How to Apply for a Mortgage

You’ve decided to buy a home. Hooray! Now you need a mortgage. Take a breath — it’s not every day you apply for a loan with that many zeros.

Preparation is key, because after your purchase offer is accepted, the clock is ticking. Closing a mortgage transaction takes about 43 days on average, according to data provider ICE Mortgage Technology, though certain loan types may take a little longer.

By familiarizing yourself with the mortgage application process, you can be prepared to hit the ground running.

What to do before applying for a mortgage

Review your credit report. You can access free reports from the top three credit reporting bureaus — Experian, Equifax and TransUnion — at AnnualCreditReport.com. You’ll want to check the report for errors and dispute anything that appears wrong, as this could be holding your score back.

You’ll also want to know where your credit score will likely stand with lenders. Scores in the most desirable range (720-850) are considered “excellent.” From there, scores in the 690-719 range are “good,” scores in the 630-689 range are “fair” and scores in the 300-629 range are “bad.” The higher your score, the more likely it is that you’ll be approved for a mortgage — and receive more favorable rate offers.

» MORE: What credit score do you need to buy a house?

Explore different types of mortgages. This decision will largely come down to the rate, terms and requirements that best fits your needs.

For example, if you need a mortgage with flexible credit score requirements and a low minimum down payment, you might consider a loan backed by the Federal Housing Administration (FHA). If you know that you’re only planning on being in the home for a few years, you may be interested in taking advantage of the lower introductory rate that comes with an adjustable-rate mortgage.

Considering your own needs as a borrower will help you narrow your search and seek out the type of mortgage that is right for you.

» MORE: Different types of mortgage loans

Research and compare lenders. Shopping around and applying with multiple lenders will allow you to compare offers and find the lowest rate. NerdWallet’s roundup of the best mortgage lenders can be a great place to start your search.

Assemble your loan paperwork. This includes:

• Personal information, like your Social Security number and ID. 

• Income verification, such as W-2s and pay stubs (or tax returns, if you’re self-employed).

• Federal tax returns. 

• Bank statements. 

• Proof of other debts and assets. 

Get preapproved to borrow at a given loan amount. This is a sort of preliminary application that you’ll fill out before you start looking at homes. Lenders will review your personal information, such as your credit report, income documentation and assets, to evaluate how much you may be eligible to borrow.

The lender will provide you with a letter detailing these results. When you’re ready to make an offer on a home, this letter can boost the chances of your offering being accepted, since it shows the seller that you can secure financing.

Work with a real estate agent and find your home. Referrals and online searches can be great ways to find real estate agents in the area where you’re planning to move. You’ll want to interview a few until you find an agent that you feel comfortable with — especially if you’ll have unique needs.

For example, if you’re getting an FHA loan or a loan backed by the Department of Veterans Affairs (VA), the home has to meet certain requirements at the appraisal. An experienced agent can steer you toward homes that will meet these standards.

» MORE: How much house can you afford?