How do I qualify for a loan?

Starting the mortgage process can be intimidating, which is why communication and transparency is an important aspect of the process.

To get qualified, we will assess important ratios and factors such as your debt-to-income, available funds to close, credit score, employment/income stability among others to determine the best loan option for you, and the amount you can afford to borrow.

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What is the difference between getting pre-qualified and pre-approved?

Getting Pre-Qualified occurs when a broker advises you may satisfy a general criteria for a mortgage, based on your self-reported financial information. Pre-qualification can be as simple as a short phone conversation with a lender.

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A pre-approval goes a step further, giving you a conditional commitment to approve you for a loan as long as you continue to meet their conditions by the time you close on the home. You’ll need to provide documents like bank statements, W2s and pay stubs, as well as run a credit check, which will show as a hard inquiry on your credit report.

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Once pre-approved, you’ll receive a pre-approval letter detailing the loan amount, types of loan programs you may qualify for, an estimated interest rate and annual percentage rate. When sellers review your offer, a preapproval means you’re a serious buyer whose lender has already started the loan process.

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What documents do I need to apply for a mortgage?

The types of documents required varies from person to person, depending on their employment type, sources of income, sources of funds etc.

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Have your pay stubs, W-2s, tax returns, bank statements, investment account statements and brokerage account information ready. Your broker will also provide a list of required documents so you can gather them ahead of time. Be sure to send everything in a timely manner to help keep things moving.

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Can I get a mortgage without a credit score?

YES! Whether you’ve been debt-free for years, or never established a credit history, it is still possible to get approved for a mortgage.

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If you apply for a mortgage without a credit score, you’ll need to go through a process called manual underwriting. Manual underwriting simply means you’ll be asked to provide additional paperwork for the underwriter to review personally, which typically results in a longer loan process.

 

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If I have bad credit, can I still get a mortgage?

YES! You may be approved for an FHA loan with a down payment as low as 3.5% with a 580+ score, or 10% down with a minimum 500 score.

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Typically, the lower your credit score, the higher interest you’ll be charged, if you get approved. Lenders need to protect themselves in the event of a mortgage default. They typically see borrowers with a low credit score as being less likely to be capable of making payments in full and on time, which is why a higher rate is typically tacked onto riskier mortgages.

If you need assistance getting access to credit repair, reach out and we’ll help you get on the right track.

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How much of a down payment do I need?

Down payment amounts vary depending on the type of loan. First Time Homebuyers can put as little as 3% down on a conventional loan, and anyone can get a 3.5% down FHA loan. Both these options will require you to pay mortgage insurance. There are also USDA and VA loans which will cover 100% of the purchase price, requiring no down payments.

 

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What are the current mortgage rates?

Mortgage interest rates fluctuate regularly – often multiple times in one day! Your rate is also based on a variety of factors including the loan type, occupancy, loan-to-value, credit score and even debt-to-income ratio.

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When getting pre-approved, it is good practice for your lender to leave some wiggle room in your budget to accommodate for these fluctuations. It's also a good idea to get prequalified for a mortgage and lock in that rate so you want be impacted if rates go up.