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7MustsForMortgageApproval
Dated: October 22 2020
Views: 97
Gear up to apply for a mortgage
These days, mortgage rates are sitting at historic lows, so now's a really good time to apply for a home loan. But you can't just jump into that process blindly. Rather, you'll need to check these key items off your list before submitting applications with different mortgage lenders.
1. Have a decent credit score (or better yet, a strong one) Your credit score speaks to how trustworthy you are as a borrower, and the higher yours is, the more likely you'll be to get approved for a mortgage. Generally, you'll need a minimum score of 620 to get a home loan, but if you want the best rates out there, you'll need a score in the mid-700s or above. If your credit isn't great, work on boosting it before you apply for a mortgage, or you might get rejected.
2. Shed some debt
The less debt you have, the more comfortable lenders will be loaning you money. If you're carrying a lot of debt right now, paying some of it off could push your debt-to-income ratio into more favorable territory, thereby increasing your chances of getting your mortgage applications approved.
3. Earn enough money to cover the loan amount you're seeking
You're unlikely to get approved for a $500,000 mortgage on a $30,000 annual salary. Rather, you'll need to earn enough money to support the loan amount you're after. If you're underemployed right now, you may want to hold off on your mortgage applications until your income picks up. Or, you might try supplementing your income with a side gig.
4. Have a steady job
Earning enough money to cover your mortgage payments is only part of the equation; your lender will also want reassurance that your job is stable. To that effect, you'll need to be prepared to provide a letter of employment stating how long you've been with your company and that you're currently an employee in good standing. Also, expect your lender to verify your employment status not only when you apply for a home loan but also right before it closes.
5. Save for a down payment
Though there are exceptions to this rule, generally you'll need to come up with 20% of your home's purchase price when applying for a mortgage. Some lenders will allow you to put down less money, but then you'll risk getting charged private mortgage insurance, a costly premium that makes your monthly payments more expensive. It's a good idea to save up that 20% to not only avoid this fee but also help ensure that you don't get underwater on your mortgage early on, which is what happens when your home value drops to the point where it's less than your remaining mortgage balance.
6. Have extra cash on hand
In addition to your down payment, your lender will want reassurance that you have some money to your name. That's why you'll need to present proof of assets outside your down payment. You may, for example, need to provide several months of bank statements so your lender can see what you have in savings.
7. Gather financial documents and records
Your lender isn't just going to take your word for it that you earn a certain salary or have a certain down payment on hand. Rather, you'll need to provide proof, so it pays to gather some key financial documents during the mortgage application process. These include recent bank statements, tax returns, a copy of your business license if you're self-employed, and other forms documenting your income, like pension statements.
Maurie Backman
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Information provided courtesy of LERA MLS. IDX information is provided exclusively for consumers' personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. Information is believed to be accurate but not guaranteed. Provided courtesy of LERA MLS. Copyright 2026 LERA MLS, All Rights Reserved. Data last updated September 21, 2026 6:07 AM UTC
