How to get a mortgage: Step-by-step

Quick insights

Buying a house is more than a transaction—it’s a major milestone that can shape your finances for years. But a lot of the work that goes into getting a mortgage actually happens before you apply. Following these steps can make a big difference in what you qualify for.

Let’s dive into what goes into getting a home loan, from preparing your finances to closing.

How to get a home loan: Steps to take before applying for a mortgage

Not all of these steps are required. But following them may put you in a stronger position to secure a mortgage and submit competitive property offers.

1. Save for your down payment

Saving up for a down payment is one of the earliest steps toward getting your mortgage—and some might say the earlier the better. This is because the down payment is often the largest lump expense associated with a home loan. The down payment is also one of the biggest factors in how much your mortgage payment will be. The more you put down, the less you’ll owe.

Generally, lenders require private mortgage insurance (PMI) on loans with a down payment below 20% of the total mortgage amount. The insurance will increase your monthly payments and add to your overall costs.

Use Chase’s mortgage calculator to experiment with what your monthly payment might look like with different down payment amounts. The results will give you an idea of how much to save for your down payment.

2. Improve your credit

Your credit score reflects how well you’ve managed debts in the past, and lenders use it to assess your likelihood to repay your mortgage in the future. Generally, higher credit scores help you qualify for better mortgage terms and lower interest rates, reducing the total amount paid over the life of your loan. 

If your credit score is lower than you’d like, it might be wise to review your credit report and consider strategies for improving credit before your mortgage application. Strategies can include:

You are typically entitled to one free annual credit report from the three major credit bureaus per year. Additionally, you could consider speaking with a mortgage loan officer to see if you qualify for home loans designed for lower credit scores.

3. Account for closing costs

While your down payment is a major upfront cost when securing a home loan, there are other upfront costs to consider. Broker fees, application fees, appraisal fees, title-related fees and more all factor into your closing costs. Taken together, they usually amount to somewhere between 2% and 5% of the overall loan amount.

Mortgage lenders should be able to help you estimate your closing costs. They are a significant lump sum in addition to your down payment, so include them in your budget plan for saving to buy a house.

4. Estimate a budget

Your mortgage lender may be able to help you set a budget. Before you talk with them, it can be helpful if you estimate your own budget based on factors like your anticipated down payment and credit score. Setting a budget can help you target your saving goals.

Even ballpark figures can help you start focusing your housing search and getting an idea of the types of properties you’ll be able to afford. Another helpful method for estimating a mortgage budget is to calculate it based on your income.

5. Research mortgage options

Lenders offer a variety of mortgage options tailored to different budgets, lifestyles, timelines and financial goals. This can range from the length of your loan term, such as a 15- or 30-year mortgage, to the way it handles interest rates, such as a fixed-rate mortgage or adjustable-rate mortgage. 

The most common types of mortgage loans include:

6. Explore and compare mortgage lenders

Just as comparing different types of mortgages can be a helpful process, so is shopping around and comparing different lenders. Look at the differences not only in interest rates, but also in origination rates and other fees. If all the back-and-forth is too overwhelming, you may want to work with a mortgage broker. They’ll shop for lenders for you and present all your options.

7. Gather your paperwork

Generally, there are a few key documents needed for a mortgage application. This is the paperwork they use to assess your financial profile and help evaluate your application. 

Collecting your financial records before applying can help speed things up. Lenders commonly ask for recent pay stubs, tax filings, bank statements and more. You may also need some supporting documents to explain any large deposits or withdrawals made recently. Co-signers will need to provide the same records.

8. Consider getting preapproved

Preapproval is a process many homebuyers go through before applying for their mortgage or making an offer on a house. The process is optional, but generally recommended.

During preapproval, your lender thoroughly reviews your finances. They assess details like your credit score, income and debts to estimate a potential mortgage amount they could offer you. 

Preapproval often comes with a conditional commitment letter for a mortgage as well. Note that preapproval differs from prequalification, which provides a more generalized estimate of potential loan offers based solely on consumer-provided data.

Getting preapproved has a few potential benefits. With a firm estimate of what your lender is willing to offer, you can make more informed decisions when house hunting. With a conditional commitment in hand, any offers you make might be more competitive as this document signals the financial backing and readiness to close on a purchase.

Getting a mortgage: What to do after preapproval

Whether or not you decide to get preapproved, once your finances are ready, it’s time to find the property and submit an offer.

Find a real estate agent

First thing’s first—having a skilled real estate agent in your corner can be a valuable asset. They can help you decipher local markets and decode listing descriptions. This is especially helpful if you have to look at more houses than you planned on.

Your agent may also serve as a valuable resource during negotiations. Ideally, they’ll know the local market like the back of their hand and should be able to spot red flags you might miss.

Start house hunting

To formally apply for a mortgage, the lender needs the actual property address and total loan amount. That means you need to find the property and decide how much you want to offer for it. House hunting can be one of the most time-consuming steps in the process, but many people also find it to be rewarding. In your search, you can visualize yourself in your potential new home.

Submit an offer

Once you’ve found “the one,” it’s time to make an offer. Your real estate agent can help you craft a competitive bid. If your offer is accepted, you’ll begin the closing process. This is also when your mortgage application is formally submitted to the lender.

If your offer is not accepted, you’ll either need to negotiate with the seller or continue searching for another property.

Home appraisal and underwriting

Your lender wants to make sure they’re not lending you money for a home that’s worth less than your offer, which is where the home appraisal comes in. This typically happens shortly after you submit your mortgage application. If the appraisal comes in low, you might need to renegotiate the price, bring more cash to closing or walk away entirely.

Then comes underwriting. This is when the underwriter verifies your income, employment, assets and debt to make sure you qualify for your mortgage loan. Think of this process as the formal review of your mortgage application. The underwriter will either approve or deny you for the home loan.

Closing

Once you’ve been approved for the loan, you’re ready to start the closing process. Even though closing is the last part of the mortgage process, it’s often referred to independently because there are several steps involved, like clearing the title. Your lender will be able to guide you through the necessary steps in the process. Once closing is complete, you will have secured a mortgage and a new home.

In summary

There are a few key steps to take before getting a mortgage that may improve your application and help you save money in the long run. This often means addressing key elements of your financial profile, like your credit score, down payment, budget and choice of mortgage. It also includes doing some research into the expected fees and costs of the mortgage.

A qualified home lending advisor may be able to provide more specific guidance tailored to your unique financial situation.