To process a bank housing loan, applicants must first verify their creditworthiness through a credit report and score check. They then submit a completed mortgage application with documents like income statements, tax returns, and asset proofs. Banks assess debt-to-income ratios, property value, and loan-to-value ratios to determine eligibility. Conditional approval follows, requiring applicants to address any documentation gaps or meet specific terms. Final approval occurs after a property appraisal and title search. Closing involves signing contracts and disbursing funds.

The structured process ensures compliance with regulations like the Truth in Lending Act (TILA) and safe lending practices. Credit scores directly impact loan terms; a FICO score above 740 typically secures the lowest rates, while scores below 620 often face denial. In 2022, 30% of mortgage applications were denied due to insufficient documentation, per the Consumer Financial Protection Bureau (CFPB). Property appraisals prevent overvaluation risks, with conforming loan limits set at $729,750 in 2023 (Fannie Mae). Underwriting criteria also mitigate defaults, as loans with debt-to-income ratios below 43% have lower delinquency rates. These steps balance risk management with accessibility, ensuring banks maintain profitability while supporting homebuyers. Data from the Urban Institute shows 95% of qualified borrowers obtain loans if all requirements are met, underscoring the importance of meticulous processing.