Mortgage Application Guide: How to Apply for a Mortgage

Finding your dream house is only one small part of the homebuying process. Unless you’re purchasing that property in all cash, you’ll also need to apply for a mortgage loan.

Though purchase loans typically take around 45 days from application to closing day, according to the most recent data from mortgage technology company Ellie Mae, the process starts long before your application is submitted.

What to do before you apply

Here are the steps you should take in the lead-up to filling out your application and how long each step may take you.

1. Shop around and compare rates

Every lender offers different terms, so it’s a good idea to compare rates before making a decision. Shopping around can ensure you find the right loan for your situation and, because mortgages are typically so large, can also help you find a lower rate and save money in the long term. When shopping around for mortgage lenders, you’ll want to consider things like rates, fees, and loan products.

Learn More: What You Need to Know About Working With a Mortgage Broker

2. Get pre-approved

Getting pre-approved by a mortgage lender means that the lender thinks you’re a good candidate for a loan. Once you’re pre-approved, you’ll get an official pre-approval letter, stating how much you’ll likely be able to borrow. You can use this number to guide your home search and ensure you stay on budget.

A pre-approval can also give sellers more confidence in your offers and help you be a more competitive buyer (not all buyers take this step).

What you need to know: To get pre-approved, you’ll usually need to provide your income, estimated monthly debts, credit score, and some info about what type of home you’re looking for. In some cases, the lender may require financial documentation to support these details.

Our mortgage prequalification calculator can help you determine how much you can afford.

Learn More:

• Your Mortgage Pre-Approval Checklist: Every Document You’ll Need
• Does Mortgage Pre-Approval Affect Your Credit Score?

3. Make an offer on a home

Making an offer on the home you want to purchase is the next step — and your pre-approval letter can help you get there. Include the letter in any offers you submit and give sellers confidence in your bids.

Once your offer is accepted, you’ll sign your purchase and sale agreement, moving you one step closer to homeownership.

4. Gather all the documents you’ll need to apply

When filling out your official loan application, you’ll need some documents to prove your income, debts, assets, and more. Lenders use this information to gauge your risk and assess how much you can comfortably afford payment-wise.

How to apply for a mortgage

If you’re ready to apply for a mortgage, here are the important steps you’ll need to follow — along with the estimated time each may take to complete.

1. Fill out your mortgage application

The application will ask about your income, monthly debts, employment history, and assets. You’ll also need to provide details about the home you’re purchasing and agree to a credit check.

You may want to fill out applications for several lenders to ensure you get the best rate and terms.

Be careful: Filling out a mortgage application will result in a hard credit inquiry (and hurt your score). To prevent your credit score from getting dinged several times over, submit your applications within the same 45-day window.

Each lender will then review your application and provide you with a loan estimate — an official form detailing all the fees your lender or any third parties will charge at closing should you proceed with the loan. Use these documents to compare your offers and choose which lender to move forward with.

2. Compare offers using your loan estimates

Once you have your loan estimates in hand, compare the interest rate on the first page. Be sure to check the top, right-hand corner for when that rate will expire. Since rates fluctuate daily, you want an expiration date that gives you plenty of time to close on your loan.

You should also flip to the third page of your loan estimate and view the “Comparisons” section. Here you’ll find the five-year total cost and principal paid on the loan, APR, and total interest percentage (TIP). These measures give you an idea of the long-term costs of each loan and can be a good way to compare your options.

For help understanding what each section of the loan estimate indicates, check out the Consumer Financial Protection Bureau’s explainer.

3. Commit to a lender and wait for approval

Choose the best offer, and let your loan officer know you’re ready to move forward with the process. They may request additional documentation along the way, so make sure you respond quickly to prevent your loan from getting delayed.

Your loan will soon move into underwriting when all your financial information is double-checked and verified. The underwriter will look to assess your overall risk as a borrower.

Specifically, your loan’s underwriter will be looking at:

• Your credit history
• Your employment history
• Your property’s value and condition (they’ll order an appraisal if one is needed)
• Your debts and assets
• Your financial reserves

Using this information, they’ll work to verify that you 1) meet the requirements for the loan you’re applying for and 2) can afford the mortgage payment that comes with it.

Learn More: Best Mortgage Lenders

4. Close on your loan

Once your loan is through underwriting, you’ll be given a closing appointment, which usually occurs at the settlement, escrow, or title company you’re working with. That’s when you’ll sign your closing paperwork, pay your closing costs and down payment, and finalize your home purchase. This part of the process can take a few hours to complete. If you use a real estate agent, they’ll usually attend this appointment with you.

After you’ve signed your paperwork, your lender will fund the loan, and the settlement, escrow, or title company will transfer funds to the seller and various service providers. You can then get your keys and are free to move into the house.