How to Get Pre-Approved for a Mortgage in 2020

As nearly a third of Americans look to buy a home in the next five years, many of them will be in for a shock when trying to get a mortgage. The process getting pre-approved for a mortgage can be a long and confusing one that could require a lot more work than you anticipate. You’ll have to do a deep dive on your entire financial history before you get the answer you seek.

Here are a few things you’ll need to take care of.


Anyone looking to get pre-approved will have to prove their earnings and income. Before you walk into a mortgage broker’s office, you must get your paperwork in order.

This typically starts with tracking down your W2 wage statements. This shows potential lenders how much you’re bringing in on a regular basis and how much you can afford. You might have to go back as far as a year or more if you have a non-traditional job or you work for yourself.

Any proof of additional income from alimony to annual bonuses can also be helpful, bring with you your two most recent tax filings as well. Home sellers and lenders are both willing to negotiate with people who can more than clear the regular payments.


Beyond the actual income you earn from wages, you might have other assets that could be liquidated if you need to pay off your mortgage. Lenders like to see this as it can prove a borrower’s ability to fall on a safety net in case of an emergency.

Borrowers will need to bring in bank statements from any accounts other than their standard checking or savings. If they have an extremely high savings account, it can help secure funding and pre-approval quickly.

Down payments are made in cash before you can get keys to a home. This is typically around 20% of the final purchase price of a home. Most mortgages won’t cover this and you may need an entirely separate loan with a strong financial backing to acquire one of these.

On top of that, lenders charge a disbursement fee at the start of the loan. Keep track of your credit score but also keep track of what kinds of assets you can call upon if you bite off more than you can chew. You should have that safety net to call upon in case you lose your job or if your business faces hard times.


While credit scores aren’t everything when it comes to securing financing, they do mean a lot. Most lenders are going to require you to have a FICO score well above 600 before they approve a conventional loan for you. Lenders will only offer the best interest rates to people with the best credit scores, meaning that the more you struggle with a credit score, the higher your interest.

This is a much-overlooked aspect of acquiring a home loan.

People with lower scores can also end up paying a much higher down payment. Those with low scores must work on improving their score to save money in the long run, it’s better to take the time to improve your credit before applying.

Each time you apply for a loan, remember that your credit score might take a temporary hit. Just the process of the application requires a credit inquiry that takes your credit score down a bit. The smartest borrowers wait until they have their ducks in a row before applying.

If you take out a loan over the course of 30 years with a poor credit score, you could actually end up paying the entire amount of the home in interest alone. A low range credit score on a $300,000 loan could end up netting over $250,000 in interest. Make sure really want to commit to buying a home if your credit score is less than stellar, as you might be better off renting until you’re able to increase your score.


Several lenders are going to want to see that you have stable employment before they give a loan to you, and may need to see more than a few pay stubs, in addition to calling your employer.

Many larger companies have a stock employment verification letter they can furnish you with. They can add your salary and any other relevant information that your lender wants to see.

Self-employed homebuyers are going to need to put together a lot of paperwork about their business and income if they want to secure a pre-approval. This can take a fair amount of time, which is hard to come by when you work for yourself.

The stability of your income will come into question. The location of your business and the nature of your business might also come into play. Expect to have to answer a lot of questions about the stability of your business and projected income before you can get pre-approved.


There might even be some additional documentation when trying to navigate how to get pre-approved for a mortgage.

The lender you work with may want to make copies of your driver’s license and social security card, and may go through great lengths to run a credit check.

Expect to have to prepare a lot of paperwork in advance. Make a call to your lender to see what they need so that you can finish the process in a single visit. Stay cooperative and communicative and it should go smoothly.

If you want to build wealth, buying a home is where to start.