There are many people who don’t know a single thing about getting approved for a mortgage loan. They usually just hear about the lower mortgage rates and dropped home prices and immediately decide to buy a home.

But buying a home is probably one of the biggest purchases most of us will ever make which makes the home mortgage your biggest loan.  You will not get such a huge loan from your lender just by asking nicely. This whole process of getting approved for your home mortgage might seem a little difficult and intimidating at first, but the more you are prepared for it upfront, the easier it will be to get approved without any hurdles.

Most buyers, however, do not realize the difference between getting an expensive product and purchasing a new home. They deal with their mortgage loan just like any other loan they are taking from the bank. But, unfortunately, that is not the case. The lenders will evaluate if you are prepared for such a big loan and a long-time commitment and then decide to approve your application. Typically, a better credit score and good monthly income will allow you to have better mortgage options at good terms.

How to get your mortgage loan approved

Follow these simple mortgage tips to avoid any delays and problems with your mortgage. Most of these tips might seem like common sense but know that often the small and overlooked steps create the biggest hurdles in getting your mortgage approved.

  1.     Know what you can afford

Before initiating anything about purchasing your new home, you must identify how much debt you can afford. Be very realistic when you are calculating your estimated loan budget. The best way to find your budget is to base your decisions on your monthly income.

Figure out how much extra cash you can have after paying off your bills every month, this will give you a clear idea of how much mortgage amount you should borrow. The general tradition is to dedicate roughly 1/3 of your monthly income to your mortgage payments.

Apart from this, you should also consider the possibility of extreme financial crisis during your mortgage term so that you don’t overextend yourself. Borrow only the amount of money that you feel comfortable with and are positive that you will be able to pay your monthly mortgage payments without any financial stress.

  1.     Know your Credit Score

When your mortgage application is being evaluated, the first thing that your lender checks is your credit score and history. Unfortunately, many homeowners ignore this basic step and submits their mortgage application without even checking their score. Most of them assume that their credit score will be high enough to qualify anyway. This, however, is mostly not the case.

The higher your credit score is, the better your chances are to get qualified with lower interest rates. This is because the high credit score poses less financial risk to your lender and ultimately they lend you their money at a lower interest rate. Majority of the lenders require a minimum of 680 credit score to approve your loan application, and if your score falls below 680, they will simply decline your request for conventional mortgage loan or offer you a mortgage with a high interest rate.

However, there are ways that can help you improve your credit score significantly. You need to pay your bills on time and pay off your debts as much as you can to improve your credit score. Cleaning up your credit history and fixing the errors on your credit report can also really help you in keeping up a good credit score.

  1.     Save your cash

Buying a new home is a big thing and it obviously doesn’t come cheap. If you are planning to purchase your new home, you should start stacking up the extra cash. If you do not have the money to pay upfront (down payment), there is no way a lender is going to approve your application.

The minimum required down payment varies and depends on a number of different factors like the type of loan and the price of your new home. Each lender has its own criteria for minimum down payments, but typically you should expect to pay at least 3.5% of the price of your new home. However, if you want to get a lower interest rate for your mortgage, you should aim for a higher down payment.

A higher down payment will also alleviate your PMI and can help you gain the trust of your mortgage lender as well. Though, the down payment is not the only thing you should be saving up for. There are other payments as well that you need to take care of like closing costs, home inspection, home appraisals, application fees, renovations etc. It is better that you keep in mind all these expenses and save the money accordingly.

  1.     Do Your Homework

Purchasing a new home is one of your biggest financial purchases so it makes sense that you aim to get the best deal you can. Do the necessary research for different types of properties and their prices in different areas near you.

Ask around for a trusted real estate agent who has expertise in the local real estate market and who can really help you in negotiating the best deal possible. Research about every little detail related to purchasing a new home exhaustively as this hard work will pay off later. Once you are confident that you are ready to jump into the house hunting process, only then start filling up the mortgage applications.

  1.     Don’t leave your job

There are people out there who quit working just a few days before applying for a mortgage application. It does not make sense at all, how do such people expect the mortgage lender to approve their application when they have no certainty of their financial resources.

It is important that you have a job at the time of filling a mortgage application so that your lender can trust you with his money. No lender will approve a mortgage application until he is sure that the applicant has the financial resources to pay off his monthly mortgage payments every month.

Do not change and move to a lower paying job when you are applying for a mortgage as it will only reduce your chances of getting approved for a mortgage.

  1.     Pay down your debts

It is not necessary that you have zero balance on your credit card in order to get approved for mortgage. But it is better that you pay down your major debts so that your credit history gets better.

Mortgage lenders typically evaluate your debt-to-income ratio while examining your application. So, if you have a high debt compared to your income, it will lower your chances of getting qualified or getting a reasonable interest rate on your mortgage. Therefore, paying down your debts before filing a mortgage application will lower your debt-to-income ratio and will ultimately increase your chance of getting approved for a mortgage with a lower interest rate.

Even after you get approved for a mortgage, avoid taking any other debts during the process as lenders often re-check your score. And if there are any additional new debts or big purchases, the lender will most probably stop the closing of your mortgage.

  1.     Get Pre-approved for your mortgage

The last thing that you must take care of before going home shopping is getting yourself pre-approved for the mortgage. Getting pre-approved will let you know what you can afford before you start bidding on properties.

The process of getting pre-approved is pretty simple in most states. Contact a trusted mortgage lender, submit your financial and personal information, and then wait for a response from the lender. A pre-approval includes everything from how much you can afford to spend on a house to the interest rate you will be paying on your mortgage. If the evaluation of your information turns out positive, the lender will hand you over a printed pre-approval for your record and the funds will be available to you as soon as a seller accepts your bid.


We know that the home buying process is really intimidating and if something goes wrong during the process, home buyers get really discouraged. But the key here is to not get discouraged by the hurdles in your way. For example, if you don’t meet the qualification criteria for mortgage, take it as a motivation to improve your finances and credit score. There are many examples of the people who have risen above low credit score, poor credit history, bankruptcy, and foreclosure and got their dream home in no time.

Make sure you have a realistic plan to cope up with the finances of your new home, and stick to it. 

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