Qualify for a mortgage loan in Texas
A few things you should understand about how to qualify for a mortgage.
There are many types of mortgage loans which will either be government backed or private backed loans. Each have their own criteria and qualification conditions. Each loan will also have different down payment requirements. The loans will also have fee differences and limits. Some loan programs may even offer loans with no down payment.
Getting pre-approved to qualify for a mortgage loan in Texas is the most important step in the process of qualifying for a mortgage and purchasing a home. This makes you more appealing to sellers and will also help in figuring out the real cost of the mortgage loan prior to shopping for a home. Know your buying power to make the process as smooth as possible
The items you will need to have to submit an application for approval are: W-2 forms from the last 2 years, pay stubs from the past 30 days, Federal tax returns from the past 2 years, 30-60 days of most recent bank statements, and ID and Social Security card.
There may be additional documents needed based on your history and special circumstances. The lender will also pull your credit through all three credit bureaus to determine your mid-score used to determine what type of loan will be best for you. The information you provide will determine if a pre-approval can be provided to start shopping.
A mortgage underwriter will review your loan to determine whether you qualify for a mortgage loan. The underwriter will review your credit history, debt to income ratios, income along with length of employment, the property information, and other documents requested from third parties to make their determination.
Included in this will be student loans, location of home for second homes and investment homes, whether you currently own a home and will be selling your house before you close on your loan, source of your down payment, appraisal or survey of the property you are purchasing, and self-employed documents.
The ideal debt to income ratio should be 43% – 45% to qualify for a mortgage loan in Texas. For some loans, you can also be at 50% DTI. To determine your debt to income ratio, take the total minimum monthly payment reported on your credit report + any other monthly payments, such as child support, etc. and divide by your gross monthly income (before taxes).
Do not include utilities or car maintenance, etc. You must include any student loan payments. Your mid-credit score can range from 600 to 640 or higher. If you do not have 600 or higher credit score, do not lose hope, you can always take steps to improve your score. You will want a 2 year history of job history in the same line of work.
If you changed careers, you want to be in the line of work for at least 6 months. If you are self-employed, you need two years of tax returns and your average for the two years is what will determine the monthly income used for the application.
During the loan process, you should not switch jobs, take out any new loans or credit cards, make any large purchases, or co-sign on any loans. Keep your credit picture exactly the same until you close on a loan. Any changes may take you from an approval to a denial very easily.
It is important to seek out professional advice and help in the form of a licensed loan officer and realtor to help your home purchase go smoothly. I would be happy to help. Schedule a quick call with me.