To apply for a bank loan to purchase a home, first assess your credit score and financial stability. A minimum credit score of 620–680 is typically required, with higher scores securing better terms. Save for a down payment (20% is ideal to avoid private mortgage insurance) and closing costs (2–5% of the loan amount). Secure pre-approval from a lender by submitting documents like pay stubs, tax returns, bank statements, and employment verification. Compare loan types (fixed-rate vs. adjustable-rate mortgages) and interest rates from multiple lenders. Once pre-approved, make an offer on a property, and the lender will underwrite the loan by verifying all financial details again. Finally, close the loan by signing final documents and transferring funds.

The steps above are critical because they ensure you meet lenders’ criteria and secure favorable terms. A strong credit score reduces default risk, with Fannie Mae requiring scores above 620 for conforming loans. Pre-approval saves time by eliminating financing delays, as 70% of U.S. homebuyers obtain pre-approval before house hunting (Bankrate, 2023). A 20% down payment minimizes monthly payments and avoids costly PMI, which averages $50–150 monthly on a $300,000 loan (National Association of Realtors). Lender comparisons are vital because average mortgage rates vary by 1–2% between top lenders, saving $100–$300 annually on a $300,000 loan (Federal Reserve, 2022). Underwriting ensures alignment with debt-to-income (DTI) limits, which cap at 43% of gross monthly income (Federal Reserve guidelines). Skipping these steps risks loan denial, higher rates, or missed opportunities.