- 1). Request your credit report and credit score, also called a FICO score. While requirements vary, it is recommended to have a FICO score of 650 to be approved for a good rate. For best rates, lenders are looking for a credit score of 760 or higher. Make sure that your credit report information is valid.
- 2). Calculate the down payment amount. You probably know the price range of a home that you can afford. While FHA loans require a 3.5 percent down payment, traditional mortgages require from 5 percent to 20 percent down. The lender will check your bank statement to verify that you have the funds.
- 3). Collect the last two years' tax returns and W-2s, recent paycheck stubs, bank statements and other documents showing additional income, such as pension, alimony or child support. If you have a copy of your credit report and your credit score, bring it with you. If not, the lender will pull up your reports in the office.
- 4). Present the documents to the lender. The pre-approval process is automated. The underwriting software will determine whether you are qualified and issue a letter of pre-approval. Once you find a home you would like to purchase, the lender will submit the information to an underwriter who, in turn, will give one of four answers: approved, approved with conditions, suspended (additional documentation needed) or denied.
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