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BuyingMortgage 101BHRECO
Buying

Mortgage 101

Understanding your financing options and how to get the best mortgage.

Mortgage Calculator

$100K$2M
%
0%$110,00050%
%
2%12%
$3,472/month
P&I
$2,853.83
Property Tax
$458.33
Insurance
$160.42
Total Interest$587,379

$440,000 loan · 30-year fixed · 6.75% rate · $110,000 down (20%)

$440,000 loan · 6.75% · 30 yr · $587,379 total interest

$
Principal Interest
151015202530

Principal exceeds interest at year 21

Estimate Your Closing Costs

Beyond the down payment, buyers typically pay 2–5% of the purchase price in closing costs. Adjust the numbers below to estimate your total cash to close.

$100K$2M
%

$110,000

%

$2,200

%

$1,375 · 3 months

Loan OriginationAppraisalInspectionTitle InsuranceEscrow FeeRecording FeesPrepaid TaxHome Insurance
Total Closing Costs$8,375
Est. Cash to Close$118,375

$550,000 purchase · 20% down · $440,000 loan · WA state defaults

Estimates only, actual costs vary by transaction. Consult your agent for a detailed breakdown.

Loan Types

Understanding your loan options is the first real step. Here are the most common types.

Traditional mortgages not backed by the government. Best rates for strong credit profiles.

Down payment

5–20%

Credit score

620+ (ideal 740+)

Government-backed with lower barriers to entry. Requires mortgage insurance premium (MIP).

Down payment

As low as 3.5%

Credit score

580+

No down payment, no PMI, competitive rates. Available to eligible veterans and active-duty service members.

Down payment

$0

PMI

None

For loan amounts exceeding conventional limits. Common in Bellingham's higher-priced neighborhoods.

Down payment

10–20%

Credit score

700+

APR

Annual Percentage Rate: the total yearly cost of your loan

Points

Fees paid upfront to lower your interest rate

PMI

Private Mortgage Insurance, required if down payment < 20%

Escrow

Account that holds funds for taxes and insurance

DTI

Debt-to-Income ratio, which determines loan eligibility

LTV

Loan-to-Value ratio: loan amount vs. home value

Pre-Approval Checklist

  • Proof of income (pay stubs, W-2s)
  • Tax returns (2 years)
  • Bank statements
  • Credit report authorization
  • ID and Social Security
  • Employment verification

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