Mortgage Process Explained

How to Get a Mortgage in 6 Steps

By 

Matt Ryan Webber

Updated November 19, 2024

Reviewed by 

Doretha Clemon

Fact checked by 

Vikki Velasquez

Getting a mortgage can seem daunting. You’ll need to make big decisions about mortgage types, lenders, and properties. However, at its most basic level, the mortgage process involves only six steps: pre-approval from mortgage lenders, house shopping, mortgage application, loan processing, underwriting, and closing. Understanding each of these steps can help you weather the more complicated aspects of the process. In this guide, we’ll explain everything you need to know.

Key Takeaways

• The mortgage process is complicated but can be broken into six steps: pre-approval, house shopping, mortgage application, loan processing, underwriting, and closing.
• It’s a good idea to get pre-approval for a mortgage before you start looking for a property, so you know what you can afford.
• Once you’ve found a property and put in an offer, expect the mortgage closing process to take 30 to 60 days to complete.
• Check all of your paperwork carefully. You will be paying for your mortgage for a long time, so the small print can end up costing you a lot of money.

1. Get Your Pre-Approval

Before you can go house shopping, you need to secure your pre-approval from a mortgage lender. This shows sellers that you’re a serious buyer, as well as helps you narrow down your options during your home-buying search.

Start by figuring out how much you can afford to pay. Keep in mind that an accurate picture of your monthly costs includes not just the loan principal, but also interest payments, taxes, and homeowners insurance. And if you aren’t able to make a 20% down payment on a property, you’ll also need to pay for private mortgage insurance (PMI).1 A mortgage calculator can show you the impact of different rates on your monthly payment. 

Calculate Your Monthly Payment

Your monthly mortgage payment will depend on your home price, down payment, loan term, property taxes, homeowners insurance, and interest rate on the loan (which is highly dependent on your credit score). Use the inputs below to get a sense of what your monthly mortgage payment could end up being.Enter Home Price

$Enter Down Payment

$

%Select Loan Term

30 years20 years15 years10 yearsEnter APROr Use Credit Score For Estimate

%

Or

Your Credit Score760-850700-759680-699660-679640-659620-639

+ More Options

Monthly Payment

$2,649.04/monthfor 30 yearsMonthly Payment$2,649.05

Principal & Interest

$2,264.38

Property Taxes

$256.67

Homeowners Insurance

$128.00

Mortgage Size$352,000.00

Mortgage Interest*$463,176.16

Total Mortgage Paid*$815,176.16

*Assuming a fixed interest rate. A variable rate could give you a lower upfront rate. To understand more click here.Expand

Knowing your budget will help you determine which type of mortgage is right for you. There are several types of mortgages available with different down payment options, credit score requirements, and income restrictions. The most common type of home-buying loan issued in the United States is a conventional mortgage, which means that the mortgage is issued by a private lender. However, you might also be eligible for a mortgage through the Federal Housing Administration (FHA), U.S. Department of Agriculture (USDA), or U.S. Department of Veterans Affairs (VA).

Once you have an idea of the type of mortgage you would like, you can approach mortgage lenders for pre-approval. A pre-approval is a document that states the maximum amount your mortgage lender is willing to loan to you. You can get pre-approved quite quickly—your mortgage lender will just need to run a three-bureau credit report (called a tri-merge) that shows your credit score and credit history as reported by third-party credit bureaus.

Warning

Mortgage lending discrimination is illegal. If you think you’ve been discriminated against based on race, religion, sex, marital status, use of public assistance, national origin, disability, or age, there are steps you can take. One such step is to file a report to the Consumer Financial Protection Bureau (CFPB), the Federal Trade Commission (FTC), or the U.S. Department of Housing and Urban Development (HUD).

2. Find a Property

Most people start looking for properties long before they are pre-approved for a mortgage, and perhaps before they are even thinking of buying a home. But once you have your pre-approval, you’re ready to begin looking in earnest.

There are many ways of searching for a home. You can use online real estate portals like Zillow or Trulia, buy a house at auction, or even look for an off-market home. Just make sure you don’t fall into some of the common mistakes people make when house-hunting.

Making an Offer

Once you’ve found a suitable property, you’ll need to put in an offer on it. Your real estate agent should help you to do this, as different sellers and properties require different sorts of offers.

At this stage, you’ll normally have to put down earnest money, a deposit that indicates you are seriously interested in a property. Typical earnest money deposits are 1% to 2% of the sale price.2 If you close on a property, this money is put towards the downpayment.

Normally, your offer will also contain contingencies that allow you to pull out of the deal. These are designed to protect you and your money if the house you’ve chosen is not quite what it seems. Common contingencies include:

• Appraisals must come in close to the loan amount, not lower
• Home inspections do not find major issues with the property
• You are able to secure final mortgage approval

3. Apply for a Mortgage

Now you are ready to apply for a mortgage. To do this, you’ll need to approach a mortgage lender—most likely the one that gave you pre-approval, but you should also shop around to make sure you get the best deal.

Each mortgage lender will need information to give you an offer. If you go with the lender who provided your pre-approval, they may have some of what they need already. However, expect to do some digging to get everything in order. Your real estate agent may be able to grab some of the harder-to-find items, such as property taxes.

Your lender should guide you as to what to send and when, but they are likely to need:

Employment
   • Name of current employer, phone, and street address
   • Length of time at current employer
   • Position/title
   • Salary including overtime, bonuses, or commissions

Income
   • Two years of W-2s
   • Profit and loss statement if self-employed
   • Pensions, Social Security
   • Public assistance
   • Child support
   • Alimony

Assets
   • Bank accounts (savings, checking, brokerage accounts)
   • Real property
   • Investments (stocks, bonds, retirement accounts)
   • Proceeds from the sale of your current home
   • Gifted funds from relatives (e.g. a down payment gift for an FHA loan)

Debts
   • Current mortgage
   • Liens
   • Alimony
   • Child support
   • Car loans
   • Credit cards
   • Real property

Property information
   • Street address
   • Expected sales price
   • Type of home (single-family residence, condo, etc.)
   • Size of property
   • Real estate taxes (annual)
   • Homeowner’s association dues (HOA)
   • Estimated closing date

Credit history
   • Bankruptcies
   • Collections
   • Foreclosures
   • Delinquencies

This last item—your credit history—is one of the most important elements in getting your mortgage approved. Because of this, it’s a good idea to check your credit report beforehand to see where you stand.

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