Mortgage Loan Approval Guidelines Mortgage Loan Underwriting Process Mortgage Approval

Your goal as a potential home owner, is to find a mortgage program where the mortgage payment will fit your budget. Since the early 2000’s to 2004 time period, mortgage underwriters guidelines have considerably tighten. This was due to the high mortgage foreclosure’s that were engulfing the national crisis.

 Mortgage underwriters will review your credit profile to determine your qualifications for your mortgage application.  Underwriters will review your credit payment history, your debt to income ratio, your current assets,  to verify that you can qualify for a mortgage program approval.

 Prior to shopping for a mortgage loan it is critical for your as a mortgage applicant to obtain a copy of your credit report.   You need to know and understand your credit payment history. You can obtain a copy of your credit report from Equifax (800) 637-2422, Trans Union(800) 888-4213 or   For business owners who have a business credit profile, you can obtain a copy of your credit rating from Dunn & Bradstreet, (800) 234-3867.

 Mortgage under writers have mortgage guidelines to follow. Your mortgage application will need fit within those underwriting guidelines in order to get a mortgage approval.    Think of the mortgage application process as a 4 legged stool. 

 The four parts to the mortgage approval process include your credit profile, and debt to income ratio, your assets and income verification, and finally your property appraisal of the home you are purchasing.   The loan of value ratio (LTV) will have an affect upon which mortgage program you qualify.    So long as all four legs fit in the  mortgage program guidelines,  your chances of being approved for your mortgage application will increase significantly.

 Credit profiling is the life blood for the Real Estate mortgage industry.  With that in mind it is critical that you understand and review your credit profile.  With today’s mortgage industry standards mortgage loan programs will only consider a FICO score of  620 or above to be considered for mortgage loan approval.

 A FICO credit score between 620 to 700 is now considered “B” credit grade.  Credit scores that are between 700 to 800 are now consider “A credit grades.  The lower the credit score the higher your mortgage payment will be.  The lower your credit score the less mortgage programs that you can qualify for.

 Debt to income ratios are very important to mortgage underwriters.  For example (FHA) home Loans Federal Housing authority loans have the following debt to income guidelines;  (PITI)  Principle, Interest, Taxes, and insurance can not exceed 31% of your gross income. Total debt to income ratio can not exceed 43% of your gross income.

 As  mentioned earlier in this article organization of your paper work is key for your mortgage approval.  Mortgage underwriters will look for at least 1 or 2 years worth of cancelled rental payment checks that were paid to your landlord.  You will need to provide your landlords name, address, and phone number for verification purposes.  You will also have to provide payment history for your credit cards, auto loans, student loans, Utility payments.  Also include auto insurance payments.

If you had prior bankruptcies, or a mortgage foreclosure, you need to fully document that history.  Your prior bankruptcy has to be discharged at least 2 years prior to the mortgage application.  Any prior mortgage foreclosures have to have been discharged 3 years prior to mortgage application. The effect of bankruptcy’s and mortgage foreclosures means that your mortgage payments will be higher and that you might not qualify for some of the mortgage programs.  However some FHA mortgage loan programs will provide you with a oppurtunity to a manual review of your mortgage application.

You also have to have organized all your bank statements, brokerages statements, retirement statements. Also gather any whole life insurance policies and annuities that you might own.

 The final 4th leg of your mortgage approval process will be the completion of a property appraisal of the home that you intend to purchase.  The Loan to Value  (LTV) will also determine which mortgage program that you can qualify for.

 As you can see there are many moving parts to getting approved for a mortgage application.  You need to plan and organize well head of the date that you apply for your mortgage.