How to Get a Mortgage (2023)

If you’re like most Americans—more than two-thirds of recent home buyers—then you’ll need a mortgage loan to make your ownership dreams a reality.

The process of getting a mortgage requires preparing your finances, gathering some important documents and having your home appraised, among other steps. Typically, you can expect it to take anywhere from four to six weeks from application to closing day—though you’ll usually want to start preparing at least a few months in advance of that.

It can all seem a little daunting, particularly when interest rates are high, but being informed and prepared can help ease the stress. Are you hoping to buy a home this year? We’ve simplified the mortgage process below. Follow these eight steps, and you’ll be well on your way to homeownership.

1. Get your finances in order

As soon as buying a home is on your radar, start prepping your finances. Begin by building your savings; you’ll need funds for both your down payment and closing costs.

The exact cost of these varies, but for most loan types, you’ll need a down payment of at least 3% of your estimated purchase price (though lenders usually require 20% to avoid private mortgage insurance). Closing costs generally come out to between 2% and 6% of the loan amount. Make sure to save extras such as moving costs and furniture, too.

“Down payment requirements will vary by loan programs and some other factors, but it’s always helpful to have a plentiful nest egg set aside when getting ready to purchase a new home,” says Scott Bridges, head of consumer lending at mortgage lender PennyMac. “Consider how much you’ll need to spend on appliances and furnishing the home as well.”

You should also pull your credit report and credit score to see where you stand. Depending on your loan type, you’ll usually need a credit score of at least 580 to qualify for a mortgage, though some lenders go down to 520. If you want the best interest rates, 760 should be your target.

When you pull your credit report, look for late payments and accounts in collections. These are issues that may give lenders pause when evaluating your application, so it’s best to get current on your debts now—before you apply for your loan. You should also look for errors on your report, as disputing these could improve your score.

“You need to know where you stand and have a sense of your credit profile—specifically, anything that could prevent you from obtaining financing or a more favorable interest rate,” Bridges says.

Finally, keep your income as consistent as possible in the months leading up to your purchase, and avoid opening new credit cards, racking up debt or making large purchases. These could all hurt your chances at qualifying for a mortgage—or at least one with a good rate.

2. Determine what you can afford

Figuring out how much house you can afford is the next step. This includes determining what size monthly payment you can comfortably carry and how large a down payment you can offer. Though many loan programs allow you to make very small down payments (or sometimes none at all), smaller down payments result in larger loan balances—and larger monthly payments. You may also owe mortgage insurance, which can increase your monthly costs as well.

When determining your monthly budget, follow the 28/36 rule, which says that your housing costs shouldn’t take up more than 28% of your monthly pretax income, and all your debts—mortgage included—should be 36% or less.

These are just general guidelines, though. The important thing is to make sure your payment is comfortable and leaves funds free for emergencies. Most experts recommend setting aside at least 1% of your home’s value for annual repairs and maintenance.

“Houses cost more than the money invested to purchase them,” s​​ays Brian Rugg, chief credit officer at mortgage lender loanDepot. “Always consider the cost of maintenance, and plan for unforeseen circumstances that may arise after you move in.”

3. Research mortgage loan types and lenders

There are two basic categories of mortgage: private and government backed. With government-backed mortgages, you still get the loan through a private lender, but the federal government agrees to repay them—at least partially—if you default on your loan. Because this lowers the risk lenders take on, these loans often come with less stringent qualifying requirements.

When choosing a loan program, your down payment, credit score and expected loan amount will each play a role. See below for a breakdown of common mortgage products and their minimum requirements. Keep in mind that lenders can impose stricter requirements, so it is important to shop around if you’re on the cusp of qualifying.

Government-backed mortgages

Federal Housing Administration (FHA) loans500 (with a 10% down payment), 580 (with a 3.5% down payment)$472,030 in most markets, $1,089,300 in higher-cost markets3.5% to 10%
Veterans Affairs (VA) loansNone (though most lenders want at least a 580-620)No official limits, though your VA entitlement will factor inNo down payment required
U.S. Department of Agriculture (USDA) loansNone (though most lenders want at least a 620-640)No official limits, though your lender may set one based on your ability to repayNo down payment required

Private mortgages

Conventional conforming loans620$726,200 in most markets, $1,089,300 in higher-cost markets3%
Jumbo loans660Starts at $726,200 in most markets. Cap depends on the lender (up to $9.5 million in some cases)Usually 20% or more

You’ll also need to decide whether you need a fixed- or adjustable-rate loan and how long of a loan term you want.

With a fixed-rate loan, your interest rate is set for the entire time you hold the mortgage. The rate on an adjustable-rate mortgage, or ARM, on the other hand will be fixed to start and then can rise or fall depending on market conditions.

ARM rates are typically fixed for the first three to 10 years of a 30-year term and then reset once or twice annually. Because the initial rate tends to be low, an ARM can be smart if you only plan to be in the home for a few years. Just make sure you understand the terms of your loan and if you don’t leave before it begins to adjust, be prepared for higher payments or to refinance.

As for your loan’s length, most home buyers opt for 30-year terms, which typically allow them to get the lowest monthly payment. Shorter-term loans, though, typically come with lower interest rates and can save you money over time. According to Freddie Mac, the spread between rates on 15-year and 30-year loans has averaged 0.56 percentage points since 1991. Though the difference has ranged from as little a quarter point to a full percentage point.

Finally, you’ll need to choose which lender (or lenders) you want to apply for preapproval with. When looking at lenders, check out their loan programs, advertised rates and reputation.

“Look at customer reviews from past borrowers,” says Alex Shekhtman, a mortgage broker and founder of LBC Mortgage in New York. “This will give you real-world insight into how easy or difficult it is to work with a particular lender.”

If you’re not sure where to start, consider our best mortgage lenders of 2023 winners. You should also consider the institution you bank with, as they may offer lower rates and fees for your loyalty.

4. Get preapproved

Now, it is time to apply for mortgage preapproval with the lender or lenders you’ve chosen.

During the preapproval step, lenders will evaluate your finances to determine whether you’re a good candidate for a mortgage and, if so, the loan amount and interest rate you would likely qualify for. (Lenders vary in how they use this terminology, but mortgage preapproval is usually more useful than prequalification, which involves a more basic financial check.)

“Mortgage preapproval sets an important precedent for a successful real estate transaction,” says Carolina ​Gerdts, an agent at RelatedISG Realty in Miami. “Buyers are more likely to have a smoother, quicker home buying process if they come prepared with preapproval from a lender.”

To get preapproved, you’ll need to fill out a short application about your income, debts, credit and finances. Most lenders allow you to do this online. You will usually need to submit several forms of financial documentation, too. These often include:

  • Your last two W-2s and tax returns
  • Your two most recent pay stubs
  • The last two months of bank statements
  • A profit and loss statement for your business (if you’re self-employed)
  • The last two months of statements for any retirement or investment accounts you have

You must also agree to a credit check, which allows the lender to pull your credit report and score. Many borrowers apply with several lenders, as it can help you get the best interest rate.

5. Find a property and make an offer

Armed with your preapproval—and the real-estate agent of your choice (if you want)—you can now start the home search. Keep your preapproval amount in mind, but remember: That is just the maximum you can qualify for, not necessarily what’s right for your household budget.

Once you find a property you like, submit an offer, being sure to include your preapproval letter. This lets sellers know you’re likely to be approved for financing—and not back out of the transaction. As Rugg puts it, “It shows you’re serious about purchasing a home.”

6. Apply and lock your rate

If the seller accepts your offer, you’ll need to complete the full loan application for the lender you’ve chosen to work with. If you didn’t compare lenders at the preapproval step, now is the time. Make sure you apply with at least four lenders, as Freddie Mac has determined this will save you about $1,200 annually compared with getting just one quote.

When filling out your lender’s full application, you’ll provide information about your income, employment history, education, past residences and more—both for you and any co-borrowers you may have. Your lender may also request additional or updated documentation.

Once the lender has processed your full application, you can lock your interest rate—which guarantees your rate for between 30 and 90 days, depending on your lender. This essentially protects you from rate increases that may occur between when you apply and actually close on your loan. (If mortgage rates decrease during this period, you may be able to do a “float down,” which allows you to take advantage of the lower rate, usually for a small fee.)

7. Have the home appraised

One of the very last steps in the mortgage process is the appraisal, when a third-party professional hired by your lender assesses the home you want to buy and assigns it a value. They may do this through a physical evaluation of the home or by using property records and local home sales data.

“Mortgage lenders use appraisals to protect their investment in the home,” says Liz Lopez, a real-estate agent at RelatedISG Realty. Lenders typically won’t make a loan for more than the home’s appraised value.

If the appraised value of your home comes in lower than the purchase price you’ve offered, you have three choices:

  1. Pay the difference between the appraised value and your offer out of pocket.
  2. Renegotiate with the seller, asking them to accept the appraised amount or meet you somewhere in the middle.
  3. If you have an appraisal contingency in your contract, you can back out of the deal entirely if the appraisal comes in too low.

In some cases, you may be able to request another appraisal (at your own cost), but this depends on your lender.

8. Close on your loan

Finally, your lender will assign you a closing date. According to ICE Mortgage Technology, the average purchase loan takes 43 days from application to closing. Depending on your state and transaction, your closing may occur at a lawyer’s office, the title agency or your lending institution.

Before you attend, make sure to get homeowner’s insurance, as lenders require this before you can close. You should also do a final walk-through of the property to check that requested repairs were made and that the home was left in good condition. Also be sure to review the closing disclosure, which details your final closing costs and fees.

“Your lender is obligated to provide you with a closing disclosure a minimum of three days in advance, which contains all the costs and terms of your mortgage,” Rugg says. “Once you are at this point, most of the hard work is done—but don’t be afraid to ask questions. It’s important that you understand everything you are signing.”

When the time comes, you’ll attend your closing. There, you’ll pay your down payment, closing costs and prepaid interest (for the days between your closing date and the last day of the month)—typically via wire transfer or cashier’s check—and sign all the final paperwork for your loan. Once all is said and done, you’ll receive the keys to your new house.

After you’ve closed on your mortgage loan

You won’t hear from your lender immediately after closing, but you can typically expect a welcome letter and payment booklet to arrive in the mail within the next few weeks. This will outline how to submit your monthly payments and how to get in touch with your lender if you have questions or concerns.

Since mortgage payments are made in arrears—meaning you pay on the first of the month for the previous month’s charges—you won’t owe a mortgage payment until the start of the second month following your closing date. (For example, if you closed on March 28, you wouldn’t have a payment due until May 1.)

For many homeowners, setting up autopayments is easiest for managing their mortgage. If you choose this option, be sure to check your account balance at the end of each month. You don’t want to accidentally overdraft your account and be penalized.

More on Mortgages

  • The Best Mortgage Lenders of 2023
  • When Is The Best Time to Buy a House?
  • How to Get Preapproved for a Mortgage


What are the steps of getting a mortgage? ›

Most people will go through these six steps: pre-approval, house shopping, mortgage application, loan processing, underwriting, and closing.

How many years of income do you need to get a mortgage? ›

Usually, you do need proof of 2 years of employment to be approved for a home loan. However, mortgage lenders will look at these compensating factors when making their approval decision: Healthy credit score. Low debt-to-income ratio.

What is the easiest way to get a mortgage? ›

An FHA loan has lower down payment requirements and is easier to qualify for than a conventional loan. FHA loans are excellent for first-time homebuyers because, in addition to lower up-front loan costs and less stringent credit requirements, you can make a down payment as low as 3.5%.

What are the three requirements to get a mortgage? ›

Tips for qualifying for a mortgage
  • You have high credit scores.
  • You can make at least a 20% down payment.
  • You're eligible for the HomeReady or Home Possible loan programs and can make a 3% down payment.
Apr 6, 2023

How much house can I afford on $60 000 a year? ›

How much of a home loan can I get on a $60,000 salary? The general guideline is that a mortgage should be two to 2.5 times your annual salary. A $60,000 salary equates to a mortgage between $120,000 and $150,000.

What credit score is good for buying a house? ›

It's recommended you have a credit score of 620 or higher when you apply for a conventional loan. If your score is below 620, lenders either won't be able to approve your loan or may be required to offer you a higher interest rate, which can result in higher monthly payments.

How much income do I need for a 200k mortgage? ›

To be approved for a $200,000 mortgage with a minimum down payment of 3.5 percent, you will need an approximate income of $62,000 annually. (This is an estimated example.)

How much do you need to make to buy a 300K house? ›

To purchase a $300K house, you may need to make between $50,000 and $74,500 a year. This is a rule of thumb, and the specific salary will vary depending on your credit score, debt-to-income ratio, type of home loan, loan term, and mortgage rate.

What income is needed for a 150k mortgage? ›

You need to make $55,505 a year to afford a 150k mortgage. We base the income you need on a 150k mortgage on a payment that is 24% of your monthly income. In your case, your monthly income should be about $4,625.

What hurts your chances of getting a mortgage? ›

A poor Credit Score

Any payment that is more than 14 days past the due date will adversely impact your credit score. If you are looking for a loan, then obviously now is not a good time to start getting delinquent or tardy with your current obligations.

What is the lowest credit score to get a mortgage? ›

Generally speaking, you'll need a credit score of at least 620 in order to secure a loan to buy a house. That's the minimum credit score requirement most lenders have for a conventional loan. With that said, it's still possible to get a loan with a lower credit score, including a score in the 500s.

Is it harder to get a mortgage with a bank? ›

Some people prefer to approach their own bank when it comes to getting a mortgage. However, it's useful to know that already being a customer of a bank will not usually have any impact on the acceptance of your application.

What 4 things do you need for a mortgage? ›

Mortgage pre-approval requires a buyer to complete a mortgage application and provide proof of assets, confirmation of income, good credit, employment verification, and important documentation.

How much do you have to make to qualify for a 250 000 mortgage? ›

A $250,000 home, with a 5% interest rate for 30 years and $12,500 (5%) down requires an annual income of $65,310.

What is most important when applying for a mortgage? ›

When it comes to getting a lender's approval to buy or refinance a home, there are 3 key numbers that affect your ability to qualify for a mortgage and how much it will cost you — your credit score, debt-to-income ratio, and loan-to-value ratio.

Can you buy a 300k house on a 70k salary? ›

On a $70,000 income, you'll likely be able to afford a home that costs $280,000–380,000. The exact amount will depend on how much debt you have and where you live — as well as the type of home loan you get.

Can I buy a house if I make 25K a year? ›

Mortgage experts recommend spending no more than 28 percent of your gross monthly income on a housing payment. So if you make $25K per year, you can likely afford around $580 per month for a house payment.

Can I afford a $300 K house on a $70 K salary? ›

How much house can I afford on $70,000 a year? The house you can afford on a $70,000 income will likely be between $290,000 to $360,000. However, your home-buying budget depends on quite a few financial factors — not just your salary.

How much can I borrow with 580 credit score? ›

You can borrow anywhere from a few thousand dollars to $100,000+ with a 580 credit score. The exact amount of money you will get depends on other factors besides your credit score, such as your income, your employment status, the type of loan you get, and even the lender.

What's a perfect credit score? ›

A perfect credit score of 850 is hard to get, but an excellent credit score is more achievable. If you want to get the best credit cards, mortgages and competitive loan rates — which can save you money over time — excellent credit can help you qualify. “Excellent” is the highest tier of credit scores you can have.

Does buying a house hurt credit score? ›

The Bottom Line. Obtaining a mortgage will affect your credit score, and while it might dip slightly at first, your credit score can improve by making consistent, timely mortgage payments every month. Once your credit score is on the rise, you'll likely see better terms and interest rates for future loans you take on.

How much is a downpayment on a 150k house? ›

Most lenders recommend putting down 20%, which is $30,000. But there are loan programs where less is required. Also, remember to budget for closing costs, which are usually around 3-6% of the total sales price. So, a $150,000 mortgage would be an extra $4500 - $9000 at closing.

What is the monthly payment on a $600 000 mortgage? ›

Monthly Payment For a $600,000 Mortgage

With a 5% down payment ($30,000) and an interest rate of 6%, you would pay $3417 monthly for a 30-year fixed-rate loan, not including taxes and insurance. For a 15-year fixed-rate loan, it would be $4809.

How much is a downpayment on a 100K house? ›

With a 20% down payment (or $20,000) on a 30-year $100,000 mortgage, you'd need to make at least $1,418 in minimum monthly income to afford it.

What is the 20% down payment on a $300 000 house? ›

Most lenders are looking for 20% down payments. That's $60,000 on a $300,000 home. With 20% down, you'll have a better chance of getting approved for a loan. And you'll earn a better mortgage rate.

How much do you have to make a year to afford a $400000 house? ›

Assuming a 30-year fixed conventional mortgage and a 20 percent down payment of $80,000, with a high 6.88 percent interest rate, borrowers must earn a minimum of $105,864 each year to afford a home priced at $400,000.

Can I afford a 300k house on a 100k salary? ›

With a $100,000 salary, you have a shot at a great home buying budget — likely in the high-$300,000 to $400,000 range or above. But you'll need more than a good income to buy a house. You will also need a strong credit score, low debts, and a decent down payment.

Can I buy a house making $20 an hour? ›

Yes. The lender will approve your loan based on your debt to income ratio (DTI), which is the total house payment, including taxes, insurance and mortgage insurance (if any) plus other monthly debt payments, all divided by your gross monthly income. If you work 40 hours per week, your gross monthly income is $2,250.

Can I buy a house with 40k salary? ›

How much house can I afford with 40,000 a year? With a $40,000 annual salary, you should be able to afford a home that is between $100,000 and $160,000. The final amount that a bank is willing to offer will depend on your financial history and current credit score.

How much is a 30 year mortgage on 150k? ›

For a $150,000, 30-year mortgage with a 4% rate, your basic monthly payment — meaning just principal and interest — should come to $716.12. If you have an escrow account, the costs would be higher and depend on your insurance premiums, your local property tax rates, and more.

What should you not say when applying for a mortgage? ›

1) Anything untruthful

Lying to a mortgage lender can ruin your chances of approval. On top of that, providing misleading info on a loan application is considered mortgage fraud. Some try to hide certain info, but lenders are required to perform verifications of key financial documents.

Is it common to be denied a mortgage? ›

Yes. Many lenders use third-party “loan audit” companies to validate your income, debt and assets again before you sign closing papers. If they discover major changes to your credit, income or cash to close, your loan could be denied.

How do you know if I will get approved for a mortgage? ›

How do I know if I'll get approved for a mortgage?
  1. Your credit score is above 620.
  2. You have a down payment of 3-5% or more.
  3. Your existing debts are low.
  4. You've had a stable job and income for at least two years.
Jan 7, 2022

What lenders are the easiest to get approved for? ›

The easiest banks to get a personal loan from are USAA and Wells Fargo. USAA does not disclose a minimum credit score requirement, but their website indicates that they consider people with scores below the fair credit range (below 640).

How far back do mortgage Lenders look at credit history? ›

The typical timeframe is the last six years. Your credit history is one of the many factors that can affect your ability to get approved for a mortgage and a lender can pull up one of your credit reports to see financial information about you, within minutes.

How accurate is credit karma? ›

Here's the short answer: The credit scores and reports you see on Credit Karma come directly from TransUnion and Equifax, two of the three major consumer credit bureaus. The credit scores and reports you see on Credit Karma should accurately reflect your credit information as reported by those bureaus.

Is it better to go with a local bank for a mortgage? ›

If meeting with lenders face to face is important to you, a local bank with a good reputation is a sound choice. Local banks may also have better rates or lower fees than online options do. Both types of lenders offer mortgage pre-approval.

How do I approach a bank for a mortgage? ›

How To Talk to Mortgage Lenders?
  1. Talk to a lender before you start house hunting. ...
  2. Contact different types of lending institutions. ...
  3. Make appointments with several lenders. ...
  4. Research common terms and conditions. ...
  5. State your budget. ...
  6. Ask questions about the loan. ...
  7. Determine what extra fees you will be paying.
Apr 20, 2023

Will I lose my deposit if I am denied a mortgage? ›

If a loan can't be secured, then you won't buy the house—and can take back your earnest money. A real estate attorney can help draw up a contract with contingencies that protect you and your earnest money, says Scott Browder, broker in charge at Wilkinson ERA Real Estate in Charlotte, NC.

How many paychecks do you need for a mortgage? ›

Your lender will want to see at least two years of steady income before they'll authorize a mortgage. That means no gaps in employment during that time. It's ok if you've changed jobs, but only if you stay in the same field.

How many months of pay stubs do I need for a mortgage? ›

Most lenders will require at least one full month of pay stubs prior to closing the loan. However, a lender might accept an employment contract (showing a start date, income and new position title) within 60 days of closing and/or a letter from the employer stating all employment requirements have been met.

How much is usually required for a mortgage? ›

You'll typically need at least 3 percent of the purchase price of the home as a down payment. Keep in mind that you'll need to put at least 20 percent down to avoid having to pay for mortgage insurance, however. Don't let the mortgage insurance cost scare you, though.

How much is a 200k mortgage per month? ›

On a $200,000, 30-year mortgage with a 4% fixed interest rate, your monthly payment would come out to $954.83 — not including taxes or insurance. But these can vary greatly depending on your insurance policy, loan type, down payment size, and more.

How much house can I afford if I make $36,000 a year? ›

If you make $3,000 a month ($36,000 a year), your DTI with an FHA loan should be no more than $1,290 ($3,000 x 0.43) — which means you can afford a house with a monthly payment that is no more than $900 ($3,000 x 0.31). FHA loans typically allow for a lower down payment and credit score if certain requirements are met.

What 3 factors are considered in qualifying for a mortgage? ›

5 Factors That Determine if You'll Be Approved for a Mortgage
  • Your credit score.
  • Your debt-to-income ratio.
  • Your down payment.
  • Your work history.
  • The value and condition of the home.
Feb 23, 2023

What are 3 steps you should take before applying for a mortgage? ›

How to apply for a mortgage in 3 steps
  1. Select a lender. The first step to applying for a mortgage is to decide which lender you'll work with. ...
  2. Apply and submit financial documents. Once you've decided on a lender, you can complete a full mortgage application. ...
  3. Respond to conditions and wait for approval.
Oct 20, 2022


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