How to prepare for your mortgage loan application

When you’re ready to purchase a new property and own a home, the first step of the process is applying for a mortgage loan through a bank or financial institution. Your mortgage loan will allow you to make an offer on a property and will determine how much you pay in interest. To increase your chances of getting approved, there are a few important steps to take with the application process to become a credible buyer.


Your employment history is a key component of your loan application and will prove if you have a stable income to pay your mortgage each month. It’s important to avoid applying for a loan until you have one to two years of employment to ensure that you have a solid work history.

You will also need multiple assets to back up the loan if you’re unable to pay it in the future. Any money that you transferred to relatives or friends will also be investigated to determine how credible you are as a borrower.


The more money that you save for a down payment, the more likely lenders are to approve a mortgage. This will also reduce your interest rate, which can save you thousands of dollars over the term of your loan. Attempt to save an average of 20 percent of the price of the home that you’ll purchase.


Your debt-to-income ratio is one of the main factors that lenders look at when evaluating your mortgage loan application. You may have a high household income, but you may also have a significant amount of debt that makes it difficult for you to afford a new home or can put you at risk of bankruptcy. Pay off your student loans, auto loans, and credit card debt that you’ve acquired to ensure that you increase your credibility as a borrower and reduce monthly payments that are made towards debt.

You’ll also want to avoid applying for other loans while trying to get a mortgage loan, which can cause you to get rejected or will increase your interest rate.


Your credit score will ultimately determine if you get approved for a mortgage loan and what your interest rate will be. This proves to lenders that you are paying off debt on time. It’s important to build your credit score by using 20 percent of your credit card limits and avoiding late payments. You’ll also want to clear up any errors with the credit bureaus to increase your score.

Have a question about mortgage lending? Get in touch with one of our helpful mortgage lenders near you.

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