How to Apply for a Mortgage

To apply for a mortgage, you'll first need to find a lender you’re comfortable with and that offers the best loan terms for your situation. From there, the mortgage application process involves completing an official loan application, sharing financial documents,  and undergoing the underwriting process (the way lenders assess whether your application should be accepted). 

You won’t formally apply for a mortgage until your offer on a house has been accepted. If you haven't found a home yet, make sure you have a mortgage pre-approval before making offers. Think of the pre-approval as the precursor to the application — it’s necessary to demonstrate proof of financing to sellers, and it’ll help fast-track your mortgage application once a seller says yes to your offer.

Mortgage application process

If you're a first-time home buyer, the mortgage application process may seem confusing. Here are the key steps involved:

1. Prep your finances

Review your credit score and income. A favorable credit score is usually in the mid-to-high 700s. While the amount of income a homeowner spends on their mortgage can vary, Zillow considers a home affordable when 30% or less of your monthly income goes toward housing. You can use Zillow’s Affordability Calculator to estimate a budget based on your circumstances.

Before applying for a mortgage, avoid making any major purchases or acquiring new lines of credit. These can increase your debt load, which impacts the portion of your income available to repay your loan. At best, it may delay your closing while the lender confirms you’re still reasonably able to afford the loan. At worst, it may mean your lender has to create a new loan and you’ll have to complete a new application, derailing the sale.

You'll also want to start saving for your down payment and closing costs if you haven't already. Your down payment is typically 3% to 20% of the purchase price depending on your loan type, and closing costs generally run 2% to 5% of the loan amount. Knowing these numbers ahead of time helps you set a realistic budget before you begin shopping for homes.

2. Gather your documents

Your mortgage application requires much of the same documentation required for your pre-approval, unless more than 30 days have passed, at which time you’ll need updated documents such as paystubs and bank statements. Most lenders carry your pre-approval information over to your loan application as a starting point.

Documents needed for your mortgage application

• Last 2 years of tax returns, including W-2s, 1099s or other forms
• Last 30-60 days of paystubs
• Last 30-60 days of other income streams, such as bonuses or rental income
• Last 60 days of bank statements
• Recent brokerage statements (Investment or retirement accounts, etc.)
• Recent loan statements (Car loan, student loan, etc.)
• Identification such as a driver’s license
• Social Security number or Individual Taxpayer Identification Number
• Copy of the purchase agreement or real estate sale contract, including property address and purchase price
• Information on other real estate if you own other properties
• Down payment gift letter
• Records from your business if you’re self-employed

3. Begin your application

The vast majority of lenders use the same application template, called the Uniform Residential Loan Application or Fannie Mae Form No. 1003. This standard application collects the detailed financial and personal information underwriters need to formally approve or deny your loan. Keep in mind that even though you've been pre-approved, that's not a guarantee you'll receive final loan approval — the underwriting process is a full verification of everything in your application. The mortgage application process can usually be completed online. Your loan officer will help you if you have questions.Be sure to respond quickly whenever your lender or representatives from their office reach out.

4. Include personal information

You and your co-borrower (if applicable) must fill in your personal information, including:

• Your name (and names of any co-borrowers)
• Social Security number 
• Date of birth
• Citizenship
• Marital status
• Number and agents of any dependents
• Contact information (Email and phone)
• Current address and whether you rent or own 
• Previous address if less than two years at current address

Note: Near the end of your mortgage application, you’ll be asked about your race, ethnicity and sex, but you are not required to provide such information. The government requires lenders to ask applicants for demographic information to monitor lenders’ compliance with federal equal credit opportunity, fair housing, and home mortgage disclosure laws.

5. List employment information

You and your co-borrower (if applicable) will need to list out details of your employment. This includes:

• Name of employer or company
• Contact information for your employer (address and phone)
• Your position or job title
• How long you've been in that field
• Whether you are self-employed

If you’ve been in your job for less than two years, you’ll need to fill out previous employment details, as well. If you’re self-employed, you’ll need to provide a minimum of two years’ personal and business tax returns and other business records.

6. Detail the purpose of the loan

Next, you’ll need to indicate why you want the loan: Is it to purchase a property,  refinance, to build a new construction, or some other reason?

7. Document income and housing expenses

You and your co-borrower (if applicable) will need to include details about your income, including employment income and any other sources of income. You’ll also need to provide your monthly housing expense, either a rent or mortgage payment. If you own other property, you’ll need to share those expenses, as well. 

8. Detail assets and liabilities

You and your co-borrower (if applicable) will need to list out what you own (your assets) and what you owe (your liabilities, or debt).

Some examples of assets include:

• Bank accounts
• Investments
• Real estate
• Businesses owned

Some liabilities include:

• Credit card balances
• Installment loans (e.g., car loans, student loans)
• Alimony and child support 

You will need to list out the details (name of bank, account number) and cash or market value for each of these. For installment loans and credit cards, you will need to include account number, monthly payment amount, months left to pay and total unpaid balance. For alimony and child support, you'll need to provide the monthly payment amount and the remaining duration of the obligation. Some of these fields may be pre-populated based on data your lender already has, but you’ll want to verify their accuracy. 

9. Source your down payment

Your lender has to confirm that the money you’re using for your down payment belongs to you and isn’t owed to anyone else. They’ll ask for the source of your down payment, such as a savings account, and analyze account statements to confirm you have the funds for both the down payment amount and closing costs. If a family member or friend gifted you money for your down payment, you’ll need a formal letter that confirms it’s a gift, not a loan. Your lender can help you with this.

10. Make declarations

You will need to answer a series of yes or no questions about the home you’re buying, the loan and your financial history. If you answer yes to any of these questions, you may need to provide an explanation letter. If any of these situations apply to you, it’s best to let your lender know ahead of time.

11. Sign the application

Finally, you’ll sign the mortgage application, where you and any co-borrower certify that all the information provided on the application is true and accurate.your down payment, you’ll need a formal letter that confirms it was a gift, not a loan. Your lender can help you with this.

Can you switch lenders during the mortgage application process?

Once you have the Loan Estimate, you have the opportunity to compare final costs between multiple lenders. Although submitting the loan application is a demonstration of commitment to move ahead with that lender, it's not a binding commitment. It’s possible to switch lenders at any time, even after submitting a mortgage application.

How long does the mortgage application process take?

The mortgage application itself might take you less than an hour to complete if you have your documents gathered and much of your pre-approval information automatically populated. Your loan officer can help you complete your application and avoid missing information. 

What happens after you submit your mortgage application?

Once your application is signed and submitted, you’ll progress to loan processing, underwriting, and, if approved, closing.

Processing

A loan processor will work with you to collect any information missing from your loan application. They’ll also confirm your employment, credit score and check for any fraud alerts related to you or your identity. 

Underwriting

Underwriting is the umbrella process covering everything that happens between submitting your application and closing. It includes loan processing (collecting any missing documents and verifying your employment, credit, and identity), a review of your full application by a loan underwriter, a property appraisal, and title review. 

Throughout this process, your loan officer may reach out with requests for additional documentation; make sure you respond promptly to keep the process moving. Once all conditions are satisfied, you'll receive a conditional approval, which means your loan is on track to be fully approved.

Appraisal

As part of underwriting, your lender will require a home appraisal to confirm the property’s market value supports the loan amount. An independent, licensed appraiser will visit the property and assess its condition, size, and comparable sales in the area. You'll pay the appraisal fee directly at the time of the appraisal. If the appraised value comes in lower than the purchase price, you may need to renegotiate with the seller or make up the difference out of pocket.

Loan approval

If approved for the mortgage, your loan application will be deemed “clear to close.” At least three business days before your closing date, you’ll receive the Closing Disclosure detailing the finalized costs of your loan. Take time to review the disclosure to make sure they accurately reflect the terms of your loan and the anticipated closing costs. The costs might vary slightly from your initial Loan Estimate, but by law they can’t increase too much. If everything looks correct on the Closing Disclosure you’ll sign it. If you have questions, don’t hesitate to ask your loan officer for clarification before signing. 

Closing

In many states, you’ll close your mortgage loan through an escrow or settlement agent or company. Other states require a closing attorney to oversee the process.

Whether it’s an escrow company or attorney, they’ll walk you through signing your closing paperwork, disbursing the funds for the sale and the mortgage, and ensuring the deed and mortgage are filed with the local recording office. You’ll need to have your closing payment ready for this step, usually either a cashier's check or a wire transfer.

You may be able to sign some of your closing documents electronically ahead of closing day. Talk with your loan officer, escrow agent or attorney to learn your options.

Once you’re all set with signing, congratulations! You’ll receive the keys to your new home and finalize your moving plans. Here’s a rundown of what to do after buying a house.