getting approved for a mortgageWith interest rates near six month lows, and a steadily growing economy, many people are looking into buying a home. For this reason, the real estate market has become very competitive in most parts of the country. Buyers are forced to become more aggressive with their offers.

Home buyers will want to have an understanding of what it means to get approved for a mortgage. They’ll want to understand the process involved in obtaining a loan, and how much home they can afford, prior to house-hunting. 


Credit scores have a major impact on mortgage approvals. Lenders examine credit scores and credit histories in order to make a more informed decision regarding loan approval. Generally, the higher the credit score, the easier it is to qualify for a mortgage.

Many lenders require a minimum credit score of 620, some require higher scores.

In addition to credit score requirements, missed payments, frequent late payments, and other derogatory information can significantly impact your ability to obtain mortgage approval.

For these reasons, it’s imperative to know your credit scores. There are many free sites that offer complimentary credit reports. Sites such as and can be valuable resources for obtaining copies of your credit report.


Although pre-approvals and pre-qualifications will both involve a credit pull, generally a credit pull is where the documentation ends with pre-qualification letters. 

Lenders will usually start by asking some basic information about you and your financial history. Typically, a lender will then request your Social Security number and permission to pull your required credit report (and your co-borrower’s, if you have one).

Assuming the information provided from your credit report satisfies the lender’s guidelines, the lender will typically make a preliminary determination in writing stating that you would qualify for a particular loan amount subject to certain terms and conditions.

The pre-qualification letter will usually include various disclaimers.  The disclaimers will typically indicate the need for appropriate documentation to support the buyer’s income and assets.

Each lender has its own standards, processes and requirements for getting pre-qualified.

On the other hand, a pre-approval letter involves verification of the information verbally obtained.  This means more time and effort, and written documentation to support the information provided. This is why a pre-approval letter carries more weight than a pre-qualification letter. 

pre-approval allows you to shop for your new home with more certainly and less anxiety.


A down payment is the amount required upfront when purchasing a home.

Down payment requirements vary according to the type of loan for which you’re applying. Some loans require zero down payment, others may require up to 20% down.

There are a few down payment assistance programs available for first time home buyers. The majority of home buyers will need to put down a minimum of 3% to 5% of the purchase price.

Unless otherwise negotiated and stated in the purchase and sale agreement, buyer will also have to pay closing costs. Generally, closing costs will run between 3-4% of the purchase price.

It takes time to build up enough savings for a decent down payment. The key is to start saving sooner than later.

Buyers should also be aware that some lenders have additional cash reserve requirements.


As you work towards buying your home, it’s important to remember that today’s real estate inventory is relatively tight. Low rates and a growing economy generally results in a seller’s market. As a buyer, this means there may be a need for patience and compromise.

According to the Association of Realtors, the most difficult task for today’s home buyers is finding the right home.

Although the path to home ownership may take a little bit of time, there are a number of financial benefits, including the interest deduction on your taxes.


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