Getting Pre-Approved For Your Home Loan
Get Pre-Approved Now To Save Time When Needing To Close
How Do I Get Pre-Approved For A Home Loan
- Proof Of Income
For a time it was almost impossible to get a loan without a W-2 or tax returns but things have loosened up a bit. Be prepared with W-2 statements from the past two years, if available, your most recent pay stubs showing income as well as your year-to-date income, proof of other income such as bonuses or alimony and your two most recent tax returns.
First time home buyers should call to discuss the best way to purchase their first home. 800-826-5077.
Get Your Pre-Approval Today
- Proof Of Assets
You will be required to provide bank statements and investment account statements to prove that you have funds for the down payment and closing costs, as well as cash reserves. Your down payment, expressed as a percentage of the selling price, varies by loan type. Most loans come with a requirement that you purchase private mortgage insurance (PMI) or pay a mortgage insurance premium (MIP) or a funding fee unless you put 20 percent (or more) down.
In addition to your down payment, pre-approval is also based on your FICO(credit) score, debt-to-income (DTI) ratio and certain other factors, based on loan type. All except jumbo loans are conforming, meaning they conform to GSE Fannie Mae and Freddie Mac) guidelines. Some loans, such as HomeReady (Fannie Mae) and Home Possible (Freddie Mac), are designed for low- to moderate-income homebuyers or first-time buyers. VA loans, which require no money down, are for U.S. veterans, service members and not-remarried spouses. If you receive money from a friend or relative to assist with the down payment, you may need a gift letter to prove that the funds are not a loan.
The chart below lists common loan types and the basic requirements for each one; you'll see how different the requirements can be. In the DTI Ratio column where two figures appear the first refers to housing-only debt and the second refers to all debt. Under PMI/MIP/Fee, two numbers separated by a slash (/) indicate an upfront fee followed by an annual fee (paid monthly). All mortgage loans have additional requirements not listed here.
Mortgage
Min Down
FICO
DTI Ratio
PMI/MIP/Fee
Addl Req.
Conventional 97
3%
620
41%
0.15-1.95%
Conventional
5%-20%
620
43%
0.15-1.95%
Jumbo
5%-20%
720-740
43%
None
Non conforming
FHA 96.5%
3.5%
580
31/43%
1.75%-0.85%
FHA 90%
10%
500
31/43%
1.75%-0.85%
- Good Credit
Most lenders require a FICO score of at least 620 or above to approve a conventional loan and some even require that score for an FHA loan. Lenders typically reserve the best interest rates for customers with a credit score of 750 or above. FHA loan guidelines allow approved borrowers with a score of 580 or above to pay as little as 3.5-percent down.
People who have lower scores must make a larger down payment. Lenders will often work with borrowers with a low or moderately low credit score and suggest ways they can improve their score.
- Employment Verification
Most lenders require a FICO score of at least 620 or above to approve a conventional loan and some even require that score for an FHA loan. Lenders typically reserve the best interest rates for customers with a credit score of 750 or above. FHA loan guidelines allow approved borrowers with a score of 580 or above to pay as little as 3.5-percent down. People who have lower scores must make a larger down payment. Lenders will often work with borrowers with a low or moderately low credit score and suggest ways they can improve their score.
- Other Documents
our lender will need to copy your driver's license and will need your Social Security number (SSN) and your signature allowing the lender to pull a credit report. Be prepared at the pre-approval session and later to provide (as quickly as possible) any additional paperwork requested by the lender. As the saying goes the money will find out everything. Better to be honest with your loan officer and put everything on the table up front so they can find the best program and deals for you.
What Is The Difference Between Pre-Qualifying
and Pre-Approval
-
A pre-qualification is basically a phone interview. A pre-approval is the lender actually verifying the information to confirm that they can make the loan with the rate and amount suggested by a pre-qualification
Today the markets are very aggressive. If you want the best purchase price, letting the owner know that you can close a deal by having a pre-approval is always better. An owner is more likely to take a lower offer from someone they know will close.
To apply now for a pre-qualification letter click below.
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