How to Get Pre Approved for a Home Loan

Looking at homes to potentially buy is fun, but serious buyers need to start off with their mortgage lender first. The best way to buy a home is to get a mortgage pre-approval first. That way, you already know how much house you can afford and what your loan options are. What's more, home sellers expect all potential buyers to have a pre-approval in hand and will negotiate more readily with those who are approved for financing.

To get pre-approved for a mortgage loan is quite simple. Here's what you need:

#1 Proof of Income

Gone are the days when you could get a house loan without documents or with no income verification. Those policies are in part what led to the subprime mortgage crash. All borrowers these days need to have W-2s for the last two years, a few pay stubs from the last three months, and two years of tax returns. If you are self-employed, no problem, but you will definitely need to show proof of income on tax returns for the last two years.

#2 Proof of Assets

Be prepared to provide bank statements that should you have the funds to make a down payment and pay closing costs. Lenders also want to see that you have enough cash reserves to make a few mortgage payments if you lose your job. The good news here is that many available home loans today require very low down payments. FHA financing can usually be obtained with a mere 3.5% down payment. Even conventional home loans can now be obtained with 3% or 5% down, although 10% to 20% is more common. If you get help from a relative for the down payment, you probably will need a letter from them that states it is a gift rather than a loan.

#3 Decent Credit

The very lowest interest rates are usually for people who have credit scores above 740. But no worries if your credit score is well under that. You can still be pre-approved for a mortgage; you will just pay a slightly higher interest rate. If you have a credit score as low as 620, you still can be approved for an FHA loan with 3.5% down.

#4 Verification of Employment

For your home loan pre approval, mortgage lenders want to see that you have income, but they also may call your employer to verify you still have a job. They also may double check on your salary. If you changed jobs in the last year, the lender might contact your last employer. Lenders today are more careful to lend money only to people with stable jobs.

#5 Other Documentation

Your mortgage lender will want a copy of your driver's license and social security card, as well as those for anyone else on the mortgage. These are required for the lender to pull your credit report to qualify you. You should be ready during this process to provide any additional paperwork that is requested, and quickly. The more responsive you are, the more likely you will get a rapid pre-approval.

If you want to increase the chances that you will easily get a pre-approved mortgage and have a great home ownership experience, remember these additional tips:

  • Get rid of debt: Mortgage lenders do not want to see that you have six maxed out credit cards. They prefer to see that you are financially responsible. This means you should ideally have a lot of available credit that is not being used. So, before you start applying for loans, you should try to pay down as much debt as you can. Ideally, you want to have no more than 10% of your revolving credit lines in use.
  • Know what you can really afford: Many borrowers can be approved for more house than they really can afford. Do not let the mortgage lender tell you how much house to buy. You know your budget better than your lender, so buy a house that is not stretching your budget. You don't want to be one financial problem away from foreclosure.
  • Stay employed: For some reason, people can forget that the reason they are able to get a mortgage is that they have income from a job. You do not want to quit your job in the middle of the mortgage approval process. As obvious as this sounds, it happens.

Pre-approval for a home loan is really an easy process these day. As long as you have stable income and credit over 620 to 640, you should be able to get approved for a loan with a low down payment. Just keep the above mortgage pre-approval tips in mind for you to get into the home of your dreams faster than you ever thought possible. provides a news and information service by offering editorial content related to the housing and mortgage industry. This website is not responsible for the accuracy of information or responsible for the accuracy of the rates, APR or mortgage guidelines posted by advertising banks, lenders and brokers.

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