To secure a mortgage loan, first obtain pre-approval from a lender to understand your budget and strengthen your offer. Next, ensure your credit score is at least 620 (ideally 740+), as higher scores qualify for lower interest rates. Save for a down payment (typically 3%-20% of the purchase price) and closing costs (2%-5% of the loan amount). Compare loan types (e.g., fixed-rate vs. adjustable-rate) and terms with multiple lenders to find the best rates. Submit a formal loan application with proof of income, assets, and employment stability. Underwriters will assess your debt-to-income ratio (ideally below 43%) and verify financial documents. Once approved, finalize the purchase with a signed purchase agreement and mortgage closing.

The steps above are critical because mortgage approval hinges on creditworthiness, affordability, and market conditions. A credit score below 620 can lead to loan denials or higher rates, as Fannie Mae and Freddie Mac require scores of at least 620 for conforming loans. Lenders use credit scores to calculate risk; a 100-point increase can reduce rates by 0.25%-0.50% (Federal Reserve, 2022). Pre-approval increases offer success by 50% (National Association of Realtors, 2023), as sellers favor serious buyers. A 20% down payment avoids private mortgage insurance (PMI), saving $50-$100 monthly on a $300,000 loan (Bankrate, 2023). Debt-to-income ratios above 43% often result in rejection, per FHA guidelines. Finally, mortgage rates impact monthly payments; a 1% rate increase raises payments by 10% on a 30-year loan (CoreLogic, 2023). These factors collectively determine loan approval and long-term costs.