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Everything You Need to Know About Applying for a Mortgage Loan

Everything You Need to Know About Applying for a Mortgage Loan
Buying a home can be one of the most significant events of your life, and for many people, even those who aren’t first-time home buyers, the process can be overwhelming. Unless you’re planning to pay outright for your house, you’ll need a mortgage loan. Today, we’re covering the basics of what you need to apply for a home mortgage. 

Know What Mortgage Lenders Look For

Making yourself a candidate for the best mortgage terms starts with knowing what lenders look for. There are a few key areas for lenders to analyze your finances.

Credit Score

Your credit score rates your loan repayment history. The minimum credit score for traditional lenders to approve a home loan is 620 (although some government-backed loans can be grated with a score of 580 or greater). If your credit is in the “fair” range, you may get a loan but won’t get the best terms.
Credit scores over 700 may help you get lower interest rates, a higher loan amount, or both. If your credit score is marginal, you may wish to take six months off from the mortgage application process to improve it.

Income and Job History

Not only will lenders look at your history of loan repayments, but they’ll also look at your means to do so. You’ll need to provide your job history for at least the last two years, along with pay stubs and a statement from your employer. If you’re self-employed or a freelance contractor, the process is a little different, but you’ll still be required to submit proof of income.

Debt-To-Income Ratio

Debt-to-income (DTI) ratio is the total amount of all your minimum monthly payment obligations divided by your gross (not net) monthly income. These are recurring expenses such as car loans, student loans, and credit card bills. It doesn’t include your monthly living expenses, like groceries, power bills, or Netflix subscriptions.
A DTI of less than 50% is what traditional mortgage lenders require. If yours is higher, then pay down credit card bills or look for loan consolidation services. Or, you could start a side hustle to boost your gross monthly income.


In this case, assets doesn’t mean things you own, like your car or jewelry, but rather extra money in the bank, such as :
  • Savings accounts
  • Retirement accounts
  • Taxable investments
This shows that you’ll be able to pay for your loan even if you run into financial difficulty or lose your job.

The Bottom Line

Lenders look at several factors when deciding whether to grant a home loan. Your income, credit history, debts, and assets are all considered, as is the type of loan you’re seeking. The first step in securing a mortgage is a pre-approval. Once you’ve gotten that, your real estate agent can walk you through the rest of the loan application and house-hunting process.
Contact V Sells & Associates today for professional home buying and expert Realtor® services in the greater Baltimore area!

Work With Us

Whether you are buying or selling, we at VSells & Associates make it our mission to guide our clients through the whole process. We make moving simple, straightforward, and as stress-free as possible.

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