to $1,000,000. Actual compensation varies by deal.
TurboHome's flat fee by purchase price
$5K
$10K
$15K
$20K
$30K
$40K
$50K
Up to $500K
$500K to $1M
$1M to $2M
$2M to $3M
$3M to $4M
$4M to $5M
Over $5M
We credit you the buyer's agent commission and keep the flat fee. No hidden fees, no surprises.
Questions to ask any buyer's agent
- How are you paid, and how much of the commission comes back to me?
- How many buyers do you work with at once?
- How quickly can you get me into a home that just listed?
- How do you decide what to offer in a multiple-offer situation?
7Understand your buyer agreement
Before you tour any home listed on the MLS, you'll sign a Buyer Representation and Broker Compensation agreement (BRBC). It makes the relationship official and states how your agent is paid.
TurboHome's agreement, in plain English
- 1.Non-exclusive. You can work with any other agent or brokerage too.
- 2.90-day term. No long lock-in.
- 3.Clear pay. We credit you the buyer's agent commission and keep our flat fee.
Our one ask
If we analyze a property or book a tour for you, we represent you on that listing. That's it.
We'd rather earn your business with service and real savings than with a long contract. Read any agreement carefully before you sign, and ask about the term and whether it's exclusive.
Common questions
How long does pre-approval take?
Often one to three business days once you've submitted your documents. Having W-2s, tax returns, and statements ready speeds it up.
Does getting pre-approved hurt my credit?
A hard inquiry can lower your score slightly. Multiple mortgage inquiries within a short shopping window usually count as one.
Can I switch lenders after I'm pre-approved?
Yes. You can change lenders any time before closing, though switching late can delay your timeline.
How does the TurboHome rebate work?
We credit you the buyer's agent commission and keep a low flat fee based on the purchase price. Ask your lender how the credit can be applied to your loan.