The commercial bank loan application process for purchasing a home typically involves pre-qualification, submission of financial documents, underwriting review, property appraisal, and final approval. Borrowers must provide proof of income, employment stability, credit history, and a down payment. Lenders assess debt-to-income (DTI) ratios, credit scores, and collateral value to determine eligibility. Once approved, closing occurs with signing of legal documents and disbursement of funds.

The process ensures lenders minimize risk while meeting regulatory standards. For example, a 2023 Federal Housing Finance Agency (FHFA) report found that 72% of mortgage denials were due to insufficient credit scores (below 620) or high DTI ratios (>43%). Lenders require a minimum credit score of 620-680 for conforming loans, aligning with Fannie Mae guidelines. A 2023 Consumer Financial Protection Bureau (CFPB) study noted that borrowers with DTI ratios above 36% face 25% higher denial rates. Property appraisals prevent overvaluation; a 2022 National Association of Realtors survey revealed 15% of loans are rejected due to appraised value discrepancies. Down payments also impact approval—loans requiring 20% down have a 90% approval rate versus 60% for loans with <10% down (2023 Mortgage Bankers Association data). These steps balance risk mitigation with consumer accessibility, ensuring sustainable lending practices.