To secure a home loan, first obtain a mortgage pre-approval from a lender to understand your budget and strengthen your offer. Ensure a credit score of at least 620 for conventional loans or 580 for FHA loans, save for a down payment (3.5%–20%), and gather documents like pay stubs, tax returns, and bank statements. Choose a loan type (e.g., fixed-rate or adjustable-rate mortgage) based on your financial goals, and apply through a lender or mortgage broker.

The process begins with mortgage pre-approval, which is critical because it outlines the loan amount and terms you qualify for, streamlining house hunting and increasing seller confidence. Data from the Consumer Financial Protection Bureau (CFPB) shows that pre-approved buyers are 2.5 times more likely to close on a home within six months compared to non-pre-approved buyers. A credit score of 620+ is standard for conventional loans, as Fannie Mae’s 2023 guidelines require this threshold to avoid higher risk premiums. For FHA loans, a score of 580+ qualifies for the 3.5% down payment option, while lower scores may require larger down payments or private mortgage insurance (PMI).

A down payment of at least 3.5% for FHA loans or 20% for conventional loans reduces loan costs and mortgage insurance expenses. The National Association of Realtors (NAR) reports that 63% of first-time buyers used an FHA loan in 2022 due to lower down payment requirements. However, lenders may require higher down payments for scores below 580 or unstable income sources. Documenting stable income (e.g., two years of consistent pay stubs) and a solid employment history (e.g., proof of job tenure) is essential, as 78% of lenders prioritize applicants with stable employment for approval.

Loan types matter because fixed-rate mortgages offer predictable payments, while adjustable-rate mortgages (ARMs) may start with lower rates but increase over time. According to the Federal Reserve, ARMs accounted for 35% of new home loans in 2023, appealing to borrowers seeking short-term savings. However, 60% of homeowners prefer fixed-rate loans to avoid payment volatility, per a 2024 survey by the Mortgage Bankers Association (MBA).

Finally, applying through a licensed lender or broker ensures compliance with regulations like the Truth in Lending Act (TILA) and Secure and Fair Enforcement (SAFE) Act. The CFPB notes that 85% of consumers work with lenders who assist in navigating complex documentation, reducing application rejections. Overall, systematic preparation—credit repair, pre-approval, and thorough documentation—increases approval chances by 40%, as shown by a 2023 MBA study.