So you’re ready to buy a new home but before you start house hunting you’ll need to get pre-approved.
Most real estate agents won’t start taking you to look at homes until you have a pre-approval letter in hand.
A mortgage pre-approval means a lender has pulled your credit and verified your income and assets and that you are approved for a home loan.
Before You Call a Lender
Before you start calling lenders to get pre-approved you should make sure that you meet some of the basic loan requirements.
Check Your Credit Score
Your credit score is one of the biggest factors in determining your eligibility for a mortgage. 620-640 is the target minimum FICO score you should be aiming for.
There are some types of loans that are for people with less than perfect credit. FHA loans require a 580 credit score with a 3.5% down payment.
Check your credit score for free with these apps and websites:
If you have a score below 580 it’s best to take some time to work on improving your credit before applying for a loan.
Use a Mortgage Calculator
Before going through the hassle of calling a loan officer it’s good to make sure you can afford a mortgage payment first. There are many costs associated with a mortgage besides just the monthly payment such as, PMI, home insurance and HOA fees.
You can easily see if you’re able to afford a mortgage based on your income with our home affordability calculator.
Gather You Documents
There are a few documents you’ll need to have in order to get pre-approved. A loan officer will ask for your past 2 years of tax returns, w2’s, bank statements, pay stubs and photo ID. You should gather these before calling in order to expedite the process.
Documents needed for Pre-Approval
- Last 2 years of tax returns
- Past 2-4 pay check stubs
- 2-3 months of bank statements showing money for the down payment
- Previous 2 years W2’s
- Photo ID
How Long Does it Take to Get Pre-Approved?
As long as you have all of the documents ready to go and the automated underwriting systems returns a “approve” or “refer” then you will get a pre-approval letter showing how much you’re approved for in a matter of minutes.
To speed up the process make sure to have all of your documents ready for your loan officer.