Top 5 Things to Know Before Applying for a Mortgage

Applying for a mortgage is one of the biggest financial steps you’ll take—but it doesn’t have to be overwhelming. Whether you’re a first-time buyer or a seasoned homeowner, understanding the process can help you avoid surprises, save money, and get approved faster. Here are the top 5 things you should know before applying for a mortgage.

1. Your Credit Score Matters—A Lot

Your credit score is one of the first things lenders look at. It affects not only whether you’re approved, but also what interest rate you’ll qualify for. Generally, a higher score means better loan terms and lower monthly payments.

  • Aim for a score of 620 or higher for conventional loans
  • FHA loans allow scores as low as 580 (with 3.5% down)
  • Check your score early and fix any errors before applying

Tip: Avoid opening new credit accounts or making big purchases before applying—it can negatively impact your score.

2. Your Debt-to-Income Ratio Is Just as Important

Lenders want to see that you can comfortably handle a mortgage payment along with your existing debts. Your debt-to-income (DTI) ratio is the percentage of your monthly income that goes toward debts like credit cards, car loans, and student loans.

  • Most lenders prefer a DTI of 43% or lower
  • FHA loans may allow a slightly higher ratio with strong compensating factors

Action Step: Pay down as much debt as possible before applying to strengthen your application.

3. You’ll Need More Than Just a Down Payment

Many buyers focus on saving for the down payment—but don’t forget the additional costs that come with buying a home. These can include:

  • Closing costs (2–5% of the purchase price)
  • Appraisal and inspection fees
  • Escrow deposits for taxes and insurance
  • Moving expenses

Pro Tip: Some loan programs offer down payment or closing cost assistance—ask your mortgage broker about eligibility.

4. Getting Pre-Approved Gives You a Big Advantage

A mortgage pre-approval is a powerful tool. It shows sellers you’re a serious buyer and gives you a clear idea of what you can afford. Pre-approval involves a credit check and review of your income and assets.

  • Speeds up the home-buying process
  • Strengthens your offer in competitive markets
  • Helps you stay within budget

Reminder: Pre-approval letters are typically valid for 60–90 days—don’t wait too long to start house hunting.

5. Choosing the Right Lender Can Save You Thousands

Not all lenders are created equal. Some offer better rates, faster closings, or special programs for first-time buyers. Others may charge higher fees or have stricter requirements.

  • Compare interest rates, fees, and loan terms
  • Ask about turnaround times and customer service
  • Consider working with a mortgage broker who can shop multiple lenders for you

Final Thought: A good lender should take time to understand your goals—not just quote you a number.