Getting a mortgage involves several steps, from assessing your financial situation to finding the right lender and completing the application process. After choosing the right lender, (or contacting us to refer you to our most trusted lender) you will have to meet some requirements. Here’s a five minute guide on how to get a mortgage:
Good Credit Score: Lenders typically look for a credit score of 620 or higher, although requirements may vary. The better your credit score, the more favorable terms you’re likely to get.
Stable Income: Lenders want to ensure you have a steady income to make mortgage payments. They’ll typically ask for proof of income. Some documents they usually will require to show proof of income include:
- Pay stubs covering the past 30 days.
- W-2 forms for the past two years.
- Tax returns (Form 1040) for the past two years if you’re self-employed or have additional income sources.
- If you receive income from rental properties, you may need to provide rental agreements and proof of rental income.
- Bank statements for the past two or three months for all checking, savings, and investment accounts.
Low Debt-to-Income Ratio: Lenders calculate your debt-to-income ratio (DTI) to determine how much of your monthly income goes toward paying debts. Generally, a DTI of 43% or lower is preferred.
Down Payment: You’ll need a down payment, typically ranging from 3% to 20% of the home’s purchase price. Some loans have down payment assistance and require no down payment. However, the higher your down payment, the lower your loan amount and potentially your interest rate could be.
Get Pre-Approved: There are various types of mortgages available, including fixed-rate mortgages, adjustable-rate mortgages (ARMs), FHA loans, VA loans, and USDA loans.
Ultimately, it is important to provide all requested documents promptly and accurately to avoid delays in the mortgage approval process. Working closely with your lender and providing any additional information they request can help ensure a smooth and efficient mortgage application process.Your lender will help you decide the right once for you and get you pre-approved so you can go search for homes.
