Getting a Mortgage: From Pre-Approval to Closing

Before approaching any lender, review your credit reports from all three major bureaus — Equifax, Experian, and TransUnion — for errors or outdated negative items. Your credit score is one of the primary factors lenders use to determine your interest rate and whether you qualify at all. Calculate your debt-to-income (DTI) ratio — the percentage of your gross monthly income consumed by recurring debt payments — because most conventional loans require a DTI at or below 43%.

Pre-approval is a lender's written assessment of how much you can borrow, based on a hard credit pull and verified financial documents. It differs from pre-qualification, which is an informal estimate based on self-reported information and carries less weight with sellers. Submit a complete application — including income, assets, employment history, and the property type you plan to purchase — to receive a pre-approval letter, typically valid for 60–90 days.

Common mortgage types include conventional loans (not government-backed), FHA loans (government-insured, lower down payment), VA loans (for eligible veterans and service members), and USDA loans (for qualifying rural areas). Each has different credit, income, and property requirements. Once you have an accepted offer on a home, ask your lender about a rate lock — a written agreement that holds your interest rate for a set period (commonly 30–60 days) while your loan is processed.

After your offer is accepted, your lender opens a formal loan file using the Uniform Residential Loan Application (commonly called the 1003 form). You will receive a Loan Estimate within three business days — a standardized three-page document that outlines your estimated interest rate, monthly payment, and closing costs. Review it carefully and ask your loan officer to explain any line items you do not recognize.

Underwriting is the lender's formal process of verifying every piece of information on your application and assessing the risk of extending the loan. An underwriter will scrutinize your income, employment, assets, credit history, and the property itself. Expect requests for additional documentation — sometimes called conditions — such as explanation letters for large deposits or gaps in employment. Respond fully and quickly to each request.

Your lender will order an independent appraisal — a professional valuation of the property conducted by a licensed appraiser. The appraiser assesses the home's condition, size, and comparable recent sales in the area to determine its fair market value. If the appraised value comes in lower than the purchase price, you will need to renegotiate with the seller, increase your down payment to cover the gap, or potentially walk away (depending on your contract contingencies).

Once underwriting approves your file and all conditions are satisfied, you receive a clear to close (CTC) — the lender's confirmation that the loan is ready to fund. At least three business days before closing, your lender is required to deliver a Closing Disclosure, which shows the final loan terms and itemized closing costs. Compare it carefully against your Loan Estimate. On closing day, you will sign the loan documents, pay your down payment and closing costs (typically 2–5% of the loan amount), and receive the keys to your new home.