Steps to Mortgage Approval

Income:
 

Lenders will check your income to figure out how big of a loan you can afford. At the same time lenders will verify your ongoing employment. Income can be in the form of wages, business income, interest, annuity payments, dividends, rental income, alimony, or child support.

What you will need:

  • W2 forms (last 2 years if possible)
  • Last 2 pay stubs
  • Statements from any interest, annuity, or dividend payments
  • Last 2 tax returns if you are self employed or using business income
Assets:
 

Lenders want to know what other assets you currently have. This is in order to see if you can afford the down payments and closing costs. Assets include cash in checking and savings accounts, CD, Stocks, Bonds, Mutual Funds, Retirement Accounts, other Real Estate, and cash value of life insurance.

What you will need:

  • Last 2 months of bank statements
  • Last statements from any asset or investments account
  • Proof of ownership of any real estate
Credit History:
 

Lenders look at credit history to see your willingness to pay and get a sense of how much debt you currently have. Bad credit is not always an instant disqualifier and there are simple ways to improve your credit situation.

What you will need:

  • Social Security Number and Date of Birth to pull your credit
Payment Ability:
 

Finally, lenders will take your monthly income and compare it to your monthly debt payments. Debt payments include: credit cards, loans, cars, alimony, child support. These payments will be added to your potential mortgage payment, taxes, and insurance to get a total monthly debt payment.  This monthly debt payment is divided by your total monthly income to get a debt to income (DTI) number.

Lenders like to see a debt to income (DTI) of 50% or below, but can go higher or lower depending on the circumstances and the other factors of the loan.

Have questions? Ready to get started?