How to Apply for a Mortgage Loan

How to Apply for a Mortgage Loan

If you’re thinking about buying a home, you should apply for a mortgage loan. This will let the lender know that you can afford to make your monthly payments on a new home.

You can apply for a mortgage after you find the home you want to buy, or while you’re still shopping, which is known as preapproval. Either way, you will need to provide documentation.

The Application Process

The mortgage application is the first step in determining whether you are eligible for a loan and which type of loan you may qualify for. It is a standard form that lenders use for both conventional and FHA loans. The application typically asks for your credit information, income, debts and assets.

Your lender will then analyze the information and provide you with a Loan Estimate within three days that discloses the rates, fees and terms of the mortgage loan. It is important to complete the application accurately and completely.

When reviewing your credit, loan officers will look for a strong borrowing history that includes timely repayment of debt. They will also check for inaccuracies that could lower your credit score.

In addition, they will review your employment history and verify the source of funds for the down payment and closing costs. The lender will also verify your assets, such as bank accounts, pay stubs and tax returns.


Mortgage preapproval allows prospective home buyers to shop confidently within a specific price range. It also shows sellers that a potential buyer is serious about purchasing a home, which encourages them to move forward.

To get preapproval, the borrower will complete a formal loan application and provide documentation such as paystubs, income tax returns, bank statements, profit-and-loss statements, driver’s license and more.

Lenders typically want to see a debt-to-income ratio (DTI) of 36 percent or lower, with all monthly household expenses including the proposed mortgage payment, homeowner’s insurance and private mortgage insurance taken into account.

It’s a good idea to get preapproval from multiple lenders because different institutions may use different credit-scoring models, which can change your score. The lender will verify the information and issue a letter that states how much you’re preapproved to borrow and the term of the approval. This gives prospective home buyers a leg up during the negotiation process because they can prove to the seller that they’re ready to purchase their new home.


The pre-qualification process, which can be done online, over the phone or in person, gives you an estimate of the loan amount you may be able to afford based on your financial data. It doesn’t involve a credit check, so it won’t affect your score.

You might have to provide proof of income, bank statements and documentation showing the source of any money used for a down payment or other costs. You also might be asked to provide proof of identity, and to get a gift letter from family members if you’re using their money for the down payment.

The preapproval process is more involved and takes the loan application and supporting documents that you submit to underwriters for a closer look at your finances. The result is an approval letter that you can use when shopping for a home. The letter can help speed up the closing process once you find a property. It’s an important step, especially for first-time buyers.

The Closing

Once your loan is approved, you’ll attend a closing meeting to sign the mortgage documents. At this point, you’ll have a chance to ask any final questions you might have. You’ll need to bring your Closing Disclosure, a photo ID and a check for your down payment and closing costs.

Lenders review your financial information with a fine-tooth comb during the mortgage processing stage. They’ll scrutinize your credit score, debt-to-income ratio and assets to verify that you’re qualified for the loan. They’ll also verify your employment history and review your savings account statements, pay stubs, W-2s, income tax returns and any other relevant documentation.

The home mortgage process can seem daunting, but with some planning you can get ahead of the game. Understanding the types of loans available, how monthly mortgage payments break down and home loan terms can help you get ready for one of the biggest financial decisions you’ll ever make. The more you prepare, the easier it will be to hit each milestone in your journey to homeownership.

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