Applying for a mortgage represents an essential step toward homeownership. While the mortgage application process can be intimidating for homebuyers, the mortgage professionals at PNC Bank are here to explain the process and help you navigate it. Understanding how to get a mortgage loan to finance your new home makes the purchasing process smoother and more enjoyable.

This mortgage application checklist will show you:

  • How to prepare before applying for a home loan,
  • Which documents are needed for a mortgage application and
  • The steps to follow when applying for a mortgage.

Here is what you need to know about how to apply for a mortgage.

How to Prepare Before Applying for a Mortgage

Completing the following steps before applying for a home loan can help streamline the mortgage loan application process.

  • Check your credit. Credit scores play an important part in determining whether a buyer qualifies for a mortgage loan and what interest rate lenders can offer[1]. So it can be helpful to know your credit score before applying for a loan. Reviewing your credit history also allows you to correct any potential errors on the report. 
  • Review your finances. Using current income and expenses, calculate a monthly budget to see how much you can comfortably afford to spend on a mortgage plus homeowner expenses (including maintenance, utilities, property taxes, and insurance) each month. Take care to use realistic figures. This will minimize the risk of financial stress once you start making your monthly mortgage payments. For a more detailed budget, use a tool like PNC’s Home Insight Planner to create an accurate picture of your finances and see how a new home payment fits into it.
  • Research home loan options. Different loan types are designed to suit buyers in different situations. You can consider conventional loans vs. government-backed loans, fixed-rate vs. adjustable-rate loans, and 15-year vs. 30-year loans[2]. Get a solid overview of home loan options by reading about the five main types of mortgage loans
  • Save for a down payment and closing costs. Budgeting for the down payment and closing costs shows how much you can afford. By saving a down payment of 20%, you can avoid paying for private mortgage insurance (PMI), but well-qualified borrowers might be able to buy a home with just 3-5% down[3].  

What Documentation Do I Need to Get a Mortgage?

Here is a checklist of documents typically needed for mortgage application[4]:

  • Proof of current income: Pay stubs for the last 30 days for employees or profit and loss statements for those who are self-employed.  
  • Proof of income history: W-2 forms, 1099s and tax returns from the last two years, plus documentation of any other income sources.
  • Proof of assets: The two most recent statements from bank and investment accounts. 
  • Debt information: A list of current debts, including credit cards, auto loans, student loans, and any other outstanding loans. 
  • Proof of identity: Your social security number and a valid, government-issued ID (such as a passport or driver’s license).
  • Documentation of the source of your down payment: This could be covered by the proof of assets, but if the funds were a gift rather than earned income, you may need a statement from the giver confirming the gift.
  • Documentation of any name change (only needed if the change is recent).

In addition to these documents, the lender may require proof of residence and proof of employment throughout the application process. Lenders also look into credit history to see how you have handled debt payments to this point[1].  

How Do I Begin to Get a Mortgage?

Now that preparations and documents are in order, you can begin the mortgage application process by following these steps:

1. Get Pre-Approved With a Lender

Even before beginning the house hunt in earnest, buyers may want to begin the pre-approval process with a lender. 

This process starts with a preliminary pre-approval, in which the borrower answers some basic questions about their finances and the lender does a "soft credit pull," which allows them to get an idea of the borrower's credit history without making the "hard credit inquiry," which can temporarily reduce the borrower's credit score by a few points. This step is used to give the borrower some peace of mind about their ability to qualify for a loan.  

Formal pre-approval is often the next step, in which the lender reviews the borrower’s financials and runs a hard credit pull to determine that the borrower can qualify for a certain amount of money. Upon completion of the pre-approval, the lender will provide the borrower with a pre-approval letter. This letter can strengthen a buyer’s offer to purchase a home by assuring the home seller that the buyer can get the financing needed to close the deal[5]. Many lenders have an online pre-approval application to simplify the process. 

2. Keep Documents Organized 

Keep the documents outlined in the previous section organized as you begin the home search. These documents, as well as new paystubs, bank statements and other financial documents received, are needed once you find a home and are ready to apply for a mortgage loan. It’s important to remember that while the pre-approval is based on borrower qualifications, the actual mortgage loan also takes the specific property into account. A pre-approval does not necessarily mean that your specific property will be approved. So your lender will need to review all current financials and property details when you have found the right home. 

3. Complete the Loan Application Once You’ve Chosen a Home

When your offer has been accepted on the new home, complete the mortgage application accurately and thoroughly. Provide all requisite information, including personal details, financial information, employment history, and details about the home you plan to purchase. 

4. Work with a Loan Officer 

Once the application is submitted, a loan officer guides you through the remainder of the process. They review your application, verify the provided information and request any additional documentation as needed. The loan officer may need additional information or documentation throughout the underwriting and appraisal process, so make sure to remain in close communication and respond promptly to any requests.

5. Close on the New Loan

If the application is approved, you are ready to proceed to the closing stage, in which you can sign the loan documents with a notary and finalize the purchase of your new home. 

How Hard Is It to Get a Home Mortgage?

The effort needed to successfully complete the mortgage process depends on several factors, including your financial situation, credit history, and the lender's specific requirements. While there may be challenges along the way, being well-prepared and meeting the lender's criteria can increase your chances of success.

How Do I Know If I Qualify for a Mortgage?

Lenders are looking at four key factors to determine mortgage loan eligibility:

  1. Stable Income. Lenders want to see that borrowers have reliable income as a source of funds to cover their monthly mortgage payments. 
  2. Credit History. Credit scores show lenders how responsibly applicants have used debt. Credit histories show past due debts, late payments and how much of their available credit a borrower uses. Lenders may look for a credit score of at least 620, although a lower score can be considered with certain loan types. 
  3. Debt-to-Income Ratio (DTI). DTI compares an applicant’s monthly debt payments to their gross monthly income. Lenders like to see a lower DTI ratio because it indicates that a lower percentage of an applicant’s income is allocated to existing debt payments. 
  4. Assets (Including Down Payment Funds). Lenders must see that an applicant has enough money to cover the down payment and closing costs. Lenders may also look to see if an applicant has reserve funds, which is extra money that could be used to cover unexpected expenses. 

The Bottom Line

Applying for a mortgage requires careful preparation and organization. Follow the mortgage application checklist and understand the necessary documents and steps to navigate the process confidently.