what is needed PreQual Requirements
What is needed to Pre-Qualify for a Mortgage?
Are you considering buying a home and wondering, "What do you need to prequalify for a mortgage?"
This fast-reading guide will provide you with essential information on prequalification requirements, the process, and tips to help you secure a mortgage with ease.
What is the requirement to get prequalified for a mortgage?
To get pre-qualified for a mortgage, you will need to meet the following criteria based on the underwriting guidelines for most mortgage loan programs.
Below is a list of generalized requirements for each loan program:
FHA Requirements to get prequalified for a mortgage
- 3.5% Down Payment, Minimum Credit Score of 580
- 10% Down Payment, Minimum Credit Score of 550
- No 30 days late in the last 12 months
- No Bankruptcy Chapter 7 in the last 2 years
- Bankruptcy Chapter 13 requires 12 repayments made on time
- 2 years of verifiable income
- Debt-to-income ratio less than 50%
VA Requirements to get prequalified for a mortgage
- 0% Down Payment, Minimum Credit Score of 580
- 10% Down Payment, Minimum Credit Score of 550
- No 30 days late in the last 12 months
- No Bankruptcy Chapter 7 in the last 2 years
- Bankruptcy Chapter 13 requires 12 repayments made on time
- 2 years of verifiable income
- Debt-to-income ratio less than 50%
USDA Requirements to get prequalified for a mortgage
- 0% Down Payment, Minimum Credit Score of 600
- No 30 days late in the last 12 months
- No Bankruptcy Chapter 7 in the last 3 years
- Bankruptcy Chapter 13 requires 12 repayments made on time
- 2 years of verifiable income
- Debt-to-income ratio less than 46%
Conventional Requirements to get prequalified for a mortgage
- 3% Down Payment, Minimum Credit Score of 620 median income.
- 5% Down Payment, Minimum Credit Score of 620.
- No 30 days late in the last 12 months.
- No Bankruptcy Chapter 7 in the last 4 years from the date filed.
- Bankruptcy Chapter 13 must be discharged for 2 years or more.
- 2 years of verifiable income.
- Debt-to-income ratio of less than 50%, varies based on other factors.
What is a mortgage prequalification for a home loan?
Mortgage prequalification is the first step in the home-buying process.
A mortgage pre-qualification is an informal estimate of your eligibility to get approved for a home loan based on the information you provide or submit online.
This preliminary prequalification is not as reliable as mortgage pre-approval which requires the submission of all income and asset documents for review.
However, mortgage pre-qualifications do not affect your credit score, and give you the ability to shop and compare multiple mortgage lenders to identify the best loan terms before you commit to a lender for mortgage pre-approval.
How do I get pre-qualified for a home loan?
If you want to get pre-qualified, there are two different options to choose from.
If you value the opportunity to identify the lowest interest rates and fees, then you will want to price-check several lenders.
Option 1: Call multiple mortgage lenders and you can provide them with your information over the phone to get pre-qualified.
Option 2: Use an online mortgage marketplace that offers mortgage pre-qualifications and pre-approvals and identify the mortgage lender that has the lowest interest rates and fees.
Option 3: Use a mortgage pre-qualification calculator to verify your eligibility online.
5 Steps to Prequalify for a Home Loan
Follow these steps to successfully prequalify for a mortgage:
- Check your credit report: Review your credit report for any errors and dispute them if necessary. Aim to improve your credit score before starting the prequalification process.
- Gather necessary documents: Compile your financial documents, such as tax returns, pay stubs, and bank statements.
- Use an Online Pre-Qualification Calculator: Answer each question to the best of your knowledge.
- Compare lenders: Research multiple lenders to find the one that offers the best terms and rates for your financial situation.
- Submit your information: Complete the prequalification application, either online or over the phone.
- Obtain your prequalification letter: If approved, the lender will provide you with a prequalification letter stating the estimated loan amount you may qualify for.
IMPORTANT: It is important that you understand the pre-qualification letter is not as reliable as a mortgage pre-approval letter. Once you identify the best mortgage loan you will want to proceed with a mortgage pre-approval.
4 Tips for a Successful Mortgage Prequalification
Keep these tips in mind to increase your chances of prequalifying for a mortgage:
- Maintain a good credit score by making timely payments and reducing your debt.
- Stay within your budget and avoid taking on new debt before applying for a mortgage.
- Save for a down payment, as a larger down payment can help you secure better loan terms.
- Be prepared to provide additional documentation if needed, such as proof of rental history or gift letters for down payment assistance.
Summary of Prequalification Requirements:
The journey of buying a home starts with getting prequalified for a home loan. This important step gives you the ability to shop, compare and identify the lowest rate and fee mortgage loan without committing to any mortgage lender.
This preliminary step will provide you with the most important information to help you minimize the cost of financing while getting confirmation of your borrowing capacity.
