Commercial Bank Loans FAQ’s
Understanding how much you’re eligible to borrow is the first step toward securing the right loan—and it sets the foundation for your homebuying journey. Before you begin searching for properties, it’s important to determine your purchasing power so you can shop with clarity and confidence. By answering a few basic questions, we can estimate your borrowing capacity using standard lending guidelines.
For a more definitive picture, we recommend getting pre-approved. This involves verifying your income, credit profile, assets, and liabilities. Pre-approval provides several key advantages:
- You can confidently focus on properties within your budget.
- Sellers take your offer more seriously, knowing your financing is already conditionally approved.
- The closing process tends to move more quickly and smoothly.
Pre-Qualification Overview:
Loan-to-Value (LTV) & Debt-to-Income Ratios: LTV refers to how much a lender is willing to finance compared to your home’s purchase price. Borrowers with strong credit may qualify for higher LTVs—sometimes up to 100%. Lenders also assess your debt-to-income ratio (DTI) to determine affordability. Generally, your monthly mortgage payment should not exceed one-third of your gross monthly income. If your DTI is high, you may need to make a larger down payment to reduce your LTV.
FICO™ Credit Score: Your credit score is a key factor in determining loan eligibility. Based on models developed by Fair isaac Corporation, a FICO™ score evaluates your creditworthiness by analyzing your payment history, credit utilization, account age, credit mix, and recent inquiries. Since each credit inquiry can slightly impact your score, we recommend allowing a lender or broker to pull your report only once you’ve chosen to move forward with your application.
Self-Employed Borrowers: If you’re self-employed, lenders will typically require additional documentation to verify your income. Unlike traditional employees who provide pay stubs, self-employed borrowers are generally asked to submit at least two years of tax returns. These help establish consistent earnings and overall financial stability.
Source of Down Payment: Lenders will ask you to demonstrate that you have enough funds to cover your down payment and any related closing costs. Most buyers use personal savings, but “gift funds” are also acceptable if they come from a qualified donor. In such cases, the donor must provide a signed letter confirming that the funds are a gift, not a loan.
At Bravo Mortgage, we’re here to walk you through this step-by-step. Our team will help you evaluate your financial position and prepare a clear path forward, so you can make decisions with confidence and peace of mind.
Choosing the right mortgage is a crucial part of your home-financed journey. The best loan program for you depends on your financial goals, how long you plan to stay in your home, and your comfort with potential payment changes over time. Here’s a look at two of the most common options:
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Fixed-Rate Mortgage:
A fixed-rate mortgage offers consistency and stability with a term typically set at 15 or 30 years. Both your interest rate and monthly principal and interest payments remain the same throughout the life of the loan. This option is ideal if:
- You plan to live in the home for more than 7 years
- You value the certainty of a stable monthly payment
- You prefer to avoid future increases in housing costs
- You expect your income and expenses to remain steady
A fixed-rate mortgage provides peace of mind, making it a strong choice for those seeking long-term financial predictability.
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Adjustable-Rate Mortgage (ARM):
An adjustable-rate mortgage also usually has a 15- or 30-year term, but unlike fixed-rate loans, the interest rate is subject to periodic adjustments based on market conditions. Your monthly payments may rise or fall over time. An ARM may be a good fit if:
- You expect to move or re-finance within the next 5 years
- You’re comfortable with some fluctuation in your monthly payment
- You can manage the potential for future increases in payments
- You anticipate your income will grow over time
ARMs often start with lower initial rates, making them a strategic option for short-term homeowners or those expecting future financial growth.
At Bravo Mortgage, we’ll help you compare loan types, evaluate the pros and cons of each, and guide you toward the option that aligns with both your current situation and long-term financial goals.
Once your application is submitted, the loan process officially begins. While all lenders follow standardized government lending guidelines, each loan may have unique criteria based on its specific terms. Ultimately, loan approval depends on two key components: your financial ability and willingness to repay the loan, and the appraised value of the property.
At Bravo Mortgage, we move swiftly to initiate your loan review. Our experienced loan processor carefully verifies all the information you've provided. If any discrepancies arise, your processor or loan officer will reach out to resolve them efficiently. Here’s what’s typically reviewed:
- Income and Employment Verification: We confirm that your income is sufficient to support your monthly mortgage payment, using standard industry benchmarks to evaluate your income and current debt levels.
- Credit Review: Your credit history helps us assess how reliably you've repaid debts in the past. We'll examine previous loans, payment patterns, and any delinquencies which may require written explanations.
- Asset Verification: We review your available funds to ensure you have the necessary resources for your down payment and closing costs.
- Property Appraisal: A professional appraisal is conducted to confirm the property’s market value. Location, zoning, and overall condition play a role in determining whether the home justifies the requested loan amount.
- Additional Documentation: Depending on your loan type, we may request supplementary documents before making a final approval decision.
To keep your loan process on track:
- Complete your application fully and accurately.
- Respond quickly to any document requests, especially if your rate is locked or you’re targeting a specific closing date.
- Avoid large deposits or withdrawals unless you have a clear, documented source. If you're receiving gift funds, be sure to have a signed gift letter and notify us in advance.
- Hold off on any major purchases such as furniture or a vehicle until after your loan closes, as they may affect your credit and debt profile.
- Plan any travel with your closing date in mind. If necessary, we can help you arrange a Power of Attorney to avoid delays.
Our team at Bravo Mortgage is committed to guiding you through every step of the process, ensuring clarity, efficiency, and a smooth path to closing.
With your loan fully approved, you’ll move into the final phase, closing. This step involves signing the official loan documents, and it’s essential to review them thoroughly to ensure everything aligns with the interest rate, terms, and conditions previously agreed upon. Double-check that your name, address, and other personal details are accurate. Loan documents are usually signed in the presence of a notary public.
At closing, you’ll also be responsible for covering the final costs associated with your mortgage and the property transfer. This includes your down payment, lender fees, title charges, and other closing costs. To ensure a smooth process, bring a cashier’s check for the exact amount due—personal checks are not accepted. In addition, have your homeowner’s insurance policy, proof of payment, and any other required documents (such as flood insurance, if applicable) ready to present.
Once you've signed all documents, the closing is generally completed promptly. However, if you’re refinancing a primary residence, federal law provides a 3-day right of rescission, giving you a window to review and confirm the agreement before the loan is finalized.
At Bravo Mortgage, we’re here to guide you through this final stage with clarity and confidence—ensuring every detail is in order so you can close with peace of mind.
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