7 Tips to Help Get Your Mortgage Application Approved

buying a home
Photo by ShutterOK / Shutterstock.com

You’ve found your dream home, but are having difficulty getting a mortgage. What’s an applicant to do?

Loan offers are all over the place, but don’t be fooled into thinking that everyone is automatically approved. Lenders are no longer willing to lend large sums to eager borrowers who may not be able to hold up their end of the promise. New federal rules that took effect in January are intended to prohibit risky loans.

Fortunately, there are actions you can take to increase your chances of getting a mortgage.

1. Do your homework

Contact multiple lenders to get an idea of the standards you need to meet to qualify for a loan. They may tell you that it varies by applicant, but most have a general set of criteria in place. (Ideally, this step should be taken before you begin looking for a house.)

Because of the new rules, “mortgage lenders are asked to comply with two new requirements: the Ability to Repay rule and Qualified Mortgages,” reports CNN Money. Here is a brief overview of what the two rules entail:

  • Your debt-to-income ratio will be analyzed to confirm that you are indeed able to make timely payments over the duration of the loan. Your debt should be less than 43 percent, although exceptions can be made.
  • Lenders must verify the assets, liabilities and income of the loan applicant.
  • The loan repayment period should not exceed 30 years.

Although your lender may have additional criteria, keep this short list in mind. Also ask potential lenders what credit score you’ll need to qualify.

2. Shop around

Traditional banks are often a bit more stringent than credit unions. The New York Times says that “because credit unions typically keep a hefty portion of their loans in portfolio (rather than sell them on the secondary market), they have flexibility in tailoring mortgages to better meet consumer needs instead of the expectations of investors.”

So if you know that you may have a difficult time qualifying, credit unions may be the better option.

3. Be cooperative

Provide all of the requested information in a timely manner when you attempt to pre-qualify for the loan or obtain preapproval, which banks are more reluctant to grant these days. After that, comply with all requests for paperwork. There’s nothing worse than being denied because you failed to follow instructions or paperwork deadlines lapsed. Says Credit.com:

When your application is approved it’s important to check the underwriter’s checklist of borrower conditions. This list will specify everything that you need to do in order to ensure that their loan will be approved for closing. The conditions often include requests for alternative and supplementary documentation, explanation and correction of anomalies, and verifications and attestations.

Lenders don’t have time on their hands to chase down applicants for paperwork and explanations for vague responses.

4. Plead your case

Failing to meet the lender’s criteria doesn’t automatically disqualify you for a mortgage. You may simply have to ask the lender to take a second look or make an exception to the rules, if possible. It may also be necessary to provide additional documentation to strengthen your case.

5. Get a co-signer

Do you know someone with stellar credit and verifiable income who is willing to co-sign a loan for you without actually residing on the property?

But proceed very cautiously and make sure your potential co-signer understands the risks. If you don’t pay, your co-signer is responsible for the entire loan. For that reason, our general advice is that people should not agree to co-sign a loan for anyone, even a family member or close friend.

However, the co-signer may be confident in your ability to pay because of your complex situation, such as self-employment or a substantial amount of expected income that the lender may not be unaware of.

6. Be patient

Maybe the time isn’t right for you to purchase a home. Put it off for a year.

Identify the problem areas that kept you from obtaining a mortgage and make improvements. Reduce outstanding debt balances, boost your income and build a cushion. Save for a larger down payment.

And take the necessary steps to improve your credit score. A higher score could secure you a loan at a rate that will save you significant money.

7. Lower your expectations

Look at properties that are more comfortable financially. Perhaps a condominium would be suitable, or a less affluent neighborhood than the one you’ve been eyeing.

Still no luck? It may be time to revisit the drawing board to determine if you really should be in the market to buy a home.

Do you have any additional tips? Let us know in the comments below or on our Facebook page.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
Why Cutting the Cord Can Be Confusing — and How to Decide If It’s for You
Why Cutting the Cord Can Be Confusing — and How to Decide If It’s for You

Streaming TV might sound like the antidote to sky-high cable bills, but cutting the cord is easier said than done.

7 Things That Prove Cheaper Isn’t Always Better
7 Things That Prove Cheaper Isn’t Always Better

These items can end up costing you more if you try to go the cheap route.

Never Buy These 19 Things Online
Never Buy These 19 Things Online

The internet has changed how we shop. But for some things, you’re still better off buying the old-fashioned way.

4 Streaming TV Services That Cost $20 a Month — or Less
4 Streaming TV Services That Cost $20 a Month — or Less

Here’s how to ditch cable and satellite TV — and save a bundle — without giving up your favorite shows.

19 Things You Should Never Buy at a Grocery Store
19 Things You Should Never Buy at a Grocery Store

These household necessities are overpriced at the grocery store. Get them cheaper at these places instead.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

11 Things Retirees Should Always Buy at Costco
11 Things Retirees Should Always Buy at Costco

This leader in bulk shopping is a great place to find discounts in the fixed-income years.

Over 50? The CDC Says You Need These 4 Vaccines
Over 50? The CDC Says You Need These 4 Vaccines

Fall is the time to schedule vaccines that can keep you healthy — and even save your life.

11 Senior Discounts for Anyone Age 55 or Older
11 Senior Discounts for Anyone Age 55 or Older

There is no need to wait until you’re 65 to take advantage of so-called “senior” discounts.

11 Household Items That Go Bad — or Become Dangerous
11 Household Items That Go Bad — or Become Dangerous

When you get the impulse to stockpile these everyday items, pay close attention to their expiration dates.

8 Things You Can Get for Free at Pharmacies
8 Things You Can Get for Free at Pharmacies

In this age of higher-priced drugs and complex health care systems, a trip to the pharmacy can spark worry. Freebies sure do help.

These Are the 4 Best Medicare Advantage Plans for 2020
These Are the 4 Best Medicare Advantage Plans for 2020

Medicare Advantage customers themselves rate these plans highest.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

The 10 Most Commonly Stolen Vehicles in America
The 10 Most Commonly Stolen Vehicles in America

A new model parks atop the list of vehicles that thieves love to pilfer.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

10 Reasons Why You Should Actually Retire at 62
10 Reasons Why You Should Actually Retire at 62

If you can, here are several good reasons to retire earlier than we’re told to.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

26 States That Do Not Tax Social Security Income
26 States That Do Not Tax Social Security Income

These states won’t tax any of your Social Security income — and in some cases, other types of retirement income.

14 Things That Are ‘Free’ With Medicare
14 Things That Are ‘Free’ With Medicare

These services could save you money and help prevent costly health problems.

5 Keys to Making Your Car Last for 200,000 Miles
5 Keys to Making Your Car Last for 200,000 Miles

Pushing your car to 200,000 miles — and beyond — can save you piles of cash. Here’s how to get there.

5 Things That Make Life More Meaningful for Retirees
5 Things That Make Life More Meaningful for Retirees

Retirees agree: These are the things that give them purpose and fulfillment in their golden years.

15 Amazon Purchases That We Are Loving Right Now
15 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

10 Things You Should Never Do With Bleach
10 Things You Should Never Do With Bleach

Does the pandemic have you reaching for bleach more than ever before? Learn the ins and outs of using this powerful disinfectant.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.