A Guide to Getting a Mortgage and Buying a Home

June 10, 2025

Buying a home is a big milestone. Unless you plan to pay the full price in cash, you will need a mortgage. According to the U.S. Census Bureau, more than 60% of owner-occupied homes in the country are financed through mortgages. But how exactly do you go about getting one?

This guide walks you through the essential steps to prepare for, apply for, and ultimately secure a mortgage, from checking your credit score to closing on your new home.

1. Know Where Your Credit Stands

One of the first things lenders review is your credit score. It’s a key factor in determining whether you’ll be approved for a loan, what your borrowing limit might be, and the interest rate you’ll pay.

For most conventional loans, lenders look for a credit score of at least 620. However, government-backed loans such as FHA, VA, or USDA loans may have more lenient credit requirements. For example, some FHA loans can be approved with a score as low as 500, depending on your down payment.

If your score isn’t where you’d like it to be, take time to boost it:

●     Pay bills on time and avoid late payments.

●     Keep credit card balances low relative to your credit limit.

●     Correct any errors on your credit reports.

●     Avoid applying for new credit accounts before applying for a mortgage.

●     Keep older credit accounts open to maintain the age of your credit history.

2. Choose the Right Mortgage Type

Mortgages aren’t one-size-fits-all. Here are some common options:

●     Conventional Loans: Issued by private lenders without government insurance. These typically require higher credit scores and down payments.

●     FHA Loans: Government-backed and designed to help lower-income or first-time buyers. These often require a smaller down payment.

●     VA Loans: Offered to eligible military service members and veterans with zero down payment required.

●     USDA Loans: Designed for rural property buyers who meet certain income requirements, also offering no-down-payment options.

●     Jumbo Loans: Used for high-priced homes that exceed the conforming loan limits in your area.

Also consider the term length—30-year loans have lower monthly payments but higher overall interest, while 15-year loans involve larger payments but less interest paid over time.

3. Build Your Down Payment Fund

Traditionally, buyers aim to put down 20% of the home’s purchase price. Doing so helps avoid private mortgage insurance (PMI), lowers monthly payments, and can lead to more favorable loan terms.

That said, many buyers—especially first-timers—put down less. In fact, the National Association of Realtors reports that the median down payment for first-time buyers is around 9%. FHA loans may allow you to buy with just 3.5% down, and VA or USDA loans may not require any down payment at all.

4. Evaluate Your Debt-to-Income Ratio (DTI)

Your DTI ratio helps lenders gauge how much of your income is already committed to debt. To calculate it, add up your monthly debt payments (credit cards, student loans, etc.) along with estimated housing costs, then divide that by your gross monthly income.

Many lenders prefer a DTI under 36%, though some may approve loans with a DTI as high as 45%, depending on other qualifying factors.

5. Shop Around for Mortgage Lenders

Don’t settle for the first lender you find. Compare different lenders based on:

●     The types of loans they offer

●     Interest rates and closing costs

●     Customer service and reviews

●     Features like easy refinancing, rate locks, or flexible repayment terms

Finding the right lender could save you thousands of dollars over the life of the loan.

6. Get Preapproved

A mortgage preapproval gives you a clearer idea of how much you can borrow and helps you stand out to sellers. To get preapproved, you’ll typically need to provide:

●     Identification

●     Proof of income (pay stubs, W-2s, etc.)

●     Employment history

●     Statements from bank, investment, and retirement accounts

If approved, the lender will issue a preapproval letter that’s usually valid for 30 to 90 days.

7. Make an Offer

Once you’re preapproved, you can begin house hunting in earnest. A trusted real estate agent can help you find homes in your budget and guide you through making offers. Sellers often want to see your preapproval letter to confirm your ability to finance the purchase.

8. Submit Your Mortgage Application

When your offer is accepted, it’s time to formally apply for the mortgage. If your preapproval is recent, some documents may carry over, but you’ll likely need to provide updated financials and any additional information requested by the lender.

9. Appraisal and Inspection

Your lender will order an appraisal to ensure the property is worth the purchase price. While optional, it’s also wise to schedule a home inspection to uncover any potential issues before closing.

10. Prepare to Close

As closing day approaches, you’ll receive a closing disclosure with final loan details. Be ready to:

●     Do a final walk-through

●     Review and sign documents

●     Pay closing costs, which typically range from 2% to 5% of the home’s purchase price

You may need a certified or cashier’s check for this payment—your lender or agent can clarify what's required.

11. Close and Get the Keys

Once all documents are signed and funds are transferred, the home is officially yours. Whether your closing is in person or virtual, it marks the final step in the mortgage process—and the start of your journey as a homeowner.

Sources:

https://www.fidelity.com/learning-center/smart-money/how-to-get-a-mortgage

Disclosure:

This information is an overview and should not be considered as specific guidance or recommendations for any individual or business.

This material is provided as a courtesy and for educational purposes only.

These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. Neither the named Representative nor Advisory Services Network, LLC gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.